Secured and Unsecured Debt

6 Months Ended

Jun. 30, 2013

SECURED AND UNSECURED DEBT

The following is a summary of our secured and unsecured debt at June 30, 2013 and December 31, 2012 (amounts in thousands):



	Principal Outstanding				For the Six Months Ended June 30, 2013
					Weighted Average Interest Rate		Weighted Average Years to Maturity	Number of Communities Encumbered
	June 30, 2013		December 31, 2012
	June 30, 2013		December 31, 2012
Secured Debt:
Fixed Rate Debt
Mortgage notes payable (a)	$	450,641	$	455,533	5.42	%	3.0	8
Fannie Mae credit facilities (b)	628,284		631,078		4.99	%	5.5	22
Total fixed rate secured debt	1,078,925		1,086,611		5.17	%	4.5	30
Variable Rate Debt
Mortgage notes payable	—		37,415		—		—	—
Tax-exempt secured notes payable (c)	94,700		94,700		0.89	%	9.7	2
Fannie Mae credit facilities (b)	211,409		211,409		1.63	%	7.0	7
Total variable rate secured debt	306,109		343,524		1.40	%	7.9	9
Total Secured Debt	1,385,034		1,430,135		4.34	%	5.2	39

Unsecured Debt:
Commercial Banks
Borrowings outstanding under an unsecured credit facility due December 2017 (d), (g)	228,500		76,000		1.30	%	4.4
Senior Unsecured Notes
4.63% Medium-Term Notes due January 2022 (net of discount of $3,061 and $3,241) (g)	396,939		396,759		4.63	%	8.5
1.45% Term Notes due June 2018 (e), (g)	35,000		35,000		1.45	%	4.9
2.50% Term Notes due June 2018 (e), (g)	65,000		65,000		2.50	%	4.9
6.05% Medium-Term Notes due June 2013	—		122,500
5.13% Medium-Term Notes due January 2014	184,000		184,000		5.13	%	0.5
5.50% Medium-Term Notes due April 2014 (net of discount of $54 and $89)	128,446		128,411		5.50	%	0.8
5.25% Medium-Term Notes due January 2015 (net of discount of $198 and $262)	324,977		324,913		5.25	%	1.5
5.25% Medium-Term Notes due January 2016	83,260		83,260		5.25	%	2.5
2.73% Term Notes due June 2018 (f), (g)	250,000		250,000		2.73	%	4.9
8.50% Debentures due September 2024	15,644		15,644		8.50	%	11.2
4.25% Medium-Term Notes due June 2018 (net of discount of $2,108 and $2,322) (g)	297,892		297,678		4.25	%	4.9
Other	31		33		N/A		N/A
Total Unsecured Debt	2,009,689		1,979,198		4.10	%	4.3
Total Debt	$	3,394,723	$	3,409,333	4.20	%	4.7

Our secured debt instruments generally feature either monthly interest and principal or monthly interest-only payments with balloon payments due at maturity. For purposes of classification 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. Secured debt encumbers $2.2 billion or 27.1% of UDR’s total real estate owned based upon gross book value ($5.8 billion or 72.9% of UDR’s real estate owned based on gross book value is unencumbered) as of June 30, 2013.

(a) At June 30, 2013, fixed rate mortgage notes payable are generally due in monthly installments of principal and interest and mature at various dates from December 2014 through May 2019 and carry interest rates ranging from 3.43% to 5.94%.

The Company will from time to time acquire properties subject to fixed rate debt instruments. In those situations, management will record the secured debt at its estimated fair value and amortize any difference between the fair value and par to interest expense over the life of the underlying debt instrument. During the three and six months ended June 30, 2013 and 2012, the Company had $1.2 million and $2.5 million and $1.2 million and $2.3 million of a reduction to interest expense based on amortization on the fair market adjustment of debt assumed in acquisition of properties, respectively. The unamortized fair market adjustment was a net premium of $14.4 million and $16.9 million at June 30, 2013 and December 31, 2012, respectively.

(b) UDR has three secured credit facilities with Fannie Mae with an aggregate commitment of $928.5 million at June 30, 2013. The Fannie Mae credit facilities are for terms of seven to ten years (maturing at various dates from May 2017 through July 2023) and bear interest at floating and fixed rates. At June 30, 2013, we have $628.3 million of the outstanding balance fixed at a weighted average interest rate of 4.99% and the remaining balance of $211.4 million on these facilities is currently at a weighted average variable interest rate of 1.63%.

On June 28, 2013, the Company refinanced $186 million of a Fannie Mae credit facility that carried an interest rate equal to LIBOR plus a spread of 284 basis points and was scheduled to mature in 2019. The new loans include a $90 million, 7-year fixed-rate loan that carries an interest rate of 3.95% and a $96 million, 10-year variable-rate loan that carries an interest rate equal to LIBOR plus a spread of 190 basis points. Three of the Company's communities were released from the facility and added to the Company's unencumbered asset pool.

Further information related to these credit facilities is as follows (dollars in thousands):



	June 30, 2013			December 31, 2012
Borrowings outstanding	$	839,693		$	842,487
Weighted average borrowings during the period ended	840,437			903,817
Maximum daily borrowings during the period ended	841,494			1,054,735
Weighted average interest rate during the period ended	4.3		%	4.3		%
Weighted average interest rate at the end of the period	4.2		%	4.4		%

(c) The variable rate mortgage notes payable that secure tax-exempt housing bond issues mature on August 2019 and March 2032, respectively. Interest on these notes is payable in monthly installments. The variable rate mortgage notes have interest rates of 0.82% and 1.05%, respectively, as of June 30, 2013.

(d) The Company has a $900 million unsecured revolving credit facility. In June 2013, the Company amended its unsecured revolving credit facility. The amendment extends the maturity date to December 2017, includes a six month extension option, and contains an accordion feature that allows the Company to increase the facility to $1.45 billion. Based on the Company's current credit rating, the credit facility carries an interest rate equal to LIBOR plus a spread of 110 basis points and a facility fee of 20 basis points.

The following is a summary of short-term bank borrowings under UDR’s bank credit facility at June 30, 2013 and December 31, 2012 (dollars in thousands):



	June 30, 2013			December 31, 2012
Total revolving credit facility	$	900,000		$	900,000
Borrowings outstanding at end of period (1)	228,500			76,000
Weighted average daily borrowings during the period ended	179,495			167,038
Maximum daily borrowings during the period ended	372,000			788,000
Weighted average interest rate during the period ended	1.2		%	1.5		%
Interest rate at end of the period	1.3		%	1.4		%

(1) Excludes $2.1 million and $3.9 million of letters of credit at June 30, 2013 and December 31, 2012, respectively.

(e) In June 2013, the Company amended and re-priced its $100 million unsecured term notes due in January 2016. The loan was re-priced from LIBOR plus 142.5 basis points to LIBOR plus 125 basis points, and the maturity date was extended to June 2018.

(f) In June 2013, the Company amended and re-priced its $250 million unsecured term notes due in January 2016. The loan was re-priced from LIBOR plus 142.5 basis points to LIBOR plus 125 basis points, and the maturity date was extended to June 2018.

(g) The Operating Partnership is a guarantor at June 30, 2013 and December 31, 2012.

The aggregate maturities, including amortizing principal payments of secured debt, of total debt for the next five calendar years subsequent to June 30, 2013 are as follows (dollars in thousands):



Year	Total Fixed Secured Debt		Total Variable Secured Debt		Total Secured Debt		Total Unsecured Debt (a)		Total Debt
2013	$	6,639	$	—	$	6,639	$	—	$	6,639
2014	47,984		—		47,984		311,578		359,562
2015	197,191		—		197,191		552,889		750,080
2016	136,440		—		136,440		432,485		568,925
2017	178,374		65,000		243,374		—		243,374
Thereafter	512,297		241,109		753,406		712,737		1,466,143
Total	$	1,078,925	$	306,109	$	1,385,034	$	2,009,689	$	3,394,723

(a) With the exception of the 1.45% Term Notes due June 2018 and revolving credit facility which carry a variable interest rate, all unsecured debt carries fixed interest rates.

We were in compliance with the covenants of our debt instruments at June 30, 2013.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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