JOINT VENTURES AND PARTNERSHIPS

UDR has entered into joint ventures and partnerships with unrelated third parties to acquire 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. In addition, the Company consolidates any joint venture or partnership in which we are the general partner or managing partner and the third party does not have the ability to substantively participate in the decision-making process nor the ability to remove us as general partner or managing partner without cause.

UDR’s joint ventures and partnerships are funded with a combination of debt and equity. Our losses are 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.

Consolidated Joint Ventures

In December 2013, the Company consolidated its 95%/5% development joint ventures 13^th and Market in San Diego, California and Domain College Park in Metropolitan, D.C. The consolidation was due to the Company becoming the managing partner of each of the joint ventures pursuant to amendments to the LLC Agreements. In connection with the amendments, our partner received equity distributions reducing its capital account balances to zero, the Company replaced our partner as the managing partner, and our partner no longer has the ability to substantively participate in the decision-making process, with only protective rights remaining. We accounted for the consolidations as asset acquisitions since the joint ventures were under development and not complete at the time of consolidation resulting in no gain or loss upon consolidation and increasing our real estate owned by $129.4 million and our debt owed by $63.6 million. In addition pursuant to the amendments, the Company paid a non-refundable deposit to our partner in January 2014 of $2.0 million for each joint venture, or $4.0 million in total, for the right to exercise options in 2014 to acquire our partner’s upside participation in the joint ventures. The non-refundable deposits were applied towards the total purchase price of approximately $24.7 million when the Company acquired 100% of the interest in the joint ventures in November 2014.

In December 2014, the Company sold a 49% interest in 13th and Market to MetLife for $54.2 million, resulting in a gain, net of tax, of $7.2 million. Additionally, the Company sold a 50% interest in a wholly owned land parcel to MetLife for $8.3 million, resulting in a loss, net of tax, of $2.2 million. As a result, the Company no longer controls these two joint ventures and they were deconsolidated by the Company in December 2014.

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 to the unconsolidated joint ventures and partnerships.

The following table summarizes the Company’s investment in and advances to unconsolidated joint ventures and partnerships, net, which are accounted for under the equity method of accounting as of December 31, 2014 and 2013 (dollars in thousands):



Joint Venture	Location of Properties	Number of Properties	Number of Apartment Homes	Investment at						UDR’s Ownership Interest
Joint Venture	Location of Properties	2014	2014	2014			2013			2014			2013
Operating and development:
UDR/MetLife I (a)	Various	4 land parcels	—	$	13,306		$	47,497		15.7		%	4.5		%
UDR/MetLife II (a)	Various	21 operating communities	4,642	431,277			327,926			50.0		%	50.0		%
Other UDR/MetLife Joint Ventures (a)	Various	1 operating community, 3 development communities (b), 2 land parcels	1,282	134,939			36,313			50.6		%	35.8		%
UDR/MetLife Vitruvian Park^®(c)	Addison, TX	3 operating communities, 6 land parcels	1,394	80,302			79,318			50.0		%	50.0		%
UDR/KFH (d)	Washington, D.C.	3 operating communities	660	21,596			25,919			30.0		%	30.0		%
Texas (e)	Texas	8 operating communities	3,359	(25,901		)	(23,591		)	20.0		%	20.0		%
Investment in and advances to unconsolidated joint ventures, net, before participating loan investment				655,519			493,382

	Location	Preferred Return	Years To Maturity	Investment at						Income From Participating Loan Investment For The Year Ended
Participating loan investment:				2014			2013			2014	2013			2012
Steele Creek (f)	Denver, CO	6.5%	2.8	62,707			14,273			$2,350	$156			$—

Total investment in and advances to unconsolidated joint ventures, net				$	718,226		$	507,655

(a)

In January 2012, the Company formed a joint venture with an unaffiliated third party to acquire 399 Fremont (land for future development) in San Francisco, California, which is included in Other UDR/MetLife Joint Ventures in the table above. At closing, UDR owned a noncontrolling interest of 92.5% in the joint venture. The Company’s total investment was $55.5 million, which consisted of its initial investment of $37.3 million and an option to exercise its right to acquire its partner’s 7.5% ownership interest in the joint venture. In October 2012, the Company exercised its option and paid $13.5 million. In January 2013, the Company subsequently acquired its partner’s 7.5% ownership interest for $4.7 million. In December 2013, the Company sold a 49% ownership interest to MetLife in the fully-entitled 399 Fremont land parcel for approximately $29.9 million. In conjunction with the sale, the Company formed a new unconsolidated real estate joint venture with MetLife, UDR/MetLife 399 Fremont, to develop a $318 million, 447-home, luxury high-rise tower on the site. Construction commenced in the first quarter 2014. As the Company recently acquired the 399 Fremont land parcel, the sale price was equivalent to the cost basis resulting in no gain or loss on the transaction. Under the terms of the partnership, the Company serves as the general partner with significant participating rights held by our partner, and has the ability to earn fees for development management, property management, asset management, and financing transactions. The UDR/MetLife 399 Fremont Joint Venture is accounted for under the equity method of accounting. Our initial investment was approximately $31.1 million.

In June 2013 and within UDR/MetLife I, the Company exchanged with MetLife its approximately 10% ownership interest in four operating communities and paid MetLife an additional $15.6 million in cash for an increased ownership interest of approximately 35% in two high-rise operating communities, bringing UDR's ownership interest in the two high-rise operating communities to 50% each. The two high-rise operating communities are located in Denver, Colorado and San Diego, California and were subsequently contributed to UDR/MetLife II. The four operating communities in which UDR exchanged its ownership interest are located in Washington D.C.; San Francisco, California; Dallas, Texas; and Charlotte, North Carolina. UDR continues to fee manage these four operating communities.

In March 2014, the Company sold its minority ownership interests in two operating communities located in Los Angeles, California to MetLife for cash proceeds of $3.0 million, which resulted in an immaterial gain. In April 2014, the Company increased its ownership interest in the remaining six operating communities in the UDR/MetLife I Joint Venture from 12% to 50%, and MetLife and the Company contributed the communities to the UDR/MetLife II Joint Venture. The Company paid MetLife $82.5 million for the additional ownership interests. The Company continues to fee manage the operating communities that were contributed to the UDR/MetLife II Joint Venture as well as the two operating communities in which it sold its minority ownership interests.

In July 2014, the Company increased the ownership interest in two land sites in UDR/Metlife I to 50.1% and formed individual asset joint ventures, which are included in Other UDR/MetLife Joint Ventures in the table above. The remaining 49.9% continues to be held by our joint venture partner MetLife. The Company paid MetLife approximately $21.5 million for the additional ownership interests.

In December 2014, the Company increased its ownership interest in one land site in the UDR/MetLife I Joint Venture to 50%. Additionally, the Company increased its ownership interest in another land site to 50.1%, which MetLife and the Company contributed to a separate joint venture and is included in Other UDR/MetLife Joint Ventures in the table above. The Company paid MetLife approximately $15.3 million for the additional ownership interests. As of December 31, 2014, the remaining assets in the UDR/MetLife I Joint Venture were comprised of three potential development land sites in which the Company has an average ownership interest of approximately 5% and one fully entitled land parcel in which the Company owns 50%.

In December 2014, the Company sold a 49% interest in 13th and Market located in San Diego, California to MetLife for gross proceeds of $54.2 million, resulting in a gain, net of tax, of $7.2 million and a 50% interest in 3033 Wilshire in Los Angeles, California, also to MetLife for gross proceeds of $8.3 million, resulting in a loss, net of tax, of $2.2 million.


(b)	The number of apartment homes for the communities under development presented in the table above is based on the projected number of total homes. As of December 31, 2014, no apartment homes had been completed in Other UDR/MetLife Development Joint Ventures.

(c)

In June 2013, the Company sold a 50% interest in five partnerships (the “UDR/MetLife Vitruvian Park^® Partnerships”) to MetLife for approximately $141.3 million. The transaction resulted in a gain of approximately $436,000 which the Company has deferred until the terms of the construction completion guarantee have been met. Under the terms of the UDR/MetLife Vitruvian Park^® Partnerships, the Company serves as the general partner with significant participating rights held by our partner, and earns fees for property management, asset management, and financing transactions. The UDR/MetLife Vitruvian Park^® Partnerships are accounted for under the equity method of accounting. Our initial investment was approximately $80.2 million, which consisted of approximately $140.0 million (50% of our net book value of the real estate at the time of the transaction) reduced by our share of the net proceeds received upon encumbering the assets of approximately $58.7 million and other operating adjustments.

At closing, a total of $118.3 million of secured debt was placed on the two operating communities and the community under development. The debt on the two operating communities carries an interest rate of 4.0% with a term of ten years and the non-recourse construction loan on the community under development carries an interest rate of LIBOR plus 175 basis points with a term of two years and two one-year extension options. The Company has guaranteed the completion of the construction of the development. Proceeds from the construction loan will be used for completion of construction of the development. Upon completion, at its 50% ownership, the Company's pro-rata share of the undepreciated book value of the UDR/MetLife Vitruvian Park^® Partnerships' real estate assets and outstanding debt will be approximately $145.0 million and $62.8 million, respectively.

(d) UDR is a partner with an unaffiliated third party, which formed a joint venture for the investment of up to $450 million in multifamily properties located in key, high barrier to entry markets. The partners will contribute equity of $180 million of which the Company’s maximum equity will be 30% or $54 million when fully invested.

(e) In November 2007, UDR and an unaffiliated third party formed a joint venture to own and operate 10 communities located in Texas. UDR contributed cash and property equal to 20% of the fair value of the joint venture. During the year ended December 31, 2012, the Company acquired the remaining 80% ownership interests in two communities in Austin, Texas for $11.7 million. The Company’s investment in the joint venture at December 31, 2014 and 2013 was net of deferred profits on the sale of depreciable properties to the joint venture of $23.9 million and $24.0 million, respectively.

In January 2015, the eight communities held by the Texas joint venture were sold, generating net proceeds to UDR of $43.5 million. The Company recorded promote and fee income of $9.6 million and a gain of $59.1 million (including $24.2 million of previously deferred gains) in connection with the sale.

(f) In October 2013, the Company entered into a participating debt financing arrangement with a third party that is developing a $108 million, 218-home, high-rise luxury community located adjacent to the Cherry Creek Mall in Denver, Colorado. Under the agreement, UDR will finance up to 85%, or approximately $92.0 million, of the development cost at an interest rate of 6.5% per annum on the outstanding debt balance. In addition, the Company has the option to purchase the community upon completion of construction and has a 50% participating interest in the profit upon the acquisition of the community or sale to a third party. The Company accounts for the arrangement consistent with an investment in real estate under the equity method of accounting.

As of December 31, 2014, and 2013, our participating loan investment was $62.7 million and $14.3 million, respectively, which was included in Investment in and advances to unconsolidated joint ventures, net on the Consolidated Balance Sheets. We also recognized $2.4 million and $156,000 of income included in Income/(loss) from unconsolidated entities on the Consolidated Statements of Operations for the years ended December 31, 2014 and 2013, respectively.

As of December 31, 2014 and 2013, the Company had deferred fees and deferred profit from the sale of properties to joint ventures or partnerships of $24.7 million and $25.4 million, respectively, which will be recognized through earnings over the weighted average life of the related properties, upon the disposition of the properties to a third party, or upon completion of certain development obligations.

The Company recognized $11.3 million, $11.2 million, and $11.8 million of management fees during the years ended December 31, 2014, 2013, and 2012, respectively, for our management of 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 evaluate our investments in unconsolidated joint ventures and partnerships when events or changes in circumstances indicate that 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. The Company did not recognize any other-than-temporary decrease in the value of its other investments in unconsolidated joint ventures or partnerships during the years ended December 31, 2014, 2013, and 2012.

Combined summary financial information relating to all of the unconsolidated joint ventures and partnerships operations (not just our proportionate share), is presented below for the years ended December 31, 2014, 2013, and 2012 (dollars in thousands):



As of and For the Year Ended December 31, 2014	UDR/MetLife I			UDR/MetLife II			UDR/MetLife Vitruvian Park^®			Texas			UDR/KFH			Other joint ventures			Total
Condensed Statements of Operations:
Total revenues	$	727		$	152,047		$	19,376		$	—		$	19,724		$	1,579		$	193,453
Property operating expenses	618			52,150			10,711			—			7,498			1,122			72,099
Real estate depreciation and amortization	2,130			41,504			7,380			—			14,426			3,959			69,399
Operating income/(loss)	(2,021		)	58,393			1,285			—			(2,200		)	(3,502		)	51,955
Interest expense	—			(48,493		)	(4,131		)	—			(5,873		)	(94		)	(58,591		)
Other income/(expense)	—			—			—			—			—			—			—
Gain/(loss) on sale of real estate	—			—			—			—			—			—			—
Income/(loss) from discontinued operations	(31,802		)	—			—			(4,229		)	—			—			(36,031		)
Net income/(loss)	$	(33,823	)	$	9,900		$	(2,846	)	$	(4,229	)	$	(8,073	)	$	(3,596	)	$	(42,667	)
UDR recorded income (loss) from unconsolidated entities	$	(2,955	)	$	2,814		$	(4,068	)	$	(772	)	$	(2,601	)	$	576		$	(7,006	)

Condensed Balance Sheets:
Total real estate, net	$	89,482		$	1,986,237		$	278,600		$	—		$	235,623		$	351,861		$	2,941,803
Assets held for sale	1,978			—			—			214,218			—			—			216,196
Cash and cash equivalents	1,983			15,245			6,570			—			2,507			6,239			32,544
Other assets	(146		)	19,589			3,933			—			1,128			4,203			28,707
Total assets	93,297			2,021,071			289,103			214,218			239,258			362,303			3,219,250
Amount due/(from) to UDR	107			(444		)	1,960			—			531			843			2,997
Third party debt	—			1,147,109			123,649			—			165,209			68,510			1,504,477
Liabilities held for sale	5,110			—			—			224,596			—			—			229,706
Accounts payable and accrued liabilities	749			17,573			6,766			—			1,396			17,851			44,335
Total liabilities	5,966			1,164,238			132,375			224,596			167,136			87,204			1,781,515
Total equity	$	87,331		$	856,833		$	156,728		$	(10,378	)	$	72,122		$	275,099		$	1,437,735
UDR’s investment in unconsolidated joint ventures	$	13,306		$	431,277		$	80,302		$	(25,901	)	$	21,596		$	197,646		$	718,226



As of and For the Year Ended December 31, 2013	UDR/MetLife I			UDR/MetLife II			UDR/MetLife Vitruvian Park^®			Texas			UDR/KFH			Other joint ventures			Total
Condensed Statements of Operations:
Total revenues	$	691		$	109,926		$	7,680		$	—		$	19,221		$	5,324		$	142,842
Property operating expenses	621			33,809			4,633			—			7,035			3,292			49,390
Real estate depreciation and amortization	115			30,122			3,830			—			14,199			3,564			51,830
Operating income/(loss)	(45		)	45,995			(783		)	—			(2,013		)	(1,532		)	41,622
Interest expense	—			(37,055		)	(1,886		)	—			(5,872		)	(913		)	(45,726		)
Other income/(expense)	—			1			—			—			—			—			1
Income/(loss) from discontinued operations	(22,388		)	—			—			(9,584		)	—			—			(31,972		)
Net income/(loss)	$	(22,433	)	$	8,941		$	(2,669	)	$	(9,584	)	$	(7,885	)	$	(2,445	)	$	(36,075	)
UDR recorded income/(loss) from unconsolidated entities	$	(4,675	)	$	4,471		$	(2,851	)	$	(1,218	)	$	(2,366	)	$	6,224		$	(415	)

Condensed Balance Sheets:
Total real estate, net	$	90,971		$	1,476,588		$	283,878		$	—		$	249,097		$	65,133		$	2,165,667
Assets held for sale	753,427			—			—			231,981			—			—			985,408
Cash and cash equivalents	305			16,454			3,498			—			2,289			—			22,546
Other assets	4,782			16,666			1,578			—			1,474			83			24,583
Total assets	849,485			1,509,708			288,954			231,981			252,860			65,216			3,198,204
Amount due to UDR	4,520			2,275			1,352			—			420			1,136			9,703
Third party debt	—			877,799			120,999			—			165,209			—			1,164,007
Liabilities held for sale	346,810			—			—			230,393			—			—			577,203
Accounts payable and accrued liabilities	89			14,508			7,152			—			1,234			2,813			25,796
Total liabilities	351,419			894,582			129,503			230,393			166,863			3,949			1,776,709
Total equity	$	498,066		$	615,126		$	159,451		$	1,588		$	85,997		$	61,267		$	1,421,495
UDR’s investment in unconsolidated joint ventures	$	47,497		$	327,926		$	79,318		$	(23,591	)	$	25,919		$	50,586		$	507,655



For the Year Ended December 31, 2012	UDR/MetLife I			UDR/MetLife II			UDR/MetLife Vitruvian Park^®		Texas			UDR/KFH			Other joint ventures			Total
Condensed Statements of Operations:
Total revenues	$	632		$	87,386		$	—	$	—		$	18,670		$	2,724		$	109,412
Property operating expenses	252			25,737			—		—			6,831			1,368			34,188
Real estate depreciation and amortization	124			32,553			—		—			16,546			1,897			51,120
Operating income/(loss)	256			29,096			—		—			(4,707		)	(541		)	24,104
Interest expense	—			(29,170		)	—		—			(5,890		)	(561		)	(35,621		)
Other income/(expense)	—			(9		)	—		—			—			—			(9		)
Income/(loss) from discontinued operations	8,609			—			—		(1,040		)	—			—			7,569
Net income/(loss)	$	8,865		$	(83	)	$	—	$	(1,040	)	$	(10,597	)	$	(1,102	)	$	(3,957	)
UDR recorded income/(loss) from unconsolidated entities	$	(1,750	)	$	15		$	—	$	(2,399	)	$	(3,221	)	$	(1,224	)	$	(8,579	)