UDR (UDR) 10-K risk factor changes: FY2015 vs FY2014

Even if the residents do renew or we can relet the apartment units, the terms of renewal or [removed: reletting may be less favorable than current lease terms.]

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 [removed: single-and] [added: single- and] multi-family homes.

| • | 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 [added: debt used to finance the] acquisition; |

| • | we may be unable to obtain construction financing for development activities under favorable terms, including but not limited to interest rates, maturity dates and/or loan to value ratios, or at [removed: all] [added: all,] which could cause us to delay or even abandon potential developments; |

We currently have [removed: 15] [added: 16] active joint ventures and partnerships, [removed: excluding] [added: including] our participating loan [added: investment and preferred equity] investment, with a total equity investment of [removed: $655.5] [added: $938.9] million.

We have a comprehensive insurance program covering our property and operating activities with limits of liability customary within the [removed: multi-family] [added: multifamily] industry.

If an uninsured loss or a loss in excess of insured limits [removed: occur,] [added: 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.

Such events could adversely affect our cash flow and ability to make [removed: distributions to UDR’s stockholders.][added: distributions.]

From time to [removed: time] [added: time,] claims may be asserted against us with respect to some of our properties under the Americans with Disabilities Act.

[added: We do not] know whether existing requirements will change or whether compliance with future requirements will require significant unanticipated expenditures that will affect our cash flow and results of operations.

[removed: 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 [removed: taxes,] [added: taxes] to tenants under leases.

Any such loss could materially and adversely affect our [removed: business and our] [added: business,] financial condition and results of operations.

If a borrower defaults on our mezzanine loan or debt senior to our loan, or in the event of a borrower [added: bankruptcy, our mezzanine loan will be satisfied only after the senior debt.]

We May Experience a Decline in the Fair Value of Our Assets and Be Forced to Recognize Impairment Charges, Which Could Materially and Adversely Impact Our Financial Condition, Liquidity and Results of Operations and the Market Price of [removed: UDR’s Common Stock.]

Many of the provisions of the Dodd-Frank Act have extended implementation periods and delayed effective dates and continue to require [removed: extensive] rulemaking by regulatory authorities; thus, the impact on us may not be known for an extended period of time.

The Dodd-Frank Act, including [removed: future] rules implementing its provisions and the interpretation of those rules, along with other legislative and regulatory proposals that are [added: proposed or pending in the United States Congress, may limit our revenues, impose fees or taxes on us, and/or intensify the regulatory framework in which we operate in ways that are not currently identifiable.]

[removed: Because we are committed to maintaining high standards of internal control over financial reporting, corporate] governance and public disclosure, our management team will need to devote significant time and financial resources to comply with these evolving standards for public companies.

| • | changes in tax and housing laws, including the enactment of rent control laws or other laws regulating [removed: multi-family] [added: multifamily] housing. |

As of December 31, [removed: 2014,] [added: 2015,] UDR had approximately [removed: $579.7] [added: $610.4] million of variable rate indebtedness outstanding, which constitutes approximately [removed: 16.1%] [added: 17.0%] of total outstanding indebtedness as of such date.

As of December 31, [removed: 2014,] [added: 2015,] the Operating Partnership had approximately [removed: $219.8] [added: $197.2] million of variable rate indebtedness outstanding, which constitutes approximately [removed: 23.6%] [added: 41.2%] of total outstanding indebtedness to third parties as of such date.

There can be no assurance that our hedging activities will have [added: the] desired beneficial impact on our results of operations or financial condition.

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

[removed: 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.

As discussed in the risk factors above, because UDR is organized and qualifies as a [removed: REIT] [added: REIT,] it is generally not subject to federal income taxes, but it is subject to certain state and local taxes.

The Operating Partnership [removed: Intends] [added: and the DownREIT Partnership Intend] to Qualify as [removed: a Partnership,] [added: Partnerships,] But Cannot Guarantee That [removed: It] [added: They] Will Qualify.

If classified as [removed: a partnership,] [added: partnerships,] the Operating Partnership [added: and the DownREIT Partnership] generally will not be [removed: a] taxable [removed: entity] [added: entities] and will not incur federal income tax liability.

However, the Operating Partnership [added: and the DownREIT Partnership] would be treated as [removed: a corporation] [added: corporations] for federal income tax purposes if [removed: it] [added: they] were [removed: a] “publicly traded [removed: partnership,”] [added: partnerships,”] unless at least 90% of [removed: the Operating Partnership’s] [added: their] income was qualifying income as defined in the Code.

Although [added: neither] the Operating Partnership’s [added: nor the DownREIT Partnership’s] partnership units are [removed: not] traded on an established securities market, because of the redemption [removed: right,] [added: rights of their limited partners,] the Operating Partnership’s [added: 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 [added: and the DownREIT Partnership] may not qualify for one of the “safe harbors” under the applicable tax regulations.

The Operating Partnership [added: and the DownREIT Partnership] may not meet this qualifying income test.

[added: If the Operating Partnership or the DownREIT Partnership were to be taxed as a corporation, they 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.

Moreover, new legislation, court decisions or administrative guidance, in each case possibly with retroactive effect, may make it more difficult or [removed: impossible for us to qualify as a REIT.]

reletting may be less favorable than current lease terms.

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, 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.

Generally we do not directly pass through costs resulting from

UDR’s Common Stock.

Because we are committed to maintaining high standards of internal control over financial reporting, corporate

While we will attempt to ensure that our dealings with our

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.

impossible for us to qualify as a REIT.

We do not

bankruptcy, our mezzanine loan will be satisfied only after the senior debt.

proposed or pending in the United States Congress, may limit our revenues, impose fees or taxes on us, and/or intensify the regulatory framework in which we operate in ways that are not currently identifiable.

The Operating Partnership intends to qualify as a partnership for federal income tax purposes at any such time that the Operating Partnership admits additional limited partners other than UDR.

If the Operating Partnership were to be taxed as a corporation, it would incur substantial tax

UDR is a self-administered real estate investment trust, or REIT, that owns, operates, acquires, renovates, develops, redevelops, and manages multifamily apartment communities generally located in high barrier-to-entry markets [removed: located] throughout the United States.

At December 31, [removed: 2014,] [added: 2015,] our consolidated real estate portfolio included [removed: 139] [added: 133] communities located in [removed: 20] [added: 18] markets, with a total of [removed: 39,851] [added: 40,728] completed apartment homes, which are held through our subsidiaries, including the Operating [added: Partnership and the DownREIT] Partnership, and consolidated joint ventures.

In addition, we have an ownership interest in [removed: 36] [added: 28] communities containing [removed: 10,055] [added: 6,696] apartment homes through unconsolidated joint ventures or partnerships.

As of December 31, [removed: 2014,] [added: 2015,] the Company was developing one wholly-owned community with [removed: 369] [added: 516] apartment homes and [removed: three] [added: four] unconsolidated joint venture communities with [removed: 1,018] [added: 1,173] apartment homes, none of which have been completed.

At December 31, [removed: 2014,] [added: 2015,] the Operating Partnership’s consolidated real estate portfolio included [removed: 68] [added: 57] communities located in [removed: 17] [added: 14] markets, with a total of [removed: 20,814] [added: 16,974] completed apartment homes.

During the year ended December 31, [removed: 2014,] [added: 2015,] revenues of the Operating Partnership represented approximately [removed: 52%] [added: 51%] of our total rental revenues.

In [removed: 2014,] [added: 2015,] we declared total distributions of [removed: $1.04] [added: $1.11] per common share and paid dividends of [removed: $1.015] [added: $1.0925] per common share.

| | Dividends Declared in [removed: 2014] [added: 2015] | | | | Dividends Paid in [removed: 2014] [added: 2015] | | |

| Second Quarter | [removed: 0.260] [added: 0.2775] | | | | [removed: 0.260] [added: 0.2775] | | |

| Third Quarter | [removed: 0.260] [added: 0.2775] | | | | [removed: 0.260] [added: 0.2775] | | |

| Fourth Quarter | [removed: 0.260] [added: 0.2775] | | | | [removed: 0.260] [added: 0.2775] | | |

As of February [removed: 19, 2015,] [added: 22, 2016,] we had [removed: 1,523] [added: 1,569] full-time associates and [removed: 59] [added: 42] part-time associates, all of whom were employed by UDR.

Our Same-Store Communities segment includes those communities acquired, developed, and stabilized prior to January 1, [removed: 2013,] [added: 2014,] and held as of December 31, [removed: 2014.][added: 2015.]

For additional information regarding our operating segments, see Note 15, Reportable Segments, in the Notes to the UDR Consolidated Financial Statements included in this Report and Note [removed: 12,] [added: 13,] Reportable Segments, in the Notes to the Operating Partnership’s Consolidated Financial Statements included in this Report.

| • | In July [removed: 2014,] [added: 2015,] the Company marked its [removed: 42nd] [added: 43rd] year as a REIT and paid its [removed: 168th] [added: 172nd] consecutive quarterly dividend in October. The Company’s annualized declared [removed: 2014] [added: 2015] dividend of [removed: $1.04] [added: $1.11] represented a [removed: 10.6%] [added: 6.7%] increase over the previous year. |

| • | We achieved Same-Store revenue growth of [removed: 4.3%] [added: 5.6%] and [removed: Same-Store] [added: same-store] net operating income (“NOI”) growth of [removed: 5.2%.] [added: 6.7%.] |

Refer to Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, for further information on the Company’s and the Operating Partnership’s activities in [removed: 2014.][added: 2015.]

| | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | | | [removed: 2011] [added: 2012] | | | | [removed: 2010] [added: 2011] | | |

| Homes acquired | [removed: 358] [added: 3,246] | | | | [removed: —] [added: 358] | | | | [removed: 633] [added: —] | | | | [removed: 3,161] [added: 633] | | | | [removed: 1,374] [added: 3,161] | | |

| Homes disposed | [removed: 2,500] [added: 2,735] | | | | [removed: 914] [added: 2,500] | | | | [removed: 6,507] [added: 914] | | | | [removed: 4,488] [added: 6,507] | | | | [removed: 149] [added: 4,488] | | |

| Homes owned at December 31, | [removed: 39,851] [added: 40,728] | | | | [removed: 41,250] [added: 39,851] | | | | [removed: 41,571] [added: 41,250] | | | | [removed: 47,343] [added: 41,571] | | | | [removed: 48,553] [added: 47,343] | | |

| Total real estate owned, at cost | $ | [removed: 8,383,259] [added: 9,190,276] | | | $ | [removed: 8,207,977] [added: 8,383,259] | | | $ | [removed: 8,055,828] [added: 8,207,977] | | | $ | [removed: 8,074,471] [added: 8,055,828] | | | $ | [removed: 6,881,347] [added: 8,074,471] | |

| Homes acquired | [removed: —] [added: 421] | | | | — | | | | — | | | | [removed: 1,833] [added: —] | | | | [removed: —] [added: 1,833] | | |

| Homes disposed [added: (a)] | [removed: 264] [added: 4,256] | | | | [removed: 914] [added: 264] | | | | [removed: 1,314] [added: 914] | | | | [removed: 2,024] [added: 1,314] | | | | [removed: —] [added: 2,024] | | |

| Homes owned at December 31, | [removed: 20,814] [added: 16,974] | | | | [removed: 20,746] [added: 20,814] | | | | [removed: 21,660] [added: 20,746] | | | | [removed: 23,160] [added: 21,660] | | | | [removed: 23,351] [added: 23,160] | | |

| Total real estate owned, at cost | $ | [removed: 4,238,770] [added: 3,630,905] | | | $ | [removed: 4,188,480] [added: 4,238,770] | | | $ | [removed: 4,182,920] [added: 4,188,480] | | | $ | [removed: 4,205,298] [added: 4,182,920] | | | $ | [removed: 3,706,184] [added: 4,205,298] | |

At December 31, [removed: 2014,] [added: 2015,] our development pipeline included one wholly-owned community located in [removed: Boston, Massachusetts] [added: Huntington Beach, California] with [removed: 369] [added: 516] homes and a budget of [removed: $217.7] [added: $342.0] million, in which we have a carrying value of [removed: $177.6] [added: $124.1] million.

During [removed: 2014,] [added: 2015,] we continued to redevelop properties in primary markets where we concluded there was an opportunity to add value.

At December 31, [removed: 2014,] [added: 2015,] the Company was [removed: redeveloping 708] [added: developing one wholly-owned community with 516] apartment homes, [removed: 694] [added: none] of which have been [removed: completed, at one wholly-owned community with 739 apartment homes located in New York, New York.][added: completed.]

During the year ended December 31, [removed: 2014,] [added: 2015,] we incurred [removed: $31.5] [added: $32.9] million in major renovations, which include major structural changes and/or architectural revisions to existing buildings.

Joint Venture [added: and Partnership] Activities

Our residents have the ability to conduct business with us 24 hours a day, 7 days a week and complete online leasing applications and renewals throughout our [removed: portfolio.][added: portfolio using our web-based resident internet portal.]

For the year ended December 31, [removed: 2014,] [added: 2015,] approximately [removed: 65.0%] [added: 69.5%] of our [added: consolidated] same-store NOI was generated by communities located in our primary markets of: Seattle, Washington; San Francisco Bay Area, California; Los Angeles, California; Orange County, California; Austin, Texas; Dallas, Texas; Boston, Massachusetts; New York, New York; and Metropolitan D.C. [added: At December 31, 2015, the Company held 75.4% of its same-store carrying value of its real estate portfolio in our primary markets.]

[removed: Markets and] Competitive Conditions

[removed: During] [added: For] the year ended December 31, [removed: 2014, 72.9%] [added: 2015, approximately 73.1%] of the Operating Partnership’s same-store NOI was generated [removed: from apartment homes] [added: by communities] located in our primary [added: markets and 73.7% of its same-store carrying value of its real estate portfolio was generated in its primary] markets.

The competitive position of each community is different depending upon many [removed: factors] [added: factors,] including sub-market supply and demand.

[added: In addition,] other real estate investors compete with us to acquire existing properties, redevelop existing properties, and to develop new properties.

| • | geographic diversification with a presence in [removed: 20] [added: 18] markets across the country; and |

At December 31, [removed: 2014,] [added: 2015,] our consolidated real estate portfolio included [removed: 139] [added: 133] communities with a total of [removed: 39,851] [added: 40,728] completed apartment homes, which included the Operating Partnership’s consolidated real estate portfolio of [removed: 68] [added: 57] communities with a total of [removed: 20,814] [added: 16,974] completed apartment homes.

At December 31, [removed: 2014,] [added: 2015,] the Company was [removed: developing one wholly-owned community with 369] [added: redeveloping 264] apartment homes, [removed: none] [added: 11] of which have been [removed: completed.][added: completed, at two wholly-owned communities.]

| First Quarter | $ | 0.2775 | | | $ | 0.2600 | |

| Total | $ | 1.1100 | | | $ | 1.0925 | |

2015 Highlights

| • | We completed one development in Boston, MA containing 369 homes for an aggregate cost of approximately $217.7 million. We also completed the redevelopment of 708 homes at a community in New York, NY for an aggregate cost of approximately $98.0 million. |

| • | As of December 31, 2015, we were developing one wholly-owned community and four communities in unconsolidated joint ventures and redeveloping three wholly-owned communities. |

| • | In October 2015, the Company completed the acquisition of six Washington, D.C. area properties from Home Properties, L.P. (“Home OP”) for a total contractual purchase price of $900.6 million, which was comprised of $564.8 million of DownREIT Units in the newly formed DownREIT Partnership, the assumption of $89.3 million of debt, $221.0 million of reverse tax-deferred like-kind exchanges under Section 1031 of the Internal Revenue Code of 1986 (“Section 1031 exchanges”), and $25.5 million of cash. The Company holds a 50.1% (including a 41.6% interest held indirectly through the Operating Partnership) controlling ownership interest in, and consolidates, the DownREIT Partnership. For additional information regarding the DownREIT Partnership, see Note 11, Noncontrolling Interests, in the notes to the UDR Consolidated Financial Statements included in this Report. |

| • | We contributed $136.3 million for a preferred equity investment in five west coast communities that are currently under construction. |

| • | We recognized gains on the sale of real estate of $251.7 million from the sale of 12 communities with a total of 2,735 apartment homes. A portion of the sale proceeds was designated for tax-deferred Section 1031 exchanges for a 2014 acquisition and the October 2015 acquisitions described above. |

| • | The eight communities held by the Texas joint venture were sold, generating net proceeds to UDR of $44.2 million. The Company recorded promote and disposition fee income of $10.0 million and a gain of $59.4 million (including $24.2 million of previously deferred gains). |

| • | We sold 6,339,636 shares of common stock through public offerings for net proceeds of approximately $210.0 million. |

| • | We entered into a new $1.1 billion revolving credit facility with a maturity date in January 2020, exclusive of options to extend, which replaced the prior $900 million revolving credit facility that was scheduled to mature in December 2017, |

and entered into a $350.0 million senior unsecured term loan facility due January 2021, which replaced the Company’s $250 million term loan and $100 million term loan that were scheduled to mature in June 2018.

| • | We issued $300 million of 4.00%, 10-year senior unsecured medium-term notes in September. |

| | 2015 | | | | 2014 | | | | 2013 | | | | 2012 | | | | 2011 | | |

(a) Includes 3,107 homes deconsolidated in 2015 upon contribution of communities by the Operating Partnership to the DownREIT Partnership.

At December 31, 2015, the Company was redeveloping all 264 apartment homes, 11 of which have been completed, at two wholly-owned communities located in San Francisco, California and Bellevue, Washington.

The Company also was redeveloping one wholly-owned community in San Francisco, California with renovations to the building exterior, corridors, and common area amenities, with no impact to individual homes.

The community being developed is not part of the Operating Partnership’s real estate portfolio.

The Company was also was redeveloping one wholly-owned community, with renovations to the building exterior, corridors, and common area amenities, with no impact to individual homes.

Two of these communities under redevelopment are held by the Operating Partnership.

However, any state or

| First Quarter | $ | 0.260 | | | $ | 0.235 | |

| Total | $ | 1.040 | | | $ | 1.015 | |

| | |

| --- | --- |

2014 Highlights

| • | During the year ended December, 31, 2014, we invested approximately $251.5 million in wholly-owned development projects and $31.5 million in redevelopment projects and major renovations, including completion of 980 development apartment homes and 401 redevelopment apartment homes in primary markets. |

| • | We expanded our relationship with the Metropolitan Life Insurance Company (“MetLife”): |

| • | We increased our ownership interest in the remaining six operating communities in the UDR/MetLife I Joint Venture from 12% to 50%, and MetLife and the Company contributed the communities to the UDR/MetLife II Joint Venture. We paid MetLife $82.5 million for the additional ownership interests. |

| • | We increased our ownership interest in four land sites in the UDR/MetLife I Joint Venture from approximately 3% to 50%. The remaining interest continues to be held by our joint venture partner MetLife. We paid MetLife approximately $36.8 million for the additional ownership interests. |

| • | We sold 50% of our interest in 3033 Wilshire and 49% of our interest in 13th and Market to MetLife for gross proceeds of approximately $62.5 million, resulting in the assets being held by unconsolidated joint ventures. |

| • | We issued $300 million of 3.75%, 10-year senior unsecured medium-term notes in June. Net proceeds were used to pay down borrowings outstanding on our unsecured revolving credit facility and for general corporate purposes. |

| • | We completed five developments containing 1,396 homes for an estimated aggregate cost of $480.0 million. |

| • | We acquired land parcels for future development located in Huntington Beach, California for $77.8 million and Boston, Massachusetts for $32.2 million. |

| • | We acquired two communities located in Seattle, Washington and Kirkland, Washington with a total of 358 apartment homes for $45.5 million and $75.2 million, respectively. |

| • | We recognized gains on the sale of real estate of $143.6 million, net of tax, which consisted of: |

| • | the sale of nine communities with a total of 2,500 apartment homes, an adjacent parcel of land, and one operating property for gross proceeds of $328.4 million, resulting in a gain, net of tax, of approximately $138.6 million; and |

| • | the sale of our 49% interest in a recently completed development for gross proceeds of $54.2 million, resulting in a gain, net of tax, of $7.2 million and our 50% interest in a land parcel for gross proceeds of $8.3 million, resulting in a loss, net of tax, of $2.2 million. |

| • | We sold common stock under our amended equity distribution agreement for net proceeds of approximately $99.8 million, which was primarily used to fund the Company's Steele Creek participating loan investment. |

Other than the following, there were no significant changes to the Operating Partnership’s business during 2014 (the above 2014 highlights relate to UDR or other subsidiaries of UDR):

| • | The Operating Partnership sold one operating community and an adjacent parcel of land in San Diego, California for gross proceeds of $48.7 million, resulting in a gain of approximately $24.4 million and net proceeds of $47.9 million. The Operating Partnership also recorded gains of $39.2 million in connection with UDR’s sale of two communities in Tampa, Florida and Los Angeles, California, which were previously deferred. |

The Operating Partnership is not a party to any of the joint venture activities described above.

Since its launch in January 2009, our residents have been utilizing our web-based resident internet portal on our website.

We launched a new website at the end of 2014.

This is the third major revision of UDR.com, and represents a complete rebuild of our on-line presence.

It was completed after several months of research with customer focus groups that told us what they wanted to see in an on-line shopping experience.

The new website features elements such as on-line appointment scheduling, enhanced neighborhood information, and comparison shopping tools, all of which are available via any device the customer may choose.

To date, we are exceeding our initial targets for the site by converting a higher than expected amount of traffic to community visits.

During the year ended December 31, 2014, 65.0% of our consolidated same-store NOI was generated from apartment homes located in our primary markets.

At December 31, 2014, the Company held 70.7% of its same-store carrying value of its real estate portfolio in our primary markets.

At December 31, 2014, the Operating Partnership held 76.1% of its same-store carrying value of its real estate portfolio in its primary markets.

We believe that this diversification increases investment opportunity and decreases the risk associated with cyclical local real estate markets and economies, thereby increasing the stability and predictability of our earnings.

In addition,

In addition, at December 31, 2014, the Company had three communities with 825 apartment homes which were completed but not yet stabilized.

At December 31, 2014, the Company was redeveloping 708 apartment homes, 694 of which have been completed, at one wholly-owned community with 739 apartment homes.

currently actionable.

For the fiscal year ended December 31, [removed: 2014][added: 2015]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [removed: o]

The aggregate market value of the shares of common stock of UDR, Inc. held by non-affiliates on June 30, [removed: 2014] [added: 2015] was approximately [removed: $3.0] [added: $3.7] billion.

As of February [removed: 19, 2015,] [added: 22, 2016,] there were [removed: 258,765,713] [added: 262,132,787] shares of UDR, Inc.’s common stock outstanding.

The information required by Part III of this Report, to the extent not set forth herein, is incorporated by reference from UDR, Inc.’s definitive proxy statement for the [removed: 2015] [added: 2016] Annual Meeting of Stockholders.

| [Item 1. [removed: Business](#s46AE7CC6255970D8E86F7CF613CDD155)] [added: Business](#s7CF0AB0D708CFA604E2BAF723251524B)] | [removed: [2](#s46AE7CC6255970D8E86F7CF613CDD155)] [added: [3](#s7CF0AB0D708CFA604E2BAF723251524B)] |

| [Item 1A. Risk [removed: Factors](#sE98169427CA5919EF78F7CF621C39917)] [added: Factors](#s498CDA027EB8091B986DAF7235EB0C82)] | [removed: [9](#sE98169427CA5919EF78F7CF621C39917)] [added: [10](#s498CDA027EB8091B986DAF7235EB0C82)] |

| [Item 1B. Unresolved Staff [removed: Comments](#s570C49F50D68DF4B79077CF621F5815F)] [added: Comments](#sBD45F4AFE93E3ADE4C6FAF7236119A32)] | [removed: [21](#s570C49F50D68DF4B79077CF621F5815F)] [added: [22](#sBD45F4AFE93E3ADE4C6FAF7236119A32)] |

| [Item 2. [removed: Properties](#s03F948422B7C82DB238F7CF6117DEEA2)] [added: Properties](#s3CE9516DA7D504D6BD1AAF72224417FE)] | [removed: [22](#s03F948422B7C82DB238F7CF6117DEEA2)] [added: [23](#s3CE9516DA7D504D6BD1AAF72224417FE)] |

| [Item 3. Legal [removed: Proceedings](#s144367E6D6BD27EE17C27CF62248F254)] [added: Proceedings](#sC063FBF89578B03375E9AF7236709EB7)] | [removed: [24](#s144367E6D6BD27EE17C27CF62248F254)] [added: [24](#sC063FBF89578B03375E9AF7236709EB7)] |

| [Item 4. Mine Safety [removed: Disclosures](#sC5DED05CBCBFBCB4856A7CF6226AA57A)] [added: Disclosures](#s18E75D1873E07348AB7FAF7236888906)] | [removed: [24](#sC5DED05CBCBFBCB4856A7CF6226AA57A)] [added: [24](#s18E75D1873E07348AB7FAF7236888906)] |

| [Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#s9A3F2AE410DBB99F1AEF7CF60BF84AAB)] [added: Securities](#s9E8C7B0B7A08A93473CBAF72224472C7)] | [removed: [25](#s9A3F2AE410DBB99F1AEF7CF60BF84AAB)] [added: [25](#s9E8C7B0B7A08A93473CBAF72224472C7)] |

| [Item 6. Selected Financial [removed: Data](#s9015CC8DEA5B06B663B87CF60F34752D)] [added: Data](#s4DDDE2C4AD778018EBD4AF72236093B2)] | [removed: [29](#s9015CC8DEA5B06B663B87CF60F34752D)] [added: [29](#s4DDDE2C4AD778018EBD4AF72236093B2)] |

| [Item 7. Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#sE5B7BA521020D08263D37CF623428257)] [added: Operations](#s79B1F3FE868507FBEE98AF7237698592)] | [removed: [32](#sE5B7BA521020D08263D37CF623428257)] [added: [34](#s79B1F3FE868507FBEE98AF7237698592)] |

| [Item 7A. Quantitative and Qualitative Disclosures about Market [removed: Risk](#s9A7AC0B6A42806B9D7307CF624C2E175)] [added: Risk](#sC7623633BE501304D772AF72392B1BFA)] | [removed: [63](#s9A7AC0B6A42806B9D7307CF624C2E175)] [added: [66](#sC7623633BE501304D772AF72392B1BFA)] |

| [Item 8. Financial Statements and Supplementary [removed: Data](#s8DB1339405F85434D0837CF624E33FC3)] [added: Data](#s003F638ACB8282649478AF72392BDBD8)] | [removed: [63](#s8DB1339405F85434D0837CF624E33FC3)] [added: [66](#s003F638ACB8282649478AF72392BDBD8)] |

| [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#sC3B3C21F8F7259A884FC7CF625054E6F)] [added: Disclosure](#s36D2C933C16A682B4776AF72393E1A7B)] | [removed: [63](#sC3B3C21F8F7259A884FC7CF625054E6F)] [added: [66](#s36D2C933C16A682B4776AF72393E1A7B)] |

| [Item 9A. Controls and [removed: Procedures](#s3661DC3528D4EB6D28E37CF625369434)] [added: Procedures](#s4A81A67983CFA42CA809AF72395797BC)] | [removed: [63](#s3661DC3528D4EB6D28E37CF625369434)] [added: [66](#s4A81A67983CFA42CA809AF72395797BC)] |

| [Item 9B. Other [removed: Information](#s46BD26C4E5C7650F9EDB7CF62558A5BE)] [added: Information](#s7400D63029161CE74BC5AF7239782284)] | [removed: [64](#s46BD26C4E5C7650F9EDB7CF62558A5BE)] [added: [67](#s7400D63029161CE74BC5AF7239782284)] |

| [Item 10. Directors, Executive Officers and Corporate [removed: Governance](#s211DAE10F524593D438B7CF625AB1C12)] [added: Governance](#sF98536C3C2CEE8374B1EAF7239CB2022)] | [removed: [65](#s211DAE10F524593D438B7CF625AB1C12)] [added: [68](#sF98536C3C2CEE8374B1EAF7239CB2022)] |

| [Item 11. Executive [removed: Compensation](#s9071B38F2A4F8AD271047CF625DE4EEA)] [added: Compensation](#s2FEF5A80BC4ED530F15CAF7239EBC315)] | [removed: [65](#s9071B38F2A4F8AD271047CF625DE4EEA)] [added: [68](#s2FEF5A80BC4ED530F15CAF7239EBC315)] |

| [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#sC89AB2A68B657C3CCD707CF62604F4E4)] [added: Matters](#sAAE55D6C0F768D802CCAAF723A456B77)] | [removed: [65](#sC89AB2A68B657C3CCD707CF62604F4E4)] [added: [68](#sAAE55D6C0F768D802CCAAF723A456B77)] |

| [Item 13. Certain Relationships and Related Transactions, and Director [removed: Independence](#s428645C45416740115367CF626313A64)] [added: Independence](#sEB883E46EC01976DCCC1AF723A481ACF)] | [removed: [65](#s428645C45416740115367CF626313A64)] [added: [68](#sEB883E46EC01976DCCC1AF723A481ACF)] |

| [Item 14. Principal Accountant Fees and [removed: Services](#s2654062C72091B950AE57CF62652F1C2)] [added: Services](#sB4293F78CC44D303AE58AF723A6FAB7E)] | [removed: [65](#s2654062C72091B950AE57CF62652F1C2)] [added: [68](#sB4293F78CC44D303AE58AF723A6FAB7E)] |

| [Item 15. Exhibits, Financial Statement [removed: Schedules](#sDB126AA852570BEA8B567CF626A473F7)] [added: Schedules](#sDDCE761E598846F8C7FBAF723AECCBC5)] | [removed: [66](#sDB126AA852570BEA8B567CF626A473F7)] [added: [69](#sDDCE761E598846F8C7FBAF723AECCBC5)] |

This Report combines the annual reports on Form 10-K for the fiscal year ended December 31, [removed: 2014] [added: 2015] of UDR, [removed: Inc.] [added: 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, [removed: all references in this Report to “we,” “us,” “our,”] the [removed: “Company,” “UDR” or “UDR, Inc.” refer collectively to UDR, Inc., together with its consolidated subsidiaries and joint ventures, including United Dominion Realty, L.P. 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.

The limited partnership interests of the Operating Partnership [added: and the DownREIT Partnership] are referred to as “OP Units” and [added: “DownREIT Units,” respectively, and] the holders of the OP Units [added: and DownREIT Units] are referred to as “unitholders.” This combined Form 10-K is being filed separately by UDR and the Operating Partnership.

UDR also conducts business through other subsidiaries, including its taxable REIT subsidiary [removed: (“TRS”) whose activities include development of land and land entitlement.][added: (“TRS”).]

As of December 31, [removed: 2014,] [added: 2015,] UDR owned 110,883 units (100%) of the general partnership interests of the Operating Partnership and [removed: 174,002,342] [added: 174,114,516] units (or approximately 95.0%) of the limited partnership interests of the Operating Partnership.

This [removed: Annual] 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.

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 [removed: Annual] Report may not prove to be accurate.

Forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this [removed: Annual] 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.

10-K 1 a201510-k.htm 10-K

UNITED STATES

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”), a Delaware limited partnership of which UDR is the sole general partner that was formed in conjunction with certain acquisitions from Home Properties, L.P., a New York limited partnership, by UDR in October 2015.

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 the 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; |

| | |

| --- | --- |

| • | 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; |

10-K 1 udr-20141231x10k.htm 10-K

| | | |

| |

| | | | | | | |

For a further discussion of these and other factors that could impact future results, performance or transactions, see “Item 1A.

Risk Factors” elsewhere in this Annual Report.

At December 31, [removed: 2014,] [added: 2015,] our consolidated apartment portfolio included [removed: 139] [added: 133] communities located in [removed: 20] [added: 18] markets, with a total of [removed: 39,851] [added: 40,728] completed apartment homes.

The tables below set forth a summary of real estate portfolio by geographic market of the Company and of the Operating Partnership at December 31, [removed: 2014.][added: 2015.]

SUMMARY OF REAL ESTATE PORTFOLIO BY GEOGRAPHIC MARKET AT DECEMBER 31, [removed: 2014][added: 2015]

| Real Estate Under Development (a) | — | | | — | | | [removed: 2.1] [added: 1.4] | % | | [removed: 177,632] [added: 124,072] | | | | — | | | | | | | | | | | | |

| (a) | As of December 31, [removed: 2014,] [added: 2015,] the Company was developing one wholly-owned community with [removed: 369] [added: 516] apartment homes, which has not been completed. |

| Orange County, CA | 13 | | | 4,814 | | | 12.3 | % | | $ | 1,132,589 | | | $ | 177,005 | | | $ | 235,270 | | | 95.3 | % | | 837 | |

| San Francisco, CA | 11 | | | 2,751 | | | 9.1 | % | | 834,068 | | | | 66,310 | | | | 303,187 | | | | 96.5 | % | | 830 | |

| Seattle, WA | 11 | | | 2,085 | | | 6.3 | % | | 583,077 | | | | 57,525 | | | | 279,653 | | | | 96.7 | % | | 854 | |

| Los Angeles, CA | 4 | | | 1,225 | | | 4.8 | % | | 442,905 | | | | 110,778 | | | | 361,555 | | | | 95.5 | % | | 967 | |

| Monterey Peninsula, CA | 7 | | | 1,565 | | | 1.8 | % | | 164,948 | | | | — | | | | 105,398 | | | | 97.0 | % | | 728 | |

| Other Southern California | 3 | | | 756 | | | 1.3 | % | | 123,486 | | | | 55,263 | | | | 163,341 | | | | 96.2 | % | | 934 | |

| Portland, OR | 2 | | | 476 | | | 0.5 | % | | 46,902 | | | | — | | | | 98,534 | | | | 97.5 | % | | 903 | |

| Metropolitan D.C. | 22 | | | 8,402 | | | 22.9 | % | | 2,108,521 | | | | 407,067 | | | | 250,955 | | | | 94.6 | % | | 908 | |

| Baltimore, MD | 10 | | | 2,122 | | | 3.1 | % | | 287,435 | | | | 65,778 | | | | 135,455 | | | | 96.7 | % | | 952 | |

| Richmond, VA | 4 | | | 1,358 | | | 1.5 | % | | 141,228 | | | | 34,567 | | | | 103,997 | | | | 96.1 | % | | 1,018 | |

| Orlando, FL | 9 | | | 2,500 | | | 2.3 | % | | 211,624 | | | | 62,383 | | | | 84,650 | | | | 96.9 | % | | 946 | |

| Nashville, TN | 8 | | | 2,260 | | | 2.1 | % | | 196,023 | | | | 38,481 | | | | 86,736 | | | | 97.4 | % | | 933 | |

| Tampa, FL | 7 | | | 2,287 | | | 2.6 | % | | 240,220 | | | | 30,943 | | | | 105,037 | | | | 97.0 | % | | 982 | |

| Other Florida | 1 | | | 636 | | | 0.8 | % | | 82,192 | | | | 39,179 | | | | 129,233 | | | | 96.6 | % | | 1,130 | |

| New York, NY | 4 | | | 1,945 | | | 14.1 | % | | 1,293,394 | | | | — | | | | 664,984 | | | | 97.4 | % | | 742 | |

| Boston, MA | 5 | | | 1,548 | | | 6.1 | % | | 544,000 | | | | 77,066 | | | | 351,421 | | | | 85.5 | % | | 1,042 | |

| Dallas, TX | 8 | | | 2,725 | | | 3.2 | % | | 297,126 | | | | 112,095 | | | | 109,037 | | | | 96.9 | % | | 851 | |

| Austin, TX | 4 | | | 1,273 | | | 1.6 | % | | 150,319 | | | | 36,299 | | | | 118,083 | | | | 97.2 | % | | 913 | |

| Total Operating Communities | 133 | | | 40,728 | | | 96.4 | % | | 8,880,057 | | | | 1,370,739 | | | | $ | 218,033 | | | 95.7 | % | | 898 | |

| Land | — | | | — | | | 1.0 | % | | 80,620 | | | | — | | | | | | | | | | | | |

| Held for Disposition | — | | | | | | 0.2 | % | | 12,606 | | | | | | | | | | | | | | | | |

| Other | — | | | — | | | 1.0 | % | | 92,921 | | | | 11,755 | | | | | | | | | | | | |

| Total Real Estate Owned | 133 | | | 40,728 | | | 100.0 | % | | $ | 9,190,276 | | | $ | 1,382,494 | | | | | | | | | | | |

SUMMARY OF REAL ESTATE PORTFOLIO BY GEOGRAPHIC MARKET AT DECEMBER 31, 2015

| Orange County, CA | 8 | | | 3,499 | | | 20.7 | % | | $ | 751,329 | | | $ | 177,005 | | | $ | 214,727 | | | 95.6 | % | | 806 | |

| San Francisco, CA | 9 | | | 2,209 | | | 15.8 | % | | 574,853 | | | | 66,310 | | | | 260,232 | | | | 96.5 | % | | 817 | |

| Seattle, WA | 5 | | | 932 | | | 5.9 | % | | 215,883 | | | | 22,591 | | | | 231,634 | | | | 97.2 | % | | 874 | |

| Los Angeles, CA | 2 | | | 344 | | | 3.0 | % | | 108,828 | | | | 43,078 | | | | 316,360 | | | | 96.4 | % | | 976 | |

| Monterey Peninsula, CA | 7 | | | 1,565 | | | 4.5 | % | | 164,948 | | | | — | | | | 105,398 | | | | 97.0 | % | | 728 | |

| Other Southern California | 2 | | | 516 | | | 2.5 | % | | 91,262 | | | | 55,262 | | | | 176,864 | | | | 95.8 | % | | 951 | |

| Portland, OR | 2 | | | 476 | | | 1.3 | % | | 46,902 | | | | — | | | | 98,534 | | | | 97.5 | % | | 903 | |

| Metropolitan D.C. | 6 | | | 2,068 | | | 15.1 | % | | 549,110 | | | | 32,037 | | | | 265,527 | | | | 92.7 | % | | 898 | |

| Baltimore, MD | 4 | | | 732 | | | 3.5 | % | | 127,840 | | | | 42,701 | | | | 174,645 | | | | 96.3 | % | | 1,074 | |

| Nashville, TN | 6 | | | 1,612 | | | 3.8 | % | | 137,495 | | | | — | | | | 85,295 | | | | 97.5 | % | | 925 | |

| Tampa, FL | 2 | | | 942 | | | 2.8 | % | | 102,100 | | | | — | | | | 108,386 | | | | 97.0 | % | | 1,043 | |

| Other Florida | 1 | | | 636 | | | 2.2 | % | | 82,192 | | | | 39,179 | | | | 129,233 | | | | 96.6 | % | | 1,130 | |

| New York, NY | 2 | | | 996 | | | 16.6 | % | | 601,147 | | | | — | | | | 603,561 | | | | 97.9 | % | | 690 | |

| Boston, MA | 1 | | | 387 | | | 1.9 | % | | 68,495 | | | | — | | | | 176,990 | | | | 96.4 | % | | 1,069 | |

| Total Operating Communities | 57 | | | 16,914 | | | 99.6 | % | | 3,622,384 | | | | 478,163 | | | | $ | 214,165 | | | 96.2 | % | | 873 | |

| Other | — | | | — | | | 0.4 | % | | 8,521 | | | | — | | | | | | | | | | | | |

As of December 31, 2014, we leased approximately 44,000 square feet of office space in Highlands Ranch, Colorado for our corporate headquarters.

We also leased an aggregate of approximately 9,000 square feet of office space in Dallas, Texas, Richmond, Virginia and Alexandria, Virginia.

In February 2015, the Company acquired the office building in Highlands Ranch, Colorado housing its corporate offices, as well as other leased office space, for total consideration of approximately $24.0 million, which was comprised of assumed debt.

The building consists of approximately 120,000 square feet, of which UDR occupies approximately 44,000 square feet.

All existing leases were assumed by the Company at the time of the acquisition.

| San Francisco, CA | 12 | | | 2,751 | | | 9.7 | % | | $ | 815,153 | | | $ | 66,310 | | | $ | 296,312 | | | 94.6 | % | | 836 | |

| Orange County, CA | 14 | | | 5,214 | | | 14.3 | % | | 1,202,995 | | | | 193,873 | | | | 230,724 | | | | 89.2 | % | | 804 | |

| Seattle, WA | 11 | | | 2,085 | | | 6.9 | % | | 575,008 | | | | 58,457 | | | | 275,783 | | | | 85.6 | % | | 849 | |

| Los Angeles, CA | 4 | | | 1,225 | | | 5.3 | % | | 440,329 | | | | 100,335 | | | | 359,452 | | | | 95.2 | % | | 967 | |

| Monterey Peninsula, CA | 7 | | | 1,565 | | | 1.9 | % | | 161,633 | | | | — | | | | 103,280 | | | | 95.8 | % | | 728 | |

| Other Southern California | 4 | | | 875 | | | 1.7 | % | | 141,660 | | | | 46,471 | | | | 161,897 | | | | 96.1 | % | | 928 | |

| Portland, OR | 3 | | | 716 | | | 0.9 | % | | 73,811 | | | | 35,141 | | | | 103,088 | | | | 97.6 | % | | 918 | |

| Metropolitan D.C. | 16 | | | 5,156 | | | 14.4 | % | | 1,211,295 | | | | 184,172 | | | | 234,929 | | | | 90.7 | % | | 834 | |

| Baltimore, MD | 11 | | | 2,301 | | | 3.7 | % | | 309,894 | | | | 66,711 | | | | 134,678 | | | | 96.6 | % | | 957 | |

| Richmond, VA | 4 | | | 1,358 | | | 1.7 | % | | 139,538 | | | | 34,567 | | | | 102,753 | | | | 96.5 | % | | 1,018 | |

| Norfolk, VA | 4 | | | 846 | | | 0.6 | % | | 54,077 | | | | — | | | | 63,921 | | | | 94.6 | % | | 1,023 | |

| Other Mid-Atlantic | 1 | | | 168 | | | 0.2 | % | | 12,971 | | | | — | | | | 77,208 | | | | 95.4 | % | | 1,002 | |

| Tampa, FL | 9 | | | 2,775 | | | 3.3 | % | | 275,355 | | | | 31,239 | | | | 99,227 | | | | 96.6 | % | | 955 | |

| Orlando, FL | 10 | | | 2,796 | | | 2.8 | % | | 238,375 | | | | 63,394 | | | | 85,256 | | | | 96.7 | % | | 961 | |

| Nashville, TN | 8 | | | 2,260 | | | 2.3 | % | | 191,393 | | | | 38,834 | | | | 84,687 | | | | 97.5 | % | | 933 | |

| Other Florida | 1 | | | 636 | | | 0.9 | % | | 81,316 | | | | 39,179 | | | | 127,855 | | | | 96.5 | % | | 1,130 | |

| New York, NY | 4 | | | 1,947 | | | 15.2 | % | | 1,278,432 | | | | 190,462 | | | | 656,616 | | | | 95.0 | % | | 740 | |

| Boston, MA | 4 | | | 1,179 | | | 3.9 | % | | 323,419 | | | | 79,286 | | | | 274,316 | | | | 96.3 | % | | 1,097 | |

| SOUTHWEST REGION | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Dallas, TX | 8 | | | 2,725 | | | 3.5 | % | | 292,848 | | | | 102,438 | | | | 107,467 | | | | 97.2 | % | | 846 | |

| Austin, TX | 4 | | | 1,273 | | | 1.8 | % | | 147,873 | | | | 30,660 | | | | 116,161 | | | | 97.1 | % | | 913 | |

| Total Operating Communities | 139 | | | 39,851 | | | 95.0 | % | | 7,967,375 | | | | 1,361,529 | | | | $ | 199,929 | | | 94.1 | % | | 887 | |

| Land | — | | | — | | | 2.1 | % | | 171,253 | | | | — | | | | | | | | | | | | |

| Other | — | | | — | | | 0.8 | % | | 66,999 | | | | — | | | | | | | | | | | | |

| Total Real Estate Owned | 139 | | | 39,851 | | | 100.0 | % | | $ | 8,383,259 | | | $ | 1,361,529 | | | | | | | | | | | |

| San Francisco, CA | 9 | | | 2,185 | | | 13.2 | % | | $ | 560,868 | | | $ | 66,310 | | | $ | 256,690 | | | 97.2 | % | | 821 | |

| Orange County, CA | 9 | | | 3,899 | | | 19.5 | % | | 823,931 | | | | 193,874 | | | | 211,319 | | | | 93.8 | % | | 764 | |

| Seattle, WA | 5 | | | 932 | | | 5.0 | % | | 213,238 | | | | 22,957 | | | | 228,796 | | | | 97.3 | % | | 869 | |

| Los Angeles, CA | 2 | | | 344 | | | 2.5 | % | | 108,081 | | | | 32,635 | | | | 314,189 | | | | 95.6 | % | | 976 | |

| Monterey Peninsula, CA | 7 | | | 1,565 | | | 3.8 | % | | 161,633 | | | | — | | | | 103,280 | | | | 95.8 | % | | 728 | |

| Other Southern California | 3 | | | 635 | | | 2.6 | % | | 109,744 | | | | 46,471 | | | | 172,825 | | | | 96.1 | % | | 939 | |

| Portland, OR | 3 | | | 716 | | | 1.7 | % | | 73,811 | | | | 35,141 | | | | 103,088 | | | | 97.6 | % | | 918 | |

| Metropolitan D.C. | 8 | | | 2,710 | | | 16.3 | % | | 686,019 | | | | 102,643 | | | | 253,144 | | | | 86.4 | % | | 901 | |

| Baltimore, MD | 5 | | | 994 | | | 3.6 | % | | 152,040 | | | | 43,403 | | | | 152,958 | | | | 96.3 | % | | 1,064 | |

| Tampa, FL | 3 | | | 1,154 | | | 2.8 | % | | 117,261 | | | | — | | | | 101,613 | | | | 96.8 | % | | 1,003 | |

On February [removed: 19, 2015,] [added: 22, 2016,] the closing sale price of our common stock was [removed: $31.83] [added: $34.40] per share on the NYSE, and there were [removed: 4,306] [added: 4,149] holders of record of the [removed: 258,765,713] [added: 262,132,787] outstanding shares of our common stock.

We have determined that, for federal income tax purposes, approximately [removed: 68%] [added: 55%] of the distributions for [removed: 2014 represented ordinary income, 14%] [added: 2015] represented [removed: qualified] ordinary income, [removed: 10%] [added: 30%] represented long-term capital gain, and [removed: 8%] [added: 15%] represented unrecaptured section 1250 gain.

Distributions declared on the Series E for the years ended December 31, [removed: 2014] [added: 2015] and [removed: December 31, 2013] [added: 2014] were $1.33 per share or $0.3322 per quarter.

At December 31, [removed: 2014,] [added: 2015,] a total of [removed: 2,803,812] [added: 2,796,903] shares of the Series E were outstanding.

Holders of the Series F are entitled to one vote for each share of the Series F they hold, voting together with the holders of our common stock, on each [removed: matter submitted to a vote of security holders at a meeting of our stockholders.]

As of February [removed: 19, 2015,] [added: 22, 2016,] there were approximately [removed: 2,289] [added: 2,186] participants in the plan.

At December 31, [removed: 2014,] [added: 2015,] there were 183,278,698 OP Units outstanding in the Operating Partnership, of which [removed: 174,113,225] [added: 174,225,399] OP Units or [removed: 95.0%] [added: 95.1%] were owned by UDR and [removed: 9,165,473] [added: affiliated entities and 9,053,299] OP Units or [removed: 5.0%] [added: 4.9%] were owned by [added: non-affiliated] limited partners.

During [removed: 2014,] [added: 2015,] we issued a total of [removed: 153,451] [added: 112,174] shares of common stock upon redemption of OP Units.

As reflected in the table below, no shares of common stock were repurchased under these programs during the quarter ended December 31, [removed: 2014.][added: 2015.]

| October 1, [removed: 2014] [added: 2015] through October 31, [removed: 2014] [added: 2015] | | — | | | — | | | | — | | | 15,032,510 | |

| November 1, [removed: 2014] [added: 2015] through November 30, [removed: 2014] [added: 2015] | | — | | | — | | | | — | | | 15,032,510 | |

| December 1, [removed: 2014] [added: 2015] through December 31, [removed: 2014] [added: 2015] | | — | | | — | | | | — | | | 15,032,510 | |

| Balance as of December 31, [removed: 2014] [added: 2015] | | 9,967,490 | | | $ | 22.00 | | | 9,967,490 | | | 15,032,510 | |

During the three months ended December 31, [removed: 2014,] [added: 2015,] 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 issued under our 1999 Long-Term Incentive Plan (the “LTIP”).

The following table summarizes all of these repurchases during the three months ended December 31, [removed: 2014.][added: 2015.]

| October 1, [removed: 2014] [added: 2015] through October 31, [removed: 2014] [added: 2015] | | — | | | $ | — | | | N/A | | N/A |

| November 1, [removed: 2014] [added: 2015] through November 30, [removed: 2014] [added: 2015] | | — | | | — | | | | N/A | | N/A |

The graph assumes that $100 was invested on December 31, [removed: 2009,] [added: 2010,] in each of our common stock and the indices presented.

[removed: ][added: ]

| Index | | [removed: 12/31/2009 | | |] 12/31/2010 | | | 12/31/2011 | | | 12/31/2012 | | | 12/31/2013 | | | 12/31/2014 | | [added: | 12/31/2015 | |]

| | 2015 | | | | | | | | | | | | 2014 | | | | | | | | | | |

| Quarter ended March 31, | $ | 35.22 | | | $ | 31.37 | | | $ | 0.2775 | | | $ | 26.63 | | | $ | 23.27 | | | $ | 0.2600 | |

| Quarter ended June 30, | $ | 34.17 | | | $ | 31.62 | | | $ | 0.2775 | | | $ | 28.64 | | | $ | 25.28 | | | $ | 0.2600 | |

| Quarter ended September 30, | $ | 35.67 | | | $ | 31.14 | | | $ | 0.2775 | | | $ | 30.30 | | | $ | 27.18 | | | $ | 0.2600 | |

| Quarter ended December 31, | $ | 37.89 | | | $ | 33.77 | | | $ | 0.2775 | | | $ | 31.74 | | | $ | 27.27 | | | $ | 0.2600 | |

In connection with the acquisition of properties from Home OP and the formation of the DownREIT Partnership in October 2015, we issued 13,988,313 Series F shares at $0.0001 per share to former limited partners of the Home OP, which had the right to subscribe for one share of Series F for each DownREIT Unit issued in connection with the acquisitions.

As of December 31, 2015, a total of 16,452,496 shares of the Series F were outstanding.

matter submitted to a vote of security holders at a meeting of our stockholders.

| December 1, 2015 through December 31, 2015 | | 174,291 | | | 33.73 | | | | N/A | | N/A |

| Total | | 174,291 | | | $ | 33.73 | | | | | |

| UDR, Inc. | | 100.00 | | | 110.23 | | | 108.10 | | | 110.24 | | | 151.22 | | | 190.48 | |

| NAREIT Equity Apartment Index | | 100.00 | | | 115.10 | | | 123.08 | | | 115.45 | | | 161.20 | | | 187.72 | |

| US MSCI REITS | | 100.00 | | | 108.69 | | | 128.00 | | | 131.17 | | | 171.01 | | | 175.32 | |

| S&P 500 | | 100.00 | | | 102.11 | | | 118.45 | | | 156.82 | | | 178.28 | | | 180.75 | |

| NAREIT Equity REIT Index | | 100.00 | | | 108.29 | | | 127.85 | | | 131.01 | | | 170.49 | | | 175.94 | |

| | 2014 | | | | | | | | | | | | 2013 | | | | | | | | | | |

| Quarter ended March 31, | $ | 26.63 | | | $ | 23.27 | | | $ | 0.260 | | | $ | 25.18 | | | $ | 24.83 | | | $ | 0.235 | |

| Quarter ended June 30, | $ | 28.64 | | | $ | 25.28 | | | $ | 0.260 | | | $ | 27.04 | | | $ | 26.59 | | | $ | 0.235 | |

| Quarter ended September 30, | $ | 30.30 | | | $ | 27.18 | | | $ | 0.260 | | | $ | 26.35 | | | $ | 26.00 | | | $ | 0.235 | |

| Quarter ended December 31, | $ | 31.74 | | | $ | 27.27 | | | $ | 0.260 | | | $ | 25.42 | | | $ | 25.03 | | | $ | 0.235 | |

As of December 31, 2014, a total of 2,464,183 shares of the Series F were outstanding with an aggregate purchase value of $246.

On October 20, 2014, we issued 1,998 shares of our common stock upon redemption of OP Units.

Because these shares of common stock were issued to accredited investors in transactions not involving a public offering, the transaction is exempt from registration under the Securities Act of 1933 in accordance with Section 4(a)(2) of the Securities Act.

We did not issue any other shares of our common stock upon redemption of OP Units during the three months ended December 31, 2014.

| December 1, 2014 through December 31, 2014 | | 107,113 | | | 30.82 | | | | N/A | | N/A |

| Total | | 107,113 | | | $ | 30.82 | | | | | |

| UDR, Inc. | | 100.00 | | | 148.70 | | | 163.91 | | | 160.75 | | | 163.92 | | | 224.86 | |

| NAREIT Equity Apartment Index | | 100.00 | | | 147.04 | | | 169.23 | | | 180.97 | | | 169.76 | | | 237.02 | |

| US MSCI REITS | | 100.00 | | | 128.48 | | | 139.65 | | | 164.46 | | | 168.52 | | | 219.72 | |

| S&P 500 | | 100.00 | | | 115.06 | | | 117.49 | | | 136.30 | | | 180.44 | | | 205.14 | |

| NAREIT Equity REIT Index | | 100.00 | | | 127.96 | | | 138.57 | | | 163.60 | | | 167.63 | | | 218.16 | |

The following tables set forth selected consolidated financial and other information of UDR, Inc. and of the Operating Partnership as of and for each of the years in the five-year period ended December 31, [removed: 2014.][added: 2015.]

| | 2014 | | | | 2013 | | | | 2012 | | | | 2011 | | | [removed: | 2010 | | |]

| Rental income | $ | [removed: 805,002] [added: 871,928] | | | $ | [removed: 746,484] [added: 805,002] | | | $ | [removed: 704,701] [added: 746,484] | | | $ | [removed: 613,689] [added: 704,701] | | | $ | [removed: 503,097] [added: 613,689] | |

| Income/(loss) from continuing operations | [removed: 16,260] [added: 105,482] | | | | [removed: 2,340] [added: 16,260] | | | | [removed: (46,305] [added: 2,340] | | [removed: )] | | [removed: (126,869] [added: (46,305] | | ) | | [removed: (121,117] [added: (126,869] | | ) |

| Income/(loss) from discontinued operations, net of tax | [removed: 10] [added: —] | | | | [removed: 43,942] [added: 10] | | | | [removed: 266,608] [added: 43,942] | | | | [removed: 147,454] [added: 266,608] | | | | [removed: 14,529] [added: 147,454] | | |

| Net income/(loss) | [removed: 159,842] [added: 357,159] | | | | [removed: 46,282] [added: 159,842] | | | | [removed: 220,303] [added: 46,282] | | | | [removed: 20,585] [added: 220,303] | | | | [removed: (106,588] [added: 20,585] | | [removed: )] |

| Distributions to preferred stockholders | [removed: 3,724] [added: 3,722] | | | | 3,724 | | | | [removed: 6,010] [added: 3,724] | | | | [removed: 9,311] [added: 6,010] | | | | [removed: 9,488] [added: 9,311] | | |

| Net income/(loss) attributable to common stockholders | [removed: 150,610] [added: 336,661] | | | | [removed: 41,088] [added: 150,610] | | | | [removed: 203,376] [added: 41,088] | | | | [removed: 10,537] [added: 203,376] | | | | [removed: (112,362] [added: 10,537] | | [removed: )] |

| Common distributions declared | [removed: 263,503] [added: 289,500] | | | | [removed: 235,721] [added: 263,503] | | | | [removed: 215,654] [added: 235,721] | | | | [removed: 165,590] [added: 215,654] | | | | [removed: 126,086] [added: 165,590] | | |

| Income/(loss) from continuing operations attributable to common stockholders | $ | [removed: 0.60] [added: 1.30] | | | $ | [removed: (0.01] [added: 0.60] | [removed: )] | | $ | [removed: (0.22] [added: (0.01] | ) | | $ | [removed: (0.65] [added: (0.22] | ) | | $ | [removed: (0.77] [added: (0.65] | ) |

| Income/(loss) from discontinued operations attributable to common stockholders | — | | | | [removed: 0.17] [added: —] | | | | [removed: 1.07] [added: 0.17] | | | | [removed: 0.71] [added: 1.07] | | | | [removed: 0.09] [added: 0.71] | | |

| Net income/(loss) attributable to common stockholders | $ | [removed: 0.60] [added: 1.30] | | | $ | [removed: 0.16] [added: 0.60] | | | $ | [removed: 0.85] [added: 0.16] | | | $ | [removed: 0.05] [added: 0.85] | | | $ | [removed: (0.68] [added: 0.05] | [removed: )] |

| Income/(loss) from continuing operations attributable to common stockholders | $ | [removed: 0.59] [added: 1.29] | | | $ | [removed: (0.01] [added: 0.59] | [removed: )] | | $ | [removed: (0.22] [added: (0.01] | ) | | $ | [removed: (0.65] [added: (0.22] | ) | | $ | [removed: (0.77] [added: (0.65] | ) |

| Net income/(loss) attributable to common stockholders | $ | [removed: 0.59] [added: 1.29] | | | $ | [removed: 0.16] [added: 0.59] | | | $ | [removed: 0.85] [added: 0.16] | | | $ | [removed: 0.05] [added: 0.85] | | | $ | [removed: (0.68] [added: 0.05] | [removed: )] |

| Weighted average number of Common Shares outstanding — basic | [removed: 251,528] [added: 258,669] | | | | [removed: 249,969] [added: 251,528] | | | | [removed: 238,851] [added: 249,969] | | | | [removed: 201,294] [added: 238,851] | | | | [removed: 165,857] [added: 201,294] | | |

| Weighted average number of Common Shares outstanding — diluted | [removed: 253,445] [added: 263,752] | | | | [removed: 249,969] [added: 253,445] | | | | [removed: 238,851] [added: 249,969] | | | | [removed: 201,294] [added: 238,851] | | | | [removed: 165,857] [added: 201,294] | | |

| Weighted average number of Common Shares outstanding, OP [added: Units/DownREIT] Units and Common Stock equivalents outstanding — diluted | [removed: 265,728] [added: 276,699] | | | | [removed: 263,926] [added: 265,728] | | | | [removed: 252,659] [added: 263,926] | | | | [removed: 214,086] [added: 252,659] | | | | [removed: 176,900] [added: 214,086] | | |

| Common distributions declared | $ | [removed: 1.04] [added: 1.11] | | | $ | [removed: 0.94] [added: 1.04] | | | $ | [removed: 0.88] [added: 0.94] | | | $ | [removed: 0.80] [added: 0.88] | | | $ | [removed: 0.73] [added: 0.80] | |

| Real estate owned, at cost (a) | $ | [removed: 8,383,259] [added: 9,190,276] | | | $ | [removed: 8,207,977] [added: 8,383,259] | | | $ | [removed: 8,055,828] [added: 8,207,977] | | | $ | [removed: 8,074,471] [added: 8,055,828] | | | $ | [removed: 6,881,347] [added: 8,074,471] | |

| Accumulated depreciation (a) | [removed: 2,434,772] [added: 2,646,874] | | | | [removed: 2,208,794] [added: 2,434,772] | | | | [removed: 1,924,682] [added: 2,208,794] | | | | [removed: 1,831,727] [added: 1,924,682] | | | | [removed: 1,638,326] [added: 1,831,727] | | |

| Total real estate owned, net of accumulated depreciation (a) | [removed: 5,948,487] [added: 6,543,402] | | | | [removed: 5,999,183] [added: 5,948,487] | | | | [removed: 6,131,146] [added: 5,999,183] | | | | [removed: 6,242,744] [added: 6,131,146] | | | | [removed: 5,243,021] [added: 6,242,744] | | |

| Total assets [added: - as previously reported] | [added: $ |] 6,846,534 | | | [added: $] | 6,807,722 | | | [added: $] | 6,859,103 | | | [added: $] | 6,692,254 | | [removed: | | 5,500,597 | | |]

| Secured debt [removed: (a)] [added: - as previously reported] | [added: $ |] 1,361,529 | | | [added: $] | 1,442,077 | | | [added: $] | 1,430,135 | | | [added: $] | 1,891,553 | | [removed: | | 1,963,670 | | |]

| Unsecured debt [added: - as previously reported] | [added: $ |] 2,221,576 | | | [added: $] | 2,081,626 | | | [added: $] | 1,979,198 | | | [added: $] | 2,026,817 | | [removed: | | 1,603,834 | | |]

| Total debt [added: - as previously reported] | [added: $ |] 3,583,105 | | | [added: $] | 3,523,703 | | | [added: $] | 3,409,333 | | | [added: $] | 3,918,370 | | [removed: | | 3,567,504 | | |]

| Total stockholders’ equity | [removed: 2,735,097] [added: $] | [added: 2,899,755] | | | [removed: 2,811,648] [added: $] | [added: 2,735,097] | | | [removed: 2,992,916] [added: $] | [added: 2,811,648] | | | [removed: 2,314,050] [added: $] | [added: 2,992,916] | | | [removed: 1,606,343] [added: $] | [added: 2,314,050] | |

| Number of Common Shares outstanding | [removed: 255,115] [added: 261,845] | | | | [removed: 250,750] [added: 255,115] | | | | [removed: 250,139] [added: 250,750] | | | | [removed: 219,650] [added: 250,139] | | | | [removed: 182,496] [added: 219,650] | | |

| Total consolidated apartment homes owned (at end of year) [removed: (a)] | [removed: 39,851] [added: 40,728] | | | | [removed: 41,250] [added: 39,851] | | | | [removed: 41,571] [added: 41,250] | | | | [removed: 47,343] [added: 41,571] | | | | [removed: 48,553] [added: 47,343] | | |

| Weighted average number of consolidated apartment homes owned during the year | [removed: 40,644] [added: 39,501] | | | | [removed: 41,392] [added: 40,644] | | | | [removed: 42,747] [added: 41,392] | | | | [removed: 48,531] [added: 42,747] | | | | [removed: 47,571] [added: 48,531] | | |

| Cash provided by/(used in) operating activities | $ | [removed: 392,360] [added: 431,615] | | | $ | [removed: 339,902] [added: 392,360] | | | $ | [removed: 327,187] [added: 339,902] | | | $ | [removed: 251,411] [added: 327,187] | | | $ | [removed: 214,180] [added: 251,411] | |

| Cash provided by/(used in) investing activities | [removed: (293,660] [added: (238,449] | | ) | | [removed: (123,209] [added: (293,660] | | ) | | [removed: (211,582] [added: (123,209] | | ) | | [removed: (1,054,683] [added: (211,582] | | ) | | [removed: (583,754] [added: (1,054,683] | | ) |

| Cash provided by/(used in) financing activities | [removed: (113,725] [added: (201,648] | | ) | | [removed: (198,559] [added: (113,725] | | ) | | [removed: (115,993] [added: (198,559] | | ) | | [removed: 806,289] [added: (115,993] | | [added: )] | | [removed: 373,075] [added: 806,289] | | |

| Funds from operations — basic | $ | [removed: 411,702] [added: 455,565] | | | $ | [removed: 376,778] [added: 411,702] | | | $ | [removed: 350,628] [added: 376,778] | | | $ | [removed: 269,856] [added: 350,628] | | | $ | [removed: 189,045] [added: 269,856] | |

| Funds from operations — diluted | [removed: 415,426] [added: 459,287] | | | | [removed: 380,502] [added: 415,426] | | | | [removed: 354,532] [added: 380,502] | | | | [removed: 273,580] [added: 354,532] | | | | [removed: 192,771] [added: 273,580] | | |

| (b) | Funds from operations, or FFO, is defined as net income [added: attributable to common stockholders] (computed in accordance with generally accepted accounting principles, or “GAAP”), excluding impairment write-downs of depreciable real estate or of investments in non-consolidated investees that are driven by measurable decreases in the fair value of depreciable real estate held by the investee, gains (or losses) from sales of depreciable property, plus real estate depreciation and amortization, and after adjustments for [added: noncontrolling interests,] unconsolidated partnerships and joint ventures. This definition conforms with the National Association of Real Estate Investment Trust’s definition issued in April 2002. We consider FFO a useful metric for investors as we use FFO in evaluating property acquisitions and our operating performance, and believe that FFO should be considered along with, but not as an alternative to, net income and cash flows as a measure of our activities in accordance with 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. |

Activities of our [removed: TRS] [added: taxable REIT subsidiaries (“TRS”)] include development and land entitlement.

Management Discussion and Analysis of Financial Condition and Results of Operations for a reconciliation of FFO and Net income/(loss) attributable to [removed: UDR, Inc.][added: common stockholders.]

| Rental income | $ | [removed: 422,634] [added: 440,408] | | | $ | [removed: 401,853] [added: 422,634] | | | $ | [removed: 384,946] [added: 401,853] | | | $ | [removed: 344,937] [added: 384,946] | | | $ | [removed: 297,380] [added: 344,937] | |

| Income/(loss) from continuing operations | [removed: 33,544] [added: 56,940] | | | | [removed: 32,766] [added: 33,544] | | | | [removed: (13,309] [added: 32,766] | | [removed: )] | | [removed: (40,744] [added: (13,309] | | ) | | [removed: (30,937] [added: (40,744] | | ) |

| Income/(loss) from discontinued operations | — | | | | [removed: 45,176] [added: —] | | | | [removed: 57,643] [added: 45,176] | | | | [removed: 70,973] [added: 57,643] | | | | [removed: 10,243] [added: 70,973] | | |

| Income/(loss) from discontinued operations attributable to common stockholders | — | | | | — | | | | 0.17 | | | | 1.07 | | | | 0.71 | | |

| Total assets (c) | 7,663,844 | | | | 6,828,728 | | | | 6,787,342 | | | | 6,839,637 | | | | 6,669,656 | | |

| Secured debt, net (a) (c) | 1,376,945 | | | | 1,354,321 | | | | 1,432,186 | | | | 1,420,028 | | | | 1,877,933 | | |

| Unsecured debt, net (c) | 2,193,850 | | | | 2,210,978 | | | | 2,071,137 | | | | 1,969,839 | | | | 2,017,839 | | |

| Total debt, net (c) | 3,570,795 | | | | 3,565,299 | | | | 3,503,323 | | | | 3,389,867 | | | | 3,895,772 | | |

| (c) | The Company elected to early adopt Financial Accounting Standards Board (the “FASB”) Accounting Standards Updates (“ASU”) 2015-03, Simplifying the Presentation of Debt Issuance Costs, and ASU 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements, during the fourth quarter of 2015. See Note 2, Significant Accounting Policies, in the Notes to the UDR, Inc. Consolidated Financial Statements included in this Report for a complete description of the ASUs and their impact. |

Under the ASUs, deferred financing costs related to debt are treated as offsets to the debt instead of assets while deferred financing costs related to our credit facilities will continue to be treated as assets.

As a result of adopting the ASUs, the following retrospective changes were made to the above table:

| | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | |

| Deferred financing costs related to secured debt | (7,208 | | ) | | (9,891 | | ) | | (10,107 | | ) | | (13,620 | | ) |

| Deferred financing costs related to unsecured debt | (10,598 | | ) | | (10,489 | | ) | | (9,359 | | ) | | (8,978 | | ) |

| Total assets - as presented above | $ | 6,828,728 | | | $ | 6,787,342 | | | $ | 6,839,637 | | | $ | 6,669,656 | |

| | | | | | | | | | | | | | | | |

| Deferred financing costs related to secured debt | (7,208 | | ) | | (9,891 | | ) | | (10,107 | | ) | | (13,620 | | ) |

| Secured debt, net - as presented above | $ | 1,354,321 | | | $ | 1,432,186 | | | $ | 1,420,028 | | | $ | 1,877,933 | |

| | | | | | | | | | | | | | | | |

| Deferred financing costs related to unsecured debt | (10,598 | | ) | | (10,489 | | ) | | (9,359 | | ) | | (8,978 | | ) |

| Unsecured debt, net - as presented above | $ | 2,210,978 | | | $ | 2,071,137 | | | $ | 1,969,839 | | | $ | 2,017,839 | |

| | | | | | | | | | | | | | | | |

| Deferred financing costs related to secured debt | (7,208 | | ) | | (9,891 | | ) | | (10,107 | | ) | | (13,620 | | ) |

| Deferred financing costs related to unsecured debt | (10,598 | | ) | | (10,489 | | ) | | (9,359 | | ) | | (8,978 | | ) |

| Total debt - as presented above | $ | 3,565,299 | | | $ | 3,503,323 | | | $ | 3,389,867 | | | $ | 3,895,772 | |

| Total assets (b) | 2,554,808 | | | | 2,873,809 | | | | 2,987,393 | | | | 3,130,182 | | | | 3,283,983 | | |

| Secured debt, net (a) (b) | 475,964 | | | | 927,484 | | | | 929,017 | | | | 961,167 | | | | 1,181,461 | | |

| Total liabilities (b) | 833,478 | | | | 1,139,758 | | | | 1,184,296 | | | | 1,211,426 | | | | 1,430,614 | | |

| (b) | The Operating Partnership elected to early adopt FASB ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, and ASU 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements, during the fourth quarter of 2015. See Note 2, Significant Accounting Policies, in the Notes to the Operating Partnership Consolidated Financial Statements included in this Report for a complete description of the ASUs and their impact. |

Under the ASUs, deferred financing costs related to debt are treated as offsets to the debt instead of assets.

As a result of adopting the ASUs, the following retrospective changes were made to the above table:

| | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | |

| Deferred financing costs related to secured debt | (4,475 | | ) | | (5,848 | | ) | | (6,072 | | ) | | (8,184 | | ) |

| Total assets - as presented above | $ | 2,873,809 | | | $ | 2,987,393 | | | $ | 3,130,182 | | | $ | 3,283,983 | |

| | | | | | | | | | | | | | | | |

| Deferred financing costs related to secured debt | (4,475 | | ) | | (5,848 | | ) | | (6,072 | | ) | | (8,184 | | ) |

| Secured debt, net - as presented above | $ | 927,484 | | | $ | 929,017 | | | $ | 961,167 | | | $ | 1,181,461 | |

| | | | | | | | | | | | | | | | |

| Deferred financing costs related to secured debt | (4,475 | | ) | | (5,848 | | ) | | (6,072 | | ) | | (8,184 | | ) |

| San Francisco, CA | 11 | | | 2,436 | | | 7.9 | % | | $ | 666,210 | | | 97.2 | % | | $ | 2,804 | | | $ | 60,730 | |

| Orange County, CA | 10 | | | 3,290 | | | 7.3 | % | | 612,309 | | | | 95.5 | % | | 1,752 | | | | 47,990 | | |

| Seattle, WA | 9 | | | 1,727 | | | 5.4 | % | | 449,375 | | | | 97.1 | % | | 1,732 | | | | 24,812 | | |

| Los Angeles, CA | 3 | | | 642 | | | 3.0 | % | | 253,448 | | | | 95.3 | % | | 2,409 | | | | 12,159 | | |

| Monterey Peninsula, CA | 7 | | | 1,565 | | | 1.9 | % | | 161,635 | | | | 95.8 | % | | 1,216 | | | | 15,326 | | |

| Other Southern California | 4 | | | 875 | | | 1.7 | % | | 141,656 | | | | 96.1 | % | | 1,550 | | | | 10,938 | | |

| Portland, OR | 3 | | | 716 | | | 0.9 | % | | 73,811 | | | | 97.6 | % | | 1,195 | | | | 6,971 | | |

| Metropolitan D.C. | 13 | | | 4,313 | | | 10.6 | % | | 893,677 | | | | 97.1 | % | | 1,818 | | | | 62,261 | | |

| Baltimore, MD | 11 | | | 2,301 | | | 3.7 | % | | 309,894 | | | | 96.6 | % | | 1,462 | | | | 27,431 | | |

| Richmond, VA | 4 | | | 1,358 | | | 1.7 | % | | 139,538 | | | | 96.5 | % | | 1,220 | | | | 14,309 | | |

| Norfolk, VA | 4 | | | 846 | | | 0.6 | % | | 54,076 | | | | 94.6 | % | | 1,047 | | | | 6,520 | | |

| Other Mid-Atlantic | 1 | | | 168 | | | 0.2 | % | | 12,972 | | | | 95.4 | % | | 1,021 | | | | 1,241 | | |

| Tampa, FL | 9 | | | 2,775 | | | 3.3 | % | | 275,354 | | | | 96.6 | % | | 1,126 | | | | 23,276 | | |

| Orlando, FL | 10 | | | 2,796 | | | 2.8 | % | | 238,375 | | | | 96.7 | % | | 1,045 | | | | 22,839 | | |

| Nashville, TN | 8 | | | 2,260 | | | 2.3 | % | | 191,393 | | | | 97.5 | % | | 1,053 | | | | 18,922 | | |

| Other Florida | 1 | | | 636 | | | 1.0 | % | | 81,316 | | | | 96.5 | % | | 1,362 | | | | 6,491 | | |

| New York, NY | 2 | | | 700 | | | 5.0 | % | | 423,130 | | | | 97.8 | % | | 3,711 | | | | 23,280 | | |

| Boston, MA | 4 | | | 1,179 | | | 3.9 | % | | 323,420 | | | | 96.3 | % | | 2,225 | | | | 21,617 | | |

| Dallas, TX | 8 | | | 2,725 | | | 3.5 | % | | 292,847 | | | | 97.2 | % | | 1,130 | | | | 22,657 | | |

| Austin, TX | 4 | | | 1,273 | | | 1.8 | % | | 147,873 | | | | 97.1 | % | | 1,274 | | | | 11,068 | | |

| Total/Average Same-Store Communities | 126 | | | 34,581 | | | 68.5 | % | | 5,742,309 | | | | 96.7 | % | | $ | 1,573 | | | 440,838 | | |

| Non Matures, Commercial Properties & Other | 13 | | | 5,270 | | | 29.4 | % | | 2,463,318 | | | | | | | | | | | 115,580 | | |

| Total Real Estate Held for Investment | 139 | | | 39,851 | | | 97.9 | % | | 8,205,627 | | | | | | | | | | | 556,418 | | |

| Real Estate Under Development (b) | — | | | — | | | 2.1 | % | | 177,632 | | | | | | | | | | | (97 | | ) |

| Total Real Estate Owned | 139 | | | 39,851 | | | 100.0 | % | | 8,383,259 | | | | | | | | | | | $ | 556,321 | |

Acquisition activity in strategic markets may be funded through joint ventures, by the

The change in investing activities was due to changes in the level of investment activities, which reflect our strategy as it relates to our investments in unconsolidated joint ventures and partnerships, acquisitions, dispositions, capital expenditures, and development activities, all of which are discussed in further detail throughout this Report.

During 2012, the Company acquired the remaining 80% ownership interests in two apartment communities (633 homes) located in Austin, Texas for $11.7 million from its joint venture partner.

In addition, the Company also acquired two parcels of land for development in San Francisco, California and Boston, Massachusetts for a total purchase price of $77.2 million.

The decrease is primarily attributable to our 27 Seventy Five Mesa

Verde project in Orange County, which incurred a full year of major renovation costs in 2013.

The renovation project was completed in the second quarter of 2014.

| Asset preservation expenditures | 31,761 | | | | 30,857 | | | | 2.9 | % | | 801 | | | | 752 | | | | 6.5 | % |

| Revenue-enhancing improvements | 14,647 | | | | 10,364 | | | | 41.3 | % | | 370 | | | | 253 | | | | 46.2 | % |

| Major renovations | 31,547 | | | | 92,141 | | | | (65.8 | )% | | 796 | | | | 2,244 | | | | (64.5 | )% |

| Total capital expenditures | $ | 90,115 | | | $ | 145,212 | | | (37.9 | )% | | $ | 2,274 | | | $ | 3,537 | | | (35.7 | )% |

month.

Recurring capital expenditures during 2015 are projected to be approximately $1,150 per home.

| Pier 4 | | Boston, MA | | 369 | | | — | | | $ | 177,632 | | | $ | 217,700 | | | $ | 590 | | | 2Q2015 |

| DelRay Tower (a)(b) | | Alexandria, VA | | 332 | | | 332 | | | 124,873 | | | | 132,000 | | | | 398 | | | | 4Q2014 |

As of December 31, [removed: 2014,] [added: 2015,] we carried out an evaluation, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer of the Company, which is the sole [removed: General Partner] [added: general partner] of the Operating Partnership, of the effectiveness of the design and operation of the disclosure controls and procedures of the Company and the Operating Partnership.

Based on such evaluation, management concluded that the Company’s and the Operating Partnership’s internal control over financial reporting was effective as of December 31, [removed: 2014.][added: 2015.]

Ernst & Young LLP, the independent registered public accounting firm that audited our consolidated financial statements included in this Report, has audited UDR, Inc.’s internal control over financial reporting as of December 31, [removed: 2014.][added: 2015.]

The report of Ernst & Young LLP, which expresses an unqualified opinion on UDR, Inc.’s internal control over financial reporting as of December 31, [removed: 2014,] [added: 2015,] is included under the heading “Report of Independent Registered Public Accounting Firm” of UDR, Inc. contained in this Report.

The information required by this item is incorporated by reference to the information set forth under the headings “Proposal No. 1 - Election of Directors,” “Corporate Governance Matters,” “Audit Committee Report,” “Corporate Governance Matters-Board Leadership Structure and Committees-Audit Committee Financial Expert,” “Corporate Governance Matters-Identification and Selection of Nominees for Directors,” “Corporate Governance Matters-Board of Directors and Committee Meetings,” “Executive Officers” and “Other [removed: Matters - Section] [added: Matters-Section] 16(a) Beneficial Ownership Reporting Compliance” in UDR, Inc.’s definitive proxy statement (our “definitive proxy statement”) for its [removed: 2015] [added: 2016] Annual Meeting of Stockholders.

Information regarding our codes is available on our website, www.udr.com, and is incorporated by reference to the information set forth under the heading “Corporate Governance Matters” in our definitive proxy statement for UDR’s [removed: 2015] [added: 2016] Annual Meeting of Stockholders.

The information required by this item is incorporated by reference to the information set forth under the headings “Security Ownership of Certain Beneficial Owners and Management,” “Corporate Governance Matters-Board Leadership Structure and Committees-Compensation Committee Interlocks and Insider Participation,” “Executive Compensation,” “Compensation of Directors” and “Compensation Committee Report” in the definitive proxy statement for UDR’s [removed: 2015] [added: 2016] Annual Meeting of Stockholders.

The information required by this item is incorporated by reference to the information set forth under the headings “Security Ownership of Certain Beneficial Owners and Management,” “Executive Compensation” and “Executive [removed: Compensation - Equity] [added: Compensation-Equity] Compensation Plan Information” in the definitive proxy statement for UDR’s [removed: 2015] [added: 2016] Annual Meeting of Stockholders.

The information required by this item is incorporated by reference to the information set forth under the heading “Security Ownership of Certain Beneficial Owners and Management,” “Corporate Governance Matters-Corporate Governance Overview,” “Corporate Governance Matters-Director Independence,” “Corporate Governance Matters-Board Leadership Structure and Committees-Independence of the Audit, Compensation and Governance Committees,” and “Executive Compensation” in the definitive proxy statement for UDR’s [removed: 2015] [added: 2016] Annual Meeting of Stockholders.

Information regarding related party transactions between UDR and the Operating Partnership is presented in Note [removed: 6,] [added: 7,] Related Party Transactions, of the Consolidated Financial Statements of United Dominion Realty, L.P. referenced in Part IV, Item 15(a) of this Report.

The information required by this item is incorporated by reference to the information set forth under the headings “Audit Matters-Audit Fees” and “Audit Matters-Pre-Approval Policies and Procedures” in the definitive proxy statement for UDR’s [removed: 2015] [added: 2016] Annual Meeting of Stockholders.

| Date: | February [removed: 24, 2015] [added: 23, 2016] | By: | /s/ Thomas W. Toomey | | |

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below on February [removed: 24, 2015] [added: 23, 2016] by the following persons on behalf of the registrant and in the capacities indicated.

| [removed: /s/ Lynne B. Sagalyn] | | /s/ Robert A. McNamara |

| [removed: Lynne B. Sagalyn] | | Robert A. McNamara |

| [Reports of Independent Registered Public Accounting [removed: Firm](#sCC9BF4EABDE01AEE00CE7CF628D7C3F4)] [added: Firm](#s989E338A342A5DA8F2C2AF723B1C8096)] | [F - [removed: 2](#sCC9BF4EABDE01AEE00CE7CF628D7C3F4)] [added: 2](#s989E338A342A5DA8F2C2AF723B1C8096)] |

| [Consolidated Balance Sheets at December 31, [removed: 2014] [added: 2015] and [removed: 2013](#sDF9C4BBAD6B3850AA2CA7CF5F33FC4B9)] [added: 2014](#sCE5610A2E0A3F61817E3AF71FD3073B9)] | [F - [removed: 4](#sDF9C4BBAD6B3850AA2CA7CF5F33FC4B9)] [added: 4](#sCE5610A2E0A3F61817E3AF71FD3073B9)] |

| [Consolidated Statements of Operations for the years ended December 31, [removed: 201](#s6869A9DAF2A4F57F9C827CF5F498BAF0)4, 2013,] [added: 201](#sD5E31C024F4272DFC302AF71FD4FA603)5, 2014,] and [removed: 2012] [added: 2013] | [F - [removed: 5](#s6869A9DAF2A4F57F9C827CF5F498BAF0)] [added: 5](#sD5E31C024F4272DFC302AF71FD4FA603)] |

| [Consolidated Statements of Comprehensive Income/(Loss) for the years ended December 31, [removed: 201](#sA4B60A7B14F1F02ACCF77CF5F3AA675C)4, 2013,] [added: 201](#s10EBC810FB12F46BA9C5AF71FD7E100D)5, 2014,] and [removed: 2012] [added: 2013] | [F - [removed: 7](#sA4B60A7B14F1F02ACCF77CF5F3AA675C)] [added: 6](#s10EBC810FB12F46BA9C5AF71FD7E100D)] |

| [Consolidated Statements of Changes in Equity for the years ended December 31, [removed: 201](#s90ED4C230B0612D5A5B87CF5F1D36AEA)4, 2013,] [added: 201](#sA40D1205E971BF0C92EDAF71FD7E265C)5, 2014,] and [removed: 2012] [added: 2013] | [F - [removed: 8](#s90ED4C230B0612D5A5B87CF5F1D36AEA)] [added: 7](#sA40D1205E971BF0C92EDAF71FD7E265C)] |

| [Consolidated Statements of Cash Flows for the years ended December 31, [removed: 201](#s2F1C329101F0DF9DD1667CF5F1E7F9DB)4, 2013,] [added: 201](#sAB0579FE9C868B8366C7AF71FDCCB90C)5, 2014,] and [removed: 2012] [added: 2013] | [F - [removed: 10](#s2F1C329101F0DF9DD1667CF5F1E7F9DB)] [added: 8](#sAB0579FE9C868B8366C7AF71FDCCB90C)] |

| [Notes to Consolidated Financial [removed: Statements](#s1A30C2A066BB1BBC74027CF62A6DC405)] [added: Statements](#s2AD88D83D713FB1DBBA5AF723CBD22F1)] | [F - [removed: 12](#s1A30C2A066BB1BBC74027CF62A6DC405)] [added: 10](#s2AD88D83D713FB1DBBA5AF723CBD22F1)] |

| [Report of Independent Registered Public Accounting [removed: Firm](#s7920D1FC0D2CB635ACBC7CF62F1DFBC9)] [added: Firm](#s34720753C91A2188EF09AF72416FF8CF)] | [F - [removed: 51](#s7920D1FC0D2CB635ACBC7CF62F1DFBC9)] [added: 53](#s34720753C91A2188EF09AF72416FF8CF)] |

| [Consolidated Balance Sheets at December 31, [removed: 2014] [added: 2015] and [removed: 2013](#sB5798B246E52FB8EAC197CF5F435B431)] [added: 2014](#s310562735360CC13DD9BAF7201A3BC84)] | [F - [removed: 52](#sB5798B246E52FB8EAC197CF5F435B431)] [added: 54](#s310562735360CC13DD9BAF7201A3BC84)] |

| [Consolidated Statements of Operations for the years ended December 31, [removed: 201](#s27E1A062A53CE32ACE227CF5F2B6C54A)4, 2013,] [added: 201](#sA7CBC5FABCE85A5A7377AF7201C218BB)5, 2014,] and [removed: 2012] [added: 2013] | [F - [removed: 53](#s27E1A062A53CE32ACE227CF5F2B6C54A)] [added: 55](#sA7CBC5FABCE85A5A7377AF7201C218BB)] |

| [Consolidated Statements of Comprehensive Income/(Loss) for the years ended December 31, [removed: 201](#sA80D6C2A9BC3DEC8F7D47CF5F292B5EF)4, 2013,] [added: 201](#sA0F966B9109DE20A3A93AF7201E1998E)5, 2014,] and [removed: 2012] [added: 2013] | [F - [removed: 54](#sA80D6C2A9BC3DEC8F7D47CF5F292B5EF)] [added: 56](#sA0F966B9109DE20A3A93AF7201E1998E)] |

| [Consolidated Statements of Changes in Capital for the years ended December 31, [removed: 201](#sCD510A3DC349150C24A67CF5F4ABD2CA)4, 2013,] [added: 201](#sE953CDCAF6FDF9C8E55CAF7201F1EA6F)5, 2014,] and [removed: 2012] [added: 2013] | [F - [removed: 55](#sCD510A3DC349150C24A67CF5F4ABD2CA)] [added: 57](#sE953CDCAF6FDF9C8E55CAF7201F1EA6F)] |

| [Consolidated Statements of Cash Flows for the years ended December 31, [removed: 201](#s5E2F26C6DD9FDA2626497CF5F35FFF12)4, 2013,] [added: 201](#sCB2B13B5914F4D1B4C25AF72024E3112)5, 2014,] and [removed: 2012] [added: 2013] | [F - [removed: 56](#s5E2F26C6DD9FDA2626497CF5F35FFF12)] [added: 58](#sCB2B13B5914F4D1B4C25AF72024E3112)] |

| [Notes to Consolidated Financial [removed: Statements](#s858AD7509BBCD1ACF9827CF6305AC81E)] [added: Statements](#s711DFA501F7751F502F6AF72427B84BD)] | [F - [removed: 57](#s858AD7509BBCD1ACF9827CF6305AC81E)] [added: 59](#s711DFA501F7751F502F6AF72427B84BD)] |

| [Schedule III- Summary of Real Estate [removed: Owned](#s57921CAA2C73B9E2E3877CF634D7CAAB)] [added: Owned](#s08EDCFA3654472B14B32AF7246A090BB)] | [S - [removed: 1](#s57921CAA2C73B9E2E3877CF634D7CAAB)] [added: 1](#s08EDCFA3654472B14B32AF7246A090BB)] |

| [Schedule III- Summary of Real Estate [removed: Owned](#sD5BA64F52190F4D601A77CF636C9427F)] [added: Owned](#s3DCED0EBB328C1B43A63AF72485496CD)] | [S - [removed: 6](#sD5BA64F52190F4D601A77CF636C9427F)] [added: 6](#s3DCED0EBB328C1B43A63AF72485496CD)] |

We have audited the accompanying consolidated balance sheets of UDR, Inc. (the “Company”) as of December 31, [removed: 2014] [added: 2015] and [removed: 2013,] [added: 2014,] and the related consolidated statements of operations, comprehensive income/(loss), changes in equity, and cash flows for each of the three years in the period ended December 31, [removed: 2014.][added: 2015.]

These financial statements [removed: and schedule] are the responsibility of the Company's management.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of UDR, Inc. at December 31, [removed: 2014] [added: 2015] and [removed: 2013,] [added: 2014,] and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2014,] [added: 2015,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), UDR, Inc.'s internal control over financial reporting as of December 31, [removed: 2014,] [added: 2015,] based on criteria established in Internal [removed: Control - Integrated] [added: Control-Integrated] Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 [removed: Framework)] [added: framework)] and our report dated February [removed: 24, 2015] [added: 23, 2016] expressed an unqualified opinion thereon.

[removed: As] [added: Also as] discussed in Notes 2 and 3 to the consolidated financial statements, the Company changed its reporting of discontinued operations as a result of the adoption of the amendments to the FASB Accounting Standards Codification resulting from Accounting Standards Update No. 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360), Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity”.

We have audited UDR, [removed: Inc.'s] [added: Inc.’s] internal control over financial reporting as of December 31, [removed: 2014,] [added: 2015,] based on criteria established in Internal [removed: Control - Integrated] [added: Control-Integrated] Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 [removed: Framework)] [added: framework)] (the COSO criteria).

In our opinion, UDR, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2014,] [added: 2015,] based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of UDR, Inc. as of December 31, [removed: 2014] [added: 2015] and [removed: 2013,] [added: 2014,] and the related consolidated statements of operations, comprehensive income/(loss), changes in equity, and cash flows for each of the three years in the period ended December 31, [removed: 2014] [added: 2015] and our report dated February [removed: 24, 2015,] [added: 23, 2016] expressed an unqualified opinion thereon.

| [removed: |] December 31, 2014 | | | | [removed: December 31, 2013] | | | [added: | | | | | | | | |]

| Real estate held for investment | $ | [removed: 8,205,627] [added: 9,053,599] | | | $ | [removed: 7,723,844] [added: 8,205,627] | |

| Less: accumulated depreciation | [removed: (2,434,772] [added: (2,646,044] | | ) | | [removed: (2,200,815] [added: (2,434,772] | | ) |

| Real estate held for investment, net | [removed: 5,770,855] [added: 6,407,555] | | | | [removed: 5,523,029] [added: 5,770,855] | | |

| Real estate under development (net of accumulated depreciation of $0 and [removed: $1,411,] [added: $0,] respectively) | [removed: 177,632] [added: 124,072] | | | | [removed: 466,002] [added: 177,632] | | |

| Real estate [removed: sold or] held for disposition (net of accumulated depreciation of [removed: $0] [added: $830] and [removed: $6,568,] [added: $0,] respectively) | [removed: —] [added: 11,775] | | | | [removed: 10,152] [added: —] | | |

| Total real estate owned, net of accumulated depreciation | [removed: 5,948,487] [added: 6,543,402] | | | | [removed: 5,999,183] [added: 5,948,487] | | |

| Cash and cash equivalents | [removed: 15,224] [added: 6,742] | | | | [removed: 30,249] [added: 15,224] | | |

| Restricted cash | [removed: 22,340] [added: 20,798] | | | | [removed: 22,796] [added: 22,340] | | |

| Deferred financing [removed: costs, net] [added: costs] | [removed: 22,686] [added: —] | | | | [removed: 26,924] [added: —] | | | [added: | — | | | | — | | | | — | | | | — | | | | — | | |]

| Notes receivable, net | [removed: 14,369] [added: 16,694] | | | | [removed: 83,033] [added: 14,369] | | |

| Investment in and advances to unconsolidated joint ventures, net | [removed: 718,226] [added: 938,906] | | | | [removed: 507,655] [added: 718,226] | | |

| /s/ Thomas M. Herzog | | /s/ Mary Ann King |

| Thomas M. Herzog | | Mary Ann King |

| /s/ Lynne B. Sagalyn | | /s/ Clint McDonnough |

| Lynne B. Sagalyn | | Clint McDonnough |

| | | Director |

| Date: | February 23, 2016 | By: | /s/ Thomas W. Toomey | | |

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below on February 23, 2016 by the following persons on behalf of the registrant and in the capacities indicated.

| /s/ Thomas M. Herzog | | /s/ Mary Ann King |

| Thomas M. Herzog | | Mary Ann King |

| /s/ Lynne B. Sagalyn | | /s/ Clint McDonnough |

| Lynne B. Sagalyn | | Clint McDonnough |

| | | |

| | | /s/ Robert A. McNamara |

| | | Robert A. McNamara |

| | | |

| | | Director of the General Partner |

As discussed in Note 2 to the consolidated financial statements, the Company changed its presentation of debt issuance costs related to a recognized debt liability in the financial statements as a result of the adoption of the amendments to the FASB Accounting Standards Codification resulting from Accounting Standards Update No. 2015-03, “Interest-Imputation of Interest (Subtopic 835-30),” and Accounting Standards Update No. 2015-15, “Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements”.

| February 23, 2016 | | | |

| February 23, 2016 | | | |

| Other assets | 137,302 | | | | 110,082 | | |

| Total assets | $ | 7,663,844 | | | $ | 6,828,728 | |

| Secured debt, net | $ | 1,376,945 | | | $ | 1,354,321 | |

| Unsecured debt, net | 2,193,850 | | | | 2,210,978 | | |

| Total liabilities | 3,816,797 | | | | 3,810,298 | | |

| Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership | 946,436 | | | | 282,480 | | |

| Series F; 16,452,496 and 2,464,183 shares issued and outstanding at December 31, 2015 and 2014, respectively | 1 | | | | — | | |

| Common stock, $0.01 par value; 350,000,000 shares authorized: | | | | | | | |

| 261,844,521 and 255,114,603 shares issued and outstanding at December 31, 2015 and 2014, respectively | 2,618 | | | | 2,551 | | |

| Total liabilities and equity | $ | 7,663,844 | | | $ | 6,828,728 | |

| Income/(loss) from discontinued operations attributable to common stockholders | — | | | | — | | | | 0.17 | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Issuance/(forfeiture) of common and restricted shares, net | — | | | | 3 | | | | 10,191 | | | | — | | | | — | | | | — | | | | 10,194 | | |

| Issuance of common shares through public offering | — | | | | 63 | | | | 209,948 | | | | — | | | | — | | | | — | | | | 210,011 | | |

| Conversion of Series E Cumulative Convertible shares | (114 | | ) | | — | | | | 114 | | | | — | | | | — | | | | — | | | | — | | |

| Issuance of Series F Preferred Stock | 1 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1 | | |

| Adjustment for conversion of noncontrolling interest of unitholders in the Operating Partnership | — | | | | 1 | | | | 3,816 | | | | — | | | | — | | | | — | | | | 3,817 | | |

| Preferred stock distributions declared-Series E ($1.3288 per share) | — | | | | — | | | | — | | | | (3,722 | | ) | | — | | | | — | | | | (3,722 | | ) |

| Balance at December 31, 2015 | $ | 46,458 | | | $ | 2,618 | | | $ | 4,447,816 | | | $ | (1,584,459 | ) | | $ | (12,678 | ) | | $ | 856 | | | $ | 2,900,611 | |

| | | | | | |

| /s/ Thomas M. Herzog | | /s/ Eric J. Foss |

| Thomas M. Herzog | | Eric J. Foss |

| February 24, 2015 | | | |

| Other assets | 105,202 | | | | 137,882 | | |

| Total assets | $ | 6,846,534 | | | $ | 6,807,722 | |

| Secured debt | $ | 1,361,529 | | | $ | 1,442,077 | |

| Unsecured debt | 2,221,576 | | | | 2,081,626 | | |

| Total liabilities | 3,828,104 | | | | 3,777,621 | | |

| Common stock, $0.01 par value; 350,000,000 shares authorized; 255,114,603 and 250,749,665 shares issued and outstanding at December 31, 2014 and 2013, respectively | 2,551 | | | | 2,507 | | |

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

| | | | | | | | | | | | |

| Premium on preferred stock redemption or repurchases, net | — | | | | — | | | | (2,791 | | ) |

(In thousands)

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | Shares | | | Amount | | | | Shares | | | Amount | | | | | | | | | | | | | | | | | | | | | | |

| Balance at December 31, 2011 | 6,068,174 | | | $ | 128,180 | | | 219,650,225 | | | $ | 2,197 | | | $ | 3,340,470 | | | $ | (1,142,895 | ) | | $ | (13,902 | ) | | $ | 4,734 | | | $ | 2,318,784 | |

| Redemption of 3,264,362 shares of 6.75% Series G Cumulative Redeemable Shares | (3,264,362 | ) | | (81,609 | | ) | | — | | | — | | | | 2,791 | | | | (2,791 | | ) | | — | | | | — | | | | (81,609 | | ) |

| Acquisition of noncontrolling interests | — | | | — | | | | — | | | — | | | | — | | | | — | | | | — | | | | (4,871 | | ) | | (4,871 | | ) |

| Increase in noncontrolling interests from business combination, net | — | | | — | | | | — | | | — | | | | — | | | | — | | | | — | | | | 913 | | | | 913 | | |

(In thousands, expect share and per share data)

| Other | 26,517 | | | | 24,826 | | | | 26,009 | | |

| Payments for the repurchase of Series G preferred stock, net | — | | | | — | | | | (81,609 | | ) |

| Acquisition of nonredeemable noncontrolling interests | — | | | | — | | | | (4,871 | | ) |

| Fair market value adjustment of secured debt assumed in acquisitions of properties, including asset exchange | — | | | | — | | | | 2,617 | | |

| Contribution of purchase deposit made in 2011 to unconsolidated joint venture | — | | | | — | | | | 80,397 | | |

The Company has not yet selected a transition method and we

| Note due June 2014 (a) | | | | $ | — | | | $ | 40,800 | |

| Note due June 2022 (net of discount of $0 and $247, respectively) (d) | | | | — | | | | 26,253 | | |

(a) In the fourth quarter of 2013, in conjunction with the sale of its 95% interest in the Lodge at Stoughton, one of its unconsolidated joint ventures, the Company provided the buyer with a $40.8 million loan secured by the property at LIBOR plus a spread of 350 basis points with two three\-month extension options at increased rates and a financing fee.

In June 2014, the note was paid in full.

During the year ended December 31, 2014, the Company loaned an additional $1.2 million and received a payment of $3.9 million in the fourth quarter under this note.

(d) In 2012, the Company purchased a "B" Note secured by a first mortgage on a class A community in West Los Angeles.

The $26.5 million loan was purchased at a yield of 7.25% and bore a coupon rate of 7.00%.

The discount is amortized using the effective interest method.

Prior to 2012, our TRS had a history of losses and, as a result, historically recognized a valuation allowance for net deferred tax assets.

Each quarter, the Company evaluates the need to retain all or a portion of the valuation allowance on its net deferred tax assets.

In 2012, the Company determined that it was more likely than not that the deferred tax assets, including any remaining net operating loss carry forward, would be realized.