Item 16. FORM 10-K SUMMARY

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Item 16. FORM 10-K SUMMARY

None.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.


	UDR, Inc.

Date: February 15, 2022	By:	/s/ Thomas W. Toomey
		Thomas W. Toomey
		Chairman of the Board and Chief Executive Officer (Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below on February 15, 2022 by the following persons on behalf of the registrant and in the capacities indicated.



/s/ Thomas W. Toomey		/s/ Katherine A. Cattanach
Thomas W. Toomey		Katherine A. Cattanach
Chairman of the Board and Chief Executive Officer (Principal Executive Officer)		Director

/s/ Joseph D. Fisher		/s/ Jon A. Grove
Joseph D. Fisher		Jon A. Grove
Senior Vice President and Chief Financial Officer		Director
(Principal Financial Officer)

/s/ Tracy L. Hofmeister		/s/ Mary Ann King
Tracy L. Hofmeister		Mary Ann King
Senior Vice President – Chief Accounting Officer		Director
(Principal Accounting Officer)

/s/ James D. Klingbeil		/s/ Clint D. McDonnough
James D. Klingbeil		Clint D. McDonnough
Lead Independent Director		Director

		/s/ Robert A. McNamara
		Robert A. McNamara
		Director

		/s/ Diane M. Morefield
		Diane M. Morefield
		Director

		/s/ Kevin C. Nickelberry
		Kevin C. Nickelberry
		Director

		/s/ Mark R. Patterson
		Mark R. Patterson
		Director

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE


	PAGE
FINANCIAL STATEMENTS FILED AS PART OF THIS REPORT

Reports of Independent Registered Public Accounting Firm	F-2

Consolidated Balance Sheets at December 31, 2021 and 2020	F-6

Consolidated Statements of Operations for the years ended December 31, 2021, 2020, and 2019	F-7

Consolidated Statements of Comprehensive Income/(Loss) for the years ended December 31, 2021, 2020, and 2019	F-8

Consolidated Statements of Changes in Equity for the years ended December 31, 2021, 2020, and 2019	F-9

Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020, and 2019	F-10

Notes to Consolidated Financial Statements	F-12

SCHEDULES FILED AS PART OF THIS REPORT

Schedule III- Summary of Real Estate Owned	S-1

All other schedules are omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements and notes thereto.

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of UDR, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of UDR, Inc. (the Company) as of December 31, 2021 and 2020, 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, 2021, and the related notes and the financial statement schedule listed in the accompanying Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, 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) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 15, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.


	Indicators of Impairment of Real Estate Owned and Investment in Unconsolidated Joint Ventures
Description of the Matter	At December 31, 2021, the Company’s real estate owned, net and investment in and advances to unconsolidated joint ventures, net were approximately $9.6 billion and $702.5 million, respectively. As more fully described in Note 2 to the consolidated financial statements, the Company periodically evaluates these assets for indicators of impairment, and this includes, among other things, judgments based on factors such as operational performance, market conditions, the Company’s intent and ability to hold each asset, as well as any significant cost overruns on development or redevelopment communities. During 2021, the Company did not recognize an impairment related to real estate

Indicators of Impairment of Real Estate Owned and Investment in Unconsolidated Joint Ventures

Description of the Matter

At December 31, 2021, the Company’s real estate owned, net and investment in and advances to unconsolidated joint ventures, net were approximately $9.6 billion and $702.5 million, respectively. As more fully described in Note 2 to the consolidated financial statements, the Company periodically evaluates these assets for indicators of impairment, and this includes, among other things, judgments based on factors such as operational performance, market conditions, the Company’s intent and ability to hold each asset, as well as any significant cost overruns on development or redevelopment communities. During 2021, the Company did not recognize an impairment related to real estate

F - 2

	owned, net or any other than temporary impairments related to its investment in unconsolidated joint ventures. Auditing the Company’s evaluation for indicators of impairment was complex due to a high degree of subjectivity in the identification of events or changes in circumstances that may indicate an impairment of its real estate owned or that the value of its investment in unconsolidated joint ventures may be other than temporarily impaired. Differences or changes in these judgments could have a material impact on the Company’s analysis.
How We Addressed the Matter in Our Audit	We tested the Company’s internal controls over the asset impairment evaluation process. This included testing controls over management’s determination and review of the considerations used in the impairment indicator analysis. Our procedures with regards to the Company’s evaluation for indicators of impairment included, among others, testing the completeness and accuracy of management’s impairment analysis and evaluating management’s judgments determining whether indicators of impairment were present. For example, we performed inquires of management, considered historical operating results and the current market conditions, performed an independent assessment using both internally and externally available information, read the minutes of the meetings of the Board of Directors, and reviewed the Company’s development and redevelopment costs.
	Accounting for acquisitions of real estate investment properties
Description of the Matter	During 2021, the Company acquired real estate investment properties which were accounted for as asset acquisitions. The aggregate increase in real estate and other assets due to these acquisitions was approximately $1.5 billion. As more fully described in Note 3 to the consolidated financial statements, the total consideration was allocated to land, land improvements, buildings and improvements, and real estate intangible assets based on their relative fair value. Auditing the Company’s acquisition of real estate investment properties is complex and requires a higher degree of auditor judgment due to the significant assumptions that are utilized in the determination of the relative fair values of the assets acquired. The significant assumptions used in management’s analysis to estimate the fair value of these components includes capitalization rates, market comparable prices for similar land parcels, market rental rates, leasing commission rates as well as the time it would take to lease any acquired buildings that were vacant at acquisition.
How We Addressed the Matter in Our Audit	We tested the Company’s internal controls over the acquisition of real estate investment properties and the resulting purchase price allocations. This included testing controls over management’s identification of the assets acquired and liabilities assumed and evaluating the methods and significant assumptions used by the Company to develop such estimates. Our testing of the fair values of the assets acquired included, among others, evaluating the selection of the Company's valuation model and testing the significant assumptions discussed above as well as the completeness and accuracy of the underlying data. For example, we compared management’s assumptions to observable market transactions and replacement costs associated with the fair value of the land and buildings and improvements. For in-place leases, we compared management’s assumptions to published market data for comparable leases, related leasing commissions and the amount of time it would take to lease up the space to stabilization assuming the space was vacant at acquisition. We involved our real estate valuation specialists to assist in evaluating the significant assumptions listed above. In addition, we performed sensitivity tests on the significant assumptions to evaluate the change in the fair value resulting from changes in the assumptions.

F - 3

/s/ Ernst & Young LLP

We have served as the Company's auditor since at least 1984, but we are unable to determine the specific year.

Denver, Colorado

February 15, 2022

F - 4

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of UDR, Inc.

Opinion on Internal Control Over Financial Reporting

We have audited UDR, Inc.’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, UDR, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, 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, 2021, and the related notes and the financial statement schedule listed in the accompanying Index at Item 15(a) and our report dated February 15, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Denver, Colorado

February 15, 2022

F - 5

UDR, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)


	December 31,		December 31,
	2021		2020
ASSETS
Real estate owned:
Real estate held for investment	$	14,352,234	$	12,706,940
Less: accumulated depreciation		(5,136,589)		(4,590,577)
Real estate held for investment, net		9,215,645		8,116,363
Real estate under development (net of accumulated depreciation of $507 and $1,010, respectively)		388,062		246,867
Real estate held for disposition (net of accumulated depreciation of $0 and $13,779, respectively)		—		102,876
Total real estate owned, net of accumulated depreciation		9,603,707		8,466,106

Cash and cash equivalents		967		1,409
Restricted cash		27,451		22,762
Notes receivable, net		26,860		157,992
Investment in and advances to unconsolidated joint ventures, net		702,461		600,233
Operating lease right-of-use assets		197,463		200,913
Other assets		216,311		188,118
Total assets	$	10,775,220	$	9,637,533

LIABILITIES AND EQUITY
Liabilities:
Secured debt, net	$	1,057,380	$	862,147
Unsecured debt, net		4,355,407		4,114,401
Operating lease liabilities		192,488		195,592
Real estate taxes payable		33,095		29,946
Accrued interest payable		45,980		44,760
Security deposits and prepaid rent		55,441		49,008
Distributions payable		124,729		115,795
Accounts payable, accrued expenses, and other liabilities		136,954		110,999
Total liabilities		6,001,474		5,522,648

Commitments and contingencies (Note 15)

Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership		1,299,442		856,294

Equity:
Preferred stock, no par value; 50,000,000 shares authorized at December 31, 2021 and December 31, 2020:
8.00% Series E Cumulative Convertible; 2,695,363 and 2,695,363 shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively		44,764		44,764
Series F; 12,582,575 and 14,440,519 shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively		1		1
Common stock, $0.01 par value; 450,000,000 and 350,000,000 shares authorized at December 31, 2021 and December 31, 2020, respectively:
318,149,635 and 296,611,579 shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively		3,181		2,966
Additional paid-in capital		6,884,269		5,881,383
Distributions in excess of net income		(3,485,080)		(2,685,770)
Accumulated other comprehensive income/(loss), net		(4,261)		(9,144)
Total stockholders’ equity		3,442,874		3,234,200
Noncontrolling interests		31,430		24,391
Total equity		3,474,304		3,258,591
Total liabilities and equity	$	10,775,220	$	9,637,533

See accompanying notes to consolidated financial statements.

F - 6

UDR, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)


	Year Ended December 31,
	2021		2020		2019
REVENUES:
Rental income	$	1,284,665	$	1,236,096	$	1,138,138
Joint venture management and other fees		6,102		5,069		14,055
Total revenues		1,290,767		1,241,165		1,152,193
OPERATING EXPENSES:
Property operating and maintenance		218,094		201,944		178,947
Real estate taxes and insurance		199,446		180,450		150,888
Property management		38,540		35,538		32,721
Other operating expenses		21,649		22,762		13,932
Real estate depreciation and amortization		606,648		608,616		501,257
General and administrative		57,541		49,885		51,533
Casualty-related charges/(recoveries), net		3,748		2,131		474
Other depreciation and amortization		13,185		10,013		6,666
Total operating expenses		1,158,851		1,111,339		936,418
Gain/(loss) on sale of real estate owned		136,052		119,277		5,282
Operating income		267,968		249,103		221,057

Income/(loss) from unconsolidated entities		65,646		18,844		137,873
Interest expense		(186,267)		(202,706)		(170,917)
Interest income and other income/(expense), net		15,085		6,274		15,404
Income/(loss) before income taxes		162,432		71,515		203,417
Tax (provision)/benefit, net		(1,439)		(2,545)		(3,838)
Net income/(loss)		160,993		68,970		199,579
Net (income)/loss attributable to redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership		(10,873)		(4,543)		(14,426)
Net (income)/loss attributable to noncontrolling interests		(104)		(161)		(188)
Net income/(loss) attributable to UDR, Inc.		150,016		64,266		184,965
Distributions to preferred stockholders — Series E (Convertible)		(4,229)		(4,230)		(4,104)
Net income/(loss) attributable to common stockholders	$	145,787	$	60,036	$	180,861

Income/(loss) per weighted average common share:
Basic	$	0.49	$	0.20	$	0.63
Diluted	$	0.48	$	0.20	$	0.63

Weighted average number of common shares outstanding:
Basic		300,326		294,545		285,247
Diluted		301,703		294,927		286,015

See accompanying notes to consolidated financial statements.

F - 7

UDR, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

(In thousands)


	Year Ended December 31,
	2021		2020		2019
Net income/(loss)	$	160,993	$	68,970	$	199,579
Other comprehensive income/(loss), including portion attributable to noncontrolling interests:
Other comprehensive income/(loss) - derivative instruments:
Unrealized holding gain/(loss)		3,502		(3,382)		(8,437)
(Gain)/loss reclassified into earnings from other comprehensive income/(loss)		1,755		4,827		(2,770)
Other comprehensive income/(loss), including portion attributable to noncontrolling interests		5,257		1,445		(11,207)
Comprehensive income/(loss)		166,250		70,415		188,372
Comprehensive (income)/loss attributable to noncontrolling interests		(11,351)		(4,845)		(13,788)
Comprehensive income/(loss) attributable to UDR, Inc.	$	154,899	$	65,570	$	174,584

See accompanying notes to consolidated financial statements.

F - 8

UDR, INC.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(In thousands, except per share data)


							Distributions		Accumulated Other Comprehensive
	Preferred		Common		Paid-in		in Excess of		Income/(Loss),		Noncontrolling
	Stock		Stock		Capital		Net Income		net		Interests		Total
Balance at December 31, 2018	$	46,201	$	2,755	$	4,920,732	$	(2,063,996)	$	(67)	$	17,152	$	2,922,777
Net income/(loss) attributable to UDR, Inc.		—		—		—		184,965		—		—		184,965
Net income/(loss) attributable to noncontrolling interests		—		—		—		—		—		125		125
Contribution of noncontrolling interests in consolidated real estate		—		—		—		—		—		125		125
Long Term Incentive Plan Unit grants/(vestings), net		—		—		—		—		—		13,370		13,370
Other comprehensive income/(loss)		—		—		—		—		(10,381)		—		(10,381)
Issuance/(forfeiture) of common and restricted shares, net		—		—		2,088		—		—		—		2,088
Issuance of common shares through public offering, net		—		158		725,157		—		—		—		725,315
Adjustment for conversion of noncontrolling interest of unitholders in the Operating Partnership and DownREIT Partnership		—		33		133,998		—		—		—		134,031
Common stock distributions declared ($1.37 per share)		—		—		—		(395,113)		—		—		(395,113)
Preferred stock distributions declared-Series E ($1.4832 per share)		—		—		—		(4,104)		—		—		(4,104)
Adjustment to reflect redemption value of redeemable noncontrolling interests		—		—		—		(183,884)		—		—		(183,884)
Balance at December 31, 2019		46,201		2,946		5,781,975		(2,462,132)		(10,448)		30,772		3,389,314
Net income/(loss) attributable to UDR, Inc.		—		—		—		64,266		—		—		64,266
Net income/(loss) attributable to noncontrolling interests		—		—		—		—		—		99		99
Redemption of noncontrolling interests in consolidated real estate		—		—		—		—		—		(125)		(125)
Long Term Incentive Plan Unit grants/(vestings), net		—		—		—		—		—		(6,355)		(6,355)
Other comprehensive income/(loss)		—		—		—		—		1,304		—		1,304
Issuance/(forfeiture) of common and restricted shares, net		—		1		2,886		—		—		—		2,887
Cumulative effect upon adoption of ASC 326		—		—		—		(2,182)		—		—		(2,182)
Issuance of common shares through public offering, net		—		21		102,213		—		—		—		102,234
Conversion of Series E Cumulative Convertible shares		(1,436)		1		1,435		—		—		—		—
Adjustment for conversion of noncontrolling interest of unitholders in the Operating Partnership and DownREIT Partnership		—		3		12,663		—		—		—		12,666
Common stock distributions declared ($1.44 per share)		—		—		—		(425,233)		—		—		(425,233)
Repurchase of common shares				(6)		(19,789)		—		—		—		(19,795)
Preferred stock distributions declared-Series E ($1.5592 per share)		—		—		—		(4,230)		—		—		(4,230)
Adjustment to reflect redemption value of redeemable noncontrolling interests		—		—		—		143,741		—		—		143,741
Balance at December 31, 2020		44,765		2,966		5,881,383		(2,685,770)		(9,144)		24,391		3,258,591
Net income/(loss) attributable to UDR, Inc.		—		—		—		150,016		—		—		150,016
Net income/(loss) attributable to noncontrolling interests		—		—		—		—		—		80		80
Redemption of noncontrolling interests in consolidated real estate		—		—		—		—		—		(125)		(125)
Long Term Incentive Plan Unit grants/(vestings), net		—		—		—		—		—		7,084		7,084
Other comprehensive income/(loss)		—		—		—		—		4,883		—		4,883
Issuance/(forfeiture) of common and restricted shares, net		—		1		4,115		—		—		—		4,116
Issuance of common shares through public offering, net		—		195		898,858		—		—		—		899,053
Adjustment for conversion of noncontrolling interest of unitholders in the Operating Partnership and DownREIT Partnership		—		19		99,913		—		—		—		99,932
Common stock distributions declared ($1.45 per share)		—		—		—		(442,329)		—		—		(442,329)
Preferred stock distributions declared-Series E ($1.570 per share)		—		—		—		(4,229)		—		—		(4,229)
Adjustment to reflect redemption value of redeemable noncontrolling interests		—		—		—		(502,768)		—		—		(502,768)
Balance at December 31, 2021	$	44,765	$	3,181	$	6,884,269	$	(3,485,080)	$	(4,261)	$	31,430	$	3,474,304

See accompanying notes to consolidated financial statements.

F - 9

UDR, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, except for share data)


	Year Ended December 31,
	2021		2020		2019
Operating Activities
Net income/(loss)	$	160,993	$	68,970	$	199,579
Adjustments to reconcile net income/(loss) to net cash provided by/(used in) operating activities:
Depreciation and amortization		619,833		618,629		507,923
(Gain)/loss on sale of real estate owned		(136,052)		(119,277)		(5,282)
(Income)/loss from unconsolidated entities		(65,646)		(18,844)		(137,873)
Return on investment in unconsolidated joint ventures		23,269		20,664		5,179
Amortization of share-based compensation		22,052		19,616		24,330
Loss on extinguishment of debt, net		42,336		49,190		29,594
Other		19,182		12,193		10,364
Changes in operating assets and liabilities:
(Increase)/decrease in operating assets		(33,454)		(44,670)		(10,956)
Increase/(decrease) in operating liabilities		11,447		(2,155)		7,846
Net cash provided by/(used in) operating activities		663,960		604,316		630,704

Investing Activities
Acquisition of real estate assets		(1,244,508)		(407,829)		(1,370,770)
Proceeds from sales of real estate investments, net		280,077		277,886		38,000
Development of real estate assets		(178,029)		(121,240)		(25,401)
Capital expenditures and other major improvements — real estate assets		(156,384)		(163,105)		(167,188)
Capital expenditures — non-real estate assets		(10,140)		(11,008)		(17,159)
Investment in unconsolidated joint ventures		(112,321)		(76,073)		(93,059)
Distributions received from unconsolidated joint ventures		37,362		49,342		72,441
Purchase deposits on pending acquisitions		—		(1,530)		(12,160)
Repayment/(issuance) of notes receivable, net		111,690		(7,285)		(111,391)
Net cash provided by/(used in) investing activities		(1,272,253)		(460,842)		(1,686,687)

Financing Activities
Payments on secured debt		(1,096)		(425,839)		(162,253)
Proceeds from the issuance of secured debt		—		160,930		162,500
Payments on unsecured debt		(300,000)		(300,000)		(700,000)
Net proceeds from the issuance of unsecured debt		511,552		959,419		1,099,816
Net proceeds/(repayment) of commercial paper		30,000		(110,000)		198,885
Net proceeds/(repayment) of revolving bank debt		1,522		11,441		16,567
Proceeds from the issuance of common shares through public offering, net		899,053		102,234		725,315
Repurchase of common shares		—		(19,795)		—
Distributions paid to redeemable noncontrolling interests		(33,663)		(32,038)		(31,580)
Distributions paid to preferred stockholders		(4,225)		(4,217)		(4,063)
Distributions paid to common stockholders		(433,780)		(419,350)		(383,079)
Payment of prepayment and extinguishment costs		(40,769)		(62,645)		(27,782)
Other		(16,054)		(12,734)		(13,943)
Net cash provided by/(used in) financing activities		612,540		(152,594)		880,383
Net increase/(decrease) in cash, cash equivalents, and restricted cash		4,247		(9,120)		(175,600)
Cash, cash equivalents, and restricted cash, beginning of year		24,171		33,291		208,891
Cash, cash equivalents, and restricted cash, end of year	$	28,418	$	24,171	$	33,291

Supplemental Information:
Interest paid during the period, net of amounts capitalized	$	136,978	$	159,386	$	160,622
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases		12,502		12,502		7,874
Cash paid/(refunds received) for income taxes		4,778		1,029		1,519
Non-cash transactions:
Secured debt assumed upon acquisition of real estate assets	$	201,296	$	—
Acquisition of land parcel pursuant to a deed in lieu of foreclosure		25,000		—
Cancellation of secured note receivable pursuant to a deed in lieu of foreclosure		24,869		—
Transfer of investment in and advances to unconsolidated joint ventures to real estate owned		16,425		14,700	$	288,108
Transfer of investment in and advances to unconsolidated joint ventures to joint venture member		—		—		60,625
Secured debt assumed in the consolidation of unconsolidated joint ventures		—		—		551,800
OP Units issued for real estate, net		48,533		—		—
Acquisition of intellectual property in exchange for cancellation of secured note receivable		—		2,250		—

F - 10

UDR, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS – (Continued)

(In thousands, except for share data)


	Year Ended December 31,
	2021		2020		2019
Recognition of allowance for credit losses		—		2,182		—
Recognition of operating lease right-of-use assets		—		—		94,349
Recognition of operating lease liabilities		—		—		88,336
Right-of-use assets obtained in exchange for operating lease liabilities remeasurement		—		—		111,055
Vesting of LTIP Units		14,578		23,501		14,742
Development costs and capital expenditures incurred, but not yet paid		39,856		31,387		16,635
Conversion of Operating Partnership and DownREIT Partnership noncontrolling interests to common stock (1,916,613 shares in 2021; 303,146 shares in 2020; and 3,165,780 shares in 2019)		99,932		12,666		134,031
Dividends declared, but not yet paid		124,729		115,795		109,382

The following reconciles cash, cash equivalents, and restricted cash to amounts as shown above:
Cash, cash equivalents, and restricted cash, beginning of year:
Cash and cash equivalents	$	1,409	$	8,106	$	185,216
Restricted cash		22,762		25,185		23,675
Total cash, cash equivalents, and restricted cash as shown above	$	24,171	$	33,291	$	208,891
Cash, cash equivalents, and restricted cash, end of year:
Cash and cash equivalents	$	967	$	1,409	$	8,106
Restricted cash		27,451		22,762		25,185
Total cash, cash equivalents, and restricted cash as shown above	$	28,418	$	24,171	$	33,291

See accompanying notes to consolidated financial statements.

F - 11

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021

CONSOLIDATION AND BASIS OF PRESENTATION

Organization and Formation

UDR, Inc. (“UDR,” the “Company,” “we,” or “our”) is a self-administered real estate investment trust, or REIT, that owns, operates, acquires, renovates, develops, redevelops, and manages apartment communities in targeted markets located in the United States. At December 31, 2021, our consolidated apartment portfolio consisted of 160 consolidated communities located in 21 markets consisting of 53,229 apartment homes. In addition, the Company has an ownership interest in 6,570 completed or to-be-completed apartment homes through unconsolidated joint ventures or partnerships, including 3,733 apartment homes owned by entities in which we hold preferred equity investments.

Basis of Presentation

The accompanying consolidated financial statements of UDR include its wholly-owned and/or controlled subsidiaries (see Note 4, Variable Interest Entities, for further discussion). All significant intercompany accounts and transactions have been eliminated in consolidation. Certain previously reported amounts have been reclassified to conform to the current financial statement presentation.

The accompanying consolidated financial statements include the accounts of UDR and its subsidiaries, including United Dominion Realty, L.P. (the “Operating Partnership” or the “OP”) and UDR Lighthouse DownREIT L.P. (the “DownREIT Partnership”). As of December 31, 2021 and 2020, there were 186.1 million and 184.8 million units, respectively, in the Operating Partnership (“OP Units”) outstanding, of which 176.2 million, or 94.7% and 176.2 million, or 95.3%, respectively, were owned by UDR and 9.9 million, or 5.3% and 8.6 million, or 4.7%, respectively, were owned by outside limited partners. As of December 31, 2021 and 2020, there were 32.4 million units in the DownREIT Partnership (“DownREIT Units”) outstanding, of which 20.6 million, or 63.6% and 18.7 million, or 57.8%, respectively, were owned by UDR and its subsidiaries and 11.8 million, or 36.4% and 13.7 million, or 42.2%, respectively, were owned by outside limited partners. The consolidated financial statements of UDR include the noncontrolling interests of the unitholders in the Operating Partnership and DownREIT Partnership.

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

SIGNIFICANT ACCOUNTING POLICIES

Recent Accounting Pronouncements

In March 2020, the SEC adopted rules that amended the financial disclosure requirements for subsidiary issuers and guarantors of registered debt securities in Rule 3-10 of Regulation S-X. Subsequently, in November 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-09, Debt (Topic 470): Amendments to SEC Paragraphs Pursuant to SEC Release No. 33-10762, which revised SEC paragraphs of the codification to reflect, as appropriate, the amended disclosure requirements mentioned above. Under the amended rules, parent companies can provide alternative disclosures in lieu of separate audited financial statements of subsidiary issuers and guarantors that meet certain criteria. We evaluated the criteria and determined that we are eligible for the exceptions, which allow us to provide alternative disclosures for the Operating Partnership, which guarantees certain outstanding debt securities issued by the Company. As a result of the amendments, the Operating Partnership, as subsidiary guarantor, is no longer subject to the filing requirements under Section 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and will no longer file separate periodic and current reports in reliance on Rule 12h-5 under the Exchange Act. The alternative disclosures related to the Operating Partnership are presented in Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations” in this report.

In August 2020, the FASB issued ASU 2020-06, Debt—Debt With Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in E_ntity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity_. The ASU simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s

F - 12

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021

own equity. The updated standard will be effective on January 1, 2022; however, early adoption of the ASU is permitted on January 1, 2021. The Company early adopted the guidance on January 1, 2021; however, the updated standard did not have a material impact on the consolidated financial statements and related disclosures.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the first quarter of 2020, the Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur. The ASU has not had a material impact on the consolidated financial statements and the Company does not expect the ASU to have a material impact on the consolidated financial statements on a prospective basis.

Real Estate

Real estate assets held for investment are carried at historical cost and consist of land, land improvements, buildings and improvements, furniture, fixtures and equipment and other costs incurred during their development, acquisition and redevelopment.

Expenditures for ordinary repair and maintenance costs are charged to expense as incurred. Expenditures for improvements, renovations, and replacements related to the acquisition and/or improvement of real estate assets are capitalized and depreciated over their estimated useful lives if the expenditures qualify as a betterment or the life of the related asset will be substantially extended beyond the original life expectancy.

UDR purchases real estate investment properties and records the tangible and identifiable intangible assets and liabilities acquired based on their estimated fair value. The primary, although not only, identifiable intangible asset associated with our portfolio is the value of existing lease agreements. When recording the acquisition of a community, we first assign fair value to the estimated intangible value of the existing lease agreements and then to the estimated value of the land, building and fixtures assuming the community is vacant. The Company estimates the intangible value of the lease agreements by determining the lost revenue associated with a hypothetical lease-up. Depreciation on the building is based on the expected useful life of the asset and the in-place leases are amortized over their remaining average contractual life. Property acquisition costs are capitalized as incurred if the acquisition does not meet the definition of a business.

Quarterly or when changes in circumstances warrant, UDR will assess our real estate properties for indicators of impairment. The judgments regarding the existence of impairment indicators are based on certain factors. Such factors include, among other things, operational performance, market conditions, the Company’s intent and ability to hold the related asset, as well as any significant cost overruns on development properties.

If a real estate property has indicators of impairment, we assess whether the long-lived asset’s carrying value exceeds the community’s undiscounted future cash flows, which is representative of projected net operating income (“NOI”) plus the residual value of the community. Our future cash flow estimates are based upon historical results adjusted to reflect our best estimate of future market and operating conditions and our estimated holding periods. If such indicators of impairment are present and the carrying value exceeds the undiscounted cash flows of the community, an impairment loss is recognized equal to the excess of the carrying amount of the asset over its estimated fair value. Our estimates of fair value represent our best estimate based primarily upon unobservable inputs related to rental rates, operating costs, growth rates, discount rates, capitalization rates, industry trends and reference to market rates and transactions.

For long-lived assets to be disposed of, impairment losses are recognized when the fair value of the asset less estimated cost to sell is less than the carrying value of the asset. Properties classified as real estate held for disposition generally represent properties that are actively marketed or contracted for sale with the closing expected to occur within the next twelve months. Real estate held for disposition is carried at the lower of cost, net of accumulated depreciation, or fair value, less the cost to sell, determined on an asset-by-asset basis. Expenditures for ordinary repair and

F - 13

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021

maintenance costs on held for disposition properties are charged to expense as incurred. Expenditures for improvements, renovations, and replacements related to held for disposition properties are capitalized at cost. Depreciation is not recorded on real estate held for disposition.

For the years ended December 31, 2021, 2020 and 2019, we did not record any impairments on our real estate properties.

Depreciation is computed on a straight-line basis over the estimated useful lives of the related assets which are 30 to 55 years for buildings, 10 to 35 years for major improvements, and 3 to 10 years for furniture, fixtures, equipment, and other assets.

Predevelopment, development, and redevelopment projects and related costs are capitalized and reported on the Consolidated Balance Sheets as Total real estate owned, net of accumulated depreciation. The Company capitalizes costs directly related to the predevelopment, development, and redevelopment of a capital project, which include, but are not limited to, interest, real estate taxes, insurance, and allocated development and redevelopment overhead related to support costs for personnel working on the capital projects. We use our professional judgment in determining whether such costs meet the criteria for capitalization or must be expensed as incurred. These costs are capitalized only during the period in which activities necessary to ready an asset for its intended use are in progress and such costs are incremental and identifiable to a specific activity to get the asset ready for its intended use. These costs, excluding the direct costs of development and redevelopment and capitalized interest, for the years ended December 31, 2021, 2020, and 2019 were $11.3 million, $12.0 million and $8.4 million, respectively. During the years ended December 31, 2021, 2020, and 2019, total interest capitalized was $9.7 million, $7.0 million and $5.1 million, respectively. As each home in a capital project is completed and becomes available for lease-up, the Company ceases capitalization on the related portion and depreciation commences over the estimated useful life.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand, demand deposits with financial institutions and short-term, highly liquid investments. We consider all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. The majority of the Company’s cash and cash equivalents are held at major commercial banks.

Restricted Cash

Restricted cash primarily consists of escrow deposits held by lenders for real estate taxes, insurance and replacement reserves, and security deposits.

Real Estate Sales Gain Recognition

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

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

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

To the extent that the Company acquires a controlling financial interest in a property that it previously accounted for as an equity method investment, the Company will not remeasure its previously held interest if the acquisition is treated as an asset acquisition. The Company will include the carrying amount of its previously held equity

F - 14

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021

method interest along with the consideration paid and transaction costs incurred in determining the amounts to allocate to the related assets and liabilities acquired on its Consolidated Balance Sheets. When treated as an asset acquisition, the Company will not recognize a gain or loss on consolidation of a property.

Allowance for Credit Losses

The Company accounts for allowance for credit losses under the current expected credit loss (“CECL”) impairment model for its financial assets, including trade and other receivables, held-to-maturity debt securities, loans and other financial instruments, and presents the net amount of the financial instrument expected to be collected. The CECL impairment model excludes operating lease receivables. The CECL impairment model requires an estimate of expected credit losses, measured over the contractual life of an instrument, that considers forecasts of future economic conditions in addition to information about past events and current conditions. Based on this model, we analyze the following criteria, as applicable in developing allowances for credit losses: historical loss information, the borrower’s ability to make scheduled payments, the remaining time to maturity, the value of underlying collateral, projected future performance of the borrower and macroeconomic trends.

The Company measures credit losses of financial assets on a collective (pool) basis when similar risk characteristics exist. If the Company determines that a financial asset does not share risk characteristics with its other financial assets, the Company evaluates the financial asset for expected credit losses on an individual basis. Allowance for credit losses are recorded as a direct reduction from an asset’s amortized cost basis. Credit losses and recoveries are recorded in Interest income and other income/(expense), net on the Consolidated Statements of Operations. Recoveries of financial assets previously written off are recorded when received. For the years ended December 31, 2021 and 2020, the Company recorded net credit recoveries of $0.6 million and $0.7 million, respectively, on the Consolidated Statements of Operations.

The Company has made the optional election provided by the standard not to measure allowance for credit losses for accrued interest receivables as the Company writes off any uncollectible accrued interest receivables in a timely manner. The Company periodically evaluates the collectability of its accrued interest receivables. A write-off is recorded when the Company concludes that all or a portion of its accrued interest receivable balance is no longer collectible.

F - 15

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021

Notes Receivable

Notes receivable relate to financing arrangements which are typically secured by real estate, real estate related projects or other assets. Certain of the loans we extend may include characteristics such as options to purchase the project within a specific time window following expected project completion. These characteristics can cause the loans to fall under the definition of a variable interest entity (“VIE”), and thus trigger consolidation consideration. We consider the facts and circumstances pertinent to each loan, including the relative amount of financing we are contributing to the overall project cost, decision making rights or control we hold, and our rights to expected residual gains or our obligations to absorb expected residual losses from the project. If we are deemed to be the primary beneficiary of a VIE due to holding a controlling financial interest, the majority of decision making control, or by other means, consolidation of the VIE would be required. The Company has concluded that it is not the primary beneficiary of the borrowing entities.

Additionally, we analyze each loan arrangement that involves real estate development to consider whether the loan qualifies for accounting as a loan or as an investment in a real estate development project. The Company has evaluated its real estate loans, where appropriate, for accounting treatment as loans versus real estate development projects, as required by ASC 310-10. For each loan, the Company has concluded that the characteristics and the facts and circumstances indicate that loan accounting treatment is appropriate.

The following table summarizes our Notes receivable, net as of December 31, 2021 and 2020 (dollars in thousands):


	Interest rate at		Balance Outstanding
	December 31,		December 31,		December 31,
	2021		2021		2020
Note due February 2021 (a)	N/A		$	—	$	4,000
Note due May 2022 (b)	N/A	%		—		20,000
Note due May 2022 (c)	14.00	%		2,760		—
Note due October 2022 (d)	N/A	%		—		115,000
Note due January 2023 (e)	10.00	%		24,235		19,685
Notes Receivable				26,995		158,685
Allowance for credit losses				(135)		(693)
Total notes receivable, net			$	26,860	$	157,992

(a)	In May 2020, the Company entered into a promissory note with an unaffiliated third party with an aggregate commitment of $4.0 million, in connection with the sale of an operating community. In January 2021, the unaffiliated third party repaid the $4.0 million promissory note in full.

(b)

The Company previously had a secured note with an unaffiliated third party with an aggregate commitment of $20.0 million. The note was secured by a parcel of land and related land improvements located in Alameda, California. In September 2020, the developer defaulted on the loan. As a result of the default, in April 2021, the Company took title to the property pursuant to a deed in lieu of foreclosure. As such, the Company increased its real estate assets owned by approximately $25.0 million, the fair market value of the property on the date of the title transfer, and recorded a $0.1 million gain on extinguishment of the secured note to Interest income and other income/(expense), net on the Consolidated Statements of Operations, which was based on the note’s principal balance and unpaid accrued interest of $4.9 million. (See Note 3, Real Estate Owned for further discussion.)

(c)	The Company has a secured note with an unaffiliated third party with an aggregate commitment of $2.8 million, all of which has been funded. The note is secured by a to-be-developed parcel of land in Kissimmee, Florida. Interest payments are due when the loan matures in May 2022.

(d)	The Company previously had a secured note with an unaffiliated third party with an aggregate commitment of $115.0 million. Interest payments were due when the loan matured. The note was secured by a first priority deed of trust on a 259 apartment home operating community in Bellevue, Washington, which was completed in 2020.

F - 16

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021

In July 2021, the Company acquired the operating community. In connection with the acquisition of this community, the note and the unpaid accrued interest were paid in full. (See Note 3, Real Estate Owned for further discussion.)

(e)

The Company has a secured note with an unaffiliated third party with an aggregate commitment of $25.4 million, of which $24.2 million has been funded, including $4.6 million funded during the year ended December 31, 2021. Interest payments are due monthly. The note matures at the earliest of the following: (a) the closing of any private or public capital raising in the amount of $5.0 million or greater; (b) an acquisition; (c) acceleration in the event of default; or (d) January 2023.

In August 2021, the terms of this secured note were amended to increase the aggregate commitment from $22.0 million to $25.4 million.

The Company recognized $5.3 million, $9.1 million, and $5.5 million of interest income and zero, zero, and $8.5 million of promoted interest from notes receivable during the years ended December 31, 2021, 2020, and 2019, respectively, none of which was related party interest. Interest income and promoted interest are included in Interest income and other income/(expense), net on the Consolidated Statements of Operations.

Investment in Joint Ventures and Partnerships

We use the equity method to account for investments in joint ventures and partnerships that qualify as VIEs where we are not the primary beneficiary and other entities that we do not control or where we do not own a majority of the economic interest but have the ability to exercise significant influence over the operating and financial policies of the investee. Throughout these financial statements we use the term “joint venture” or “partnership” when referring to investments in entities in which we do not have a 100% ownership interest. The Company also uses the equity method when we function as the managing partner and our venture partner has substantive participating rights or where we can be replaced by our venture partner as managing partner without cause. For a joint venture or partnership accounted for under the equity method, our share of net earnings or losses is reflected as income/loss when earned/incurred and distributions are credited against our investment in the joint venture or partnership as received.

In determining whether a joint venture or partnership is a VIE, the Company considers: the form of our ownership interest and legal structure; the size of our investment; the financing structure of the entity, including necessity of subordinated debt; estimates of future cash flows; ours and our partner’s ability to participate in the decision making related to acquisitions, disposition, budgeting and financing of the entity; obligation to absorb losses and preferential returns; nature of our partner’s primary operations; and the degree, if any, of disproportionality between the economic and voting interests of the entity. As of December 31, 2021 and 2020, the Company did not have investments in any joint ventures or partnerships that qualify as VIEs where we were determined to be the primary beneficiary.

We evaluate our investments in unconsolidated joint ventures for events or changes in circumstances that indicate there may be an other-than-temporary decline in value. We consider various factors to determine if a decrease in the value of the investment is other-than-temporary. These factors include, but are not limited to, age of the venture, our intent and ability to retain our investment in the entity, the financial condition and long-term prospects of the entity, the fair value of the property of the joint venture, and the relationships with the other joint venture partners and its lenders. The amount of loss recognized is the excess of the investment’s carrying amount over its estimated fair value. If we believe that the decline in fair value is temporary, no impairment is recorded. The aforementioned factors are taken into consideration as a whole by management in determining the valuation of our equity method investments. Should the actual results differ from management’s judgment, the valuation could be negatively affected and may result in a negative impact to our Consolidated Financial Statements.

Derivative Financial Instruments

The Company utilizes derivative financial instruments to manage interest rate risk and generally designates these financial instruments as cash flow hedges. Derivative financial instruments are recorded on our Consolidated Balance Sheets as either an asset or liability and measured quarterly at their fair value. The changes in fair value for cash flow hedges that are deemed effective are reflected in other comprehensive income/(loss) and for non-designated derivative financial instruments in earnings. The ineffective component of cash flow hedges, if any, is recorded in earnings.

F - 17

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021

Redeemable Noncontrolling Interests in the Operating Partnership and DownREIT Partnership

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

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

Income Taxes

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

Income taxes for our TRS are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities from a change in tax rate is recognized in earnings in the period of the enactment date. The Company’s deferred tax assets/(liabilities) are generally the result of differing depreciable lives on capitalized assets, temporary differences between book and tax basis of assets and liabilities and timing of expense recognition for certain accrued liabilities. As of December 31, 2021 and 2020, UDR’s net deferred tax asset/(liability) was ($0.8) million and $(3.2) million, respectively, and are recorded in Accounts payable, accrued expenses and other liabilities on the Consolidated Balance Sheets.

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

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

The Company invests in assets that qualify for federal investment tax credits (“ITC”) through our TRS. An ITC reduces federal income taxes payable when qualifying depreciable property is acquired. The ITC is determined as a percentage of cost of the assets. The Company accounts for ITCs under the deferral method, under which the tax benefit from the ITC is deferred and amortized as a tax benefit into Tax (provision)/benefit, net on the Consolidated Statements of Operations over the book life of the qualifying depreciable property. The ITCs are recorded in Accounts payable, accrued expenses and other liabilities on the Consolidated Balance Sheets.

F - 18

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021

UDR had no material unrecognized tax benefit, accrued interest or penalties at December 31, 2021. UDR and its subsidiaries are subject to federal income tax as well as income tax of various state and local jurisdictions. The tax years 2018 through 2020 remain open to examination by tax jurisdictions to which we are subject. When applicable, UDR recognizes interest and/or penalties related to uncertain tax positions in Tax (provision)/benefit, net on the Consolidated Statements of Operations.

Principles of Consolidation

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

Discontinued Operations

In accordance with GAAP, a discontinued operation represents (1) a component of an entity or group of components that has been disposed of or is classified as held for sale in a single transaction and represents a strategic shift that has or will have a major effect on an entity’s financial results, or (2) an acquired business that is classified as held for sale on the date of acquisition. A strategic shift could include a disposal of (1) a separate major line of business, (2) a separate major geographic area of operations, (3) a major equity method investment, or (4) other major parts of an entity.

We record sales of real estate that do not meet the definition of a discontinued operation in Gain/(loss) on sale of real estate owned on the Consolidated Statements of Operations.

Stock-Based Employee Compensation Plans

The Company measures the cost of employee services received in exchange for an award of an equity instrument based on the award’s fair value on the grant date and recognizes the cost as stock-based compensation expense over the period during which the employee is required to provide service in exchange for the award, which is generally the vesting period. For performance based awards, the Company remeasures the fair value based on the estimated achievement of the performance criteria each balance sheet date with adjustments made on a cumulative basis until the award is settled and the final compensation is known. Stock-based compensation expense is only recognized for performance based awards that we expect to vest, which we estimate based upon an assessment of the probability that the performance criteria will be achieved. Stock-based compensation expense associated with awards is updated for actual forfeitures. The fair value for market based awards issued by the Company is calculated utilizing a Monte Carlo simulation and the fair value for stock options issued by the Company is calculated utilizing the Black-Scholes-Merton formula. For further discussion, see Note 10, Employee Benefit Plans.

Advertising Costs

All advertising costs are expensed as incurred and reported on the Consolidated Statements of Operations within the line item Property operating and maintenance. During the years ended December 31, 2021, 2020, and 2019, total advertising expense was $8.3 million, $7.9 million, and $6.5 million, respectively.

Cost of Raising Capital

Costs incurred in connection with the issuance of equity securities are deducted from stockholders’ equity. Costs incurred in connection with the issuance or renewal of debt are recorded based on the terms of the debt issuance or renewal. Accordingly, if the terms of the renewed or modified debt instrument are deemed to be substantially different (i.e. a 10 percent or greater difference in the cash flows between instruments), all unamortized financing costs associated with the extinguished debt are charged to earnings in the current period and certain costs of new debt issuances are capitalized and amortized over the term of the debt. When the cash flows are not substantially different, the lender costs associated with the renewal or modification are capitalized and amortized into interest expense over the remaining term of the related debt instrument and other related costs are expensed. The balance of any unamortized financing costs

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UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021

associated with retired debt is expensed upon retirement. Deferred financing costs for new debt instruments include fees and costs incurred by the Company to obtain financing. Deferred financing costs are generally amortized on a straight-line basis, which approximates the effective interest method, over a period not to exceed the term of the related debt.

Comprehensive Income/(Loss)

Comprehensive income/(loss), which is defined as the change in equity during each period from transactions and other events and circumstances from nonowner sources, including all changes in equity during a period except for those resulting from investments by or distributions to stockholders, is displayed in the accompanying Consolidated Statements of Comprehensive Income/(Loss). For the years ended December 31, 2021, 2020, and 2019, the Company’s other comprehensive income/(loss) consisted of the gain/(loss) (effective portion) on derivative instruments that are designated as and qualify as cash flow hedges, (gain)/loss on derivative instruments reclassified from other comprehensive income/(loss) into earnings, and the allocation of other comprehensive income/(loss) to noncontrolling interests. The (gain)/loss on derivative instruments reclassified from other comprehensive income/(loss) is included in Interest expense on the Consolidated Statements of Operations. See Note 14, Derivatives and Hedging Activity, for further discussion. The allocation of other comprehensive income/(loss) to redeemable noncontrolling interests during the years ended December 31, 2021, 2020, and 2019 was $0.4 million, $0.1 million, and $(0.8) million, respectively.

Forward Sales Agreements

The Company utilizes forward sales agreements for the future issuance of its common stock. When the Company enters into a forward sales agreement, the contract requires the Company to sell its shares to a counterparty at a predetermined price at a future date. The net sales price and proceeds attained by the Company will be determined on the dates of settlement, with adjustments during the term of the contract for the Company’s anticipated dividends as well as for a daily interest factor that varies with changes in the federal funds rate. The Company generally has the ability to determine the dates and method of settlement (i.e., gross physical settlement, net share settlement or cash settlement), subject to certain conditions and the right of the counterparty to accelerate settlement under certain circumstances.

The Company accounts for the shares of common stock reserved for issuance upon settlement as equity in accordance with ASC 815-40, Contracts in Entity's Own Equity, which permits equity classification when a contract is considered indexed to the entity’s own stock and the contract requires or permits the issuing entity to settle the contract in shares (either physically or net in shares).

The guidance establishes a two-step process for evaluating whether an equity-linked financial instrument is considered indexed to the entity’s own stock, first, evaluating the instrument’s contingent exercise provisions and second, evaluating the instrument’s settlement provisions. When entering into forward sales agreements, we determined that (i) none of the agreement’s exercise contingencies are based on observable markets or indices besides those related to the market for our own stock price; and (ii) none of the settlement provisions preclude the agreements from being indexed to our own stock.

Before the issuance of shares of common stock, upon physical or net share settlement of the forward sales agreements, the Company expects that the shares issuable upon settlement of the forward sales agreements will be reflected in its diluted income/(loss) per share calculations using the treasury stock method. Under this method, the number of shares of common stock used in calculating diluted income/(loss) per share is deemed to be increased by the excess, if any, of the number of shares of common stock that would be issued upon full physical settlement of the forward sales agreements over the number of shares of common stock that could be purchased by the Company in the open market (based on the average market price during the period) using the proceeds receivable upon full physical settlement (based on the adjusted forward sale price at the end of the reporting period). When the Company physically or net share settles any forward sales agreement, the delivery of shares of common stock would result in an increase in the number of weighted average common shares outstanding and dilution to basic income/(loss) per share. (See Note 8, Income/(Loss) per Share for further discussion.)

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UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021

Impact of COVID-19 Pandemic

The Company continues to closely monitor the impact of the COVID-19 pandemic on all aspects of its business. The extent of the pandemic’s effect on our operational and financial performance will depend on future developments, including the duration and intensity of the pandemic, the timing and effectiveness of COVID-19 vaccines, the duration of government measures to mitigate the pandemic and the success of government rental assistance programs, all of which continue to be uncertain and difficult to predict.

Given the uncertainty, we cannot predict the effect on future periods, but the adverse impact that could occur on the Company’s future financial condition, results of operations and cash flows could be material, including, but not limited to, as a result of extended or reinstated eviction moratoriums or other restrictions or limitations imposed, the operation of government rent assistance programs, additional rent deferrals, payment plans, lease concessions, waiving late payment fees, charges from potential adjustments to the carrying amount of receivables, and asset impairment charges.

During the years ended December 31, 2021 and 2020, the Company performed an analysis in accordance with the ASC 842, Leases, guidance to assess the collectibility of its operating lease receivables in light of the COVID-19 pandemic. This analysis included an assessment of collectibility of current and future rents and whether those lease payments were no longer probable of collection. In accordance with the leases guidance, if lease payments are no longer deemed to be probable over the life of the lease contract, we recognize revenue only when cash is received, and all existing contractual operating lease receivables and straight-line lease receivables are reserved.

As a result of its analysis, the Company reduced its reserve to approximately $13.2 million for multifamily tenant lease receivables and increased its reserve to approximately $6.1 million for retail tenant lease receivables (inclusive of $4.0 million of reserves on straight-line lease receivables) for its wholly-owned communities and communities held by joint ventures. In aggregate, the reduction in reserve is reflected as a $0.1 million increase to Rental income and a $0.1 million increase to Income/(loss) from unconsolidated entities on the Consolidated Statements of Operations for the year ended December 31, 2021. During the year ended December 31, 2020, the Company reserved approximately $13.5 million of multifamily tenant lease receivables and approximately $6.0 million of retail tenant lease receivables (inclusive of $3.3 million of reserves on straight-line lease receivables) for its wholly-owned communities and communities held by joint ventures. In aggregate, the reserve is reflected as a $18.4 million reduction to Rental income and a $1.1 million reduction to Income/(loss) from unconsolidated entities on the Consolidated Statements of Operations for the year ended December 31, 2020. The impact to deferred leasing commissions was not material for the years ended December 31, 2021 and 2020.

During the year ended December 31, 2020, the Company recorded an impairment charge of $3.1 million on its investment in equity securities of a non-core investment. The Company did not recognize any other adjustments to the carrying amounts of assets or asset impairment charges due to the COVID-19 pandemic for the years ended December 31, 2021 and 2020.

Use of Estimates

The preparation of these financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the dates of the financial statements and the amounts of revenues and expenses during the reporting periods. Actual amounts realized or paid could differ from those estimates.

Market Concentration Risk

The Company is subject to increased exposure from economic and other competitive factors specific to markets where the Company holds a significant percentage of the carrying value of its real estate portfolio. At December 31, 2021, the Company held greater than 10% of the carrying value of its real estate portfolio in each of the Metropolitan D.C., Boston, Massachusetts and New York, New York markets.

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UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021

REAL ESTATE OWNED

Real estate assets owned by the Company consist of income producing operating properties, properties under development, land held for future development, and held for disposition properties. As of December 31, 2021, the Company owned and consolidated 160 communities in 13 states plus the District of Columbia totaling 53,229 apartment homes. The following table summarizes the carrying amounts for our real estate owned (at cost) as of December 31, 2021 and 2020 (dollars in thousands):


	December 31,		December 31,
	2021		2020
Land	$	2,342,385	$	2,139,765
Depreciable property — held and used:
Land improvements		241,905		233,823
Building, improvements, and furniture, fixtures and equipment		11,717,931		10,292,782
Real estate intangible assets		50,013		40,570
Under development:
Land and land improvements		74,399		73,702
Building, improvements, and furniture, fixtures and equipment		314,170		174,175
Real estate held for disposition:
Land and land improvements		—		15,184
Building, improvements, and furniture, fixtures and equipment		—		101,471
Real estate owned		14,740,803		13,071,472
Accumulated depreciation (a)		(5,137,096)		(4,605,366)
Real estate owned, net	$	9,603,707	$	8,466,106

	(a)	Accumulated depreciation is inclusive of $8.8 million and $5.8 million of accumulated amortization related to real estate intangible assets as of December 31, 2021 and 2020, respectively.

Acquisitions

In January 2021, the Company acquired a 300 apartment home operating community located in Franklin, Massachusetts, for approximately $77.4 million. In connection with the acquisition, the Company assumed an above-market mortgage note payable secured by the community with an outstanding balance of approximately $51.8 million. The Company increased its real estate assets owned by approximately $82.0 million, recorded $2.0 million of in-place lease intangibles, and recorded a $6.6 million debt premium in connection with the above-market debt assumed.

In April 2021, the Company acquired a 636 apartment home operating community located in Farmers Branch, Texas, for approximately $110.2 million. In connection with the acquisition, the Company assumed an above-market mortgage note payable secured by the community with an outstanding balance of approximately $42.0 million. The Company increased its real estate assets owned by approximately $111.5 million, recorded $3.0 million of in-place lease intangibles, and recorded a $4.3 million debt premium in connection with the above-market debt assumed.

The Company previously had a secured note with an unaffiliated third party with an aggregate commitment of $20.0 million. The note was secured by a parcel of land and related land improvements located in Alameda, California. In September 2020, the developer defaulted on the loan. As a result of the default, in April 2021, the Company took title to the property pursuant to a deed in lieu of foreclosure. The Company increased its real estate assets owned by approximately $25.0 million, the fair market value of the property on the date of the title transfer, and recorded a $0.1 million gain on extinguishment of the secured note to Interest income and other income/(expense), net on the Consolidated Statements of Operations. (See Note 2, Significant Accounting Policies for further discussion.)

In May 2021, the Company acquired a to-be-developed parcel of land located in Tampa, Florida, for approximately $6.6 million.

In May 2021, the Company acquired a 945 apartment home operating community located in Frisco, Texas, for approximately $166.9 million. In connection with the acquisition, the Company assumed an above-market mortgage note

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UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021

payable secured by the community with an outstanding balance of approximately $89.5 million. The Company increased its real estate assets owned by approximately $169.9 million, recorded $4.1 million of in-place lease intangibles, and recorded a $7.1 million debt premium in connection with the above-market debt assumed.

In June 2021, the Company acquired a 468 apartment home operating community located in Germantown, Maryland, for approximately $121.9 million. The Company increased its real estate assets owned by approximately $119.3 million and recorded $2.6 million of in-place lease intangibles.

In July 2021, the Company acquired a 259 apartment home operating community located in Bellevue, Washington, for approximately $171.9 million. The Company previously had a $115.0 million secured note receivable associated with this operating community. The Company increased its real estate assets owned by approximately $169.1 million and recorded $2.8 million of in-place lease intangibles. In connection with the acquisition of this community, the note and the unpaid accrued interest were paid in full. (See Note 2, Significant Accounting Policies for further discussion.)

In August 2021, the Company acquired a 544 apartment home operating community located in Germantown, Maryland, for approximately $127.2 million. The Company increased its real estate assets owned by approximately $124.4 million and recorded $2.8 million of in-place lease intangibles.

In September 2021, the Company acquired a 320 apartment home operating community located in King of Prussia, Pennsylvania, for approximately $116.2 million. The Company increased its real estate assets owned by approximately $113.8 million and recorded $2.4 million of in-place lease intangibles.

In September 2021, the Company acquired a 192 apartment home operating community located in Towson, Maryland, for approximately $57.6 million. The Company increased its real estate assets owned by approximately $54.0 million and recorded $2.4 million of real estate tax intangibles and $1.2 million of in-place lease intangibles.

In September 2021, the Company acquired a 339 apartment home operating community located in Philadelphia, Pennsylvania, for approximately $147.0 million. The Company increased its real estate assets owned by approximately $136.7 million and recorded $7.1 million of real estate tax intangibles and $3.2 million of in-place lease intangibles.

In October 2021, the Company acquired its joint venture partner’s common equity interest in a 330 apartment home operating community located in Orlando, Florida, for a total purchase price of approximately $106.0 million. The Company paid for the community by issuing approximately 0.9 million OP Units (valued at $53.00 per unit per the agreement) to the seller, which equaled $47.9 million. In connection with the acquisition, the joint venture construction loan of approximately $39.6 million was repaid. The Company previously held a $16.4 million preferred equity investment in the entity on the date of acquisition, which it accounted for as an unconsolidated equity investment (see Note 5, Joint Ventures and Partnerships). As a result, in October 2021, the Company increased its ownership interest to 100% and consolidated the operating community. The Company accounted for the consolidation as an asset acquisition resulting in no gain or loss upon consolidation. The Company increased its real estate assets owned by approximately $103.6 million and recorded $2.4 million of in-place lease intangibles.

In October 2021, the Company acquired a 663 apartment home operating community located in Orlando, Florida, for approximately $177.8 million. The Company increased its real estate assets owned by approximately $174.1 million and recorded and $3.7 million of in-place lease intangibles.

In November 2021, the Company acquired a 430 apartment home operating community located in Towson, Maryland, for approximately $125.3 million. The Company increased its real estate assets owned by approximately $122.6 million and recorded and $2.7 million of in-place lease intangibles.

In January 2020, the Company acquired a 294 apartment home operating community located in Tampa, Florida, for approximately $85.2 million. The Company increased its real estate assets owned by approximately $83.1 million and recorded approximately $2.1 million of in-place lease intangibles.

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UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021

In January 2020, the Company increased its ownership interest from 49% to 100% in a 276 apartment home operating community located in Hillsboro, Oregon, for a cash purchase price of approximately $21.6 million. In connection with the acquisition, the Company repaid approximately $35.6 million of joint venture construction financing. As a result, the Company consolidated the operating community. The Company had previously accounted for its 49% ownership interest as a preferred equity investment in an unconsolidated joint venture (see Note 5, Joint Ventures and Partnerships). The Company accounted for the consolidation as an asset acquisition resulting in no gain or loss upon consolidation and increased its real estate assets owned by approximately $67.8 million and recorded approximately $1.7 million of in-place lease intangibles.

In August 2020, the Company acquired a to-be-developed parcel of land located in King of Prussia, Pennsylvania, for approximately $16.2 million.

In November 2020, the Company acquired a 672 apartment home operating community located in Tampa, Florida, for approximately $122.5 million. The Company increased its real estate assets owned by approximately $119.4 million and recorded approximately $3.1 million of in-place lease intangibles.

In December 2020, the Company acquired a 400 apartment home operating community located in Herndon, Virginia, for approximately $128.6 million. The Company increased its real estate assets owned by approximately $125.9 million and recorded approximately $2.7 million of in-place lease intangibles.

Dispositions

In February 2021, the Company sold an operating community located in Anaheim, California, with a total of 386 apartment homes for gross proceeds of $156.0 million, resulting in a gain of approximately $50.8 million.

In October 2021, the Company sold an operating community located in Anaheim, California, with a total of 265 apartment homes for a sales price of $126.0 million, resulting in a gain of approximately $85.2 million.

In May 2020, the Company sold an operating community located in Bellevue, Washington, with a total of 71 apartment homes for gross proceeds of $49.7 million, resulting in a gain of approximately $29.6 million. The sale was partially financed by the Company through the issuance of a promissory note totaling $4.0 million which was repaid in January 2021. (See Note 2, Significant Accounting Policies for further discussion.) The proceeds were designated for a tax-deferred Section 1031 exchange that were used to pay a portion of the purchase price for an acquisition of an operating community in Tampa, Florida, in January 2020.

In May 2020, the Company sold an operating community located in Kirkland, Washington, with a total of 196 apartment homes for gross proceeds of $92.9 million, resulting in a gain of approximately $31.7 million.

In October 2020, the Company sold an operating community located in Alexandria, Virginia, with a total of 332 apartment homes for gross proceeds of $145.0 million, resulting in a gain of approximately $58.0 million. The proceeds were designated for a tax-deferred Section 1031 exchange and were used to pay a portion of the purchase price for acquisitions in November and December 2020.

In June 2019, the Company sold a parcel of land located in Los Angeles, California, for $38.0 million, resulting in a gain of approximately $5.3 million. Prior to the sale, the parcel of land was subject to a ground lease, under which UDR was the lessor, scheduled to expire in 2065. The ground lease included a purchase option for the lessee to acquire the land during specific periods of the ground lease term. During the second quarter of 2019, the lessee exercised the purchase option resulting in this sale by the Company and the ground lease being terminated.

Prior to the sale, the purchase option was not deemed to be a bargain purchase option. This ground lease existed as of the adoption of the new lease accounting guidance on January 1, 2019 and we did not reassess lease classification per the practical expedient provided by the standard. As a result, this ground lease continued to be classified as an operating lease and the land parcel subject to the ground lease continued to be recognized in Real estate held for investment on our Consolidated Balance Sheets until the sale in June 2019.

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UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021

Developments

At December 31, 2021, the Company was developing five wholly-owned communities totaling 1,417 homes, none of which have been completed, in which we have an investment of $388.6 million. The communities are estimated to be completed between the second quarter of 2022 and the second quarter of 2023.

Other Activity

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

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

Amortization of Intangible Assets

The following table provides a summary of the aggregate amortization for the intangible assets acquired in the acquisition of real estate for each of the next five years and thereafter (in thousands):


	Unamortized Balance as of December 31, 2021		2022		2023		2024		2025		2026		Thereafter
Real estate intangible assets, net (a)	$	41,243	$	4,311	$	4,162	$	3,995	$	3,858	$	3,723	$	21,194
In-place lease intangible assets, net (b)		21,413		18,812		571		533		489		382		626
Total	$	62,656	$	23,123	$	4,733	$	4,528	$	4,347	$	4,105	$	21,820

	(a)	Real estate intangible assets, net is recorded net of accumulated amortization of $8.8 million in Real estate held for investment, net on the Consolidated Balance Sheets. For the years ended December 31, 2021 and 2020, $3.0 million and $3.1 million, respectively, of amortization expense was recorded in Depreciation and Amortization on the Consolidated Statement of Operations.

	(b)	In-place lease intangible assets, net is recorded net of accumulated amortization of $20.3 million in Other assets on the Consolidated Balance Sheets. For the years ended December 31, 2021 and 2020, $20.3 million and $46.1 million, respectively, was recorded in _Depreciation and Amortizatio_n on the Consolidated Statement of Operations.

VARIABLE INTEREST ENTITIES

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

JOINT VENTURES AND PARTNERSHIPS

UDR has entered into joint ventures and partnerships with unrelated third parties to own, operate, acquire, renovate, develop, redevelop, dispose of, and manage real estate assets that are either consolidated and included in Real estate owned on the Consolidated Balance Sheets or are accounted for under the equity method of accounting, and are

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UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021

included in Investment in and advances to unconsolidated joint ventures, net, on the Consolidated Balance Sheets. The Company consolidates the entities that we control as well as any variable interest entity where we are the primary beneficiary. Under the VIE model, the Company consolidates an entity when it has control to direct the activities of the VIE and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. Under the voting model, the Company consolidates an entity when it controls the entity through ownership of a majority voting interest.

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

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

The following table summarizes the Company’s investment in and advances to unconsolidated joint ventures and partnerships, net, which are accounted for under the equity method of accounting as of December 31, 2021 and 2020 (dollars in thousands):


		Number of	Number of
		Operating	Apartment
		Communities	Homes	Investment at				UDR’s Ownership Interest				Income/(loss) from investments
	Location of	December 31,	December 31,	December 31,		December 31,		December 31,		December 31,		Year Ended December 31,
Joint Ventures	Properties	2021	2021	2021		2020		2021		2020		2021		2020		2019
Operating:
UDR/MetLife I	Los Angeles, CA	1	150	$	23,880	$	26,426	50.0	%	50.0	%	$	(2,544)	$	(2,639)	$	(2,108)
UDR/MetLife II	Various	7	1,250		181,023		151,353	50.0	%	50.0	%		(3,303)		(1,044)		117,574
Other UDR/MetLife Joint Ventures (a)	Various	5	1,437		66,012		82,072	50.6	%	50.6	%		(11,938)		(10,444)		(6,349)
West Coast Development Joint Ventures (b)	Los Angeles, CA	—	—		—		30,080	47.0	%	47.0	%		2,358		(371)		(1,440)
Investment in and advances to unconsolidated joint ventures, net, before preferred equity investments and real estate technology investments				$	270,915	$	289,931					$	(15,427)	$	(14,498)	$	107,677



							Investment at				Income/(loss) from investments
Developer Capital Program				Years To	UDR		December 31,		December 31,		Year Ended December 31,
and Real Estate Technology Investments (c)	Location	Rate		Maturity	Commitment (d)		2021		2020		2021		2020		2019
Preferred equity investments:
1532 Harrison	San Francisco, CA	11.0	%	0.5	$	24,645	$	35,248	$	34,135	$	2,354	$	3,519	$	3,147
Junction	Santa Monica, CA	12.0	%	0.6		8,800		13,183		11,699		1,484		1,321		1,169
1200 Broadway (e) (f)	Nashville, TN	12.25	%	0.7		55,558		61,326		69,330		6,043		5,309		4,888
1300 Fairmount (f)	Philadelphia, PA	8.5	%	1.6		51,393		64,780		59,544		5,237		4,843		3,098
Essex (g)	Orlando, FL	—	%	—		—		—		16,770		1,627		1,965		1,639
Modera Lake Merritt (f)	Oakland, CA	9.0	%	2.3		27,250		33,828		30,928		2,899		2,592		1,067
Thousand Oaks (f)	Thousand Oaks, CA	9.0	%	3.1		20,059		22,764		17,919		1,924		763		—
Vernon Boulevard (f)	Queens, NY	13.0	%	3.5		40,000		48,210		42,360		5,845		2,348		—
Makers Rise (f) (h)	Herndon, VA	9.0	%	4.0		30,208		22,828		—		926		—		—
121 at Watters (f) (i)	Allen, TX	9.0	%	4.2		19,846		14,134		—		749		—		—
Infield Phase I (j)	Kissimmee, FL	14.0	%	2.4		16,044		—		—		—		—		—
Upton Place (k)	Washington, D.C.	9.7	%	5.9		52,163		29,566		—		92		—		—
Real estate technology investments:
RETV I (l)	N/A	N/A		N/A		18,000		71,464		20,587		50,795		5,143		4,053
RETV II	N/A	N/A		N/A		18,000		8,130		2,283		1,101		(206)		—
Total Preferred Equity Investments and Real Estate Technology Investments								425,461		305,555		81,076		27,597		19,061

Sold joint ventures and other investments								—		—		(3)		5,745		11,135

Total Joint Ventures and Developer Capital Program and Real Estate Technology Investments, net (a)							$	696,376	$	595,486	$	65,646	$	18,844	$	137,873

(a)	As of December 31, 2021 and 2020, the Company’s negative investment in 13th and Market Properties LLC of $6.1 million and $4.7 million, respectively, is included in Other UDR/MetLife Joint Ventures in the table above and recorded in Accounts payable, accrued expenses, and other liabilities on the Consolidated Balance Sheet

(b)	In January 2021, the joint venture sold its remaining community, a 293 home operating community located in Los Angeles, California, for a sales price of approximately $121.0 million. As a result, the Company recorded a gain on

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UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021

	the sale of approximately $2.5 million, which is included in Income/(loss) from unconsolidated entities on the Consolidated Statement of Operations.

(c)

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

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

(e)	In April 2021, the investment balance was paid down by $12.5 million and the Company’s preferred return increased to 12.25%.

In January 2022, the joint venture sold its community, a 313 home operating community located in Nashville, Tennessee, for a sales price of approximately $294.0 million. The Company received cash of $74.1 million, consisting of its investment and contractually accrued preferred return of $62.4 million and $11.7 million of variable participation on the sale of the community.

(f)	The Company’s preferred equity investment receives a variable percentage of the value created from the project upon a capital or liquidating event.

(g)

In October 2021, the Company acquired its joint venture partner’s common equity interest in a 330 apartment home operating community located in Orlando, Florida, for a purchase price of approximately $47.9 million. As a result, in October 2021, the Company consolidated the operating community and it is no longer accounted for as a preferred equity investment in an unconsolidated joint venture (see Note 3, Real Estate Owned).

(h)

In January 2021, the Company entered into a joint venture agreement with an unaffiliated joint venture partner to develop and operate a 356 apartment home community in Herndon, Virginia. The Company’s preferred equity investment of $30.2 million earns a preferred return of 9.0% per annum and receives a variable percentage of the value created from the project upon a capital or liquidating event. The unaffiliated joint venture partner is the managing member of the joint venture and the developer of the community. The Company has concluded that it does not control the joint venture and accounts for it under the equity method of accounting.

(i)

In March 2021, the Company entered into a joint venture agreement with an unaffiliated joint venture partner to develop and operate a 469 apartment home community in Allen, Texas. The Company’s preferred equity investment of $19.8 million earns a preferred return of 9.0% per annum and receives a variable percentage of the value created from the project upon a capital or liquidating event. The unaffiliated joint venture partner is the managing member of the joint venture and the developer of the community. The Company has concluded that it does not control the joint venture and accounts for it under the equity method of accounting**.**

(j)

In May 2021, the Company entered into a joint venture agreement with an unaffiliated joint venture partner to develop and operate a 384 apartment home community in Kissimmee, Florida. The Company’s preferred equity investment of $16.0 million earns a preferred return of 14.0% per annum. The unaffiliated joint venture partner is the managing member of the joint venture and the developer of the community. The Company has concluded that it does not control the joint venture and accounts for it under the equity method of accounting.

(k)

In December 2021, the Company entered into a joint venture agreement with an unaffiliated joint venture partner. The purpose of the joint venture is to make a preferred equity investment in a project to develop and operate a 689 apartment home community in Washington D.C. The Company’s share of the preferred equity investment of $52.2 million earns a preferred return of 9.7% per annum. The unaffiliated joint venture partner is the managing member of the joint venture. The Company has concluded that it does not control the joint venture and accounts for it under the equity method of accounting**.**

(l)

The Company recognized approximately $50.8 million of investment income from RETV I for the year ended December 31, 2021, which primarily related to unrealized gains from one portfolio investment held by RETV I, SmartRent, Inc. (“SmartRent”). In 2021, SmartRent, a provider of smart home automation solutions, went public through a merger with a publicly traded special purpose acquisition company (“SPAC”). As a result, SmartRent began trading on the New York Stock Exchange under the ticker symbol “SMRT.” Due to the merger, all shares of SmartRent that RETV I held were converted to publicly traded SmartRent shares based on a pre-determined

F - 27

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021

	conversion factor. Following the merger and stock conversion, RETV I began recording its investment in SmartRent based on the share price at the end of the reporting period less an illiquidity discount based upon a lock-up restriction on selling or transferring the investment for a period of time.

In January 2022, the Company entered into a real estate technology investment as a limited partner, for a total commitment of $25.0 million. The Company funded $7.5 million to the limited partnership at closing. The Company has concluded that it does not control the limited partnership and accounts for it under the equity method of accounting.

As of December 31, 2021 and 2020, the Company had deferred fees of $8.7 million and $8.4 million, respectively, which will be recognized through earnings over the weighted average life of the related properties, upon the disposition of the properties to a third party, or upon completion of certain development obligations.

The Company recognized management fees of $6.1 million, $5.1 million, and $14.0 million during the years ended December 31, 2021, 2020, and 2019, respectively, for management of the communities held by the joint ventures and partnerships. The management fees are included in Joint venture management and other fees on the Consolidated Statements of Operations.

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

We consider various factors to determine if a decrease in the value of our Investment in and advances to unconsolidated joint ventures, net is other-than-temporary. These factors include, but are not limited to, age of the venture, our intent and ability to retain our investment in the entity, the financial condition and long-term prospects of the entity, and the relationships with the other joint venture partners and its lenders. Based on the significance of the unobservable inputs, we classify these fair value measurements within Level 3 of the valuation hierarchy. The Company did not incur any other-than-temporary impairments in the value of its investments in unconsolidated joint ventures during the years ended December 31, 2021, 2020, and 2019.

F - 28

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021

Condensed summary financial information relating to the unconsolidated joint ventures’ and partnerships’ operations (not just our proportionate share), is presented below for the years ended December 31, 2021, 2020, and 2019 (dollars in thousands):


													Developer
					Other		West Coast				Total		Capital Program
As of and For the	UDR/		UDR/		UDR/MetLife		Development				Excluding		and Other
Year Ended December 31, 2021	MetLife I		MetLife II		Joint Ventures		Joint Ventures		RETV I		DCP		Investments		Total
Condensed Statements of Operations:
Total revenues	$	9,186	$	52,324	$	52,614	$	184	$	6	$	114,314	$	18,509	$	132,823
Property operating expenses		4,506		24,165		23,090		333		1,445		53,539		15,626		69,165
Real estate depreciation and amortization		5,948		19,006		33,532		—		—		58,486		8,429		66,915
Gain/(loss) on sale of real estate		—		—		—		34,757		—		34,757		—		34,757
Operating income/(loss)		(1,268)		9,153		(4,008)		34,608		(1,439)		37,046		(5,546)		31,500
Interest expense		(3,068)		(11,873)		(17,366)		(41)		(17)		(32,365)		(11,161)		(43,526)
Other income/(loss)		—		—		—		(1,238)		—		(1,238)		(623)		(1,861)
Net realized gain/(loss) on held investments		—		—		—		—		12,341		12,341		—		12,341
Net unrealized gain/(loss) on held investments (a)		—		—		—		—		285,155		285,155		16,276		301,431
Net income/(loss)	$	(4,336)	$	(2,720)	$	(21,374)	$	33,329	$	296,040	$	300,939	$	(1,054)	$	299,885

Condensed Balance Sheets:
Total real estate, net	$	108,340	$	636,674	$	558,680	$	—	$	—	$	1,303,694	$	739,464	$	2,043,158
Investments, at fair value		—		—		—		—		405,675		405,675		54,566		460,241
Real estate assets held for sale		—		—		—		—		—		—		168,668		168,668
Cash and cash equivalents		1,378		5,864		5,668		—		3,681		16,591		6,300		22,891
Other assets		1,804		10,483		5,419		—		14		17,720		11,228		28,948
Total assets		111,522		653,021		569,767		—		409,370		1,743,680		980,226		2,723,906
Third party debt, net		71,003		336,533		453,182		—		—		860,718		355,200		1,215,918
Liabilities held for sale		—		—		—		—		—		—		106,990		106,990
Accounts payable and accrued liabilities		1,059		7,360		5,866		—		90		14,375		37,314		51,689
Total liabilities		72,062		343,893		459,048		—		90		875,093		499,504		1,374,597
Total equity	$	39,460	$	309,128	$	110,719	$	—	$	409,280	$	868,587	$	480,722	$	1,349,309

(a)

Net unrealized gain/(loss) on held investments primarily related to unrealized gains from SmartRent, which became a public company in 2021. For the year ended December 31, 2021, the Company recorded its share of the net unrealized gain/(loss) on held investments of $49.9 million, of which $48.9 million related to SmartRent, in Income/(loss) from unconsolidated entities on the Consolidated Statement Operations (see footnote “l” from above).

F - 29

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021


													Developer
					Other		West Coast				Total		Capital Program
As of and For the	UDR/		UDR/		UDR/MetLife		Development				Excluding		and Other
Year Ended December 31, 2020	MetLife I		MetLife II		Joint Ventures		Joint Ventures		RETV I		DCP		Investments		Total
Condensed Statements of Operations:
Total revenues	$	9,480	$	56,274	$	57,781	$	8,668	$	19	$	132,222	$	16,170	$	148,392
Property operating expenses		4,978		21,951		22,870		4,477		2,382		56,658		5,850		62,508
Real estate depreciation and amortization		5,980		18,912		35,454		3,338		—		63,684		3,495		67,179
Operating income/(loss)		(1,478)		15,411		(543)		853		(2,363)		11,880		6,825		18,705
Interest expense		(3,075)		(15,386)		(17,457)		(1,344)		—		(37,262)		(3,121)		(40,383)
Other income/(loss)		—		204		—		63		—		267		35		302
Net unrealized gain/(loss) on held investments		—		—		—		—		36,151		36,151		(10)		36,141
Net income/(loss)	$	(4,553)	$	229	$	(18,000)	$	(428)	$	33,788	$	11,036	$	3,729	$	14,765

Condensed Balance Sheets:
Total real estate, net	$	114,192	$	650,593	$	589,822	$	—	$	—	$	1,354,607	$	550,198	$	1,904,805
Investments, at fair value		—		—		—		—		114,026		114,026		5,490		119,516
Real estate assets held for sale		—		—		—		88,458		—		88,458		—		88,458
Cash and cash equivalents		2,585		4,369		7,049		—		1,364		15,367		6,911		22,278
Other assets		1,622		14,133		6,214		—		9		21,978		9,400		31,378
Total assets		118,399		669,095		603,085		88,458		115,399		1,594,436		571,999		2,166,435
Third party debt, net		70,946		416,364		454,153		—		—		941,463		247,247		1,188,710
Liabilities held for sale		—		—		—		55,440		—		55,440		—		55,440
Accounts payable and accrued liabilities		3,507		6,764		8,593		—		2,397		21,261		19,295		40,556
Total liabilities		74,453		423,128		462,746		55,440		2,397		1,018,164		266,542		1,284,706
Total equity	$	43,946	$	245,967	$	140,339	$	33,018	$	113,002	$	576,272	$	305,457	$	881,729


													Developer
					Other		West Coast				Total		Capital Program
For the	UDR/		UDR/		UDR/MetLife		Development				Excluding		and Other
Year Ended December 31, 2019	MetLife I		MetLife II		Joint Ventures		Joint Ventures		RETV I		DCP		Investments		Total
Condensed Statements of Operations:
Total revenues	$	9,834	$	151,226	$	102,888	$	14,058	$	96	$	278,102	$	11,146	$	289,248
Property operating expenses		4,533		54,445		39,542		6,829		2,909		108,258		523		108,781
Real estate depreciation and amortization		5,787		44,077		50,579		5,440		—		105,883		—		105,883
Gain/(loss) on sale of real estate (a)		—		—		115,516		—		—		115,516		—		115,516
Operating income/(loss)		(486)		52,704		128,283		1,789		(2,813)		179,477		10,623		190,100
Interest expense		(3,070)		(44,825)		(27,647)		(4,656)		—		(80,198)		—		(80,198)
Net gain/(loss) on revaluation of assets and liabilities (b)		—		458,195		25,711		—		—		483,906		—		483,906
Other income/(loss)		—		—		—		159		—		159		(68)		91
Net unrealized gain/(loss) on held investments		—		—		—		—		26,417		26,417		—		26,417
Net income/(loss)	$	(3,556)	$	466,074	$	126,347	$	(2,708)	$	23,604	$	609,761	$	10,555	$	620,316

(a)	Represent the gains on the sale of three operating communities at the UDR/KFH joint venture level.

(b)

Represent the net gains on the revaluation of the assets and liabilities to fair value of 15 operating communities at the UDR/MetLife II joint venture level and one development community and four land parcels at the UDR/MetLife Vitruvian Park® joint venture level prior to their distribution to the Company or MetLife in November 2019. The net gain on revaluation of assets and liabilities to fair value was recognized at the joint venture level as the respective joint ventures distributed their equity interests in the real estate to the Company or MetLife at fair value.

For the approximately 50% ownership interest acquired in the 10 operating communities, one development community and four land parcels described above, the Company deferred its share of the net gain on revaluation of approximately $131.5 million and recorded it as a reduction of the carrying amount of real estate owned. (see Note 3, Real Estate Owned). For the 50% ownership interest acquired in the five communities by MetLife, the Company recognized a net gain on sale of $114.9 million at our share, when the communities were disposed of by the UDR/MetLife II joint venture.

F - 30

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021

LEASES

Lessee - Ground and Office Leases

UDR owns six communities that are subject to ground leases, under which UDR is the lessee, expiring between 2043 and 2103, inclusive of extension options we are reasonably certain will be exercised. All of these leases are classified as operating leases through the lease term expiration based on our election of the practical expedient provided by the leasing standard. Rental expense for lease payments related to operating leases is recognized on a straight-line basis over the remaining lease term. We currently do not hold any finance leases. The Company also elected the short-term lease exception provided by the leasing standard and therefore only recognizes right-of-use assets and lease liabilities for leases with a term greater than one year. No leases qualified for the short-term lease exception during the years ended December 31, 2021 and 2020.

As of December 31, 2021 and 2020, the Operating lease right-of-use assets were $197.5 million and $200.9 million, respectively, and the Operating lease liabilities were $192.5 million and $195.6 million, respectively, on our Consolidated Balance Sheet related to our ground leases. The value of the Operating lease right-of-use assets exceeds the value of the Operating lease liabilities due to prepaid lease payments and intangible assets for ground leases acquired in the purchase of real estate. The calculation of these amounts includes minimum lease payments over the remaining lease term (described further in the table below). Variable lease payments are excluded from the right-of-use assets and lease liabilities and are recognized in earnings in the period in which the obligation for those payments is incurred.

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

The weighted average remaining lease term for these leases was 43.2 years and 43.9 years at December 31, 2021 and 2020, respectively, and the weighted average discount rate was 5.0% at both December 31, 2021 and 2020.

Future minimum lease payments and total operating lease liabilities from our ground leases as of December 31, 2021 are as follows (dollars in thousands):


	Ground Leases
2022	$	12,442
2023		12,442
2024		12,442
2025		12,442
2026		12,442
Thereafter		430,337
Total future minimum lease payments (undiscounted)		492,547
Difference between future undiscounted cash flows and discounted cash flows		(300,059)
Total operating lease liabilities (discounted)	$	192,488

For purposes of recognizing our ground lease contracts, the Company uses the minimum lease payments, if stated in the agreement. For ground lease agreements where there is a rent reset provision based on a change in an index or a rate (i.e., changes in fair market rental rates or changes in the consumer price index) but that does not include a specified minimum lease payment, the Company uses the current rent over the remainder of the lease term. If there is a contingency upon which some or all of the variable lease payments that will be paid over the remainder of the lease term are based, which is resolved such that those payments now meet the definition of lease payments, the Company will remeasure the right-of-use asset and lease liability on the reset date.

F - 31

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021

The components of operating lease expenses were as follows (dollars in thousands):


	Year Ended December 31,
	2021		2020		2019
Lease expense:
Contractual lease expense	$	12,924	$	12,821	$	8,272
Variable lease expense (a)		78		119		664
Total operating lease expense (b)(c)	$	13,002	$	12,940	$	8,936

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

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

	(c)	For the year ended December 31, 2021, Operating lease right-of-use assets and Operating lease liabilities amortized by $3.5 million and $3.1 million, respectively, for the year ended December 31, 2020, Operating lease right-of-use assets and Operating lease liabilities amortized by $3.3 million and $3.0 million, respectively, and for the year ended December 31, 2019, Operating lease right-of-use assets and Operating lease liabilities amortized by $1.2 million and $0.8 million, respectively. Due to the net impact of the amortization, the Company recorded $0.3 million, $0.3 million and $0.4 million of total operating lease expense during the years ended December 31, 2021, 2020 and 2019, respectively.

Lessor - Apartment Home, Retail and Commercial Space Leases

UDR’s communities and retail and commercial space are leased to tenants under operating leases. As of December 31, 2021, our apartment home leases generally have initial terms of 12 months or less and represent approximately 99.1% of our total lease revenue. As of December 31, 2021, our retail and commercial space leases generally have initial terms of between 5 and 15 years and represent approximately 0.9% of our total lease revenue. Our apartment home leases are generally renewable at the end of the lease term, subject to potential increases in rental rates, and our retail and commercial space leases generally have renewal options, subject to associated increases in rental rates due to market-based or fixed-price renewal options and certain other conditions. (See Note 16, Reportable Segments for further discussion around our major revenue streams and disaggregation of our revenue.)

Future minimum lease payments from our retail and commercial leases as of December 31, 2021 are as follows (dollars in thousands):


	Retail and Commercial Leases
2022	$	25,208
2023		23,746
2024		21,649
2025		18,541
2026		15,734
Thereafter		67,713
Total future minimum lease payments (a)	$	172,591

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

Certain of our leases with retail and commercial tenants provide for the payment by the lessee of additional variable rent based on a percentage of the tenant’s revenue. The amounts shown in the table above do not include these variable percentage rents. The Company recorded variable percentage rents of $0.4 million, $0.2 million and $0.4 million during the years ended December 31, 2021, 2020 and 2019, respectively.

F - 32

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021

SECURED AND UNSECURED DEBT, NET

The following is a summary of our secured and unsecured debt at December 31, 2021 and 2020 (dollars in thousands):


	Principal Outstanding				As of December 31, 2021
					Weighted		Weighted
					Average		Average	Number of
	December 31,		December 31,		Interest		Years to	Communities
	2021		2020		Rate		Maturity	Encumbered
Secured Debt:
Fixed Rate Debt
Mortgage notes payable (a)	$	1,006,762	$	824,550	3.42	%	6.4	14
Deferred financing costs and other non-cash adjustments (b)		23,678		10,665
Total fixed rate secured debt, net		1,030,440		835,215	3.42	%	6.4	14
Variable Rate Debt
Tax-exempt secured notes payable (c)		27,000		27,000	0.71	%	10.2	1
Deferred financing costs		(60)		(68)
Total variable rate secured debt, net		26,940		26,932	0.71	%	10.2	1
Total Secured Debt, net		1,057,380		862,147	3.35	%	6.5	15
Unsecured Debt:
Variable Rate Debt
Borrowings outstanding under unsecured credit facility due January 2026 (d) (o)		—		—	—	%	4.1
Borrowings outstanding under unsecured commercial paper program due January 2022 (e) (o)		220,000		190,000	0.34	%	0.1
Borrowings outstanding under unsecured working capital credit facility due January 2024 (f)		29,546		28,024	0.88	%	2.0
Term Loan due January 2027 (d) (o)		35,000		35,000	0.95	%	5.1
Fixed Rate Debt
Term Loan due January 2027 (d) (o)		315,000		315,000	1.02	%	5.1
8.50% Debentures due September 2024		15,644		15,644	8.50	%	2.7
4.00% Medium-Term Notes due October 2025 (net of discounts of $0 and $327, respectively) (g) (o)		—		299,673	—	%	—
2.95% Medium-Term Notes due September 2026 (h) (o)		300,000		300,000	2.89	%	4.7
3.50% Medium-Term Notes due July 2027 (net of discounts of $388 and $458, respectively) (i) (o)		299,612		299,542	4.03	%	5.5
3.50% Medium-Term Notes due January 2028 (net of discounts of $717 and $835, respectively) (o)		299,283		299,165	3.50	%	6.0
4.40% Medium-Term Notes due January 2029 (net of discounts of $4 and $5, respectively) (j) (o)		299,996		299,995	4.27	%	7.1
3.20% Medium-Term Notes due January 2030 (net of premiums of $11,040 and $12,412, respectively) (k) (o)		611,040		612,412	3.32	%	8.0
3.00% Medium-Term Notes due August 2031 (net of premiums/discounts of $11,498 and $1,027, respectively) (l) (o)		611,498		398,973	3.01	%	9.6
2.10% Medium-Term Notes due August 2032 (net of discounts of $373 and $408, respectively) (o)		399,627		399,592	2.10	%	10.6
1.90% Medium-Term Notes due March 2033 (net of discounts of $1,351 and $1,471, respectively) (o)		348,649		348,529	1.90	%	11.2
2.10% Medium-Term Notes due June 2033 (net of discounts of $1,140 and $0, respectively) (m) (o)		298,860		—	2.10	%	11.5
3.10% Medium-Term Notes due November 2034 (net of discounts of $1,133 and $1,221, respectively) (n) (o)		298,867		298,779	3.13	%	12.8
Other		7		10
Deferred financing costs		(27,222)		(25,937)
Total Unsecured Debt, net		4,355,407		4,114,401	2.72	%	8.0
Total Debt, net	$	5,412,787	$	4,976,548	2.80	%	7.7

F - 33

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021

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

Our secured debt instruments generally feature either monthly interest and principal or monthly interest-only payments with balloon payments due at maturity. As of December 31, 2021, secured debt encumbered approximately 12% of UDR’s total real estate owned based upon gross book value (approximately 88% of UDR’s real estate owned based on gross book value is unencumbered).

(a) At December 31, 2021, fixed rate mortgage notes payable are generally due in monthly installments of principal and interest and mature at various dates from July 2024 through February 2031 and carry interest rates ranging from 2.62% to 4.39%.

During the year ended December 31, 2021, the Company assumed three fixed rate mortgage notes payable with an aggregate outstanding balance of $183.3 million and a fair value of $201.3 million in connection with the acquisition of three operating properties, which carry a weighted average interest rate of 3.93%. (see Note 3, Real Estate Owned).

During the years ended December 31, 2021 and 2020, the Company prepaid zero and $111.1 million, respectively, of its fixed rate mortgage notes payable with proceeds from the issuance of senior unsecured medium-term notes. The Company incurred net extinguishment costs of zero, $8.5 million and zero during years ended December 31, 2021, 2020, and 2019, respectively, which was included in Interest expense on the Consolidated Statements of Operations.

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

(b) During the years ended December 31, 2021, 2020, and 2019, the Company had $3.9 million, $22.4 million, and $3.0 million, respectively, of amortization of the fair market adjustment of debt assumed in the acquisition of properties inclusive of its fixed rate mortgage notes payable and credit facilities, which was included in Interest expense on the Consolidated Statements of Operations. The unamortized fair market adjustment was a net premium of $27.0 million and $12.9 million at December 31, 2021 and 2020, respectively.

(c) The variable rate mortgage note payable secures a tax-exempt housing bond issue that matures in March 2032. Interest on this note is payable in monthly installments. As of December 31, 2021, the variable interest rate on the mortgage note was 0.71%.

(d) In September 2021, the Company entered into an amended and restated credit agreement (the “Credit Agreement”) that provides for a $1.3 billion unsecured revolving credit facility (the “Revolving Credit Facility”) and a $350.0 million unsecured term loan (the “Term Loan”). The Credit Agreement allows the total commitments under the Revolving Credit Facility and the total borrowings under the Term Loan to be increased to an aggregate maximum amount of up to $2.5 billion, subject to certain conditions, including obtaining commitments from one or more lenders. The Revolving Credit Facility has a scheduled maturity date of January 31, 2026, with two six-month extension options, subject to certain conditions. The Term Loan has a scheduled maturity date of January 31, 2027.

The Credit Agreement amended and restated the Company’s prior credit agreement, which provided for: (i) a $1.1 billion revolving credit facility scheduled to mature in January 2023 and (ii) a $350.0 million term loan scheduled to mature in September 2023. The prior credit agreement allowed the total commitments under the revolving credit facility and total borrowings under the term loan to be increased to an aggregate maximum amount of up to $2.0 billion, subject to certain conditions.

Based on the Company’s current credit rating, the Revolving Credit Facility has an interest rate equal to LIBOR plus a margin of 77.5 basis points and a facility fee of 15 basis points, and the Term Loan has an interest rate equal to LIBOR plus a margin of 85 basis points. Depending on the Company’s credit rating, the margin under the Revolving Credit Facility ranges from 70 to 140 basis points, the facility fee ranges from 10 to 30 basis points, and the margin under the Term Loan ranges from 75 to 160 basis points.

F - 34

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021

In November 2020, the Company entered into three interest rate swaps, which became effective in January 2021, to hedge against interest rate risk on the Term Loan until July 2022. The all-in weighted average interest rate, inclusive of the impact of the interest rate swaps, was 1.02%. In August 2021, the Company entered into two interest rate swaps totaling a $175.0 million notional value, which will become effective in July 2022, to hedge against interest rate risk on the Term Loan until July 2025. The all-in weighted average interest rate, inclusive of the impact of the interest rate swaps will be 1.48%.

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

The following is a summary of short-term bank borrowings under the Revolving Credit Facility at December 31, 2021 and 2020 (dollars in thousands):


	December 31,			December 31,
	2021			2020
Total revolving credit facility	$	1,300,000		$	1,100,000
Borrowings outstanding at end of period (1)		—			—
Weighted average daily borrowings during the period ended		13,068			42,186
Maximum daily borrowings during the period ended		305,000			375,000
Weighted average interest rate during the period ended		0.9	%		1.4	%
Interest rate at end of the period		—	%		—	%

(1)	Excludes $2.6 million and $2.8 million of letters of credit at December 31, 2021 and 2020, respectively.

(e) The Company has an unsecured commercial paper program. Under the terms of the program, the Company may issue unsecured commercial paper up to a maximum aggregate amount outstanding of $700.0 million. The notes are sold under customary terms in the United States commercial paper market and rank pari passu with all of the Company’s other unsecured indebtedness. The notes are fully and unconditionally guaranteed by the Operating Partnership.

In July 2021, the maximum aggregate amount was increased from $500.0 million to $700.0 million.

The following is a summary of short-term bank borrowings under the unsecured commercial paper program at December 31, 2021 and 2020 (dollars in thousands):


	December 31,			December 31,
	2021			2020
Total unsecured commercial paper program	$	700,000		$	500,000
Borrowings outstanding at end of period		220,000			190,000
Weighted average daily borrowings during the period ended		419,563			227,090
Maximum daily borrowings during the period ended		700,000			500,000
Weighted average interest rate during the period ended		0.2	%		0.9	%
Interest rate at end of the period		0.3	%		0.3	%

In January 2022, the entire $220.0 million of outstanding unsecured commercial paper as of December 31, 2021 was repaid at maturity with additional proceeds of unsecured commercial paper with maturity dates in January 2022 and February 2022 and proceeds under the Working Capital Credit Facility.

(f) The Company has a working capital credit facility, which provides for a $75.0 million unsecured revolving credit facility (the “Working Capital Credit Facility”) with a scheduled maturity date of January 12, 2024. In September 2021, the Company amended the Working Capital Credit Facility to extend the maturity date from January 14, 2022 to January 12, 2024 and lower the margin range for the interest rate. Based on the Company’s current credit rating, the Working Capital Credit Facility now has an interest rate equal to LIBOR plus a margin of 77.5 basis points. Depending on the Company’s credit rating, the margin ranges from 70 to 140 basis points.

F - 35

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021

The following is a summary of short-term bank borrowings under the Working Capital Credit Facility at December 31, 2021 and 2020 (dollars in thousands):


	December 31,			December 31,
	2021			2020
Total working capital credit facility	$	75,000		$	75,000
Borrowings outstanding at end of period		29,546			28,024
Weighted average daily borrowings during the period ended		10,473			20,132
Maximum daily borrowings during the period ended		46,038			54,974
Weighted average interest rate during the period ended		0.9	%		1.4	%
Interest rate at end of the period		0.9	%		1.0	%

(g) In February 2021, the Company redeemed all of its $300.0 million 4.00% senior unsecured medium-term notes due October 2025 (the “2025 Notes”) (plus the make-whole amount and accrued and unpaid interest). The Company incurred extinguishment costs of $42.0 million during the year ended December 31, 2021, which was included in Interest expense on the Consolidated Statements of Operations.

(h) The Company previously entered into forward starting interest rate swaps to hedge against interest rate risk on $100.0 million of this debt. The all-in weighted average interest rate, inclusive of the impact of these interest rate swaps, was 2.89%.

(i) The Company previously entered into forward starting interest rate swaps to hedge against interest rate risk on $200.0 million of this debt. The all-in weighted average interest rate, inclusive of the impact of these interest rate swaps, was 4.03%.

(j) The Company previously entered into forward starting interest rate swaps to hedge against interest rate risk on $150.0 million of the initial $300.0 million issued. The all-in weighted average interest rate, inclusive of the impact of these interest rate swaps, was 4.27%.

(k) The Company previously entered into forward starting interest rate swaps and treasury lock to hedge against the interest rate risk of this debt. The all-in weighted average interest rate, inclusive of the impact of the forward starting swaps and treasury locks, was 3.32%.

(l) In September 2021, the Company issued an additional $200.0 million of its 3.00% medium-term notes due 2031 (the “2031 Notes”). The notes were priced at 106.388% of the principal amount of the notes to yield 2.259%. This was a further issuance of and forms a single series with the $400.0 million aggregate principal amount of the Company’s 2031 Notes that were issued in August 2019.

The Company entered into treasury lock agreements to hedge against interest rate risk on $250.0 million of the $600.0 million aggregate principal amount. The all-in weighted average interest rate, inclusive of the impact of the treasury locks, was 3.01%.

(m) In February 2021, the Company issued $300.0 million of 2.10% senior unsecured medium-term notes due June 15, 2033. The notes were priced at 99.592% of the principal amount of the notes. The Company used the net proceeds to redeem its 2025 Notes (see footnote (g) above).

(n) The Company previously entered into forward starting interest rate swaps to hedge against the interest rate risk of this debt. The all-in weighted average interest rate, inclusive of the impact of these interest rate swaps, was 3.13%.

(o) The Operating Partnership is the guarantor of this debt.

F - 36

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021

The aggregate maturities, including amortizing principal payments on secured and unsecured debt, of total debt for the next ten years subsequent to December 31, 2021 are as follows (dollars in thousands):


	Total Fixed		Total Variable		Total		Total			Total
Year	Secured Debt		Secured Debt		Secured Debt		Unsecured Debt			Debt
2022	$	1,140	$	—	$	1,140	$	220,000	(a)	$	221,140
2023		1,242		—		1,242		—			1,242
2024		96,747		—		96,747		45,190			141,937
2025		174,793		—		174,793		—			174,793
2026		52,744		—		52,744		300,000			352,744
2027		2,860		—		2,860		650,000			652,860
2028		162,310		—		162,310		300,000			462,310
2029		191,986		—		191,986		300,000			491,986
2030		162,010		—		162,010		600,000			762,010
2031		160,930		—		160,930		600,000			760,930
Thereafter		—		27,000		27,000		1,350,000			1,377,000
Subtotal		1,006,762		27,000		1,033,762		4,365,190			5,398,952
Non-cash (b)		23,678		(60)		23,618		(9,783)			13,835
Total	$	1,030,440	$	26,940	$	1,057,380	$	4,355,407		$	5,412,787

(a)	All unsecured debt due in the remainder of 2022 is related to the Company’s commercial paper program.

(b)	Includes the unamortized balance of fair market value adjustments, premiums/discounts, and deferred financing costs. For the years ended December 31, 2021 and 2020, the Company amortized $4.7 million and $4.4 million, respectively, of deferred financing costs into Interest expense.

We were in compliance with the covenants of our debt instruments at December 31, 2021.

F - 37

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021

INCOME/(LOSS) PER SHARE

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


	Year Ended December 31,
	2021		2020		2019
Numerator for income/(loss) per share:
Net income/(loss)	$	160,993	$	68,970	$	199,579
Net (income)/loss attributable to redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership		(10,873)		(4,543)		(14,426)
Net (income)/loss attributable to noncontrolling interests		(104)		(161)		(188)
Net income/(loss) attributable to UDR, Inc.		150,016		64,266		184,965
Distributions to preferred stockholders — Series E (Convertible)		(4,229)		(4,230)		(4,104)
Income/(loss) attributable to common stockholders - basic and diluted	$	145,787	$	60,036	$	180,861

Denominator for income/(loss) per share:
Weighted average common shares outstanding		300,579		294,808		285,509
Non-vested restricted stock awards		(253)		(263)		(262)
Denominator for basic income/(loss) per share		300,326		294,545		285,247
Incremental shares issuable from assumed conversion of unvested LTIP Units, unvested restricted stock and shares issuable upon settlement of forward sales agreements		1,377		382		768
Denominator for diluted income/(loss) per share		301,703		294,927		286,015

Income/(loss) per weighted average common share:
Basic	$	0.49	$	0.20	$	0.63
Diluted	$	0.48	$	0.20	$	0.63

Basic income/(loss) per common share is computed based upon the weighted average number of common shares outstanding. Diluted income/(loss) per common share is computed based upon the weighted average number of common shares outstanding plus the common shares issuable from the assumed conversion of the OP Units and DownREIT Units, convertible preferred stock, stock options, unvested long-term incentive plan units (“LTIP Units”), unvested restricted stock and continuous equity program forward sales agreements. Only those instruments having a dilutive impact on our basic income/(loss) per share are included in diluted income/(loss) per share during the periods. For the years ended December 31, 2021, 2020, and 2019, the effect of the conversion of the OP Units, DownREIT Units and the Company’s Series E preferred stock was not dilutive and therefore not included in the above calculation.

In July 2021, the Company entered into an ATM sales agreement under which the Company may offer and sell up to 20.0 million shares of its common stock, from time to time, to or through its sales agents and may enter into separate forward sales agreements to or through its forward purchasers. Upon entering into the ATM sales agreement, the Company simultaneously terminated the sales agreement for its prior at-the-market equity offering program, which was entered into in July 2017. During the year ended December 31, 2021, the Company sold 1.6 million shares of common stock through its ATM program pursuant to the Company’s forward sales agreement described below. As of December 31, 2021, we had 18.4 million shares of common stock available for future issuance under the ATM program, including an aggregate of 4.4 million shares subject to the forward sales agreements described below.

In connection with any forward sales agreement under the Company’s ATM program, the relevant forward purchasers will borrow from third parties and, through the relevant sales agent, acting in its role as forward seller, sell a number of shares of the Company’s common stock equal to the number of shares underlying the agreement. The Company does not initially receive any proceeds from any sale of borrowed shares by the forward seller.

During the year ended December 31, 2021, the Company had entered into forward sales agreements under its current or prior ATM programs for a total of 10.8 million shares of common stock at a weighted average initial forward price per share of $50.59, of which 4.4 million shares had not been settled. The actual forward price per share to be received by the Company upon settlement will be determined on the applicable settlement date based on adjustments made to the initial forward price to reflect the then-current federal funds rate and the amount of dividends paid to holders of UDR common stock over the term of the forward sales agreement. As of December 31, 2021, 6.4 million shares under

F - 38

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021

the forward sales agreements under the ATM programs had been settled at a weighted average forward price per share of $47.79, which is inclusive of adjustments made to reflect the then-current federal funds rate, the amount of dividends paid to holders of UDR common stock and commissions paid to sales agents of approximately $2.6 million, for net proceeds of $306.6 million. The final dates by which the remaining shares sold under the forward sales agreements under the ATM programs must be settled range between August 1, 2022 and September 14, 2022.

In March 2021, the Company entered into forward sale agreements to sell 7.0 million shares of its common stock at an initial forward price per share of $43.51. The actual forward price per share to be received by the Company upon settlement was determined on the applicable settlement date based on adjustments made to the initial forward price to reflect the then-current federal funds rate and the amount of dividends paid to holders of UDR common stock over the term of the forward sales agreement. In September 2021, the Company settled all 7.0 million shares at a forward price per share of $42.65, which is inclusive of adjustments made to reflect the then-current federal funds rate, the amount of dividends paid to holders of UDR common stock and commissions paid to sales agents of approximately $6.0 million, for net proceeds of $298.5 million.

In June 2021, the Company entered into forward sale agreements to sell 6.1 million shares of its common stock at an initial forward price per share of $49.22. The actual forward price per share to be received by the Company upon settlement will be determined on the applicable settlement date based on adjustments made to the initial forward price to reflect the then-current federal funds rate and the amount of dividends paid to holders of UDR common stock over the term of the forward sales agreement. In December 2021, the Company settled all 6.1 million shares at a forward price per share of $48.33, which is inclusive of adjustments made to reflect the then-current federal funds rate, the amount of dividends paid to holders of UDR common stock and commissions paid to sales agents of approximately $5.4 million, for net proceeds of $294.8 million.

As described above, during the year ended December 31, 2021, the Company settled 19.5 million shares in aggregate under forward sales agreements under the ATM programs and previously announced forward sales agreements for net proceeds of $900.0 million. Aggregate net proceeds from such forward sales, after deducting related expenses, were $899.1 million.

As of February 11, 2022, we had 18.4 million shares of common stock available for future issuance under the ATM program, including an aggregate of 4.4 million shares subject to the forward sales agreements.

The Company generally has the ability to determine the dates and method of settlement (i.e., gross physical settlement, net share settlement or cash settlement), subject to certain conditions and the right of the counterparty to accelerate settlement under certain circumstances. The Company currently expects to fully physically settle each forward sales agreement with the relevant forward purchaser on one or more dates specified by the Company on or prior to the maturity date of that particular forward sales agreement, in which case the Company expects to receive aggregate net cash proceeds at settlement equal to the number of shares underlying the particular forward sales agreement multiplied by the relevant forward sale price. However, subject to certain exceptions, the Company may also elect, in its discretion, to cash settle or net share settle a particular forward sales agreement, in which case the Company may not receive any proceeds (in the case of cash settlement) or will not receive any proceeds (in the case of net share settlement), and the Company may owe cash (in the case of cash settlement) or shares of UDR common stock (in the case of net share settlement) to the relevant forward purchaser.

The following table sets forth the additional shares of common stock outstanding by equity instrument if converted to common stock for each of the years ended December 31, 2021, 2020, and 2019 (in thousands):


	Year Ended December 31,
	2021	2020	2019
OP/DownREIT Units	22,418	22,310	22,773
Convertible preferred stock	2,918	2,950	3,011
Unvested LTIP Units and unvested restricted stock	1,377	382	768

F - 39

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021

STOCKHOLDERS’ EQUITY

UDR has an effective registration statement that allows the Company to sell an undetermined number of debt and equity securities as defined in the prospectus. The Company had the ability to issue 450.0 million shares of common stock and 50.0 million shares of preferred shares as of December 31, 2021.

The following table presents the changes in the Company’s issued and outstanding shares of common and preferred stock for the years ended December 31, 2021, 2020 and 2019:


	Common	Preferred Stock
	Stock	Series E	Series F
Balance at December 31, 2018	275,546	2,781	15,802
Issuance/(forfeiture) of common and restricted shares, net	50	—	—
Issuance of common shares through public offering	7,500	—	—
Issuance of common shares though ATM program	6,988	—	—
Issuance of common shares through forward sales agreement	1,339	—	—
Adjustment for conversion of noncontrolling interest of unitholders in the Operating Partnership	1,969	—	—
Adjustment for conversion of noncontrolling interest of unitholders in the DownREIT Partnership	1,196	—	—
Forfeiture of Series F shares	—	—	(1,111)
Balance at December 31, 2019	294,588	2,781	14,691
Issuance/(forfeiture) of common and restricted shares, net	104	—	—
Issuance of common shares through forward sales public offering, net (forward sales agreement)	2,121	—	—
Repurchase of common shares	(597)	—	—
Adjustment for conversion of noncontrolling interest of unitholders in the Operating Partnership	3	—	—
Adjustment for conversion of noncontrolling interest of unitholders in the DownREIT Partnership	300	—	—
Conversion of Series E Cumulative Convertible shares	93	(86)	—
Forfeiture of Series F shares	—	—	(250)
Balance at December 31, 2020	296,612	2,695	14,441
Issuance/(forfeiture) of common and restricted shares, net	97	—	—
Issuance of common shares through forward sales public offering, net (forward sales agreement)	19,517	—	—
Adjustment for conversion of noncontrolling interest of unitholders in the Operating Partnership	44	—	—
Adjustment for conversion of noncontrolling interest of unitholders in the DownREIT Partnership	1,880	—	—
Forfeiture of Series F shares	—	—	(1,858)
Balance at December 31, 2021	318,150	2,695	12,583

Common Stock

In July 2021, the Company entered into an ATM sales agreement under which the Company may offer and sell up to 20.0 million shares of its common stock, from time to time, to or through its sales agents and may enter into separate forward sales agreements to or through its forward purchasers. Upon entering into the ATM sales agreement, the Company simultaneously terminated the sales agreement for its prior at-the-market equity offering program, which was entered into in July 2017. As of December 31, 2021, 18.4 million shares were available for sale under the ATM program, including an aggregate of 4.4 million shares subject to forward sales agreements.

F - 40

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021

During the year ended December 31, 2021, the Company entered into the following equity transactions for our common stock:

	●	Settled 19.5 million shares in aggregate under forward sales agreements under the ATM programs and previously announced forward sales agreements at a weighted average forward price per share of $46.11, for net proceeds of approximately $900.0 million. Aggregate net proceeds from such forward sales, after deducting related expenses, were $899.1 million;

	●	Issued 0.1 million shares, net of forfeitures, of common stock through the Company’s 1999 Long-Term Incentive Plan (the “LTIP”); and

	●	Issued 1.9 million shares of common stock upon redemption of DownREIT Units, resulting in the forfeiture of 1.9 million Series F Preferred shares.

Distributions are subject to the approval of the Board of Directors and are dependent upon our strategy, financial condition and operating results. UDR’s common distributions for the years ended December 31, 2021, 2020, and 2019 totaled $1.45, $1.44, and $1.37 per share, respectively.

Preferred Stock

The Series E Cumulative Convertible Preferred Stock (“Series E”) has no stated par value and a liquidation preference of $16.61 per share. Subject to certain adjustments and conditions, each share of the Series E is convertible at any time at the holder’s option into one share of our common stock prior to a “Special Dividend” declared in 2008 (1.083 shares after the Special Dividend). The holders of the Series E are entitled to vote on an as-converted basis as a single class in combination with the holders of common stock at any meeting of our stockholders for the election of directors or for any other purpose on which the holders of common stock are entitled to vote. The Series E has no stated maturity and is not subject to any sinking fund or any mandatory redemption.

Distributions declared on the Series E for the years ended December 31, 2021, 2020, and 2019 were $1.57, $1.56, and $1.48 per share, respectively. The Series E is not listed on any exchange. At December 31, 2021 and 2020, a total of 2.7 million and 2.7 million, respectively, shares of the Series E were outstanding.

UDR is authorized to issue up to 20.0 million shares of the Series F Preferred Stock (“Series F”). The Series F may be purchased by holders of OP Units and DownREIT Units, at a purchase price of $0.0001 per share. OP/DownREIT Unitholders are entitled to subscribe for and purchase one share of UDR’s Series F for each OP/DownREIT Unit held. During the years ended December 31, 2021 and 2020, 1.9 million and 0.3 million of the Series F shares were forfeited upon the conversion of OP Units and DownREIT Units into Company common stock, respectively.

At December 31, 2021 and 2020, a total of 12.6 million and 14.4 million shares, respectively, of the Series F were outstanding with an aggregate purchase value of $1,258 and $1,444, respectively. 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 matter submitted to a vote of security holders at a meeting of our stockholders. The Series F does not entitle its holders to dividends or any other rights, privileges or preferences.

Distribution Reinvestment and Stock Purchase Plan

UDR’s Distribution Reinvestment and Stock Purchase Plan (the “Stock Purchase Plan”) allows common and preferred stockholders the opportunity to purchase, through the reinvestment of cash dividends and by making additional cash payments, additional shares of UDR’s common stock. From inception through December 31, 2008, shareholders have elected to utilize the Stock Purchase Plan to reinvest their distribution for the equivalent of 10.0 million shares of Company common stock. Shares in the amount of 11.0 million were reserved for issuance under the Stock Purchase Plan as of December 31, 2021. During the year ended December 31, 2021, UDR acquired all shares issued through the open market.

F - 41

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021

EMPLOYEE BENEFIT PLANS

In May 2021, the stockholders of UDR approved an amendment and restatement to the LTIP. The LTIP authorizes the granting of awards which may take the form of options to purchase shares of common stock, stock appreciation rights, restricted stock, dividend equivalents, partnership interests in the Operating Partnership designated as LTIP Units, performance partnership interests in the Operating Partnership designated as Performance Units, other stock-based awards, and any other right or interest relating to common stock or cash incentive awards to Company directors, employees and outside trustees to promote the success of the Company by linking individual’s compensation via grants of share based payment.

LTIP Units and Performance Units are designed to qualify as “profits interests” in the Operating Partnership for federal income tax purposes, meaning that initially they are not economically equivalent in value to a share of our common stock, but over time can increase in value to one-for-one parity with common stock by operation of special tax rules applicable to profits interests. Until and unless such parity is reached, the value that an executive will realize for a given number of vested LTIP Units or Performance Units is less than the value of an equal number of shares of our common stock.

As of December 31, 2021, 35.0 million shares were reserved on an unadjusted basis for issuance upon the grant or exercise of awards under the LTIP. As of December 31, 2021, there were 16.7 million common shares available for issuance under the LTIP.

The LTIP contains double trigger change of control provisions allowing for the vesting of an award when certain conditions are met upon qualifying events such as a merger where UDR is not the surviving entity. Upon the death or disability of an award recipient, all outstanding instruments will vest and all restrictions will lapse. The LTIP specifies that in the event of a capital transaction, which includes but is not limited to stock dividends, stock splits, extraordinary cash dividends and spin-offs, the number of shares available for grant in totality or to a single individual is to be adjusted proportionately. The LTIP specifies that when a capital transaction occurs that would dilute the holder of the stock award, prior grants are to be adjusted such that the recipient is no worse as a result of the capital transaction.

A summary of UDR’s Performance Units, LTIP Units, and restricted stock activities during the year ended December 31, 2021 is as follows (shares in thousands):


	Unvested Performance Units Outstanding			Performance Units Exercisable			LTIP Units			Restricted Stock
											Weighted
		Weighted			Weighted			Weighted			Average Fair
		Average			Average			Average Fair			Value Per
	Number of	Exercise		Number of	Exercise		Number of	Value Per		Number	Restricted
	Units	Price		Units	Price		LTIP Units	LTIP Unit		of shares	Stock
Balance, December 31, 2020	—	$	—	—	$	—	727	$	41.58	237	$	42.31
Granted	2,962		42.30	—		—	103		37.52	161		39.09
Exercised	—		—	—		—	—		—	—		—
Vested	—		—	—		—	(400)		40.05	(125)		39.91
Forfeited	—		—	—		—	(10)		46.12	(25)		38.79
Balance, December 31, 2021	2,962	$	42.30	—	$	-	420	$	41.94	248	$	40.30

As of December 31, 2021, the Company had granted 6.6 million shares of restricted stock, 2.4 million LTIP Units, and 3.0 million Performance Units under the LTIP.

Stock Option Plan

The Company has no unexercised stock options outstanding and no remaining compensation expense related to unvested stock options as of December 31, 2021.

F - 42

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021

During the years ended December 31, 2021, 2020, and 2019, respectively, we did not recognize any net compensation expense related to outstanding stock options.

Restricted Stock Awards

Restricted stock awards are granted to Company employees, officers, and directors. The restricted stock awards are valued based upon the closing sales price of UDR common stock on the date of grant. Compensation expense is recorded under the straight-line method over the vesting period, which is generally three to four years. Restricted stock awards earn dividends payable in cash. Some of the restricted stock grants are based on the Company’s performance and are subject to adjustment during the initial one year performance period. For the years ended December 31, 2021, 2020, and 2019, we recognized $4.1 million, $5.3 million, and $4.8 million of compensation expense, net of capitalization, related to the amortization of restricted stock awards, respectively. The total remaining compensation cost on unvested restricted stock awards was $4.2 million and had a weighted average remaining contractual life of 2.5 years as of December 31, 2021.

Performance Unit Awards

UDR has granted Performance Units to our employees and Company directors, subject to certain conditions. Each Performance Unit is exercisable into one Operating Partnership common unit.

The total remaining compensation cost on unvested Performance Units was $12.4 million as of December 31, 2021.

During the year ended December 31, 2021, no Performance Units were exercised.

The weighted average remaining contractual life on all Performance Units outstanding as of December 31, 2021 is 3.4 years and have a weighted average exercise price of $42.30.

During the year ended December 31, 2021, we recognized $11.7 million of net compensation expense related to outstanding Performance Units. No compensation expense was recognized during the years ended December 31, 2020, and 2019, respectively.

Short-Term Incentive Compensation

In January 2021, certain officers of the Company were awarded STI Performance Unit grants under the 2021 Long-Term Incentive Program (“2021 LTI”). The STI Performance Unit awards represent short-term incentive compensation for the officers and were valued for compensation expense purposes on the date of grant in accordance with ASC 718, Compensation - Stock Compensation, as determined by a lattice-binomial option-pricing model based on a Monte Carlo simulation using a volatility factor of 27.0%, an expected life of 5.5 years, an annualized risk-free rate of 0.49%, and an annual dividend yield of 3.4%, or $5.06 per unit, inclusive of a discount due to uncertainty associated with the STI Performance Unit reaching parity with the value of a share of UDR common stock. Compensation expense is recorded under the straight-line method over the vesting period, which is one year. The STI Performance Unit awards are primarily based on the Company’s performance and are subject to adjustment based on performance against predefined metrics during the one-year performance period. As the STI Performance Unit awards vest over a one-year period, there was no remaining unrecognized compensation expense as of December 31, 2021**.**

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021

In January 2020, certain officers of the Company were awarded STI Unit grants under the 2020 Long-Term Incentive Program (“2020 LTI”). The STI Unit awards represent short-term incentive compensation for the officers and were valued for compensation expense purposes based upon the closing sales price of UDR common stock on the date of grant in accordance with ASC 718, Compensation - Stock Compensation, or $40.77 per unit, inclusive of a discount due to uncertainty associated with the STI Unit reaching parity with the value of a share of UDR common stock. Compensation expense is recorded under the straight-line method over the vesting period, which is one year. The STI Unit awards are primarily based on the Company’s performance and are subject to adjustment based on performance against predefined metrics during the one-year performance period. For the year ended December 31, 2020, we recognized $3.1 million of compensation expense, net of capitalization, related to the amortization of STI Unit awards. As the STI Unit awards vest over a one-year period, there was no remaining unrecognized compensation expense as of December 31, 2020**.**

In January 2019, certain officers of the Company were awarded STI Unit grants under the 2019 Long-Term Incentive Program (“2019 LTI”). The STI Unit awards represent short-term incentive compensation for the officers and were valued for compensation expense purposes based upon the closing sales price of UDR common stock on the date of grant in accordance with ASC 718, Compensation - Stock Compensation, or $33.40 per unit, inclusive of a discount due to uncertainty associated with the STI Unit reaching parity with the value of a share of UDR common stock. Compensation expense is recorded under the straight-line method over the vesting period, which is one year. The STI Unit awards are primarily based on the Company’s performance and are subject to adjustment based on performance against predefined metrics during the one-year performance period. For the year ended December 31, 2019, we recognized $7.2 million of compensation expense, net of capitalization, related to the amortization of STI Unit awards. As the STI Unit awards vest over a one-year period, there was no remaining unrecognized compensation expense as of December 31, 2019.

Long-Term Incentive Compensation

In January 2021, certain officers of the Company were awarded either a restricted stock grant, an LTIP Unit grant, or an LTIP Performance Unit grant, or a combination of all three, under the 2021 LTI. For all three restricted stock grants, LTIP Unit grants and Performance Unit grants, thirty percent of the 2021 LTI award is based upon FFO as Adjusted over a one-year period and will vest fifty percent on the one-year anniversary and fifty percent on the two-year anniversary. Fifteen percent of the 2021 LTI award is based upon relative FFO as Adjusted over a three-year period and will vest 100% at the end of the three-year performance period. The remaining fifty-five percent of the 2021 LTI award is based on Total Shareholder Return (“TSR”) as measured relative to comparable apartment REITs over a three-year period and as measured relative to the Nareit Equity REITs Total Return Index over a three-year period whereby all three will vest 100% at the end of the three-year performance periods. The portion of the restricted stock grant based upon FFO as Adjusted was valued for compensation expense purposes based upon the closing sales price of UDR common stock on the date of grant or $36.85 per share. Because LTIP Units are granted at the maximum potential payout and there is uncertainty associated with an LTIP Unit reaching parity with the value of a share of UDR common stock, the portion of the LTIP Unit grant based upon the one-year FFO as Adjusted was valued for compensation expense purposes at $16.69 per unit on the grant date, inclusive of a 9.4% discount, and the portion of the LTIP Unit grant based upon the three-year FFO as Adjusted was valued for compensation expense purposes at $17.71 per unit on the grant date, inclusive of a 3.9% discount. Because LTIP Performance Units are granted at the maximum potential payout and there is uncertainty associated with an LTIP Performance Unit reaching parity with the value of a share of UDR common stock, the portion of the LTIP Performance Unit grant based upon the one-year FFO as Adjusted was valued for compensation expense purposes at $2.67 per unit on the grant date, inclusive of a 9.4% discount, a volatility factor of 27.0%, an expected life of 5.5 years, an annualized risk-free rate of 0.49%, and an annual dividend yield of 3.4%, and the portion of the LTIP Unit grant based upon the three-year FFO as Adjusted was valued for compensation expense purposes at $2.85 per unit on the grant date, inclusive of a 3.9% discount, a volatility factor of 26.0%, an expected life of 6.5 years, an annualized risk-free rate of 0.57%, and an annual dividend yield of 3.4%. The portion of the restricted stock grant based upon relative TSR was valued for compensation expense purposes at $40.09 per share for the comparable apartment REITs component and $39.95 per share for the Nareit Equity REITs Total Return Index component on the grant date as determined by a lattice-binomial option-pricing model based on a Monte Carlo simulation using a volatility factor of 33.0%. The portion of the LTIP Unit grant based upon relative TSR was valued for compensation expense purposes at $19.43 per unit, inclusive of a 3.9% discount, for the comparable apartment REITs component and $19.37 per unit, inclusive of a 3.9% discount, for the Nareit Equity REITs Total Return Index

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021

component on the grant date as determined by a lattice-binomial option-pricing model based on a Monte Carlo simulation using a volatility factor of 33.0%. The portion of the LTIP Performance Unit grant based upon relative TSR was valued for compensation expense purposes at $3.59 per unit, inclusive of a 3.9% discount, for the comparable apartment REITs component and $3.70 per unit, inclusive of a 3.9% discount, for the Nareit Equity REITs Total Return Index component on the grant date as determined by a lattice-binomial option-pricing model based on a Monte Carlo simulation using a volatility factor of 33.0%, an expected life of 6.5 years, an annualized risk-free rate of 0.16%, and an annual dividend yield of 3.5%.

In January 2020, certain officers of the Company were awarded either a restricted stock grant or an LTIP Unit grant, or a combination of both, under the 2020 LTI. For both restricted stock grants and LTIP Unit grants, thirty percent of the 2020 LTI award is based upon FFO as Adjusted over a two-year period and will vest fifty percent on the two-year anniversary and fifty percent on the three-year anniversary. Fifteen percent of the 2020 LTI award is based upon relative FFO as Adjusted over a three-year period and will vest 100% at the end of the three-year performance period. The remaining fifty-five percent of the 2020 LTI award is based on Total Shareholder Return (“TSR”) as measured relative to comparable apartment REITs over a three-year period and as measured relative to the Nareit Equity REITs Total Return Index over a three-year period whereby both will vest 100% at the end of the three-year performance periods. The portion of the restricted stock grant based upon FFO as Adjusted was valued for compensation expense purposes based upon the closing sales price of UDR common stock on the date of grant or $46.12 per share. Because LTIP Units are granted at the maximum potential payout and there is uncertainty associated with an LTIP Unit reaching parity with the value of a share of UDR common stock, the portion of the LTIP Unit grant based upon the two-year FFO as Adjusted was valued for compensation expense purposes at $21.24 per unit on the grant date, inclusive of a 7.9% discount, and the portion of the LTIP Unit grant based upon the three-year FFO as Adjusted was valued for compensation expense purposes at $22.23 per unit on the grant date, inclusive of a 3.6% discount. The portion of the restricted stock grant based upon relative TSR was valued for compensation expense purposes at $53.94 per share for the comparable apartment REITs component and $49.35 per share for the Nareit Equity REITs Total Return Index component on the grant date as determined by a lattice-binomial option-pricing model based on a Monte Carlo simulation using a volatility factor of 16.0%. The portion of the LTIP Unit grant based upon relative TSR was valued for compensation expense purposes at $26.18 per unit, inclusive of a 3.6% discount, for the comparable apartment REITs component and $23.98 per unit, inclusive of a 3.6% discount, for the Nareit Equity REITs Total Return Index component on the grant date as determined by a lattice-binomial option-pricing model based on a Monte Carlo simulation using a volatility factor of 16.0%.

In January 2019, certain officers of the Company were awarded either a restricted stock grant or an LTIP Unit grant, or a combination of both, under the 2019 LTI. For both restricted stock grants and LTIP Unit grants, thirty percent of the 2019 LTI award is based upon FFO as Adjusted over a one-year period and will vest fifty percent on the one-year anniversary and fifty percent on the two-year anniversary. Fifteen percent of the 2019 LTI award is based upon relative FFO as Adjusted over a three-year period and will vest 100% at the end of the three-year performance period. The remaining fifty-five percent of the 2019 LTI award is based on Total Shareholder Return (“TSR”) as measured relative to comparable apartment REITs over a three-year period and as measured relative to the Nareit Equity REITs Total Return Index over a three-year period whereby both will vest 100% at the end of the three-year performance periods. The portion of the restricted stock grant based upon FFO as Adjusted was valued for compensation expense purposes based upon the closing sales price of UDR common stock on the date of grant or $38.39 per share. Because LTIP Units are granted at the maximum potential payout and there is uncertainty associated with an LTIP Unit reaching parity with the value of a share of UDR common stock, the portion of the LTIP Unit grant based upon the one-year FFO as Adjusted was valued for compensation expense purposes at $17.47 per unit on the grant date, inclusive of a 9% discount, and the portion of the LTIP Unit grant based upon the three-year FFO as Adjusted was valued for compensation expense purposes at $18.24 per unit on the grant date, inclusive of a 5% discount. The portion of the restricted stock grant based upon relative TSR was valued for compensation expense purposes at $43.63 per share for the comparable apartment REITs component and $43.42 per share for the Nareit Equity REITs Total Return Index component on the grant date as determined by a lattice-binomial option-pricing model based on a Monte Carlo simulation using a volatility factor of 21.0%. The portion of the LTIP Unit grant based upon relative TSR was valued for compensation expense purposes at $20.89 per unit, inclusive of a 5% discount, for the comparable apartment REITs component and $20.79 per unit, inclusive of a 5% discount, for the Nareit Equity REITs Total Return Index component on the grant date as determined by a lattice-binomial option-pricing model based on a Monte Carlo simulation using a volatility factor of 21.0%.

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UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021

For the years ended December 31, 2021, 2020, and 2019, we recognized $5.9 million, $10.2 million and $12.4 million, respectively, of compensation expense, net of capitalization, related to the amortization of the awards. The total remaining compensation cost on unvested LTI awards was $3.8 million and had a weighted average remaining contractual life of 1.2 years as of December 31, 2021.

Profit Sharing Plan

Our profit sharing plan (the “Plan”) is a defined contribution plan covering all eligible full-time employees. Under the Plan, UDR makes discretionary profit sharing and matching contributions to the Plan as determined by the Compensation Committee of the Board of Directors. Aggregate provisions for contributions, both matching and discretionary, which are included in General and administrative on UDR’s Consolidated Statements of Operations for the years ended December 31, 2021, 2020, and 2019, were $1.4 million, $1.5 million, and $1.2 million, respectively.

INCOME TAXES

For 2021, 2020, and 2019, UDR believes that we have complied with the REIT requirements specified in the Code. As such, the REIT would generally not be subject to federal income taxes.

For income tax purposes, distributions paid to common stockholders may consist of ordinary income, qualified dividends, capital gains, unrecaptured section 1250 gains, return of capital, or a combination thereof. Distributions that exceed our current and accumulated earnings and profits constitute a return of capital rather than taxable income and reduce the stockholder’s basis in their common shares. To the extent that a distribution exceeds both current and accumulated earnings and profits and the stockholder’s basis in the common shares, it generally will be treated as a gain from the sale or exchange of that stockholder’s common shares. Taxable distributions paid per common share were taxable as follows for the years ended December 31, 2021, 2020 and 2019 (unaudited):


	Year Ended December 31,
	2021		2020		2019
Ordinary income	$	0.9798	$	1.0320	$	0.9810
Qualified ordinary income		0.0405		0.0039		0.0040
Long-term capital gain		0.3577		0.2974		0.0210
Unrecaptured section 1250 gain		0.0695		0.0892		0.0630
Nondividend distributions		—		—		0.2810
Total	$	1.4475	$	1.4225	$	1.3500

We have a TRS that is subject to federal and state income taxes. A TRS is a C-corporation which has not elected REIT status and as such is subject to United States federal and state income tax. The components of the provision for income taxes are as follows for the years ended December 31, 2021, 2020, and 2019 (dollars in thousands):


	Year Ended December 31,
	2021		2020		2019
Income tax (benefit)/provision
Current
Federal	$	2,693	$	(148)	$	1,466
State		1,236		1,374		735
Total current		3,929		1,226		2,201
Deferred
Federal		(1,770)		894		1,266
State		(672)		451		371
Investment tax credit		(48)		(26)		—
Total deferred		(2,490)		1,319		1,637
Total income tax (benefit)/provision	$	1,439	$	2,545	$	3,838

Deferred income taxes are provided for the change in temporary differences between the basis of certain assets and liabilities for financial reporting purposes and income tax reporting purposes. The expected future tax rates are based

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UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021

upon enacted tax laws. The components of our TRS deferred tax assets and liabilities are as follows for the years ended December 31, 2021, 2020, and 2019 (dollars in thousands):


	Year Ended December 31,
	2021		2020		2019
Deferred tax assets:
Federal and state tax attributes	$	60	$	6	$	22
Other		102		147		87
Total deferred tax assets		162		153		109
Valuation allowance		(32)		(23)		(19)
Net deferred tax assets		130		130		90
Deferred tax liabilities:
Book/tax depreciation and basis		(860)		(638)		(367)
Other investment ventures		—		(2,665)		(1,291)
Other		(68)		(67)		(67)
Total deferred tax liabilities		(928)		(3,370)		(1,725)
Net deferred tax assets/(liabilities)	$	(798)	$	(3,240)	$	(1,635)

Income tax provision/(benefit), net from our TRS differed from the amounts computed by applying the U.S. statutory rate of 21% to pretax income/(loss) for the years ended December 31, 2021, 2020, and 2019 as follows (dollars in thousands):


	Year Ended December 31,
	2021		2020		2019
Income tax provision/(benefit)
U.S. federal income tax provision/(benefit)	$	1,058	$	1,240	$	2,905
State income tax provision		664		1,434		1,013
Other items		(246)		(165)		(139)
Solar credit amortization		(48)		(26)		—
ITC basis adjustment		2		58		56
Valuation allowance		9		4		3
Total income tax provision/(benefit)	$	1,439	$	2,545	$	3,838

As of December 31, 2021, the Company had federal net operating loss carryovers (“NOL”) of $24.0 million expiring in 2032 through 2035 and state NOLs of $64.8 million expiring in 2021 through 2032. A portion of these attributes are still available to the subsidiary REITs, but are carried at a zero effective tax rate.

The Company’s Tax benefit/(provision), net was $(1.4) million, $(2.5) million and $(3.8) million for the years ended December 31, 2021, 2020 and 2019, respectively. The decrease of $1.1 million was primarily attributable to a decrease in TRS income of $(0.4) million and a decrease in California state tax on gains of $(0.3) million. GAAP defines a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The financial statements reflect expected future tax consequences of income tax positions presuming the taxing authorities’ full knowledge of the tax position and all relevant facts, but without considering time values. GAAP also provides guidance on derecognition, classification, interest and penalties, accounting for interim periods, disclosure and transition.

The Company evaluates our tax position using a two-step process. First, we determine whether a tax position is more likely than not (greater than 50 percent probability) to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The Company will then determine the amount of benefit to recognize and record the amount of the benefit that is more likely than not to be realized upon ultimate settlement. As of December 31, 2021 and 2020, UDR has no material unrecognized income tax benefits/(provisions), net.

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UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021

The Company files income tax returns in federal and various state and local jurisdictions. The tax years 2018 through 2020 remain open to examination by the major taxing jurisdictions to which the Company is subject.

NONCONTROLLING INTERESTS

Redeemable Noncontrolling Interests in the Operating Partnership and DownREIT Partnership

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

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

The following table sets forth redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership for the years ended December 31, 2021 and 2020 (dollars in thousands):


	Year Ended December 31,
	2021		2020
Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership, at beginning of year	$	856,294	$	1,018,665
Mark-to-market adjustment to redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership		502,768		(143,741)
OP Units issued for real estate, net		48,533		—
Conversion of OP Units/DownREIT Units to Common Stock		(99,932)		(12,666)
Net income/(loss) attributable to redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership		10,873		4,543
Distributions to redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership		(34,044)		(34,149)
Vesting of Long-Term Incentive Plan Units		14,576		23,501
Allocation of other comprehensive income/(loss)		374		141
Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership, at end of year	$	1,299,442	$	856,294

Noncontrolling Interests

Noncontrolling interests represent interests of unrelated partners and unvested LTIP Units in certain consolidated affiliates, and are presented as part of equity on the Consolidated Balance Sheets since these interests are not redeemable. Net (income)/loss attributable to noncontrolling interests was $(0.1) million, $(0.2) million, and $(0.2) million during the years ended December 31, 2021, 2020, and 2019, respectively.

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

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UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021

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

FAIR VALUE OF DERIVATIVES AND FINANCIAL INSTRUMENTS

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

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

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

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

The estimated fair values of the Company’s financial instruments either recorded or disclosed on a recurring basis as of December 31, 2021 and 2020 are summarized as follows (dollars in thousands):


					Fair Value at December 31, 2021, Using
	Total				Quoted
	Carrying				Prices in
	Amount in				Active
	Statement of				Markets		Significant
	Financial		Fair Value		for Identical		Other		Significant
	Position at		Estimate at		Assets or		Observable		Unobservable
	December 31,		December 31,		Liabilities		Inputs		Inputs
	2021 (a)		2021		(Level 1)		(Level 2)		(Level 3)
Description:
Notes receivable, net (b)	$	26,860	$	27,372	$	—	$	—	$	27,372
Equity securities (c)		3,230		3,230		—		—		3,230
Derivatives - Interest rate contracts (d)		3,279		3,279		—		3,279		—
Total assets	$	33,369	$	33,881	$	—	$	3,279	$	30,602

Secured debt instruments - fixed rate: (e)
Mortgage notes payable	$	1,033,764	$	1,032,582	$	—	$	—	$	1,032,582
Secured debt instruments - variable rate: (e)
Tax-exempt secured notes payable		27,000		27,000		—		—		27,000
Unsecured debt instruments: (e)
Working capital credit facility		29,546		29,546		—		—		29,546
Commercial paper program		220,000		220,000		—		—		220,000
Unsecured notes		4,133,083		4,199,363		—		—		4,199,363
Total liabilities	$	5,443,393	$	5,508,491	$	—	$	—	$	5,508,491

Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership (f)	$	1,299,442	$	1,299,442	$	—	$	1,299,442	$	—

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UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021


					Fair Value at December 31, 2020, Using
	Total				Quoted
	Carrying				Prices in
	Amount in				Active
	Statement of				Markets		Significant
	Financial		Fair Value		for Identical		Other		Significant
	Position at		Estimate at		Assets or		Observable		Unobservable
	December 31,		December 31,		Liabilities		Inputs		Inputs
	2020 (a)		2020		(Level 1)		(Level 2)		(Level 3)
Description:
Notes receivable, net (b)	$	157,992	$	170,411	$	—	$	—	$	170,411
Equity securities (c)		500		500		—		—		500
Derivatives - Interest rate contracts (d)		2		2		—		2		—
Total assets	$	158,494	$	170,913	$	—	$	2	$	170,911

Derivatives - Interest rate contracts (d)	$	167	$	167	$	—	$	167	$	—
Secured debt instruments - fixed rate: (e)
Mortgage notes payable		837,473		854,084		—		—		854,084
Secured debt instruments - variable rate: (e)
Tax-exempt secured notes payable		27,000		27,000		—		—		27,000
Unsecured debt instruments: (e)
Working capital credit facility		28,024		28,024		—		—		28,024
Commercial paper program		190,000		190,000		—		—		190,000
Unsecured notes		3,922,314		4,283,045		—		—		4,283,045
Total liabilities	$	5,004,978	$	5,382,320	$	—	$	167	$	5,382,153

Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership (f)	$	856,294	$	856,294	$	—	$	856,294	$	—

(a)	Certain balances include fair market value adjustments and exclude deferred financing costs.

(b)	See Note 2, Significant Accounting Policies.

(c)

The Company holds an investment in a publicly traded real estate technology company, SmartRent, that is subject to a lock-up restriction on selling or transferring the investment for a period of time. The investment is valued at the market price at the end of the period less an illiquidity discount of 15.0% as of December 31, 2021. The Company classifies the investment as Level 3 in the fair value hierarchy based upon the lock-up restriction. Prior to SmartRent becoming a public company in 2021, the securities did not have a readily determinable fair value and were valued under the measurement alternative.

(d)	See Note 14, Derivatives and Hedging Activity.

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

(f)	See Note 12, Noncontrolling Interests.

There were no transfers into or out of any of the levels of the fair value hierarchy during the year ended December 31, 2021 and 2020.

Financial Instruments Carried at Fair Value

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

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UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021

rise above the strike rate of the caps. The variable interest rates used in the calculation of projected receipts on the cap are based on an expectation of future interest rates derived from observable market interest rate curves and volatilities.

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

Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of December 31, 2021 and 2020, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. In conjunction with the FASB’s fair value measurement guidance, the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.

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

Financial Instruments Not Carried at Fair Value

At December 31, 2021, the fair values of cash and cash equivalents, restricted cash, accounts receivable, prepaids, real estate taxes payable, accrued interest payable, security deposits and prepaid rent, distributions payable and accounts payable approximated their carrying values because of the short term nature of these instruments. The estimated fair values of other financial instruments, which includes notes receivable and debt instruments, are classified in Level 3 of the fair value hierarchy due to the significant unobservable inputs that are utilized in their respective valuations.

DERIVATIVES AND HEDGING ACTIVITY

Risk Management Objective of Using Derivatives

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

Cash Flow Hedges of Interest Rate Risk

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

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UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021

designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium.

The changes in the fair value of derivatives designated and that qualify as cash flow hedges are recorded in Accumulated other comprehensive income/(loss), net on the Consolidated Balance Sheets and subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the years ended December 31, 2021, 2020, and 2019, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt.

Amounts reported in Accumulated other comprehensive income/(loss), net on the Consolidated Balance Sheets related to derivatives that will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. Through December 31, 2022, the Company estimates that an additional $1.4 million will be reclassified as an increase to Interest expense.

As of December 31, 2021, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk (dollars in thousands):


	Number of
Product	Instruments	Notional
Interest rate swaps and caps (a)	4	$	334,880

(a)	In addition to the interest rate swaps summarized above, the Company entered into two additional interest rate swaps with a total notional value of $175.0 million that will become effective in July 2022 upon maturity of the $315.0 million notional value interest rate swaps included above.

Derivatives not designated as hedges are not speculative and are used to manage the Company’s exposure to interest rate movements and other identified risks but do not meet the strict hedge accounting requirements of GAAP. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings. As of December 31, 2021, no derivatives not designated as hedges were held by the Company.

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

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Consolidated Balance Sheets as of December 31, 2021 and 2020 (dollars in thousands):


	Asset Derivatives				Liability Derivatives
	(included in Other assets)				(included in Other liabilities)
	Fair Value at:				Fair Value at:
	December 31,		December 31,		December 31,		December 31,
	2021		2020		2021		2020
Derivatives designated as hedging instruments:
Interest rate products	$	3,279	$	2	$	—	$	167

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

The tables below present the effect of the Company’s derivative financial instruments on the Consolidated Statements of Operations for the years ended December 31, 2021, 2020, and 2019 (dollars in thousands):


													Gain/(Loss) Recognized in
							Gain/(Loss) Reclassified						Interest expense
	Unrealized holding gain/(loss)						from Accumulated OCI into						(Amount Excluded from
	Recognized in OCI						Interest expense						Effectiveness Testing)
Derivatives in Cash Flow Hedging Relationships	2021		2020		2019		2021		2020		2019		2021		2020		2019

Interest rate products	$	3,502	$	(3,382)	$	(8,437)	$	(1,755)	$	(4,827)	$	2,770	$	—	$	—	$	—

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UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021


	Year Ended
	December 31,
	2021		2020		2019
Total amount of Interest expense presented on the Consolidated Statements of Operations	$	186,267	$	202,706	$	170,917

Credit-risk-related Contingent Features

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

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

Tabular Disclosure of Offsetting Derivatives

The Company has elected not to offset derivative positions on the consolidated financial statements. The tables below present the effect on its financial position had the Company made the election to offset its derivative positions as of December 31, 2021 and 2020 (dollars in thousands):


			Gross		Net Amounts of		Gross Amounts Not Offset
			Amounts		Assets		in the Consolidated
	Gross		Offset in the		Presented in the		Balance Sheets
	Amounts of		Consolidated		Consolidated				Cash
	Recognized		Balance		Balance Sheets		Financial		Collateral
Offsetting of Derivative Assets	Assets		Sheets		(a)		Instruments		Received		Net Amount
December 31, 2021	$	3,279	$	—	$	3,279	$	—	$	—	$	3,279

December 31, 2020	$	2	$	—	$	2	$	—	$	—	$	2

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


			Gross		Net Amounts of		Gross Amounts Not Offset
			Amounts		Liabilities		in the Consolidated
	Gross		Offset in the		Presented in the		Balance Sheets
	Amounts of		Consolidated		Consolidated				Cash
	Recognized		Balance		Balance Sheets		Financial		Collateral
Offsetting of Derivative Liabilities	Liabilities		Sheets		(a)		Instruments		Posted		Net Amount
December 31, 2021	$	—	$	—	$	—	$	—	$	—	$	—

December 31, 2020	$	167	$	—	$	167	$	—	$	—	$	167

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

F - 53

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021

15. COMMITMENTS AND CONTINGENCIES

Commitments

Real Estate Commitments

The following summarizes the Company’s real estate commitments at December 31, 2021 (dollars in thousands):


	Number	UDR's			UDR's Remaining
	Properties	Investment (a)			Commitment
Wholly-owned — under development	5	$	388,569		$	112,931
Joint ventures:
Preferred equity investments	4		66,528	(b)		53,652	(b)
Real estate technology investments:
RETV I (c)	-		71,464			5,220
RETV II	-		8,130			10,800
Total		$	534,691		$	182,603

(a)	Represents UDR’s investment as of December 31, 2021.

(b)	Represents UDR’s investment in and remaining commitment for Makers Rise, 121 at Watters, Infield Phase I and Upton Place, which are under development as of December 31, 2021.

(c)	Includes the impact of unrealized gains which primarily relate to SmartRent becoming a public company. (See Note 5, Joint Ventures and Partnerships).

Contingencies

Litigation and Legal Matters

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

REPORTABLE SEGMENTS

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

UDR owns and operates multifamily apartment communities that generate rental and other property related income through the leasing of apartment homes to a diverse base of tenants. The primary financial measures for UDR’s apartment communities are rental income and net operating income (“NOI”). Rental income represents gross market rent less adjustments for concessions, vacancy loss and bad debt. NOI is defined as rental income less direct property rental expenses. Rental expenses include real estate taxes, insurance, personnel, utilities, repairs and maintenance, administrative and marketing. Excluded from NOI is property management expense, which is calculated as 3.0% of property revenue, and land rent. Property management expense covers costs directly related to consolidated property operations, inclusive of corporate management, regional supervision, accounting and other costs. UDR’s Chief Operating Decision Maker utilizes NOI as the key measure of segment profit or loss.

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UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021

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

	●	Same-Store Communities represent those communities acquired, developed, and stabilized prior to January 1, 2020 and held as of December 31, 2021. A comparison of operating results from the prior year is meaningful as these communities were owned and had stabilized occupancy and operating expenses as of the beginning of the prior year, there is no plan to conduct substantial redevelopment activities, and the community is not classified as held for disposition within the current year. A community is considered to have stabilized occupancy once it achieves 90% occupancy for at least three consecutive months.

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

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

All revenues are from external customers and no single tenant or related group of tenants contributed 10% or more of UDR’s total revenues during the years ended December 31, 2021, 2020, and 2019.

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

Lease Revenue

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

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

Other Revenue

Other revenue is generated by services provided by the Company to its retail and residential tenants and other unrelated third parties. Revenue is measured based on consideration specified in contracts with customers. The Company recognizes revenue when it satisfies a performance obligation by providing the services specified in a contract to the customer. These fees are generally recognized as earned.

Joint venture management and other fees

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

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UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021

The following table details rental income and NOI for UDR’s reportable segments for the years ended December 31, 2021, 2020, and 2019, and reconciles NOI to Net income/(loss) attributable to UDR, Inc. on the Consolidated Statements of Operations (dollars in thousands):

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UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021


	Year Ended December 31,
	2021		2020		2019
Reportable apartment home segment lease revenue
Same-Store Communities (a)
West Region	$	414,063	$	411,988	$	422,564
Mid-Atlantic Region		246,176		245,460		221,509
Northeast Region		211,368		209,222		172,658
Southeast Region		144,328		136,342		129,354
Southwest Region		97,213		93,557		67,804
Non-Mature Communities/Other		132,738		101,720		88,350
Total segment and consolidated lease revenue	$	1,245,886	$	1,198,289	$	1,102,239

Reportable apartment home segment other revenue
Same-Store Communities (a)
West Region	$	10,620	$	12,357	$	12,924
Mid-Atlantic Region		8,194		7,155		7,429
Northeast Region		4,867		5,315		4,003
Southeast Region		6,498		5,765		6,752
Southwest Region		3,932		3,599		2,897
Non-Mature Communities/Other		4,668		3,616		1,894
Total segment and consolidated other revenue	$	38,779	$	37,807	$	35,899

Total reportable apartment home segment rental income
Same-Store Communities (a)
West Region	$	424,683	$	424,345	$	435,488
Mid-Atlantic Region		254,370		252,615		228,938
Northeast Region		216,235		214,537		176,661
Southeast Region		150,826		142,107		136,106
Southwest Region		101,145		97,156		70,701
Non-Mature Communities/Other		137,406		105,336		90,244
Total segment and consolidated rental income	$	1,284,665	$	1,236,096	$	1,138,138

Reportable apartment home segment NOI
Same-Store Communities (a)
West Region	$	312,341	$	314,381	$	330,586
Mid-Atlantic Region		175,445		176,741		161,325
Northeast Region		137,331		140,090		121,800
Southeast Region		102,061		96,118		94,420
Southwest Region		63,320		59,281		44,018
Non-Mature Communities/Other		76,627		67,091		56,154
Total segment and consolidated NOI		867,125		853,702		808,303
Reconciling items:
Joint venture management and other fees		6,102		5,069		14,055
Property management		(38,540)		(35,538)		(32,721)
Other operating expenses		(21,649)		(22,762)		(13,932)
Real estate depreciation and amortization		(606,648)		(608,616)		(501,257)
General and administrative		(57,541)		(49,885)		(51,533)
Casualty-related (charges)/recoveries, net		(3,748)		(2,131)		(474)
Other depreciation and amortization		(13,185)		(10,013)		(6,666)
Gain/(loss) on sale of real estate owned		136,052		119,277		5,282
Income/(loss) from unconsolidated entities		65,646		18,844		137,873
Interest expense		(186,267)		(202,706)		(170,917)
Interest income and other income/(expense), net		15,085		6,274		15,404
Tax (provision)/benefit, net		(1,439)		(2,545)		(3,838)
Net (income)/loss attributable to redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership		(10,873)		(4,543)		(14,426)
Net (income)/loss attributable to noncontrolling interests		(104)		(161)		(188)
Net income/(loss) attributable to UDR, Inc.	$	150,016	$	64,266	$	184,965

	(a)	Same-Store Community population consisted of 45,143 apartment homes.

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UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2021

The following table details the assets of UDR’s reportable segments as of December 31, 2021 and 2020 (dollars in thousands):


	December 31,		December 31,
	2021		2020
Reportable apartment home segment assets:
Same-Store Communities (a):
West Region	$	4,219,858	$	4,174,776
Mid-Atlantic Region		2,729,221		2,698,049
Northeast Region		2,921,469		2,900,017
Southeast Region		995,597		974,754
Southwest Region		903,789		869,228
Non-Mature Communities/Other		2,970,869		1,454,648
Total segment assets		14,740,803		13,071,472
Accumulated depreciation		(5,137,096)		(4,605,366)
Total segment assets — net book value		9,603,707		8,466,106
Reconciling items:
Cash and cash equivalents		967		1,409
Restricted cash		27,451		22,762
Notes receivable, net		26,860		157,992
Investment in and advances to unconsolidated joint ventures, net		702,461		600,233
Operating lease right-of-use assets		197,463		200,913
Other assets		216,311		188,118
Total consolidated assets	$	10,775,220	$	9,637,533

	(a)	Same-Store Community population consisted of 45,143 apartment homes.

Markets included in the above geographic segments are as follows:

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

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

	iii.	Northeast Region — Boston, New York and Philadelphia

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

	v.	Southwest Region — Dallas, Austin and Denver

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UDR, INC.

SCHEDULE III — REAL ESTATE OWNED

DECEMBER 31, 2021

(In thousands)


											Gross Amount at Which
			Initial Costs								Carried at Close of Period
									Costs of
									Improvements
									Capitalized
			Land and		Buildings		Total Initial		Subsequent		Land and		Buildings &		Total
			Land		and		Acquisition		to Acquisition		Land		Buildings		Carrying		Accumulated		Date of	Date
	Encumbrances		Improvements		Improvements		Costs		Costs		Improvements		Improvements		Value		Depreciation		Construction(a)	Acquired
WEST REGION
Harbor at Mesa Verde	$	—	$	20,476	$	28,538	$	49,014	$	24,270	$	22,485	$	50,799	$	73,284	$	39,973	1965/2003	Jun-03
27 Seventy Five Mesa Verde		—		99,329		110,644		209,973		108,534		116,594		201,913		318,507		157,467	1979/2013	Oct-04
Huntington Vista		—		8,055		22,486		30,541		15,025		9,420		36,146		45,566		28,499	1970	Jun-03
Missions at Back Bay		—		229		14,129		14,358		4,520		11,141		7,737		18,878		6,184	1969	Dec-03
Eight 80 Newport Beach - North		—		62,516		46,082		108,598		48,686		69,362		87,922		157,284		68,825	1968/2000/2016	Oct-04
Eight 80 Newport Beach - South		—		58,785		50,067		108,852		41,597		60,996		89,453		150,449		63,553	1968/2000/2016	Mar-05
Foxborough		—		12,071		6,187		18,258		5,477		12,750		10,985		23,735		8,652	1969	Sep-04
Beach & Ocean		—		12,878		—		12,878		40,134		13,139		39,873		53,012		17,318	2014	Aug-11
The Residences at Bella Terra		—		25,000		—		25,000		130,685		25,847		129,838		155,685		65,446	2013	Oct-11
Los Alisos at Mission Viejo		—		17,298		—		17,298		71,722		16,737		72,283		89,020		34,993	2014	Jun-04
The Residences at Pacific City		—		78,085		—		78,085		278,092		78,330		277,847		356,177		73,323	2018	Jan-14
ORANGE COUNTY, CA		—		394,722		278,133		672,855		768,742		436,801		1,004,796		1,441,597		564,233
2000 Post Street		—		9,861		44,578		54,439		38,606		14,472		78,573		93,045		49,699	1987/2016	Dec-98
Birch Creek		—		4,365		16,696		21,061		11,024		1,419		30,666		32,085		19,849	1968	Dec-98
Highlands Of Marin		—		5,996		24,868		30,864		29,356		8,190		52,030		60,220		40,691	1991/2010	Dec-98
Marina Playa		—		6,224		23,916		30,140		14,927		1,444		43,623		45,067		27,615	1971	Dec-98
River Terrace		—		22,161		40,137		62,298		9,533		23,010		48,821		71,831		35,776	2005	Aug-05
CitySouth		—		14,031		30,537		44,568		40,431		16,703		68,296		84,999		54,340	1972/2012	Nov-05
Bay Terrace		—		8,545		14,458		23,003		7,966		11,679		19,290		30,969		13,679	1962	Oct-05
Highlands of Marin Phase II		—		5,353		18,559		23,912		11,422		5,782		29,552		35,334		21,746	1968/2010	Oct-07
Edgewater		—		30,657		83,872		114,529		13,468		30,832		97,165		127,997		64,604	2007	Mar-08
Almaden Lake Village		27,000		594		42,515		43,109		10,542		1,001		52,650		53,651		35,563	1999	Jul-08
388 Beale		—		14,253		74,104		88,357		19,341		14,689		93,009		107,698		51,983	1999	Apr-11
Channel @ Mission Bay		—		23,625		—		23,625		132,104		24,104		131,625		155,729		63,693	2014	Sep-10
SAN FRANCISCO, CA		27,000		145,665		414,240		559,905		338,720		153,325		745,300		898,625		479,238
Crowne Pointe		—		2,486		6,437		8,923		10,290		3,237		15,976		19,213		12,553	1987	Dec-98
Hilltop		—		2,174		7,408		9,582		7,246		3,061		13,767		16,828		10,492	1985	Dec-98
The Hawthorne		—		6,474		30,226		36,700		9,998		7,219		39,479		46,698		29,493	2003	Jul-05
The Kennedy		—		6,179		22,307		28,486		5,064		6,360		27,190		33,550		18,897	2005	Nov-05
Hearthstone at Merrill Creek		—		6,848		30,922		37,770		9,784		7,312		40,242		47,554		26,254	2000	May-08
Island Square		—		21,284		89,389		110,673		8,380		21,703		97,350		119,053		64,066	2007	Jul-08
elements too		—		27,468		72,036		99,504		21,737		30,360		90,881		121,241		71,208	2010	Feb-10
989elements		—		8,541		45,990		54,531		6,434		8,685		52,280		60,965		31,876	2006	Dec-09
Lightbox		—		6,449		38,884		45,333		1,400		6,487		40,246		46,733		18,248	2014	Aug-14
Ashton Bellevue		—		8,287		124,939		133,226		3,712		8,370		128,568		136,938		37,540	2009	Oct-16
TEN20		—		5,247		76,587		81,834		4,478		5,308		81,004		86,312		23,884	2009	Oct-16
Milehouse		—		5,976		63,041		69,017		1,275		6,043		64,249		70,292		21,113	2016	Nov-16
CityLine		—		11,220		85,787		97,007		550		11,228		86,329		97,557		27,388	2016	Jan-17
CityLine II		—		3,723		56,843		60,566		514		3,723		57,357		61,080		12,210	2018	Jan-19
Brio		—		21,780		147,188		168,968		497		21,785		147,680		169,465		4,359	2020	Jul-21
SEATTLE, WA		—		144,136		897,984		1,042,120		91,359		150,881		982,598		1,133,479		409,581
Boronda Manor		—		1,946		8,982		10,928		12,233		3,455		19,706		23,161		13,210	1979	Dec-98
Garden Court		—		888		4,188		5,076		7,057		1,621		10,512		12,133		7,149	1973	Dec-98
Cambridge Court		—		3,039		12,883		15,922		19,372		5,806		29,488		35,294		20,688	1974	Dec-98
Laurel Tree		—		1,304		5,115		6,419		8,217		2,473		12,163		14,636		8,431	1977	Dec-98
The Pointe At Harden Ranch		—		6,388		23,854		30,242		34,935		10,417		54,760		65,177		37,182	1986	Dec-98
The Pointe At Northridge		—		2,044		8,028		10,072		13,115		3,695		19,492		23,187		13,340	1979	Dec-98
The Pointe At Westlake		—		1,329		5,334		6,663		8,662		2,397		12,928		15,325		8,590	1975	Dec-98
MONTEREY PENINSULA, CA		—		16,938		68,384		85,322		103,591		29,864		159,049		188,913		108,590
Rosebeach		—		8,414		17,449		25,863		7,386		9,011		24,238		33,249		18,613	1970	Sep-04
Tierra Del Rey		—		39,586		36,679		76,265		10,021		40,065		46,221		86,286		30,889	1998	Dec-07
The Westerly		—		48,182		102,364		150,546		46,082		51,107		145,521		196,628		96,215	1993/2013	Sep-10
Jefferson at Marina del Rey		—		55,651		—		55,651		96,001		61,713		89,939		151,652		62,688	2008	Sep-07
LOS ANGELES, CA		—		151,833		156,492		308,325		159,490		161,896		305,919		467,815		208,405
Verano at Rancho Cucamonga Town Square		—		13,557		3,645		17,202		61,883		24,479		54,606		79,085		46,565	2006	Oct-02
Windemere at Sycamore Highland		—		5,810		23,450		29,260		8,183		6,373		31,070		37,443		23,279	2001	Nov-02

S - 1

UDR, INC.

SCHEDULE III — REAL ESTATE OWNED - (Continued)

DECEMBER 31, 2021

(In thousands)

Strata	—	14,278	84,242	98,520	1,514	14,278	85,756	100,034	10,198	2010	Nov-19
OTHER SOUTHERN CA	—	33,645	111,337	144,982	71,580	45,130	171,432	216,562	80,042
Tualatin Heights	—	3,273	9,134	12,407	10,697	4,419	18,685	23,104	14,229	1989	Dec-98
Hunt Club	—	6,014	14,870	20,884	9,319	6,613	23,590	30,203	18,978	1985	Sep-04
The Arbory	—	4,366	63,457	67,823	435	4,366	63,892	68,258	8,364	2018	Jan-20
PORTLAND, OR	—	13,653	87,461	101,114	20,451	15,398	106,167	121,565	41,571
TOTAL WEST REGION	27,000	900,592	2,014,031	2,914,623	1,553,933	993,295	3,475,261	4,468,556	1,891,660
MID-ATLANTIC REGION
Dominion Middle Ridge	—	3,311	13,283	16,594	17,095	4,625	29,064	33,689	19,162	1990	Jun-96
Dominion Lake Ridge	—	2,366	8,387	10,753	10,830	3,238	18,345	21,583	14,265	1987	Feb-96
Presidential Greens	—	11,238	18,790	30,028	14,541	11,882	32,687	44,569	26,954	1938	May-02
The Whitmore	—	6,418	13,411	19,829	25,755	7,713	37,871	45,584	31,506	1962/2008	Apr-02
Ridgewood -apts side	—	5,612	20,086	25,698	14,476	6,583	33,591	40,174	26,787	1988	Aug-02
Waterside Towers	—	13,001	49,657	62,658	35,826	50,882	47,602	98,484	34,309	1971	Dec-03
Wellington Place at Olde Town	—	13,753	36,059	49,812	22,312	14,980	57,144	72,124	45,287	1987/2008	Sep-05
Andover House	—	183	59,948	60,131	7,355	347	67,139	67,486	43,926	2004	Mar-07
Sullivan Place	—	1,137	103,676	104,813	16,803	1,973	119,643	121,616	80,751	2007	Dec-07
Delancey at Shirlington	—	21,606	66,765	88,371	9,360	21,713	76,018	97,731	48,968	2006/2007	Mar-08
View 14	—	5,710	97,941	103,651	6,603	5,787	104,467	110,254	60,808	2009	Jun-11
Signal Hill Apartments	—	13,290	—	13,290	73,633	25,670	61,253	86,923	46,898	2010	Mar-07
Capitol View on 14th	—	31,393	—	31,393	97,990	31,490	97,893	129,383	52,070	2013	Sep-07
Domain College Park	—	7,300	—	7,300	61,688	7,541	61,447	68,988	30,028	2014	Jun-11
1200 East West	—	9,748	68,022	77,770	4,395	9,922	72,243	82,165	24,625	2010	Oct-15
Courts at Huntington Station	—	27,749	111,878	139,627	6,112	28,178	117,561	145,739	46,174	2011	Oct-15
Eleven55 Ripley	—	15,566	107,539	123,105	6,641	15,921	113,825	129,746	38,091	2014	Oct-15
Arbor Park of Alexandria	160,930	50,881	159,728	210,609	7,976	51,652	166,933	218,585	65,098	1969/2015	Oct-15
Courts at Dulles	—	14,697	83,834	98,531	11,467	14,871	95,127	109,998	39,860	2000	Oct-15
Newport Village	127,600	55,283	177,454	232,737	27,768	55,877	204,628	260,505	81,151	1968	Oct-15
1301 Thomas Circle	—	27,836	128,191	156,027	2,526	27,847	130,706	158,553	20,419	2006	Aug-19
Crescent Falls Church	—	13,687	88,692	102,379	1,795	13,700	90,474	104,174	12,556	2010	Nov-19
Station on Silver	—	16,661	109,198	125,859	1,063	16,677	110,245	126,922	8,213	2018	Dec-20
Seneca Place	—	21,184	98,173	119,357	2,559	21,188	100,728	121,916	6,384	1985	Jun-21
Canterbury Apartments	—	24,456	100,011	124,467	1,998	24,458	102,007	126,465	2,948	1986	Aug-21
METROPOLITAN, D.C.	288,530	414,066	1,720,723	2,134,789	488,567	474,715	2,148,641	2,623,356	907,238
Calvert's Walk	—	4,408	24,692	29,100	10,725	5,240	34,585	39,825	27,320	1988	Mar-04
20 Lambourne	—	11,750	45,590	57,340	13,082	12,486	57,936	70,422	38,943	2003	Mar-08
Domain Brewers Hill	—	4,669	40,630	45,299	3,014	4,917	43,396	48,313	26,081	2009	Aug-10
Rodgers Forge	—	15,392	67,958	83,350	6,583	15,607	74,326	89,933	14,164	1945	Apr-19
Towson Promenade	58,600	12,599	78,847	91,446	2,787	12,635	81,598	94,233	11,352	2009	Nov-19
1274 at Towson	—	7,807	46,238	54,045	2,676	7,807	48,914	56,721	1,112	2020	Sep-21
Quarters at Towson Town Center	—	16,111	106,453	122,564	481	16,111	106,934	123,045	1,728	2008	Nov-21
BALTIMORE, MD	58,600	72,736	410,408	483,144	39,348	74,803	447,689	522,492	120,700
Gayton Pointe Townhomes	—	826	5,148	5,974	32,000	3,696	34,278	37,974	32,446	1973/2007	Sep-95
Waterside At Ironbridge	—	1,844	13,239	15,083	10,879	2,768	23,194	25,962	18,370	1987	Sep-97
Carriage Homes at Wyndham	—	474	30,997	31,471	11,426	4,228	38,669	42,897	31,122	1998	Nov-03
Legacy at Mayland	—	1,979	11,524	13,503	36,568	5,873	44,198	50,071	40,415	1973/2007	Dec-91
RICHMOND, VA	—	5,123	60,908	66,031	90,873	16,565	140,339	156,904	122,353
TOTAL MID-ATLANTIC REGION	347,130	491,925	2,192,039	2,683,964	618,788	566,083	2,736,669	3,302,752	1,150,291
NORTHEAST REGION
Garrison Square	—	6,475	91,027	97,502	28,004	6,648	118,858	125,506	65,391	1887/1990	Sep-10
Ridge at Blue Hills	25,000	6,039	34,869	40,908	6,744	6,472	41,180	47,652	24,834	2007	Sep-10
Inwood West	80,000	20,778	88,096	108,874	16,204	19,866	105,212	125,078	63,670	2006	Apr-11
14 North	72,500	10,961	51,175	62,136	16,369	11,552	66,953	78,505	41,519	2005	Apr-11
100 Pier 4	—	24,584	—	24,584	203,853	24,834	203,603	228,437	71,542	2015	Dec-15
345 Harrison	—	32,938	—	32,938	330,425	44,910	318,453	363,363	62,358	2018	Nov-11
Currents on the Charles	—	12,580	70,149	82,729	1,866	12,702	71,893	84,595	12,379	2015	Jun-19
The Commons at Windsor Gardens	—	34,609	225,515	260,124	20,533	34,683	245,974	280,657	47,677	1969	Aug-19
Charles River Landing	—	17,068	112,777	129,845	1,938	17,091	114,692	131,783	15,859	2010	Nov-19
Lenox Farms	94,050	17,692	115,899	133,591	4,705	17,699	120,597	138,296	16,896	2009	Nov-19
Lodge at Ames Pond	—	12,645	70,653	83,298	3,561	12,649	74,210	86,859	10,566	2010	Nov-19
Union Place	51,800	9,902	72,242	82,144	2,205	9,943	74,406	84,349	4,638	2005	Jan-21
BOSTON, MA	323,350	206,271	932,402	1,138,673	636,407	219,049	1,556,031	1,775,080	437,329
10 Hanover Square	—	41,432	218,983	260,415	31,466	41,830	250,051	291,881	125,878	2005	Apr-11

S - 2

UDR, INC.

SCHEDULE III — REAL ESTATE OWNED - (Continued)

DECEMBER 31, 2021

(In thousands)

21 Chelsea	—	36,399	107,154	143,553	16,166	36,530	123,189	159,719	67,436	2001	Aug-11
View 34	—	114,410	324,920	439,330	116,670	116,094	439,906	556,000	246,965	1985/2013	Jul-11
95 Wall Street	—	57,637	266,255	323,892	11,397	58,114	277,175	335,289	169,531	2008	Aug-11
Leonard Pointe	—	38,010	93,204	131,214	1,483	38,071	94,626	132,697	18,542	2015	Feb-19
One William	—	6,422	75,527	81,949	(92)	6,467	75,390	81,857	12,677	2018	Aug-19
NEW YORK, NY	—	294,310	1,086,043	1,380,353	177,090	297,106	1,260,337	1,557,443	641,029
Park Square	—	10,365	96,050	106,415	1,626	10,485	97,556	108,041	18,182	2018	May-19
The Smith Valley Forge	—	17,853	95,973	113,826	123	17,853	96,096	113,949	2,175	2019	Sep-21
322 on North Broad	—	12,240	124,524	136,764	7,597	12,240	132,121	144,361	2,358	2018	Sep-21
PHILADELPHIA, PA	—	40,458	316,547	357,005	9,346	40,578	325,773	366,351	22,715
TOTAL NORTHEAST REGION	323,350	541,039	2,334,992	2,876,031	822,843	556,733	3,142,141	3,698,874	1,101,073
SOUTHEAST REGION
Summit West	—	2,176	4,710	6,886	13,799	4,029	16,656	20,685	15,027	1972	Dec-92
The Breyley	—	1,780	2,458	4,238	20,497	4,244	20,491	24,735	20,113	1977/2007	Sep-93
Lakewood Place	—	1,395	10,647	12,042	14,595	3,261	23,376	26,637	19,941	1986	Mar-94
Cambridge Woods	—	1,791	7,166	8,957	13,663	3,613	19,007	22,620	15,912	1985	Jun-97
Inlet Bay	—	7,702	23,150	30,852	22,725	10,821	42,756	53,577	36,272	1988/1989	Jun-03
MacAlpine Place	—	10,869	36,858	47,727	15,855	12,782	50,800	63,582	39,112	2001	Dec-04
The Vintage Lofts at West End	—	6,611	37,663	44,274	24,069	15,884	52,459	68,343	38,409	2009	Jul-09
Peridot Palms	—	6,293	89,752	96,045	1,788	6,316	91,517	97,833	18,435	2017	Feb-19
The Preserve at Gateway	—	4,467	43,723	48,190	1,760	4,519	45,431	49,950	8,337	2013	May-19
The Slade at Channelside	—	10,216	72,786	83,002	4,095	10,278	76,819	87,097	10,071	2009	Jan-20
Andover Place at Cross Creek	—	11,702	107,761	119,463	6,028	11,708	113,783	125,491	13,315	1997/1999	Nov-20
TAMPA, FL	—	65,002	436,674	501,676	138,874	87,455	553,095	640,550	234,944
Seabrook	—	1,846	4,155	6,001	11,099	3,239	13,861	17,100	12,465	1984/2004	Feb-96
Altamira Place	—	1,533	11,076	12,609	24,241	4,049	32,801	36,850	30,870	1984/2007	Apr-94
Regatta Shore	—	757	6,608	7,365	19,954	2,490	24,829	27,319	21,992	1988/2007	Jun-94
Alafaya Woods	—	1,653	9,042	10,695	13,955	2,934	21,716	24,650	18,196	1989/2006	Oct-94
Los Altos	—	2,804	12,349	15,153	15,271	4,640	25,784	30,424	21,383	1990/2004	Oct-96
Lotus Landing	—	2,185	8,639	10,824	14,169	3,399	21,594	24,993	16,834	1985/2006	Jul-97
Seville On The Green	—	1,282	6,498	7,780	9,226	1,920	15,086	17,006	12,230	1986/2004	Oct-97
Ashton @ Waterford	—	3,872	17,538	21,410	8,059	4,611	24,858	29,469	18,838	2000	May-98
Arbors at Lee Vista	—	6,692	12,860	19,552	18,628	7,925	30,255	38,180	22,812	1992/2007	Aug-06
Arbors at Maitland Summit	—	15,929	158,079	174,008	815	15,933	158,890	174,823	4,240	1998	Oct-21
Essex Luxe	—	9,068	94,487	103,555	370	9,069	94,856	103,925	1,576	2020	Oct-21
ORLANDO, FL	—	47,621	341,331	388,952	135,787	60,209	464,530	524,739	181,436
Legacy Hill	—	1,148	5,867	7,015	11,848	2,113	16,750	18,863	14,461	1977	Nov-95
Hickory Run	—	1,469	11,584	13,053	16,264	2,834	26,483	29,317	19,412	1989	Dec-95
Carrington Hills	—	2,117	—	2,117	40,308	5,031	37,394	42,425	29,897	1999	Dec-95
Brookridge	—	708	5,461	6,169	8,055	1,527	12,697	14,224	10,542	1986	Mar-96
Breckenridge	—	766	7,714	8,480	7,964	1,814	14,630	16,444	11,522	1986	Mar-97
Colonnade	—	1,460	16,015	17,475	10,238	2,578	25,135	27,713	18,640	1998	Jan-99
The Preserve at Brentwood	—	3,182	24,674	27,856	12,506	4,307	36,055	40,362	29,168	1998	Jun-04
Polo Park	—	4,583	16,293	20,876	19,409	6,355	33,930	40,285	28,428	1987/2008	May-06
NASHVILLE, TN	—	15,433	87,608	103,041	126,592	26,559	203,074	229,633	162,070
The Reserve and Park at Riverbridge	—	15,968	56,401	72,369	19,638	16,962	75,045	92,007	55,305	1999/2001	Dec-04
OTHER FLORIDA	—	15,968	56,401	72,369	19,638	16,962	75,045	92,007	55,305
TOTAL SOUTHEAST REGION	—	144,024	922,014	1,066,038	420,891	191,185	1,295,744	1,486,929	633,755
SOUTHWEST REGION
Thirty377	25,000	24,036	32,951	56,987	21,746	26,365	52,368	78,733	38,717	1999/2007	Aug-06
Legacy Village	90,000	16,882	100,102	116,984	24,295	21,493	119,786	141,279	81,246	2005/06/07	Mar-08
Addison Apts at The Park	—	22,041	11,228	33,269	14,859	31,319	16,809	48,128	12,155	1977/78/79	May-07
Addison Apts at The Park I	—	7,903	554	8,457	7,926	11,057	5,326	16,383	4,115	1970	May-07
Addison Apts at The Park II	—	10,440	634	11,074	2,075	8,458	4,691	13,149	3,379	1975	May-07
Savoye	—	8,432	50,483	58,915	2,300	8,518	52,697	61,215	7,422	2009	Nov-19
Savoye 2	—	6,451	56,615	63,066	1,689	6,467	58,288	64,755	8,064	2011	Nov-19
Fiori on Vitruvian Park	48,456	7,934	78,575	86,509	2,155	7,945	80,719	88,664	11,390	2013	Nov-19
Vitruvian West Phase I	41,317	6,273	61,418	67,691	1,460	6,283	62,868	69,151	9,051	2018	Nov-19
Vitruvian West Phase II	—	6,451	15,798	22,249	38,361	6,454	54,156	60,610	4,424	2021	Nov-19
The Canal	42,000	12,671	98,813	111,484	1,483	12,714	100,253	112,967	5,123	2017	Apr-21
Cool Springs at Frisco Bridges	89,510	18,325	151,982	170,307	2,619	18,335	154,591	172,926	9,395	2012	May-21
DALLAS, TX	336,283	147,839	659,153	806,992	120,968	165,408	762,552	927,960	194,481
Barton Creek Landing	—	3,151	14,269	17,420	25,417	5,506	37,331	42,837	32,431	1986/2012	Mar-02

S - 3

UDR, INC.

SCHEDULE III — REAL ESTATE OWNED - (Continued)

DECEMBER 31, 2021

(In thousands)

Residences at the Domain		—		4,034		55,256		59,290		16,075		4,646		70,719		75,365		47,394	2007	Aug-08
Red Stone Ranch		—		5,084		17,646		22,730		7,298		5,740		24,288		30,028		15,344	2000	Apr-12
Lakeline Villas		—		4,148		16,869		21,017		4,837		4,691		21,163		25,854		13,627	2002	Apr-12
AUSTIN, TX		—		16,417		104,040		120,457		53,627		20,583		153,501		174,084		108,796
Steele Creek		—		8,586		130,400		138,986		6,509		8,706		136,789		145,495		33,231	2015	Oct-17
DENVER, CO		—		8,586		130,400		138,986		6,509		8,706		136,789		145,495		33,231
TOTAL SOUTHWEST REGION		336,283		172,842		893,593		1,066,435		181,104		194,697		1,052,842		1,247,539		336,508
TOTAL OPERATING COMMUNITIES		1,033,763		2,250,422		8,356,669		10,607,091		3,597,559		2,501,993		11,702,657		14,204,650		5,113,287
REAL ESTATE UNDER DEVELOPMENT
Cirrus		—		13,853		—		13,853		74,466		13,853		74,466		88,319		—
5421 at Dublin Station		—		8,922		—		8,922		93,675		8,922		93,675		102,597		—
The George Apartments		—		17,341		—		17,341		35,037		17,348		35,030		52,378		—
Vitruvian West Phase III		—		7,141		2,754		9,895		40,629		7,141		43,383		50,524		507
The MO		—		27,135		—		27,135		67,616		27,135		67,616		94,751		—
TOTAL REAL ESTATE UNDER DEVELOPMENT		—		74,392		2,754		77,146		311,423		74,399		314,170		388,569		507
LAND
Vitruvian Park®		—		32,468		2,243		34,711		11,160		39,806		6,065		45,871		2,649
Alameda Point Block 11		—		25,006		—		25,006		2,957		25,006		2,957		27,963		—
Meridian		—		6,611		—		6,611		1,772		6,611		1,772		8,383		—
TOTAL LAND		—		64,085		2,243		66,328		15,889		71,423		10,794		82,217		2,649
COMMERCIAL
Brookhaven Shopping Center		—		—		—		—		29,937		7,793		22,144		29,937		14,995
TOTAL COMMERCIAL		—		—		—		—		29,937		7,793		22,144		29,937		14,995
Other (b)		—		—		—		—		9,359		—		9,359		9,359		241
1745 Shea Center I		—		3,034		20,534		23,568		2,503		3,081		22,990		26,071		5,417
TOTAL CORPORATE		—		3,034		20,534		23,568		11,862		3,081		32,349		35,430		5,658
TOTAL COMMERCIAL & CORPORATE		—		3,034		20,534		23,568		41,799		10,874		54,493		65,367		20,653
Deferred Financing Costs and Other Non-Cash Adjustments		23,617
TOTAL REAL ESTATE OWNED	$	1,057,380	$	2,391,933	$	8,382,200	$	10,774,133	$	3,966,670	$	2,658,689	$	12,082,114	$	14,740,803	$	5,137,096

(a)	Date of original construction/date of last major renovation, if applicable.

(b)	Includes unallocated accruals and capital expenditures.

The aggregate cost for federal income tax purposes was approximately $14.0 billion at December 31, 2021 (unaudited).

The estimated depreciable lives for all buildings in the latest Consolidated Statements of Operations are 30 to 55 years.

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UDR, INC.

SCHEDULE III — REAL ESTATE OWNED - (Continued)

DECEMBER 31, 2021

(In thousands)

3-YEAR ROLLFORWARD OF REAL ESTATE OWNED AND ACCUMULATED DEPRECIATION

The following is a reconciliation of the carrying amount of total real estate owned at December 31, (in thousands):


	2021		2020		2019
Balance at beginning of the year	$	13,071,472	$	12,602,101	$	10,196,159
Real estate acquired		1,513,106		413,488		2,241,163
Capital expenditures and development		346,365		299,986		195,981
Real estate sold		(190,140)		(244,103)		(31,202)
Balance at end of the year	$	14,740,803	$	13,071,472	$	12,602,101

The following is a reconciliation of total accumulated depreciation for real estate owned at December 31, (in thousands):


	2021		2020		2019
Balance at beginning of the year	$	4,605,366	$	4,131,353	$	3,654,160
Depreciation expense for the year		584,228		560,876		477,193
Accumulated depreciation on sales		(52,498)		(86,863)		—
Balance at end of year	$	5,137,096	$	4,605,366	$	4,131,353

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Previous: Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES