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 13, 2023	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 13, 2023 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
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, 2022 and 2021	F-5

Consolidated Statements of Operations for the years ended December 31, 2022, 2021, and 2020	F-6

Consolidated Statements of Comprehensive Income/(Loss) for the years ended December 31, 2022, 2021, and 2020	F-7

Consolidated Statements of Changes in Equity for the years ended December 31, 2022, 2021, and 2020	F-8

Consolidated Statements of Cash Flows for the years ended December 31, 2022, 2021, and 2020	F-9

Notes to Consolidated Financial Statements	F-11

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, 2022 and 2021, 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, 2022, 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, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, 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, 2022, 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 13, 2023 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, 2022, the Company’s real estate owned, net and investment in and advances to unconsolidated joint ventures, net were approximately $9.8 billion and $754.4 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 2022, 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, 2022, the Company’s real estate owned, net and investment in and advances to unconsolidated joint ventures, net were approximately $9.8 billion and $754.4 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 2022, 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 2022, 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 $236.5 million. 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, and market rental rates.
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. 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.

/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 13, 2023

F - 3

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, 2022, 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, 2022, 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, 2022 and 2021, 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, 2022, and the related notes, and the financial statement schedule listed in the accompanying Index at Item 15(a) and our report dated February 13, 2023 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 13, 2023

F - 4

UDR, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)


	December 31,		December 31,
	2022		2021
ASSETS
Real estate owned:
Real estate held for investment	$	15,365,928	$	14,352,234
Less: accumulated depreciation		(5,762,205)		(5,136,589)
Real estate held for investment, net		9,603,723		9,215,645
Real estate under development (net of accumulated depreciation of $296 and $507, respectively)		189,809		388,062
Real estate held for disposition (net of accumulated depreciation of $0 and $0, respectively)		14,039		—
Total real estate owned, net of accumulated depreciation		9,807,571		9,603,707

Cash and cash equivalents		1,193		967
Restricted cash		29,001		27,451
Notes receivable, net		54,707		26,860
Investment in and advances to unconsolidated joint ventures, net		754,446		702,461
Operating lease right-of-use assets		194,081		197,463
Other assets		197,471		216,311
Total assets	$	11,038,470	$	10,775,220

LIABILITIES AND EQUITY
Liabilities:
Secured debt, net	$	1,052,281	$	1,057,380
Unsecured debt, net		4,435,022		4,355,407
Operating lease liabilities		189,238		192,488
Real estate taxes payable		37,681		33,095
Accrued interest payable		46,671		45,980
Security deposits and prepaid rent		51,999		55,441
Distributions payable		134,213		124,729
Accounts payable, accrued expenses, and other liabilities		153,220		136,954
Total liabilities		6,100,325		6,001,474

Commitments and contingencies (Note 15)

Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership		839,850		1,299,442

Equity:
Preferred stock, no par value; 50,000,000 shares authorized at December 31, 2022 and December 31, 2021:
8.00% Series E Cumulative Convertible; 2,686,308 and 2,695,363 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively		44,614		44,764
Series F; 12,100,514 and 12,582,575 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively		1		1
Common stock, $0.01 par value; 450,000,000 shares authorized at December 31, 2022 and December 31, 2021:
328,993,088 and 318,149,635 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively		3,290		3,181
Additional paid-in capital		7,493,423		6,884,269
Distributions in excess of net income		(3,451,587)		(3,485,080)
Accumulated other comprehensive income/(loss), net		8,344		(4,261)
Total stockholders’ equity		4,098,085		3,442,874
Noncontrolling interests		210		31,430
Total equity		4,098,295		3,474,304
Total liabilities and equity	$	11,038,470	$	10,775,220

See accompanying notes to consolidated financial statements.

F - 5

UDR, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)


	Year Ended December 31,
	2022		2021		2020
REVENUES:
Rental income	$	1,512,364	$	1,284,665	$	1,236,096
Joint venture management and other fees		5,022		6,102		5,069
Total revenues		1,517,386		1,290,767		1,241,165
OPERATING EXPENSES:
Property operating and maintenance		250,310		218,094		201,944
Real estate taxes and insurance		221,662		199,446		180,450
Property management		49,152		38,540		35,538
Other operating expenses		17,493		21,649		22,762
Real estate depreciation and amortization		665,228		606,648		608,616
General and administrative		64,144		57,541		49,885
Casualty-related charges/(recoveries), net		9,733		3,748		2,131
Other depreciation and amortization		14,344		13,185		10,013
Total operating expenses		1,292,066		1,158,851		1,111,339
Gain/(loss) on sale of real estate owned		25,494		136,052		119,277
Operating income		250,814		267,968		249,103

Income/(loss) from unconsolidated entities		4,947		65,646		18,844
Interest expense		(155,900)		(186,267)		(202,706)
Interest income and other income/(expense), net		(6,933)		15,085		6,274
Income/(loss) before income taxes		92,928		162,432		71,515
Tax (provision)/benefit, net		(349)		(1,439)		(2,545)
Net income/(loss)		92,579		160,993		68,970
Net (income)/loss attributable to redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership		(5,613)		(10,873)		(4,543)
Net (income)/loss attributable to noncontrolling interests		(42)		(104)		(161)
Net income/(loss) attributable to UDR, Inc.		86,924		150,016		64,266
Distributions to preferred stockholders — Series E (Convertible)		(4,412)		(4,229)		(4,230)
Net income/(loss) attributable to common stockholders	$	82,512	$	145,787	$	60,036

Income/(loss) per weighted average common share:
Basic	$	0.26	$	0.49	$	0.20
Diluted	$	0.26	$	0.48	$	0.20

Weighted average number of common shares outstanding:
Basic		321,671		300,326		294,545
Diluted		322,700		301,703		294,927

See accompanying notes to consolidated financial statements.

F - 6

UDR, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

(In thousands)


	Year Ended December 31,
	2022		2021		2020
Net income/(loss)	$	92,579	$	160,993	$	68,970
Other comprehensive income/(loss), including portion attributable to noncontrolling interests:
Other comprehensive income/(loss) - derivative instruments:
Unrealized holding gain/(loss)		14,489		3,502		(3,382)
(Gain)/loss reclassified into earnings from other comprehensive income/(loss)		(998)		1,755		4,827
Other comprehensive income/(loss), including portion attributable to noncontrolling interests		13,491		5,257		1,445
Comprehensive income/(loss)		106,070		166,250		70,415
Comprehensive (income)/loss attributable to noncontrolling interests		(6,541)		(11,351)		(4,845)
Comprehensive income/(loss) attributable to UDR, Inc.	$	99,529	$	154,899	$	65,570

See accompanying notes to consolidated financial statements.

F - 7

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, 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
Net income/(loss) attributable to UDR, Inc.		—		—		—		86,924		—		—		86,924
Long Term Incentive Plan Unit grants/(vestings), net		—		—		—		—		—		(31,220)		(31,220)
Other comprehensive income/(loss)		—		—		—		—		12,605		—		12,605
Issuance/(forfeiture) of common and restricted shares, net		—		1		4,847		—		—		—		4,848
Issuance of common shares through public offering, net		—		115		629,437		—		—		—		629,552
Conversion of Series E Cumulative Convertible shares		(150)		1		149		—		—		—		—
Adjustment for conversion of noncontrolling interest of unitholders in the Operating Partnership and DownREIT Partnership		—		4		23,737		—		—		—		23,741
Common stock distributions declared ($1.52 per share)		—		—		—		(493,312)		—		—		(493,312)
Repurchase of common shares		—		(12)		(49,016)		—		—		—		(49,028)
Preferred stock distributions declared-Series E ($1.6456 per share)		—		—		—		(4,412)		—		—		(4,412)
Adjustment to reflect redemption value of redeemable noncontrolling interests		—		—		—		444,293		—		—		444,293
Balance at December 31, 2022	$	44,615	$	3,290	$	7,493,423	$	(3,451,587)	$	8,344	$	210	$	4,098,295

See accompanying notes to consolidated financial statements.

F - 8

UDR, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, except for share data)


	Year Ended December 31,
	2022		2021		2020
Operating Activities
Net income/(loss)	$	92,579	$	160,993	$	68,970
Adjustments to reconcile net income/(loss) to net cash provided by/(used in) operating activities:
Depreciation and amortization		679,572		619,833		618,629
(Gain)/loss on sale of real estate owned		(25,494)		(136,052)		(119,277)
(Income)/loss from unconsolidated entities		(4,947)		(65,646)		(18,844)
Return on investment in unconsolidated joint ventures and partnerships		22,369		23,269		20,664
Amortization of share-based compensation		27,505		22,052		19,616
Loss on extinguishment of debt, net		—		42,336		49,190
Other		31,835		19,182		12,193
Changes in operating assets and liabilities:
(Increase)/decrease in operating assets		9,792		(33,454)		(44,670)
Increase/(decrease) in operating liabilities		(13,140)		11,447		(2,155)
Net cash provided by/(used in) operating activities		820,071		663,960		604,316

Investing Activities
Acquisition of real estate assets		(341,149)		(1,244,508)		(407,829)
Proceeds from sales of real estate investments, net		40,808		280,077		277,886
Development of real estate assets		(198,022)		(178,029)		(121,240)
Capital expenditures and other major improvements — real estate assets		(214,833)		(156,384)		(163,105)
Capital expenditures — non-real estate assets		(21,180)		(10,140)		(11,008)
Investment in unconsolidated joint ventures and partnerships		(201,412)		(112,321)		(76,073)
Distributions received from unconsolidated joint ventures and partnerships		81,443		37,362		49,342
Purchase deposits on pending acquisitions		—		—		(1,530)
Repayment/(issuance) of notes receivable, net		(75,183)		111,690		(7,285)
Net cash provided by/(used in) investing activities		(929,528)		(1,272,253)		(460,842)

Financing Activities
Payments on secured debt		(1,141)		(1,096)		(425,839)
Proceeds from the issuance of secured debt		—		—		160,930
Payments on unsecured debt		—		(300,000)		(300,000)
Net proceeds from the issuance of unsecured debt		—		511,552		959,419
Net proceeds/(repayment) of commercial paper		80,000		30,000		(110,000)
Net proceeds/(repayment) of revolving bank debt		(1,531)		1,522		11,441
Proceeds from the issuance of common shares through public offering, net		629,552		899,053		102,234
Repurchase of common shares		(49,028)		—		(19,795)
Distributions paid to redeemable noncontrolling interests		(34,255)		(33,663)		(32,038)
Distributions paid to preferred stockholders		(4,381)		(4,225)		(4,217)
Distributions paid to common stockholders		(483,624)		(433,780)		(419,350)
Payment of prepayment and extinguishment costs		—		(40,769)		(62,645)
Other		(24,359)		(16,054)		(12,734)
Net cash provided by/(used in) financing activities		111,233		612,540		(152,594)
Net increase/(decrease) in cash, cash equivalents, and restricted cash		1,776		4,247		(9,120)
Cash, cash equivalents, and restricted cash, beginning of year		28,418		24,171		33,291
Cash, cash equivalents, and restricted cash, end of year	$	30,194	$	28,418	$	24,171

Supplemental Information:
Interest paid during the period, net of amounts capitalized	$	154,911	$	136,978	$	159,386
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases		12,502		12,502		12,502
Cash paid/(refunds received) for income taxes		1,145		4,778		1,029
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
OP Units issued for real estate, net		—		48,533		—
Acquisition of intellectual property in exchange for cancellation of secured note receivable		—		—		2,250
Recognition of allowance for credit losses		—		—		2,182
Redeemable long-term and short-term incentive plan units		56,568		14,578		23,501
Development costs and capital expenditures incurred, but not yet paid		56,336		39,856		31,387

F - 9

UDR, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS – (Continued)

(In thousands, except for share data)


	Year Ended December 31,
	2022		2021		2020
Conversion of Operating Partnership and DownREIT Partnership noncontrolling interests to common stock (502,868 shares in 2022; 1,916,613 shares in 2021; and 303,146 shares in 2020)		23,741		99,932		12,666
Distribution of equity securities from unconsolidated real estate technology investments		18,018		—		—
Dividends declared, but not yet paid		134,213		124,729		115,795

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	$	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
Cash, cash equivalents, and restricted cash, end of year:
Cash and cash equivalents	$	1,193	$	967	$	1,409
Restricted cash		29,001		27,451		22,762
Total cash, cash equivalents, and restricted cash as shown above	$	30,194	$	28,418	$	24,171

See accompanying notes to consolidated financial statements.

F - 10

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

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, 2022, our consolidated apartment portfolio consisted of 165 communities with a total of 54,999 apartment homes located in 21 markets. In addition, the Company has an ownership interest in 9,099 completed or to-be-completed apartment homes through unconsolidated joint ventures or partnerships, including 6,262 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 and Note 5, Joint Ventures and Partnerships, for further discussion). All significant intercompany accounts and transactions have been eliminated in consolidation.

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, 2022 and 2021, there were 186.1 million and 186.1 million units, respectively, in the Operating Partnership (“OP Units”) outstanding, of which 176.3 million, or 94.7%, and 176.2 million, or 94.7%, respectively, were owned by UDR and 9.8 million, or 5.3%, and 9.9 million, or 5.3%, respectively, were owned by outside limited partners. As of December 31, 2022 and 2021, there were 32.4 million units in the DownREIT Partnership (“DownREIT Units”) outstanding, of which 21.1 million, or 65.1%, and 20.6 million, or 63.6%, respectively, were owned by UDR and its subsidiaries and 11.3 million, or 34.9%, and 11.8 million, or 36.4%, 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 3, Real Estate Owned and Note 5, Joint Ventures and Partnerships.

SIGNIFICANT ACCOUNTING POLICIES

Recent Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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. In September 2022, we amended our unsecured term loan and its related interest rate swap agreements to change the interest rate benchmark from London Interbank Offered Rate (“LIBOR”) to Secured Overnight Financing Rate (“SOFR”). The Company applied the practical expedients in the ASU related to the cash flow hedges, which did not have a material impact on the consolidated financial statements. (See Note 7, Secured and Unsecured Debt, Net for further discussion.)

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.

F - 11

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2022

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 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, 2022, 2021 and 2020, 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

F - 12

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2022

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, 2022, 2021, and 2020 were $17.9 million, $11.3 million and $12.0 million, respectively. During the years ended December 31, 2022, 2021, and 2020, total interest capitalized was $13.4 million, $9.7 million and $7.0 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 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.

F - 13

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2022

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, 2022 and 2021, the Company recorded net credit recoveries/(losses) of $(0.1) million and $0.6 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.

Notes Receivable

Notes receivable relate to financing arrangements which are typically secured by assets of the borrower that may include real estate 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 of the existing loans.

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, 2022 and 2021 (dollars in thousands):


	Interest rate at		Balance Outstanding
	December 31,		December 31,		December 31,
	2022		2022		2021
Note due May 2022 (a)	N/A		$	—	$	2,760
Note due December 2023 (b)	10.00	%		30,377		24,235
Note due December 2026 (c)	11.00	%		17,292		—
Note due December 2026 (d)	11.00	%		5,813		—
Note due June 2027 (e)	18.00	%		1,500		—
Notes Receivable				54,982		26,995
Allowance for credit losses				(275)		(135)
Total notes receivable, net			$	54,707	$	26,860

(a)	The Company previously had a secured note with an unaffiliated third party with an aggregate commitment of $2.8 million. The note was secured by a parcel of land located in Kissimmee, Florida. In March 2022, the unaffiliated third party repaid the $2.8 million secured note in full.

(b)	The Company has a secured note with an unaffiliated third party with an aggregate commitment of $31.4 million. During 2022, the terms of this secured note were amended to increase the aggregate commitment from $25.4 million

F - 14

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2022

to $31.4 million and to extend the maturity date to December 2023. Interest payments are due monthly, with the exception of payments from June 2022 to December 2023, which will accrue and be due at maturity of the note. The note is secured by substantially all of the borrower’s assets and 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) December 2023.

(c)

In June 2022, the Company entered into a secured mezzanine loan with a third party developer of a 482 apartment home community located in Riverside, California, which is expected to be completed in 2025, with an aggregate commitment of $59.7 million, of which $17.3 million was funded during the year ended December 31, 2022. Interest payments accrue for 36 months and are due monthly after the loan has been outstanding for 36 months. The secured mezzanine loan has a scheduled maturity date in December 2026, with two one-year extension options.

(d)

In June 2022, the Company entered into a secured mezzanine loan with a third party developer of a 237 apartment home community located in Menifee, California, which is expected to be completed in 2025, with an aggregate commitment of $24.4 million, of which $5.8 million was funded during the year ended December 31, 2022. Interest payments accrue for 36 months and are due monthly after the loan has been outstanding for 36 months. The secured mezzanine loan has a scheduled maturity date in December 2026, with two one-year extension options.

(e)

In June 2022, the Company and a syndicate of lenders entered into a $16.0 million secured credit facility with an unaffiliated third party. The Company’s share of the facility was $1.5 million, all of which was funded during the year ended December 31, 2022. Interest payments will accrue and be due at maturity of the facility. The facility is secured by substantially all of the borrower’s assets and matures at the earliest of the following: (a) acceleration in the event of default; or (b) June 2027.

The Company recognized $3.5 million, $5.3 million, and $9.1 million of interest income for the notes receivable during the years ended December 31, 2022, 2021, and 2020, respectively, none of which was related party interest. Interest income is 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, 2022, the Company held one investment in a joint venture that qualified as a VIE where we were determined to be the primary beneficiary (See Note 5, Joint Ventures and Partnerships, for further discussion).

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

F - 15

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2022

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.

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, 2022 and 2021, UDR’s net deferred tax asset/(liability) was $(0.8) million and $(0.8) 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.

F - 16

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2022

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 a 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.

UDR had no material unrecognized tax benefit, accrued interest or penalties at December 31, 2022. UDR and its subsidiaries are subject to federal income tax as well as income tax of various state and local jurisdictions. The tax years 2019 through 2021 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.

F - 17

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2022

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, 2022, 2021, and 2020, total advertising expense was $8.7 million, $8.3 million, and $7.9 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 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, 2022, 2021, and 2020, 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, 2022, 2021, and 2020 was $0.9 million, $0.4 million, and $0.1 million, respectively.

Forward Sales Agreements

From time to time 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.

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UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2022

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.)

Impact of COVID-19 Pandemic

We continue to monitor the status and respond to the effects of the COVID-19 pandemic and its impact on our business. While the pandemic and related government measures adversely impacted our business in certain prior periods, the extent of the impact generally has decreased. Future developments regarding COVID-19, however, continue to be uncertain and difficult to predict. There can be no assurances that closures or restrictions in response to COVID-19, including due to new variants, will not be imposed in the future or that other developments related to COVID-19 will not adversely affect our business, results of operations, financial condition and cash flows in future periods.

During the years ended December 31, 2022 and 2021, 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 $8.7 million for multifamily tenant lease receivables and reduced its reserve to approximately $4.3 million for retail tenant lease receivables (inclusive of $3.2 million of reserves on straight-line lease receivables) for its wholly-owned communities and communities held by joint ventures during the year ended December 31, 2022. In aggregate, the reduction in reserve is reflected as a $6.0 million increase to Rental income and a $0.5 million increase to Income/(loss) from unconsolidated entities on the Consolidated Statements of Operations for the year ended December 31, 2022. During the year ended December 31, 2021, 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. The impact to deferred leasing commissions was not material for the years ended December 31, 2022 and 2021.

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, 2022, 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.

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UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2022

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, 2022, 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.

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, 2022, the Company owned and consolidated 165 communities in 13 states plus the District of Columbia totaling 54,999 apartment homes. The following table summarizes the carrying amounts for our real estate owned (at cost) as of December 31, 2022 and 2021 (dollars in thousands):


	December 31,		December 31,
	2022		2021
Land	$	2,539,499	$	2,342,385
Depreciable property — held and used:
Land improvements		254,578		241,905
Building, improvements, and furniture, fixtures and equipment		12,521,838		11,717,931
Real estate intangible assets		50,013		50,013
Under development:
Land and land improvements		43,711		74,399
Building, improvements, and furniture, fixtures and equipment		146,394		314,170
Real estate held for disposition:
Building, improvements, and furniture, fixtures and equipment		14,039		—
Real estate owned		15,570,072		14,740,803
Accumulated depreciation (a)		(5,762,501)		(5,137,096)
Real estate owned, net	$	9,807,571	$	9,603,707

	(a)	Accumulated depreciation is inclusive of $13.1 million and $8.8 million of accumulated amortization related to real estate intangible assets as of December 31, 2022 and 2021, respectively.

Acquisitions

In April 2022, the Company acquired a to-be-developed parcel of land located in Fort Lauderdale, Florida for approximately $16.0 million.

In June 2022, the Company acquired a 433 apartment home operating community located in Danvers, Massachusetts for approximately $207.5 million. The Company increased its real estate assets owned by approximately $203.7 million and recorded $3.8 million of in-place lease intangibles.

In June 2022, the Company acquired three contiguous to-be-developed parcels of land located in Dallas, Texas for approximately $90.2 million.

In June 2022, the Company acquired a to-be-developed parcel of land, which included two operating retail components, located in Riverside, California for approximately $29.0 million. The Company increased its real estate assets owned by approximately $28.2 million and recorded $0.8 million of in-place lease intangibles.

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.

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UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2022

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.

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 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.

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. As a

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UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2022

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.

Dispositions

In January 2023, the Company sold the retail component of a development community located in Washington D.C. for gross proceeds of approximately $14.4 million, resulting in an estimated gain of less than $0.1 million.

In November 2022, the Company sold an operating community located in Orange County, California with a total of 90 apartment homes for gross proceeds of $41.5 million, resulting in a gain of approximately $25.5 million.

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. 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.

Developments

At December 31, 2022, the Company was developing three wholly-owned communities totaling 715 homes, of which 161 have been completed, in which we have an investment of $190.1 million. The communities are estimated to be completed between the first quarter of 2023 and the second quarter of 2024.

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.

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UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2022

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, 2022		2023		2024		2025		2026		2027		Thereafter
Real estate intangible assets, net (a)	$	36,932	$	4,162	$	3,995	$	3,858	$	3,723	$	3,590	$	17,604
In-place lease intangible assets, net (b)		3,375		665		627		583		476		406		618
Total	$	40,307	$	4,827	$	4,622	$	4,441	$	4,199	$	3,996	$	18,222

	(a)	Real estate intangible assets, net is recorded net of accumulated amortization of $13.1 million in Real estate held for investment, net on the Consolidated Balance Sheets. For the years ended December 31, 2022 and 2021, $4.3 million and $3.0 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 $14.4 million in Other assets on the Consolidated Balance Sheets. For the years ended December 31, 2022 and 2021, $22.5 million and $20.3 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 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.

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UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2022

Consolidated joint venture

The Company has a preferred equity investment in a joint venture that owns 1532 Harrison, a 136 home community located in San Francisco, California. In September 2022, the joint venture defaulted on its senior construction loan, and the Company subsequently purchased the loan for its unpaid balance of $47.2 million pursuant to an agreement entered into with the lender at the time the preferred equity investment was made. As a result, the joint venture was deemed to be a VIE. The Company concluded that it is the primary beneficiary of the VIE, and therefore began consolidating the joint venture. The consolidated assets and liabilities related to the VIE were initially recorded at fair value during September 2022 and the book values were approximately $85.7 million and $0.1 million, respectively, as of December 31, 2022. The senior construction loan payable and related interest expense due from the joint venture eliminate upon consolidation of the Company’s consolidated financial statements. In February 2023, the Company took title to 1532 Harrison pursuant to a foreclosure resulting in it being a wholly-owned community.

Unconsolidated 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 for the communities held by the unconsolidated joint ventures and partnerships.

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UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2022

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, 2022 and 2021 (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	2022	2022	2022		2021		2022		2021		2022		2021		2020
Operating:
UDR/MetLife I	Los Angeles, CA	1	150	$	20,815	$	23,880	50.0	%	50.0	%	$	(2,027)	$	(2,544)	$	(2,639)
UDR/MetLife II	Various	7	1,250		174,645		181,023	50.0	%	50.0	%		1,245		(3,303)		(1,044)
Other UDR/MetLife Joint Ventures (a)	Various	5	1,437		51,700		66,012	50.6	%	50.6	%		(6,822)		(11,938)		(10,444)
Investment in and advances to unconsolidated joint ventures, net, before preferred equity investments and real estate technology investments				$	247,160	$	270,915					$	(7,604)	$	(17,785)	$	(14,127)



							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 (b)	Location	Rate		Maturity	Commitment (c)		2022		2021		2022		2021		2020
Preferred equity investments:
Junction	Santa Monica, CA	12.5	%	0.8	$	8,800	$	14,865	$	13,183	$	1,682	$	1,484	$	1,321
1532 Harrison (d)	San Francisco, CA	N/A		—		—		—		35,248		5,152		2,354		3,519
1200 Broadway (e) (f)	Nashville, TN	N/A		—		—		—		61,326		11,889		6,043		5,309
1300 Fairmount (f)	Philadelphia, PA	8.5	%	0.8		51,393		70,501		64,780		5,721		5,237		4,843
Modera Lake Merritt (f)	Oakland, CA	9.0	%	1.4		27,250		32,672		33,828		(1,156)		2,899		2,592
Thousand Oaks (f)	Thousand Oaks, CA	9.0	%	2.1		20,059		24,898		22,764		2,134		1,924		763
Vernon Boulevard (f)	Queens, NY	13.0	%	2.5		40,000		54,880		48,210		6,652		5,845		2,348
Makers Rise (f)	Herndon, VA	9.0	%	3.0		30,208		34,059		22,828		2,865		926		—
121 at Watters (f)	Allen, TX	9.0	%	3.2		19,843		22,511		14,134		1,861		749		—
Infield Phase I	Kissimmee, FL	14.0	%	1.4		16,044		17,816		—		1,743		—		—
Upton Place	Washington, D.C.	9.7	%	4.9		52,163		56,832		29,566		4,429		92		—
Meetinghouse (g)	Portland, OR	8.25	%	4.2		11,600		12,134		—		716		—		—
Heirloom (h)	Portland, OR	8.25	%	4.4		16,185		16,714		—		676		—		—
Portfolio Recapitalization (i)	Various	8.0	%	6.5		102,000		102,705		—		3,616		—		—
Real estate technology investments:
RETV I (j)	N/A	N/A		N/A		18,000		16,601		71,464		(35,507)		50,795		5,143
RETV II	N/A	N/A		N/A		18,000		11,670		8,130		(265)		1,101		(206)
RETV III (k)	N/A	N/A		N/A		15,000		—		—		—		—		—
RET Strategic Fund (l)	N/A	N/A		N/A		25,000		8,078		—		496		—		—
RET ESG (m)	N/A	N/A		N/A		10,000		2,898		—		(153)		—		—
Total Preferred Equity Investments and Real Estate Technology Investments								499,834		425,461		12,551		79,449		25,632

Sold joint ventures and other investments								—		—		—		3,982		7,339

Total Joint Ventures and Developer Capital Program and Real Estate Technology Investments, net (a)							$	746,994	$	696,376	$	4,947	$	65,646	$	18,844

(a)	As of December 31, 2022 and 2021, the Company’s negative investment in 13th and Market Properties LLC of $7.5 million and $6.1 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 Sheets.

(b)	The Developer Capital Program is the program through which the Company makes investments, including preferred equity investments, mezzanine loans or other structured investments that may receive a fixed 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.

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

(d)	As disclosed above, the Company began consolidating the 1532 Harrison joint venture in September 2022. The Company recorded $5.2 million in Income/(loss) from unconsolidated entities in connection with recording the joint venture’s assets and liabilities at fair value on the date of consolidation.

(e)	In January 2022, the joint venture sold its community, a 313 apartment home operating community located in Nashville, Tennessee, for a sales price of approximately $294.0 million. As a result, the Company recorded variable upside participation on the sale of approximately $10.6 million, net of associated costs.

(f)	The Company’s preferred equity investment receives a variable percentage of the value created from the project

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2022

	upon a capital or liquidating event.

(g)

In March 2022, the Company entered into a joint venture agreement with an unaffiliated joint venture partner to operate a 232 apartment home community in Portland, Oregon. The Company’s preferred equity investment of $11.6 million earns a preferred return of 8.25% 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.

(h)

In June 2022, the Company entered into a joint venture agreement with an unaffiliated joint venture partner to operate a 286 apartment home community in Portland, Oregon. The Company’s preferred equity investment of $16.2 million earns a preferred return of 8.25% 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**.**

(i)

In July 2022, the Company entered into a joint venture agreement with an unaffiliated joint venture partner to operate 14 communities located in various markets across the United States. The Company’s preferred equity investment of $102.0 million earns a preferred return of 8.0% 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.

(j)

The Company recognized $(35.5) million and $50.8 million of investment income/(loss) from RETV I for the years ended December 31, 2022 and 2021, respectively, which primarily related to unrealized gains/(losses) 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. 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 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 applicable reporting period.

(k)	In November 2022, the Company entered into a real estate technology investment as a limited partner, for a total commitment of $15.0 million. As of December 31, 2022, no funding to the limited partnership had occurred. The Company has concluded that it does not control the limited partnership and accounts for it under the equity method of accounting.

(l)	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 during the year ended December 31, 2022. The Company has concluded that it does not control the limited partnership and accounts for it under the equity method of accounting.

(m)	In April 2022, the Company entered into a real estate technology ESG investment as a limited partner, for a total commitment of $10.0 million. The Company funded $3.0 million to the limited partnership during the year ended December 31, 2022. 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, 2022 and 2021, the Company had deferred fees of $8.1 million and $8.7 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 $5.0 million, $6.1 million, and $5.1 million during the years ended December 31, 2022, 2021, and 2020, 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

F - 26

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2022

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, 2022, 2021, and 2020.

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, 2022, 2021, and 2020 (dollars in thousands):


											Developer
					Other				Total		Capital Program
As of and For the	UDR/		UDR/		UDR/MetLife				Excluding		and Other
Year Ended December 31, 2022	MetLife I		MetLife II		Joint Ventures		RETV I		DCP		Investments		Total
Condensed Statements of Operations:
Total revenues	$	10,813	$	58,163	$	61,253	$	42	$	130,271	$	38,145	$	168,416
Property operating expenses		5,011		25,950		24,301		1,596		56,858		23,622		80,480
Real estate depreciation and amortization		6,033		18,478		31,069		—		55,580		20,064		75,644
Gain/(loss) on sale of real estate		—		—		—		—		—		127,542		127,542
Operating income/(loss)		(231)		13,735		5,883		(1,554)		17,833		122,001		139,834
Interest expense		(3,068)		(10,124)		(17,318)		(21)		(30,531)		(16,383)		(46,914)
Other income/(loss)		—		—		—		—		—		(90)		(90)
Net realized gain/(loss) on held investments (a)		—		—		—		101,954		101,954		3,601		105,555
Net unrealized gain/(loss) on held investments (a)		—		—		—		(308,202)		(308,202)		(569)		(308,771)
Net income/(loss)	$	(3,299)	$	3,611	$	(11,435)	$	(207,823)	$	(218,946)	$	108,560	$	(110,386)

Condensed Balance Sheets:
Total real estate, net	$	102,900	$	623,994	$	531,058	$	—	$	1,257,952	$	1,481,832	$	2,739,784
Investments, at fair value		—		—		—		96,118		96,118		117,625		213,743
Cash and cash equivalents		1,863		6,586		7,105		1,160		16,714		22,285		38,999
Other assets		1,464		9,142		3,814		52		14,472		107,287		121,759
Total assets		106,227		639,722		541,977		97,330		1,385,256		1,729,029		3,114,285
Third party debt, net		71,059		334,687		452,163		—		857,909		1,079,420		1,937,329
Accounts payable and accrued liabilities		1,105		7,590		5,460		70		14,225		202,923		217,148
Total liabilities		72,164		342,277		457,623		70		872,134		1,282,343		2,154,477
Total equity	$	34,063	$	297,445	$	84,354	$	97,260	$	513,122	$	446,686	$	959,808

(a)

Net unrealized and realized gain/(loss) on held investments related to RETV I primarily related to unrealized and realized gains from SmartRent. For the year ended December 31, 2022, the Company recorded its share of net losses related to RETV I of $(35.5) million. Of that amount, $(37.2) million related to SmartRent, which are recorded in Income/(loss) from unconsolidated entities on the Consolidated Statement Operations.

F - 27

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2022


													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.


													Developer
					Other		West Coast				Total		Capital Program
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

F - 28

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2022

LEASES

Lessee - Ground Leases

UDR has six communities that are subject to ground leases, under which UDR is the lessee, that expire 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, 2022 and 2021.

As of December 31, 2022 and 2021, the Operating lease right-of-use assets were $194.1 million and $197.5 million, respectively, and the Operating lease liabilities were $189.2 million and $192.5 million, respectively, on our Consolidated Balance Sheets related to our ground leases. The value of the Operating lease right-of-use assets exceeds the value of the Operating lease liabilities due to prepaid lease payments and intangible assets for ground leases acquired in the purchase of real estate. The calculation of these amounts includes minimum lease payments over the remaining lease term (described further in the table below). Variable lease payments are excluded from the right-of-use assets and lease liabilities and are recognized in earnings in the period in which the obligation for those payments is incurred.

As the discount rate implicit in the leases was not readily determinable, we determined the discount rate for these leases utilizing the 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 42.6 years and 43.2 years at December 31, 2022 and 2021, respectively, and the weighted average discount rate was 5.0% at both December 31, 2022 and 2021.

Future minimum lease payments and total operating lease liabilities from our ground leases as of December 31, 2022 are as follows (dollars in thousands):


	Ground Leases
2023	$	12,442
2024		12,442
2025		12,442
2026		12,442
2027		12,442
Thereafter		417,895
Total future minimum lease payments (undiscounted)		480,105
Difference between future undiscounted cash flows and discounted cash flows		(290,867)
Total operating lease liabilities (discounted)	$	189,238

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 - 29

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2022

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


	Year Ended December 31,
	2022		2021		2020
Lease expense:
Contractual lease expense	$	12,991	$	12,924	$	12,821
Variable lease expense (a)		112		78		119
Total operating lease expense (b)(c)	$	13,103	$	13,002	$	12,940

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

	(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, 2022, Operating lease right-of-use assets and Operating lease liabilities amortized by $3.4 million and $3.3 million, respectively, 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, and 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. Due to the net impact of the amortization, the Company recorded $0.1 million, $0.3 million and $0.3 million of total operating lease expense during the years ended December 31, 2022, 2021 and 2020, 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, 2022, our apartment home leases generally have initial terms of 12 months or less. As of December 31, 2022, our retail and commercial space leases generally have initial terms of between 5 and 15 years and represent approximately 1% to 2% of our total lease revenue. Our apartment home leases are generally renewable at the end of the lease term, subject to potential changes 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, 2022 are as follows (dollars in thousands):


	Retail and Commercial Leases
2023	$	26,907
2024		25,232
2025		21,971
2026		19,174
2027		15,214
Thereafter		66,864
Total future minimum lease payments (a)	$	175,362

	(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 $0.8 million, $0.4 million and $0.2 million during the years ended December 31, 2022, 2021 and 2020, respectively.

F - 30

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2022

SECURED AND UNSECURED DEBT, NET

The following is a summary of our secured and unsecured debt at December 31, 2022 and 2021 (dollars in thousands):


	Principal Outstanding				As of December 31, 2022
					Weighted		Weighted
					Average		Average	Number of
	December 31,		December 31,		Interest		Years to	Communities
	2022		2021		Rate		Maturity	Encumbered
Secured Debt:
Fixed Rate Debt
Mortgage notes payable (a)	$	1,005,622	$	1,006,762	3.42	%	5.4	14
Deferred financing costs and other non-cash adjustments (b)		19,712		23,678
Total fixed rate secured debt, net		1,025,334		1,030,440	3.42	%	5.4	14
Variable Rate Debt
Tax-exempt secured notes payable (c)		27,000		27,000	2.76	%	9.2	1
Deferred financing costs		(53)		(60)
Total variable rate secured debt, net		26,947		26,940	2.76	%	9.2	1
Total Secured Debt, net		1,052,281		1,057,380	3.40	%	5.5	15
Unsecured Debt:
Variable Rate Debt
Borrowings outstanding under unsecured credit facility due January 2026 (d) (m)		—		—	—	%	3.1
Borrowings outstanding under unsecured commercial paper program due January 2023 (e) (m)		300,000		220,000	4.70	%	0.1
Borrowings outstanding under unsecured working capital credit facility due January 2024 (f)		28,015		29,546	5.18	%	1.0
Term Loan due January 2027 (d) (m)		175,000		35,000	4.90	%	4.1
Fixed Rate Debt
Term Loan due January 2027 (d) (m)		175,000		315,000	1.43	%	4.1
8.50% Debentures due September 2024		15,644		15,644	8.50	%	1.7
2.95% Medium-Term Notes due September 2026 (g) (m)		300,000		300,000	2.89	%	3.7
3.50% Medium-Term Notes due July 2027 (net of discounts of $317 and $388, respectively) (h) (m)		299,683		299,612	4.03	%	4.5
3.50% Medium-Term Notes due January 2028 (net of discounts of $598 and $717, respectively) (m)		299,402		299,283	3.50	%	5.0
4.40% Medium-Term Notes due January 2029 (net of discounts of $4 and $4, respectively) (i) (m)		299,996		299,996	4.27	%	6.1
3.20% Medium-Term Notes due January 2030 (net of premiums of $9,667 and $11,040, respectively) (j) (m)		609,667		611,040	3.32	%	7.0
3.00% Medium-Term Notes due August 2031 (net of premiums of $10,304 and $11,498, respectively) (k) (m)		610,304		611,498	3.01	%	8.6
2.10% Medium-Term Notes due August 2032 (net of discounts of $338 and $373, respectively) (m)		399,662		399,627	2.10	%	9.6
1.90% Medium-Term Notes due March 2033 (net of discounts of $1,230 and $1,351, respectively) (m)		348,770		348,649	1.90	%	10.2
2.10% Medium-Term Notes due June 2033 (net of discounts of $1,041 and $1,140, respectively) (m)		298,959		298,860	2.10	%	10.5
3.10% Medium-Term Notes due November 2034 (net of discounts of $1,045 and $1,133, respectively) (l) (m)		298,955		298,867	3.13	%	11.8
Other		5		7
Deferred financing costs		(24,040)		(27,222)
Total Unsecured Debt, net		4,435,022		4,355,407	3.17	%	6.8
Total Debt, net	$	5,487,303	$	5,412,787	3.17	%	6.7

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.

F - 31

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2022

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, 2022, secured debt encumbered approximately 11% of UDR’s total real estate owned based upon gross book value (approximately 89% of UDR’s real estate owned based on gross book value is unencumbered).

(a) At December 31, 2022, 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).

The Company did not incur any net extinguishment costs during years ended December 31, 2022 and 2021, and incurred $8.5 million of net extinguishment costs during the year ended December 31, 2020, 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 term of the underlying debt instrument.

(b) During the years ended December 31, 2022, 2021, and 2020, the Company had $4.5 million, $3.9 million, and $22.4 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 $22.5 million and $27.0 million at December 31, 2022 and 2021, 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, 2022, the variable interest rate on the mortgage note was 2.76%.

(d) The Company has 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 for these facilities ( the “Credit Agreement”) allows the total commitments under the Revolving Credit Facility and the total borrowings under the Term Loan to be increased to an aggregate maximum amount of up to $2.5 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. In September 2022, the Company amended the Credit Agreement to change the interest rate benchmark from LIBOR to SOFR.

Based on the Company’s current credit rating, the Revolving Credit Facility has an interest rate equal to SOFR plus a margin of 85.5 basis points and a facility fee of 15 basis points, and the Term Loan has an interest rate equal to SOFR plus a margin of 93.0 basis points. The margins noted for the current interest rates include a 10 basis point adjustment related to the SOFR transition. 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. Further, the Credit Agreement includes sustainability adjustments pursuant to which the applicable margin for the Revolving Credit Facility and the Term Loan were reduced by two basis points in September 2022 upon the Company receiving certain green building certifications, which is reflected in the margins noted above.

In August 2021, the Company entered into two interest rate swaps totaling a $175.0 million notional value, which became 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, was 1.48%. In September 2022, the Company amended its two interest rate swaps totaling a $175.0 million notional value to reflect the change in the Term Loan’s interest rate benchmark form LIBOR to SOFR. The all-in weighted average interest rate, inclusive of the impact of the interest rate swaps, is 1.43%.

F - 32

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2022

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, 2022 and 2021 (dollars in thousands):


	December 31,			December 31,
	2022			2021
Total revolving credit facility	$	1,300,000		$	1,300,000
Borrowings outstanding at end of period (1)		—			—
Weighted average daily borrowings during the period ended		3,776			13,068
Maximum daily borrowings during the period ended		205,000			305,000
Weighted average interest rate during the period ended		3.9	%		0.9	%
Interest rate at end of the period		—	%		—	%

(1)	Excludes $2.6 million and $2.6 million of letters of credit at December 31, 2022 and 2021, 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.

The following is a summary of short-term bank borrowings under the unsecured commercial paper program at December 31, 2022 and 2021 (dollars in thousands):


	December 31,			December 31,
	2022			2021
Total unsecured commercial paper program	$	700,000		$	700,000
Borrowings outstanding at end of period		300,000			220,000
Weighted average daily borrowings during the period ended		405,671			419,563
Maximum daily borrowings during the period ended		700,000			700,000
Weighted average interest rate during the period ended		2.3	%		0.2	%
Interest rate at end of the period		4.7	%		0.3	%

(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 2022, the Company amended its Working Capital Credit Facility to change the interest rate benchmark from LIBOR to SOFR. Based on the Company’s current credit rating, the Working Capital Credit Facility has an interest rate equal to SOFR plus a margin of 87.5 basis points. The margin noted for the current interest rate includes a 10 basis point adjustment related to the SOFR transition. Depending on the Company’s credit rating, the margin ranges from 70 to 140 basis points.

The following is a summary of short-term bank borrowings under the Working Capital Credit Facility at December 31, 2022 and 2021 (dollars in thousands):


	December 31,			December 31,
	2022			2021
Total working capital credit facility	$	75,000		$	75,000
Borrowings outstanding at end of period		28,015			29,546
Weighted average daily borrowings during the period ended		15,080			10,473
Maximum daily borrowings during the period ended		55,812			46,038
Weighted average interest rate during the period ended		3.0	%		0.9	%
Interest rate at end of the period		5.2	%		0.9	%

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UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2022

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

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

(i) 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%.

(j) 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%.

(k) 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%.

(l) 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%.

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

The aggregate maturities, including amortizing principal payments on secured and unsecured debt, of total debt for the next ten years subsequent to December 31, 2022 are as follows (dollars in thousands):


	Total Fixed		Total Variable		Total		Total			Total
Year	Secured Debt		Secured Debt		Secured Debt		Unsecured Debt			Debt
2023	$	1,242	$	—	$	1,242	$	300,000	(a)	$	301,242
2024		96,747		—		96,747		43,659			140,406
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
2032				27,000		27,000		400,000			427,000
Thereafter		—		—		—		950,000			950,000
Subtotal		1,005,622		27,000		1,032,622		4,443,659			5,476,281
Non-cash (b)		19,712		(53)		19,659		(8,637)			11,022
Total	$	1,025,334	$	26,947	$	1,052,281	$	4,435,022		$	5,487,303

(a)	All unsecured debt due in 2023 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, 2022 and 2021, the Company amortized $3.8 million and $4.7 million, respectively, of deferred financing costs into Interest expense.

We were in compliance with the covenants of our debt instruments at December 31, 2022.

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UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2022

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,
	2022		2021		2020
Numerator for income/(loss) per share:
Net income/(loss)	$	92,579	$	160,993	$	68,970
Net (income)/loss attributable to redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership		(5,613)		(10,873)		(4,543)
Net (income)/loss attributable to noncontrolling interests		(42)		(104)		(161)
Net income/(loss) attributable to UDR, Inc.		86,924		150,016		64,266
Distributions to preferred stockholders — Series E (Convertible)		(4,412)		(4,229)		(4,230)
Income/(loss) attributable to common stockholders - basic and diluted	$	82,512	$	145,787	$	60,036

Denominator for income/(loss) per share:
Weighted average common shares outstanding		321,949		300,579		294,808
Non-vested restricted stock awards		(278)		(253)		(263)
Denominator for basic income/(loss) per share		321,671		300,326		294,545
Incremental shares issuable from assumed conversion of unvested LTIP Units, performance units, unvested restricted stock and shares issuable upon settlement of forward sales agreements		1,029		1,377		382
Denominator for diluted income/(loss) per share		322,700		301,703		294,927

Income/(loss) per weighted average common share:
Basic	$	0.26	$	0.49	$	0.20
Diluted	$	0.26	$	0.48	$	0.20

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”), performance 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, 2022, 2021, and 2020, 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, 2022, the Company settled 4.4 million shares of common stock through its ATM program pursuant to the Company’s forward sales agreements described below. As of December 31, 2022, we had 14.0 million shares of common stock available for future issuance under the ATM program.

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.

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

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UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2022

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.

In June 2022, the Company settled all 4.4 million shares under the outstanding forward sales agreements under its ATM program at a weighted average forward price per share of $52.46, 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 over the term of the agreements and commissions paid to sales agents of approximately $7.5 million, for net proceeds of $230.9 million.

In March 2022, in connection with an underwritten public offering, the Company entered into forward sales agreements to sell 7.0 million shares of its common stock at an initial forward price per share of $57.565. The actual forward price per share received by the Company upon settlement was determined on the applicable settlement dates 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 agreements. During the year ended December 31, 2022, the Company settled all 7.0 million shares under the forward sales agreements at a weighted average forward price per share of $57.07, which is inclusive of adjustments made to reflect the then-current federal funds rate and the amount of dividends paid to holders of UDR common stock, for net proceeds of $399.5 million.

As described above, during the year ended December 31, 2022, the Company settled all 11.4 million shares in aggregate under previously announced forward sales agreements, including under the ATM program, for net proceeds of $630.4 million. Aggregate net proceeds from such forward sales, after deducting related expenses, were $629.6 million.

In March 2021, the Company entered into forward sales 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 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 agreements. 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 sales 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 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 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.

During the year ended December 31, 2022, the Company repurchased 1.2 million shares of its common stock at an average price of $41.14 per share for total consideration of approximately $49.0 million under its share repurchase program. During the year ended December 31, 2021, the Company did not repurchase any shares of its common stock.

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UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2022

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, 2022, 2021, and 2020 (in thousands):


	Year Ended December 31,
	2022	2021	2020
OP/DownREIT Units	21,478	22,418	22,310
Convertible preferred stock	2,916	2,918	2,950
Unvested LTIP Units and unvested restricted stock	1,029	1,377	382

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’s authorized capital was 450.0 million shares of common stock and 50.0 million shares of preferred stock as of December 31, 2022.

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, 2022, 2021 and 2020:


	Common	Preferred Stock
	Stock	Series E	Series F
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
Issuance/(forfeiture) of common and restricted shares, net	120	—	—
Issuance of common shares through forward sales public offering, net (forward sales agreement)	11,402	—	—
Repurchase of common shares	(1,192)	—	—
Adjustment for conversion of noncontrolling interest of unitholders in the Operating Partnership	4	—	—
Adjustment for conversion of noncontrolling interest of unitholders in the DownREIT Partnership	499	—	—
Conversion of Series E Cumulative Convertible shares	10	(9)	—
Forfeiture of Series F shares	—	—	(482)
Balance at December 31, 2022	328,993	2,686	12,101

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UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2022

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, 2022, 14.0 million shares were available for sale under the ATM program.

During the year ended December 31, 2022, the Company entered into the following equity transactions for our common stock:

	●	Settled 11.4 million shares in aggregate under forward sales agreements under the ATM program and previously announced forward sales agreements at a weighted average forward price per share of $55.29, for net proceeds of approximately $630.4 million. Aggregate net proceeds from such forward sales, after deducting related expenses, were $629.6 million;

	●	Repurchased 1.2 million shares of common stock at a weighted average price per share of $41.14, for total consideration of approximately $49.0 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 0.5 million shares of common stock upon redemption of DownREIT Units, resulting in the forfeiture of 0.5 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, 2022, 2021, and 2020 totaled $1.52, $1.45, and $1.44 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, 2022, 2021, and 2020 were $1.65, $1.57, and $1.56 per share, respectively. The Series E is not listed on any exchange. At December 31, 2022 and 2021, 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 certain 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, 2022 and 2021, 0.5 million and 1.9 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, 2022 and 2021, a total of 12.1 million and 12.6 million shares, respectively, of the Series F were outstanding with an aggregate purchase value of $1,210 and $1,258, 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.

F - 38

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2022

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, 2022. During the year ended December 31, 2022, UDR acquired all shares issued through the open market.

EMPLOYEE BENEFIT PLANS

In May 2022, 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, 2022, 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, 2022, there were 14.4 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.

F - 39

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2022

A summary of UDR’s Performance Units, LTIP Units, restricted stock and option activities during the year ended December 31, 2022 is as follows (shares in thousands):


	Unvested Performance Units Outstanding			Performance Units Exercisable			Unvested Stock Options Outstanding			Stock Options Exercisable			LTIP Units			Restricted Stock
																	Weighted
		Weighted			Weighted			Weighted			Weighted			Weighted			Average Fair
		Average			Average			Average			Average			Average Fair			Value Per
	Number of	Exercise		Number of	Exercise		Number of	Exercise		Number of	Exercise		Number of	Value Per		Number	Restricted
	Units	Price		Units	Price		Options	Price		Options	Price		LTIP Units	LTIP Unit		of shares	Stock
Balance, December 31, 2021	2,962	$	42.30	—	$	—	—	$	—	—	$	—	420	$	41.94	248	$	40.30
Granted	1,610		45.60	—		—	1,225		45.91	—		—	397		55.29	187		51.93
Exercised	—		—	—		—	—		—	—		—	—		—	—		—
Vested	(1,823)		36.85	1,823		36.85	—		—	—		—	(326)		40.51	(142)		40.02
Forfeited	—		—	—		—	—		—	—		—	—		—	(20)		45.38
Balance, December 31, 2022	2,749	$	44.66	1,823	$	36.85	1,225	$	45.91	—	$	-	491	$	53.69	273	$	48.77

As of December 31, 2022, the Company had granted 6.7 million shares of restricted stock, 2.8 million LTIP Units, 4.6 million Performance Units, and 1.2 million stock options under the LTIP.

Stock Option Plan

UDR has granted stock options to our employees and Company directors. Subject to certain conditions, each stock option is exercisable into one share of UDR common stock.

The total remaining compensation cost on unvested stock options was $5.1 million as of December 31, 2022.

During the year ended December 31, 2022, no stock options were exercised.

The weighted average remaining contractual life on all stock options outstanding as of December 31, 2022 is 4.7 years and such options have a weighted average exercise price of $45.91.

During the year ended December 31, 2022, we recognized $0.7 million, of net compensation expense related to outstanding stock options. No compensation expense related to outstanding stock options was recognized during the years ended December 31, 2021 and 2020.

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, 2022, 2021, and 2020, we recognized $6.1 million, $4.1 million, and $5.3 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 $5.4 million and had a weighted average remaining contractual life of 2.2 years as of December 31, 2022.

F - 40

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2022

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 $11.7 million as of December 31, 2022.

During the year ended December 31, 2022, no Performance Units were exercised.

The weighted average remaining contractual life on all Performance Units outstanding as of December 31, 2022 is 3.6 years and such Performance Units have a weighted average exercise price of $44.66.

During the years ended December 31, 2022 and 2021, we recognized $5.2 million and $11.7 million, respectively, of net compensation expense related to outstanding Performance Units. No compensation expense was recognized during the year ended December 31, 2020.

Short-Term Incentive Compensation

In January 2022, certain officers of the Company were awarded STI Unit grants under the 2022 Long-Term Incentive Program (“2022 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 $51.10 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, 2022, we recognized $6.5 million of compensation expense, net of capitalization, related to the amortization of STI Unit awards. As the STI Unit awards vest after a one-year period, there was no remaining unrecognized compensation expense as of December 31, 2022.

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**.**

F - 41

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2022

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**.**

Long-Term Incentive Compensation

In January 2022, certain officers of the Company were awarded either a restricted stock grant or an LTIP Unit grant, or a combination of both, under the 2022 LTI. For both restricted stock grants and LTIP Unit grants, thirty percent of the 2022 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 2022 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 2022 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 $59.90 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 $27.04 per unit on the grant date, inclusive of a 9.7% discount, and the portion of the LTIP Unit grant based upon the three-year FFO as Adjusted was valued for compensation expense purposes at $28.72 per unit on the grant date, inclusive of a 4.1% discount. The portion of the restricted stock grant based upon relative TSR was valued for compensation expense purposes at $66.83 per share for the comparable apartment REITs component and $68.02 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 $31.95 per unit, inclusive of a 4.1% discount, for the comparable apartment REITs component and $32.85 per unit, inclusive of a 4.1% 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%.

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2022

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 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%.

For the years ended December 31, 2022, 2021, and 2020, we recognized $9.0 million, $5.9 million and $10.2 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 $7.3 million and had a weighted average remaining contractual life of 1.7 years as of December 31, 2022.

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, 2022, 2021, and 2020, were $1.7 million, $1.4 million, and $1.5 million, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2022

INCOME TAXES

For 2022, 2021, and 2020, 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, 2022, 2021 and 2020 (unaudited):


	Year Ended December 31,
	2022		2021		2020
Ordinary income	$	1.3329	$	0.9798	$	1.0320
Qualified ordinary income		0.0001		0.0405		0.0039
Long-term capital gain		0.1521		0.3577		0.2974
Unrecaptured section 1250 gain		0.0174		0.0695		0.0892
Total	$	1.5025	$	1.4475	$	1.4225

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, 2022, 2021, and 2020 (dollars in thousands):


	Year Ended December 31,
	2022		2021		2020
Income tax (benefit)/provision
Current
Federal	$	—	$	2,693	$	(148)
State		440		1,236		1,374
Total current		440		3,929		1,226
Deferred
Federal		(27)		(1,770)		894
State		(16)		(672)		451
Investment tax credit		(48)		(48)		(26)
Total deferred		(91)		(2,490)		1,319
Total income tax (benefit)/provision	$	349	$	1,439	$	2,545

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, 2022

upon enacted tax laws. The components of our TRS deferred tax assets and liabilities are as follows for the years ended December 31, 2022, 2021, and 2020 (dollars in thousands):


	Year Ended December 31,
	2022		2021		2020
Deferred tax assets:
Federal and state tax attributes	$	157	$	60	$	6
Other		64		102		147
Total deferred tax assets		221		162		153
Valuation allowance		(33)		(32)		(23)
Net deferred tax assets		188		130		130
Deferred tax liabilities:
Book/tax depreciation and basis		(876)		(860)		(638)
Other investment ventures		—		—		(2,665)
Other		(67)		(68)		(67)
Total deferred tax liabilities		(943)		(928)		(3,370)
Net deferred tax assets/(liabilities)	$	(755)	$	(798)	$	(3,240)

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, 2022, 2020, and 2019 as follows (dollars in thousands):


	Year Ended December 31,
	2022		2021		2020
Income tax provision/(benefit)
U.S. federal income tax provision/(benefit)	$	(109)	$	1,058	$	1,240
State income tax provision		914		664		1,434
Other items		(409)		(246)		(165)
Solar credit amortization		(48)		(48)		(26)
ITC basis adjustment		—		2		58
Valuation allowance		1		9		4
Total income tax provision/(benefit)	$	349	$	1,439	$	2,545

As of December 31, 2022, the Company had federal net operating loss carryovers (“NOL”) of $24.6 million expiring in 2032 through 2035 and state NOLs of $65.4 million expiring in 2022 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 $(0.3) million, $(1.4) million and $(2.5) million for the years ended December 31, 2022, 2021 and 2020, respectively. The decrease of $1.1 million was primarily attributable to a decrease in TRS income of $5.6 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, 2022 and 2021, UDR has no material unrecognized income tax benefits/(provisions), net.

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UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2022

The Company files income tax returns in federal and various state and local jurisdictions. The tax years 2019 through 2021 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, 2022 and 2021 (dollars in thousands):


	Year Ended December 31,
	2022		2021
Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership, at beginning of year	$	1,299,442	$	856,294
Mark-to-market adjustment to redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership		(444,293)		502,768
OP Units issued for real estate, net		—		48,533
Conversion of OP Units/DownREIT Units to Common Stock or Cash		(44,346)		(99,932)
Net income/(loss) attributable to redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership		5,613		10,873
Distributions to redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership		(34,020)		(34,044)
Redeemable Long-Term and Short-Term Incentive Plan Units		56,568		14,576
Allocation of other comprehensive income/(loss)		886		374
Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership, at end of year	$	839,850	$	1,299,442

Noncontrolling Interests

Noncontrolling interests represent interests of unrelated partners in certain consolidated affiliates, and are presented as part of equity on the Consolidated Balance Sheets since these interests are not redeemable. Net (income)/loss attributable to noncontrolling interests was less than $(0.1) million, $(0.1) million, and $(0.2) million during the years ended December 31, 2022, 2021, and 2020, respectively.

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UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2022

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, 2022 and 2021 are summarized as follows (dollars in thousands):


					Fair Value at December 31, 2022, 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
	2022 (a)		2022		(Level 1)		(Level 2)		(Level 3)
Description:
Notes receivable, net (b)	$	54,707	$	55,514	$	—	$	—	$	55,514
Equity securities (c)		9,707		9,707		9,707		—		—
Derivatives - Interest rate contracts (d)		15,270		15,270		—		15,270		—
Total assets	$	79,684	$	80,491	$	9,707	$	15,270	$	55,514

Secured debt instruments - fixed rate: (e)
Mortgage notes payable	$	1,028,169	$	909,041	$	—	$	—	$	909,041
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		28,015		28,015		—		—		28,015
Commercial paper program		300,000		300,000		—		—		300,000
Unsecured notes		4,131,047		3,448,632		—		—		3,448,632
Total liabilities	$	5,514,231	$	4,712,688	$	—	$	—	$	4,712,688

Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership (f)	$	839,850	$	839,850	$	—	$	839,850	$	—

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UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2022


					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	$	—

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

(b)	See Note 2, Significant Accounting Policies.

(c)

The Company holds a direct investment in a publicly traded real estate technology company, SmartRent, that was previously subject to a lock-up restriction on selling or transferring the investment, which expired in February 2022. The investment is valued at the market price on December 31, 2022, and as of December 31, 2021, was valued at the market price on December 31, 2021 less an illiquidity discount of 15.0%. Since the lock-up restriction expired, the Company currently classifies the investment as Level 1 in the fair value hierarchy. The Company previously classified the investment as Level 3 in the fair value hierarchy based upon the lock-up restriction. During the year ended December 31, 2022, the Company increased its direct investment in SmartRent due to stock distributions from its unconsolidated real estate technology investments.

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

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

(f)	See Note 12, Noncontrolling Interests.

Other than described in footnote (c) above, there were no transfers into or out of any of the levels of the fair value hierarchy during the year ended December 31, 2022 and 2021.

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

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UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2022

market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates rise above the strike rate of the caps. The variable interest rates used in the calculation of projected receipts on the cap are based on an expectation of future interest rates derived from observable market interest rate curves and volatilities.

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

Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of December 31, 2022 and 2021, 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, 2022, 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, 2022

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, 2022, 2021, and 2020, 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, 2023, the Company estimates that an additional $6.1 million will be reclassified as a decrease to Interest expense.

As of December 31, 2022, 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	3	$	194,880

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, 2022, 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, 2022 and 2021 (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,
	2022		2021		2022		2021
Derivatives designated as hedging instruments:
Interest rate products	$	15,270	$	3,279	$	—	$	—

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, 2022, 2021, and 2020 (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	2022		2021		2020		2022		2021		2020		2022		2021		2020

Interest rate products	$	14,489	$	3,502	$	(3,382)	$	998	$	(1,755)	$	(4,827)	$	—	$	—	$	—


	Year Ended
	December 31,
	2022		2021		2020
Total amount of Interest expense presented on the Consolidated Statements of Operations	$	155,900	$	186,267	$	202,706

F - 50

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2022

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, 2022 and 2021 (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, 2022	$	15,270	$	—	$	15,270	$	—	$	—	$	15,270

December 31, 2021	$	3,279	$	—	$	3,279	$	—	$	—	$	3,279

	(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, 2022	$	—	$	—	$	—	$	—	$	—	$	—

December 31, 2021	$	—	$	—	$	—	$	—	$	—	$	—

	(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 - 51

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2022

15. COMMITMENTS AND CONTINGENCIES

Commitments

The following summarizes the Company’s commitments at December 31, 2022 (dollars in thousands):


	Number	UDR's		UDR's Remaining
	Properties	Investment (a)		Commitment
Real estate commitments
Wholly-owned — under development	3	$	190,105	$	142,395
Wholly-owned — redevelopment (b)	6		24,157		57,843
Unconsolidated joint ventures and partnerships:
Real estate technology investments:
RETV I (c)	-		16,601		4,320
RETV II	-		11,670		6,300
RETV III (d)	-		—		15,000
RET Strategic Fund	-		8,078		17,500
Climate Technology Funds (e)	-		5,741		4,079
RET ESG Fund (f)	-		2,898		7,000
Total		$	259,250	$	254,437

(a)	Represents UDR’s investment as of December 31, 2022.

(b)	Projects consist of unit additions or unit renovations and renovation of related common area amenities.

(c)	Includes the impact of unrealized losses for the year ended December 31, 2022, which primarily relate to a decrease in SmartRent’s public share price. (See Note 5, Joint Ventures and Partnerships).

(d)	In November 2022, the Company committed to invest $15.0 million in a real estate technology investment. As December 31, 2022, no funding to the limited partnership had occurred. As of December 31, 2022, the investment is recorded in Investment in and advances to unconsolidated joint ventures, net on the Consolidated Balance Sheets.

(e)	In March 2022, the Company committed to invest $10.0 million in climate technology funds and funded $5.7 million. As of December 31, 2022, the investment is recorded in Other Assets on the Consolidated Balance Sheets.

(f)	In April 2022, the Company committed to invest $10.0 million in an ESG technology fund and funded $2.9 million. As of December 31, 2022, the investment is recorded in Investment in and advances to unconsolidated joint ventures, net on the Consolidated Balance Sheets.

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.

F - 52

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2022

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 3.25% 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.

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, 2021 and held as of December 31, 2022. 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, 2022, 2021, and 2020.

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.

F - 53

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2022

Joint venture management and other fees

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

The following table details rental income and NOI for UDR’s reportable segments for the years ended December 31, 2022, 2021, and 2020, and reconciles NOI to Net income/(loss) attributable to UDR, Inc. on the Consolidated Statements of Operations (dollars in thousands):

F - 54

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2022


	Year Ended December 31,
	2022		2021		2020
Reportable apartment home segment lease revenue
Same-Store Communities (a)
West Region	$	459,179	$	417,450	$	414,705
Mid-Atlantic Region		271,034		253,877		246,101
Northeast Region		266,951		237,295		235,343
Southeast Region		189,465		162,178		143,171
Southwest Region		109,034		97,213		93,557
Non-Mature Communities/Other		169,173		77,874		65,414
Total segment and consolidated lease revenue	$	1,464,836	$	1,245,887	$	1,198,291

Reportable apartment home segment other revenue
Same-Store Communities (a)
West Region	$	12,360	$	10,731	$	12,433
Mid-Atlantic Region		10,807		8,941		7,210
Northeast Region		6,082		5,180		6,106
Southeast Region		7,907		7,124		6,037
Southwest Region		4,184		3,932		3,599
Non-Mature Communities/Other		6,188		2,870		2,420
Total segment and consolidated other revenue	$	47,528	$	38,778	$	37,805

Total reportable apartment home segment rental income
Same-Store Communities (a)
West Region	$	471,539	$	428,181	$	427,138
Mid-Atlantic Region		281,841		262,818		253,311
Northeast Region		273,033		242,475		241,449
Southeast Region		197,372		169,302		149,208
Southwest Region		113,218		101,145		97,156
Non-Mature Communities/Other		175,361		80,744		67,834
Total segment and consolidated rental income	$	1,512,364	$	1,284,665	$	1,236,096

Reportable apartment home segment NOI
Same-Store Communities (a)
West Region	$	352,675	$	314,791	$	316,334
Mid-Atlantic Region		194,926		180,693		177,206
Northeast Region		178,156		149,930		153,883
Southeast Region		135,313		112,960		99,856
Southwest Region		71,783		63,321		59,281
Non-Mature Communities/Other		107,539		45,430		47,142
Total segment and consolidated NOI		1,040,392		867,125		853,702
Reconciling items:
Joint venture management and other fees		5,022		6,102		5,069
Property management		(49,152)		(38,540)		(35,538)
Other operating expenses		(17,493)		(21,649)		(22,762)
Real estate depreciation and amortization		(665,228)		(606,648)		(608,616)
General and administrative		(64,144)		(57,541)		(49,885)
Casualty-related (charges)/recoveries, net		(9,733)		(3,748)		(2,131)
Other depreciation and amortization		(14,344)		(13,185)		(10,013)
Gain/(loss) on sale of real estate owned		25,494		136,052		119,277
Income/(loss) from unconsolidated entities		4,947		65,646		18,844
Interest expense		(155,900)		(186,267)		(202,706)
Interest income and other income/(expense), net		(6,933)		15,085		6,274
Tax (provision)/benefit, net		(349)		(1,439)		(2,545)
Net (income)/loss attributable to redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership		(5,613)		(10,873)		(4,543)
Net (income)/loss attributable to noncontrolling interests		(42)		(104)		(161)
Net income/(loss) attributable to UDR, Inc.	$	86,924	$	150,016	$	64,266

	(a)	Same-Store Community population consisted of 47,360 apartment homes.

F - 55

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2022

The following table details the assets of UDR’s reportable segments as of December 31, 2022 and 2021 (dollars in thousands):


	December 31,		December 31,
	2022		2021
Reportable apartment home segment assets:
Same-Store Communities (a):
West Region	$	4,330,820	$	4,264,381
Mid-Atlantic Region		2,882,898		2,856,143
Northeast Region		3,368,586		3,338,497
Southeast Region		1,232,858		1,208,183
Southwest Region		928,638		900,931
Non-Mature Communities/Other		2,826,272		2,172,668
Total segment assets		15,570,072		14,740,803
Accumulated depreciation		(5,762,501)		(5,137,096)
Total segment assets — net book value		9,807,571		9,603,707
Reconciling items:
Cash and cash equivalents		1,193		967
Restricted cash		29,001		27,451
Notes receivable, net		54,707		26,860
Investment in and advances to unconsolidated joint ventures, net		754,446		702,461
Operating lease right-of-use assets		194,081		197,463
Other assets		197,471		216,311
Total consolidated assets	$	11,038,470	$	10,775,220

	(a)	Same-Store Community population consisted of 47,360 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

F - 56

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UDR, INC.

SCHEDULE III — REAL ESTATE OWNED

DECEMBER 31, 2022

(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	$	26,231	$	22,654	$	52,591	$	75,245	$	42,182	1965/2003	Jun-03
27 Seventy Five Mesa Verde		—		99,329		110,644		209,973		110,936		117,060		203,849		320,909		167,309	1979/2013	Oct-04
Huntington Vista		—		8,055		22,486		30,541		16,824		9,519		37,846		47,365		29,670	1970	Jun-03
Missions at Back Bay		—		229		14,129		14,358		4,756		11,141		7,973		19,114		6,524	1969	Dec-03
Eight 80 Newport Beach - North		—		62,516		46,082		108,598		53,501		69,464		92,635		162,099		72,382	1968/2000/2016	Oct-04
Eight 80 Newport Beach - South		—		58,785		50,067		108,852		49,901		61,042		97,711		158,753		66,872	1968/2000/2016	Mar-05
Beach & Ocean		—		12,878		—		12,878		40,711		13,391		40,198		53,589		19,638	2014	Aug-11
The Residences at Bella Terra		—		25,000		—		25,000		131,109		25,854		130,255		156,109		72,928	2013	Oct-11
Los Alisos at Mission Viejo		—		17,298		—		17,298		72,370		16,797		72,871		89,668		39,174	2014	Jun-04
The Residences at Pacific City		—		78,085		—		78,085		279,094		78,481		278,698		357,179		90,862	2018	Jan-14
ORANGE COUNTY, CA		—		382,651		271,946		654,597		785,433		425,403		1,014,627		1,440,030		607,541
2000 Post Street		—		9,861		44,578		54,439		45,591		14,623		85,407		100,030		52,577	1987/2016	Dec-98
Birch Creek		—		4,365		16,696		21,061		11,502		1,481		31,082		32,563		20,938	1968	Dec-98
Highlands Of Marin		—		5,996		24,868		30,864		30,277		8,231		52,910		61,141		42,172	1991/2010	Dec-98
Marina Playa		—		6,224		23,916		30,140		15,627		1,532		44,235		45,767		28,953	1971	Dec-98
River Terrace		—		22,161		40,137		62,298		10,515		23,025		49,788		72,813		37,683	2005	Aug-05
CitySouth		—		14,031		30,537		44,568		41,554		16,811		69,311		86,122		56,314	1972/2012	Nov-05
Bay Terrace		—		8,545		14,458		23,003		8,867		11,693		20,177		31,870		14,418	1962	Oct-05
Highlands of Marin Phase II		—		5,353		18,559		23,912		11,685		5,782		29,815		35,597		22,422	1968/2010	Oct-07
Edgewater		—		30,657		83,872		114,529		13,847		30,833		97,543		128,376		67,597	2007	Mar-08
Almaden Lake Village		27,000		594		42,515		43,109		12,506		1,064		54,551		55,615		37,382	1999	Jul-08
388 Beale		—		14,253		74,104		88,357		22,388		14,693		96,052		110,745		55,485	1999	Apr-11
Channel @ Mission Bay		—		23,625		—		23,625		133,685		24,420		132,890		157,310		71,366	2014	Sep-10
5421 at Dublin Station				8,922		—		8,922		115,674		8,922		115,674		124,596		1,690	2022	Sep-16
1532 Harrison				19,938		65,816		85,754		—		19,938		65,816		85,754		1,314	2021	Sep-22
SAN FRANCISCO, CA		27,000		174,525		480,056		654,581		473,718		183,048		945,251		1,128,299		510,311
Crowne Pointe		—		2,486		6,437		8,923		11,118		3,280		16,761		20,041		13,234	1987	Dec-98
Hilltop		—		2,174		7,408		9,582		7,596		3,129		14,049		17,178		11,070	1985	Dec-98
The Hawthorne		—		6,474		30,226		36,700		10,909		7,234		40,375		47,609		30,940	2003	Jul-05
The Kennedy		—		6,179		22,307		28,486		6,048		6,371		28,163		34,534		19,972	2005	Nov-05
Hearthstone at Merrill Creek		—		6,848		30,922		37,770		10,838		7,349		41,259		48,608		27,789	2000	May-08
Island Square		—		21,284		89,389		110,673		9,605		21,745		98,533		120,278		67,055	2007	Jul-08
elements too		—		27,468		72,036		99,504		23,278		30,362		92,420		122,782		74,433	2010	Feb-10
989elements		—		8,541		45,990		54,531		7,629		8,703		53,457		62,160		33,755	2006	Dec-09
Lightbox		—		6,449		38,884		45,333		1,620		6,488		40,465		46,953		20,508	2014	Aug-14
Ashton Bellevue		—		8,287		124,939		133,226		5,075		8,384		129,917		138,301		43,738	2009	Oct-16
TEN20		—		5,247		76,587		81,834		5,793		5,308		82,319		87,627		27,893	2009	Oct-16
Milehouse		—		5,976		63,041		69,017		1,507		6,043		64,481		70,524		24,707	2016	Nov-16
CityLine		—		11,220		85,787		97,007		759		11,229		86,537		97,766		32,194	2016	Jan-17
CityLine II		—		3,723		56,843		60,566		545		3,723		57,388		61,111		16,339	2018	Jan-19
Brio		—		21,780		147,188		168,968		1,949		21,800		149,117		170,917		13,232	2020	Jul-21
SEATTLE, WA		—		144,136		897,984		1,042,120		104,269		151,148		995,241		1,146,389		456,859
Rosebeach		—		8,414		17,449		25,863		8,102		9,019		24,946		33,965		19,586	1970	Sep-04
Tierra Del Rey		—		39,586		36,679		76,265		10,714		40,081		46,898		86,979		32,631	1998	Dec-07
The Westerly		—		48,182		102,364		150,546		47,632		51,152		147,026		198,178		101,385	1993/2013	Sep-10
Jefferson at Marina del Rey		—		55,651		—		55,651		97,657		61,727		91,581		153,308		67,756	2008	Sep-07
LOS ANGELES, CA		—		151,833		156,492		308,325		164,105		161,979		310,451		472,430		221,358
Boronda Manor		—		1,946		8,982		10,928		12,816		3,467		20,277		23,744		13,932	1979	Dec-98
Garden Court		—		888		4,188		5,076		7,396		1,684		10,788		12,472		7,535	1973	Dec-98
Cambridge Court		—		3,039		12,883		15,922		20,028		5,857		30,093		35,950		21,818	1974	Dec-98
Laurel Tree		—		1,304		5,115		6,419		8,405		2,475		12,349		14,824		8,981	1977	Dec-98
The Pointe At Harden Ranch		—		6,388		23,854		30,242		35,869		10,487		55,624		66,111		39,229	1986	Dec-98
The Pointe At Northridge		—		2,044		8,028		10,072		13,463		3,700		19,835		23,535		14,098	1979	Dec-98
The Pointe At Westlake		—		1,329		5,334		6,663		9,000		2,398		13,265		15,663		9,111	1975	Dec-98
MONTEREY PENINSULA, CA		—		16,938		68,384		85,322		106,977		30,068		162,231		192,299		114,704
Verano at Rancho Cucamonga Town Square		—		13,557		3,645		17,202		63,847		24,630		56,419		81,049		49,104	2006	Oct-02

S - 1

UDR, INC.

SCHEDULE III — REAL ESTATE OWNED - (Continued)

DECEMBER 31, 2022

(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
Windemere at Sycamore Highland		—		5,810		23,450		29,260		10,138		6,408		32,990		39,398		24,710	2001	Nov-02
Strata		—		14,278		84,242		98,520		2,126		14,340		86,306		100,646		15,180	2010	Nov-19
OTHER SOUTHERN CA		—		33,645		111,337		144,982		76,111		45,378		175,715		221,093		88,994
Tualatin Heights		—		3,273		9,134		12,407		11,320		4,468		19,259		23,727		15,061	1989	Dec-98
Hunt Club		—		6,014		14,870		20,884		9,867		6,659		24,092		30,751		19,727	1985	Sep-04
The Arbory		—		4,366		63,457		67,823		555		4,384		63,994		68,378		12,752	2018	Jan-20
PORTLAND, OR		—		13,653		87,461		101,114		21,742		15,511		107,345		122,856		47,540
TOTAL WEST REGION		27,000		917,381		2,073,660		2,991,041		1,732,355		1,012,535		3,710,861		4,723,396		2,047,307
MID-ATLANTIC REGION
Dominion Middle Ridge		—		3,311		13,283		16,594		18,130		4,682		30,042		34,724		20,914	1990	Jun-96
Dominion Lake Ridge		—		2,366		8,387		10,753		11,483		3,273		18,963		22,236		15,087	1987	Feb-96
Presidential Greens		—		11,238		18,790		30,028		17,517		11,912		35,633		47,545		28,184	1938	May-02
The Whitmore		—		6,418		13,411		19,829		27,018		7,841		39,006		46,847		32,719	1962/2008	Apr-02
Ridgewood -apts side		—		5,612		20,086		25,698		16,600		6,675		35,623		42,298		28,054	1988	Aug-02
Waterside Towers		—		13,001		49,657		62,658		37,604		50,967		49,295		100,262		37,095	1971	Dec-03
Wellington Place at Olde Town		—		13,753		36,059		49,812		23,383		15,132		58,063		73,195		47,012	1987/2008	Sep-05
Andover House		—		183		59,948		60,131		8,094		355		67,870		68,225		45,961	2004	Mar-07
Sullivan Place		—		1,137		103,676		104,813		19,649		2,005		122,457		124,462		84,903	2007	Dec-07
Delancey at Shirlington		—		21,606		66,765		88,371		10,444		21,713		77,102		98,815		51,635	2006/2007	Mar-08
View 14		—		5,710		97,941		103,651		7,752		5,787		105,616		111,403		63,299	2009	Jun-11
Signal Hill Apartments		—		13,290		—		13,290		74,400		25,673		62,017		87,690		49,067	2010	Mar-07
Capitol View on 14th		—		31,393		—		31,393		98,738		31,505		98,626		130,131		57,682	2013	Sep-07
Domain College Park		—		7,300		—		7,300		62,319		7,549		62,070		69,619		33,812	2014	Jun-11
1200 East West		—		9,748		68,022		77,770		5,420		9,947		73,243		83,190		28,323	2010	Oct-15
Courts at Huntington Station		—		27,749		111,878		139,627		7,189		28,190		118,626		146,816		52,985	2011	Oct-15
Eleven55 Ripley		—		15,566		107,539		123,105		7,608		15,935		114,778		130,713		43,742	2014	Oct-15
Arbor Park of Alexandria		160,930		50,881		159,728		210,609		10,098		51,684		169,023		220,707		74,960	1969/2015	Oct-15
Courts at Dulles		—		14,697		83,834		98,531		13,171		14,880		96,822		111,702		45,627	2000	Oct-15
Newport Village		127,600		50,046		177,454		227,500		20,238		50,866		196,872		247,738		90,904	1968	Oct-15
1301 Thomas Circle		—		27,836		128,191		156,027		3,864		27,860		132,031		159,891		29,502	2006	Aug-19
Crescent Falls Church		—		13,687		88,692		102,379		2,751		13,732		91,398		105,130		18,772	2010	Nov-19
Station on Silver		—		16,661		109,198		125,859		1,350		16,684		110,525		127,209		15,946	2018	Dec-20
Seneca Place		—		21,184		98,173		119,357		7,669		21,189		105,837		127,026		16,205	1985	Jun-21
Canterbury Apartments		—		24,456		100,011		124,467		7,969		24,472		107,964		132,436		12,200	1986	Aug-21
METROPOLITAN, D.C.		288,530		408,829		1,720,723		2,129,552		520,458		470,508		2,179,502		2,650,010		1,024,590
Calvert's Walk		—		4,408		24,692		29,100		12,566		5,432		36,234		41,666		28,604	1988	Mar-04
20 Lambourne		—		11,750		45,590		57,340		15,545		12,492		60,393		72,885		41,143	2003	Mar-08
Domain Brewers Hill		—		4,669		40,630		45,299		3,922		5,076		44,145		49,221		27,374	2009	Aug-10
Rodgers Forge		—		15,392		67,958		83,350		8,006		15,607		75,749		91,356		19,775	1945	Apr-19
Towson Promenade		58,600		12,599		78,847		91,446		3,968		12,772		82,642		95,414		17,033	2009	Nov-19
1274 at Towson		—		7,807		46,238		54,045		3,390		7,823		49,612		57,435		4,630	2020	Sep-21
Quarters at Towson Town Center		—		16,111		106,453		122,564		10,628		16,111		117,081		133,192		14,714	2008	Nov-21
BALTIMORE, MD		58,600		72,736		410,408		483,144		58,025		75,313		465,856		541,169		153,273
Gayton Pointe Townhomes		—		826		5,148		5,974		32,633		3,735		34,872		38,607		33,213	1973/2007	Sep-95
Waterside At Ironbridge		—		1,844		13,239		15,083		11,834		2,932		23,985		26,917		19,221	1987	Sep-97
Carriage Homes at Wyndham		—		474		30,997		31,471		12,294		4,465		39,300		43,765		32,375	1998	Nov-03
Legacy at Mayland		—		1,979		11,524		13,503		37,473		6,084		44,892		50,976		42,048	1973/2007	Dec-91
RICHMOND, VA		—		5,123		60,908		66,031		94,234		17,216		143,049		160,265		126,857
TOTAL MID-ATLANTIC REGION		347,130		486,688		2,192,039		2,678,727		672,717		563,037		2,788,407		3,351,444		1,304,720
NORTHEAST REGION
Garrison Square		—		6,475		91,027		97,502		29,803		6,773		120,532		127,305		70,255	1887/1990	Sep-10
Ridge at Blue Hills		25,000		6,039		34,869		40,908		7,736		6,490		42,154		48,644		26,443	2007	Sep-10
Inwood West		80,000		20,778		88,096		108,874		17,583		20,005		106,452		126,457		67,473	2006	Apr-11
14 North		72,500		10,961		51,175		62,136		17,917		11,759		68,294		80,053		44,403	2005	Apr-11
100 Pier 4		—		24,584		—		24,584		205,399		24,854		205,129		229,983		81,254	2015	Dec-15

S - 2

UDR, INC.

SCHEDULE III — REAL ESTATE OWNED - (Continued)

DECEMBER 31, 2022

(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
345 Harrison		—		32,938		—		32,938		331,065		44,940		319,063		364,003		80,819	2018	Nov-11
Currents on the Charles		—		12,580		70,149		82,729		2,495		12,784		72,440		85,224		17,463	2015	Jun-19
The Commons at Windsor Gardens		—		34,609		225,515		260,124		23,963		34,710		249,377		284,087		64,326	1969	Aug-19
Charles River Landing		—		17,068		112,777		129,845		2,763		17,132		115,476		132,608		23,596	2010	Nov-19
Lenox Farms		94,050		17,692		115,899		133,591		8,125		17,878		123,838		141,716		25,400	2009	Nov-19
Lodge at Ames Pond		—		12,645		70,653		83,298		5,003		12,848		75,453		88,301		16,003	2010	Nov-19
Union Place		51,800		9,902		72,242		82,144		5,992		9,946		78,190		88,136		10,312	2005	Jan-21
Bradlee Danvers		—		28,669		175,114		203,783		1,953		28,676		177,060		205,736		7,026	1874/2008	Jun-22
BOSTON, MA		323,350		234,940		1,107,516		1,342,456		659,797		248,795		1,753,458		2,002,253		534,773
10 Hanover Square		—		41,432		218,983		260,415		34,167		41,879		252,703		294,582		133,654	2005/2020	Apr-11
21 Chelsea		—		36,399		107,154		143,553		17,009		36,531		124,031		160,562		70,621	2001	Aug-11
View 34		—		114,410		324,920		439,330		120,038		116,094		443,274		559,368		261,302	1985/2013	Jul-11
95 Wall Street		—		57,637		266,255		323,892		14,379		58,309		279,962		338,271		174,747	2008	Aug-11
Leonard Pointe		—		38,010		93,204		131,214		2,186		38,078		95,322		133,400		24,738	2015	Feb-19
One William		—		6,422		75,527		81,949		1,796		6,478		77,267		83,745		17,264	2018	Aug-19
NEW YORK, NY		—		294,310		1,086,043		1,380,353		189,575		297,369		1,272,559		1,569,928		682,326
Park Square		—		10,365		96,050		106,415		2,048		10,533		97,930		108,463		25,021	2018	May-19
The Smith Valley Forge		—		17,853		95,973		113,826		1,240		17,861		97,205		115,066		8,880	2019	Sep-21
322 on North Broad		—		12,240		124,524		136,764		8,776		12,255		133,285		145,540		12,283	2018	Sep-21
The George Apartments		—		17,341		—		17,341		48,920		17,349		48,912		66,261		1,950	2022	Aug-20
PHILADELPHIA, PA		—		57,799		316,547		374,346		60,984		57,998		377,332		435,330		48,134
TOTAL NORTHEAST REGION		323,350		587,049		2,510,106		3,097,155		910,356		604,162		3,403,349		4,007,511		1,265,233
SOUTHEAST REGION
Summit West		—		2,176		4,710		6,886		15,054		4,134		17,806		21,940		15,827	1972	Dec-92
The Breyley		—		1,780		2,458		4,238		21,263		4,297		21,204		25,501		20,749	1977/2007	Sep-93
Lakewood Place		—		1,395		10,647		12,042		15,415		3,285		24,172		27,457		20,984	1986	Mar-94
Cambridge Woods		—		1,791		7,166		8,957		14,666		3,635		19,988		23,623		16,801	1985	Jun-97
Inlet Bay		—		7,702		23,150		30,852		24,590		10,889		44,553		55,442		38,111	1988/1989	Jun-03
MacAlpine Place		—		10,869		36,858		47,727		16,847		12,785		51,789		64,574		41,298	2001	Dec-04
The Vintage Lofts at West End		—		6,611		37,663		44,274		24,858		16,005		53,127		69,132		40,741	2009	Jul-09
Peridot Palms		—		6,293		89,752		96,045		2,786		6,434		92,397		98,831		24,996	2017	Feb-19
The Preserve at Gateway		—		4,467		43,723		48,190		2,160		4,523		45,827		50,350		11,654	2013	May-19
The Slade at Channelside		—		10,216		72,786		83,002		5,112		10,394		77,720		88,114		15,637	2009	Jan-20
Andover Place at Cross Creek		—		11,702		107,761		119,463		8,375		11,718		116,120		127,838		21,214	1997/1999	Nov-20
TAMPA, FL		—		65,002		436,674		501,676		151,126		88,099		564,703		652,802		268,012
Seabrook		—		1,846		4,155		6,001		11,621		3,260		14,362		17,622		12,981	1984/2004	Feb-96
Altamira Place		—		1,533		11,076		12,609		24,496		4,060		33,045		37,105		31,722	1984/2007	Apr-94
Regatta Shore		—		757		6,608		7,365		20,579		2,633		25,311		27,944		22,814	1988/2007	Jun-94
Alafaya Woods		—		1,653		9,042		10,695		14,550		2,946		22,299		25,245		19,120	1989/2006	Oct-94
Los Altos		—		2,804		12,349		15,153		15,732		4,644		26,241		30,885		22,407	1990/2004	Oct-96
Lotus Landing		—		2,185		8,639		10,824		15,297		3,399		22,722		26,121		17,771	1985/2006	Jul-97
Seville On The Green		—		1,282		6,498		7,780		10,455		1,966		16,269		18,235		12,783	1986/2004	Oct-97
Ashton @ Waterford		—		3,872		17,538		21,410		8,724		4,680		25,454		30,134		19,847	2000	May-98
Arbors at Lee Vista		—		6,692		12,860		19,552		19,134		8,053		30,633		38,686		23,493	1992/2007	Aug-06
Arbors at Maitland Summit		—		15,929		158,079		174,008		10,363		15,940		168,431		184,371		22,624	1998	Oct-21
Essex Luxe		—		9,068		94,487		103,555		706		9,075		95,186		104,261		8,180	2020	Oct-21
ORLANDO, FL		—		47,621		341,331		388,952		151,657		60,656		479,953		540,609		213,742
Legacy Hill		—		1,148		5,867		7,015		12,524		2,165		17,374		19,539		15,107	1977	Nov-95
Hickory Run		—		1,469		11,584		13,053		17,215		2,877		27,391		30,268		20,713	1989	Dec-95
Carrington Hills		—		2,117		—		2,117		41,053		5,043		38,127		43,170		31,283	1999	Dec-95
Brookridge		—		708		5,461		6,169		8,700		1,604		13,265		14,869		11,117	1986	Mar-96
Breckenridge		—		766		7,714		8,480		8,449		1,862		15,067		16,929		12,167	1986	Mar-97
Colonnade		—		1,460		16,015		17,475		10,397		2,620		25,252		27,872		19,750	1998	Jan-99
The Preserve at Brentwood		—		3,182		24,674		27,856		13,329		4,327		36,858		41,185		30,439	1998	Jun-04
Polo Park		—		4,583		16,293		20,876		19,590		6,397		34,069		40,466		29,113	1987/2008	May-06

S - 3

UDR, INC.

SCHEDULE III — REAL ESTATE OWNED - (Continued)

DECEMBER 31, 2022

(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
NASHVILLE, TN		—		15,433		87,608		103,041		131,257		26,895		207,403		234,298		169,689
The Reserve and Park at Riverbridge		—		15,968		56,401		72,369		21,423		17,147		76,645		93,792		58,189	1999/2001	Dec-04
OTHER FLORIDA		—		15,968		56,401		72,369		21,423		17,147		76,645		93,792		58,189
TOTAL SOUTHEAST REGION		—		144,024		922,014		1,066,038		455,463		192,797		1,328,704		1,521,501		709,632
SOUTHWEST REGION
Thirty377		25,000		24,036		32,951		56,987		22,898		26,447		53,438		79,885		41,315	1999/2007	Aug-06
Legacy Village		90,000		16,882		100,102		116,984		30,307		23,285		124,006		147,291		88,321	2005/06/07	Mar-08
Addison Apts at The Park		—		22,041		11,228		33,269		18,527		31,613		20,183		51,796		14,351	1977/78/79	May-07
Addison Apts at The Park I		—		7,903		554		8,457		8,666		11,058		6,065		17,123		4,630	1970	May-07
Addison Apts at The Park II		—		10,440		634		11,074		2,513		8,458		5,129		13,587		3,785	1975	May-07
Savoye		—		8,432		50,483		58,915		4,483		8,934		54,464		63,398		10,795	2009	Nov-19
Savoye 2		—		6,451		56,615		63,066		3,156		6,942		59,280		66,222		11,991	2011	Nov-19
Fiori on Vitruvian Park		47,316		7,934		78,575		86,509		4,202		8,423		82,288		90,711		16,822	2013	Nov-19
Vitruvian West Phase I		41,317		6,273		61,418		67,691		2,801		6,533		63,959		70,492		13,244	2018	Nov-19
Vitruvian West Phase II		—		6,451		15,798		22,249		39,832		6,649		55,432		62,081		8,019	2021	Nov-19
Vitruvian West Phase III		—		7,141		2,754		9,895		63,231		7,342		65,784		73,126		3,202	2022	Nov-19
The Canal		42,000		12,671		98,813		111,484		3,278		12,716		102,046		114,762		12,295	2017	Apr-21
Cool Springs at Frisco Bridges		89,510		18,325		151,982		170,307		11,544		18,338		163,513		181,851		23,927	2012	May-21
DALLAS, TX		335,143		154,980		661,907		816,887		215,438		176,738		855,587		1,032,325		252,697
Barton Creek Landing		—		3,151		14,269		17,420		26,292		5,603		38,109		43,712		33,360	1986/2012	Mar-02
Residences at the Domain		—		4,034		55,256		59,290		16,784		4,901		71,173		76,074		49,658	2007	Aug-08
Red Stone Ranch		—		5,084		17,646		22,730		10,278		5,804		27,204		33,008		16,955	2000	Apr-12
Lakeline Villas		—		4,148		16,869		21,017		7,666		4,761		23,922		28,683		14,862	2002	Apr-12
AUSTIN, TX		—		16,417		104,040		120,457		61,020		21,069		160,408		181,477		114,835
Steele Creek		—		8,586		130,400		138,986		7,793		8,789		137,990		146,779		41,118	2015	Oct-17
Cirrus		—		13,853		—		13,853		87,591		13,854		87,590		101,444		3,498	2022	Feb-19
DENVER, CO		—		22,439		130,400		152,839		95,384		22,643		225,580		248,223		44,616
TOTAL SOUTHWEST REGION		335,143		193,836		896,347		1,090,183		371,842		220,450		1,241,575		1,462,025		412,148
TOTAL OPERATING COMMUNITIES		1,032,623		2,328,978		8,594,166		10,923,144		4,142,733		2,592,981		12,472,896		15,065,877		5,739,040
REAL ESTATE UNDER DEVELOPMENT
The MO		—		27,135		—		27,135		108,328		27,136		108,327		135,463		296
Villas at Fiori		—		9,921		776		10,697		7,035		9,964		7,768		17,732		—
Meridian		—		6,611		—		6,611		30,299		6,611		30,299		36,910		—
TOTAL REAL ESTATE UNDER DEVELOPMENT		—		43,667		776		44,443		145,662		43,711		146,394		190,105		296
LAND
Vitruvian Park®		—		22,547		1,467		24,014		10,937		30,293		4,658		34,951		660
Alameda Point Block 11		—		25,006		—		25,006		5,609		25,006		5,609		30,615		—
Newport Village II		—		5,237		—		5,237		10,287		5,237		10,287		15,524		—
2727 Turtle Creek		—		90,205		—		90,205		2,302		90,205		2,302		92,507		—
488 Riverwalk		—		16,053		—		16,053		1,817		16,053		1,817		17,870		—
3001 Iowa Ave		—		13,468		—		13,468		1,083		13,468		1,083		14,551		—
TOTAL LAND		—		172,516		1,467		173,983		32,035		180,262		25,756		206,018		660
HELD FOR DISPOSITION
The MO - Retail		—		—		—		—		14,039		—		14,039		14,039		—
TOTAL HELD FOR DISPOSITION		—		—		—		—		14,039		—		14,039		14,039		—
COMMERCIAL
Brookhaven Shopping Center		—		—		—		—		30,241		7,793		22,448		30,241		15,354
3001 Iowa Ave Commercial		—		9,882		4,861		14,743		1		9,882		4,862		14,744		180
TOTAL COMMERCIAL		—		9,882		4,861		14,743		30,242		17,675		27,310		44,985		15,534
Other (b)		—		—		—		—		21,241		78		21,163		21,241		581
1745 Shea Center I		—		3,034		20,534		23,568		4,239		3,081		24,726		27,807		6,390
TOTAL CORPORATE		—		3,034		20,534		23,568		25,480		3,159		45,889		49,048		6,971
TOTAL COMMERCIAL & CORPORATE		—		12,916		25,395		38,311		55,722		20,834		73,199		94,033		22,505
Deferred Financing Costs and Other Non-Cash Adjustments		19,658

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UDR, INC.

SCHEDULE III — REAL ESTATE OWNED - (Continued)

DECEMBER 31, 2022

(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
TOTAL REAL ESTATE OWNED	$	1,052,281	$	2,558,077	$	8,621,804	$	11,179,881	$	4,390,191	$	2,837,788	$	12,732,284	$	15,570,072	$	5,762,501

(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 $14.9 billion at December 31, 2022 (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, 2022

(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):


	2022		2021		2020
Balance at beginning of the year	$	14,740,803	$	13,071,472	$	12,602,101
Real estate acquired (including joint venture consolidation)		409,263		1,513,106		413,488
Capital expenditures and development		444,009		346,365		299,986
Real estate sold		(24,003)		(190,140)		(244,103)
Balance at end of the year	$	15,570,072	$	14,740,803	$	13,071,472

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


	2022		2021		2020
Balance at beginning of the year	$	5,137,096	$	4,605,366	$	4,131,353
Depreciation expense for the year		634,424		584,228		560,876
Accumulated depreciation on sales		(9,019)		(52,498)		(86,863)
Balance at end of year	$	5,762,501	$	5,137,096	$	4,605,366

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Previous: Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES