Reportable Segments (UNITED DOMINION REALTY, L.P.)

12 Months Ended

Dec. 31, 2014

Entity Information [Line Items]

REPORTABLE SEGMENTS

REPORTABLE SEGMENTS

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

UDR owns and operates multifamily apartment communities that generate rental and other property related income through the leasing of apartment homes to a diverse base of tenants. The primary financial measures for UDR’s apartment communities are rental income and 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 2.75% of property revenue to cover the regional supervision and accounting costs related to consolidated property operations, and land rent. 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, 2013 and held as of December 31, 2014. 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 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, 2014, 2013, and 2012.

The following table details rental income and NOI from continuing and discontinued operations for UDR’s reportable segments for the years ended December 31, 2014, 2013, and 2012, and reconciles NOI to Net income/(loss) attributable to UDR, Inc. in the Consolidated Statements of Operations (dollars in thousands):

	Year Ended December 31,
	2014			2013			2012
Reportable apartment home segment rental income
Same-Store Communities
West Region	$	245,803		$	231,156		$	218,268
Mid-Atlantic Region	161,566			160,208			155,777
Southeast Region	107,991			102,988			97,699
Northeast Region	60,796			58,075			54,461
Southwest Region	54,810			52,302			46,800
Non-Mature Communities/Other	174,183			150,907			171,239
Total segment and consolidated rental income	$	805,149		$	755,636		$	744,244
Reportable apartment home segment NOI
Same-Store Communities
West Region	$	178,926		$	166,033		$	154,205
Mid-Atlantic Region	111,762			111,643			108,490
Southeast Region	71,528			67,264			63,122
Northeast Region	44,897			42,350			39,377
Southwest Region	33,725			31,927			27,878
Non-Mature Communities/Other	115,483			94,824			111,128
Total segment and consolidated NOI	556,321			514,041			504,200
Reconciling items:
Joint venture management and other fees	13,044			12,442			11,911
Property management	(22,142		)	(20,780		)	(20,465		)
Other operating expenses	(8,271		)	(7,136		)	(5,718		)
Real estate depreciation and amortization	(358,154		)	(341,490		)	(350,401		)
General and administrative	(47,800		)	(42,238		)	(43,792		)
Casualty-related recoveries/(charges), net	(541		)	12,253			(8,495		)
Other depreciation and amortization	(5,775		)	(6,741		)	(4,105		)
Income/(loss) from unconsolidated entities	(7,006		)	(415		)	(8,579		)
Interest expense	(130,454		)	(126,083		)	(138,792		)
Interest and other income/(expense), net	11,837			4,681			2,703
Tax benefit/(provision), net	15,136			7,299			30,282
Gain/(loss) on sale of real estate owned, net of tax	143,647			40,449			251,554
Net (income)/loss attributable to redeemable noncontrolling interests in the Operating Partnership	(5,511		)	(1,530		)	(7,986		)
Net (income)/loss attributable to noncontrolling interests	3			60			(140		)
Net income/(loss) attributable to UDR, Inc.	$	154,334		$	44,812		$	212,177

The following table details the assets of UDR’s reportable segments as of December 31, 2014 and 2013(dollars in thousands):

	December 31, 2014			December 31, 2013
Reportable apartment home segment assets:
Same-Store communities:
West Region	$	2,358,444		$	2,337,980
Mid-Atlantic Region	1,410,156			1,395,772
Southeast Region	786,438			785,134
Northeast Region	746,550			738,805
Southwest Region	440,721			434,875
Non-mature Communities/Other	2,640,950			2,515,411
Total segment assets	8,383,259			8,207,977
Accumulated depreciation	(2,434,772		)	(2,208,794		)
Total segment assets — net book value	5,948,487			5,999,183
Reconciling items:
Cash and cash equivalents	15,224			30,249
Restricted cash	22,340			22,796
Deferred financing costs, net	22,686			26,924
Notes receivable, net	14,369			83,033
Investment in and advances to unconsolidated joint ventures, net	718,226			507,655
Other assets	105,202			137,882
Total consolidated assets	$	6,846,534		$	6,807,722

Capital expenditures related to our Same-Store Communities totaled $55.3 million, $47.5 million, and $46.4 million for the years ended December 31, 2014, 2013, and 2012, respectively. Capital expenditures related to our Non-Mature Communities/Other totaled $8.1 million, $8.3 million, and $8.7 million for the years ended December 31, 2014, 2013, and 2012, respectively.

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, Richmond, Norfolk, and Other Mid-Atlantic

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

iv. Northeast Region — New York and Boston

v. Southwest Region — Dallas and Austin

United Dominion Reality L.P.

Entity Information [Line Items]

REPORTABLE SEGMENTS

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. The Operating Partnership has the same chief operating decision maker as that of its parent, the General Partner. The chief operating decision maker consists of several members of UDR’s executive management team who use several generally accepted industry financial measures to assess the performance of the business for our reportable operating segments.

The Operating Partnership owns and operates multifamily apartment communities throughout the United States that generate rental and other property related income through the leasing of apartment homes to a diverse base of tenants. The primary financial measures of the Operating Partnership’s apartment communities are rental income and NOI, and are included in the chief operating decision maker’s assessment of UDR’s performance on a consolidated basis. Rental income represents gross market rent less adjustments for concessions, vacancy loss and bad debt. NOI is defined as total revenues less direct property operating 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 2.75% of property revenue to cover the regional supervision and accounting costs related to consolidated property operations and land rent. The chief operating decision maker of the General Partner utilizes NOI as the key measure of segment profit or loss.

The Operating Partnership’s two reportable segments are Same-Store Communities and Non-Mature/Other communities:

• Same-Store Communities represent those communities acquired, developed, and stabilized prior to January 1, 2013 and held as of December 31, 2014. 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 communities are not 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 of the General Partner evaluates the performance of each of the Operating Partnership's 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 Operating Partnership’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 the Operating Partnership’s total revenues during the years ended December 31, 2014, 2013, and 2012.

The following table details rental income and NOI from continuing and discontinued operations for the Operating Partnership’s reportable segments for the years ended December 31, 2014, 2013, and 2012, and reconciles NOI to Net income/(loss) attributable to OP unitholders in the Consolidated Statements of Operations (dollars in thousands):

	Year Ended December 31,
	2014			2013			2012
Reportable apartment home segment rental income
Same-Store Communities
West Region	$	194,105		$	181,935		$	172,096
Mid-Atlantic Region	68,822			68,205			66,487
Northeast Region	38,087			36,623			34,579
Southeast Region	45,224			43,208			40,771
Southwest Region	26,580			25,614			23,980
Non-Mature Communities/Other	49,816			55,257			62,778
Total segment and consolidated rental income	$	422,634		$	410,842		$	400,691
Reportable apartment home segment NOI
Same-Store Communities
West Region	$	142,388		$	131,276		$	122,477
Mid-Atlantic Region	46,639			46,770			45,801
Northeast Region	28,930			27,149			25,653
Southeast Region	29,815			28,105			26,510
Southwest Region	16,821			16,057			14,738
Non-Mature Communities/Other	35,720			38,178			46,359
Total segment and consolidated NOI	300,313			287,535			281,538
Reconciling items:
Property management	(11,622		)	(11,298		)	(11,019		)
Other operating expenses	(5,172		)	(5,728		)	(5,272		)
Real estate depreciation and amortization	(179,176		)	(181,302		)	(195,051		)
General and administrative	(28,541		)	(24,808		)	(26,204		)
Casualty-related recoveries/(charges), net	(541		)	8,083			(5,518		)
Interest expense	(41,717		)	(36,058		)	(45,234		)
Gain/(loss) on sale of real estate owned, net of tax	63,635			41,518			51,094
Net income/(loss) attributable to noncontrolling interests	(952		)	(4,566		)	(352		)
Net income/(loss) attributable to OP unitholders	$	96,227		$	73,376		$	43,982

The following table details the assets of the Operating Partnership’s reportable segments as of December 31, 2014 and 2013(dollars in thousands):

	December 31, 2014			December 31, 2013
Reportable apartment home segment assets
Same-Store Communities
West Region	$	1,749,494		$	1,733,144
Mid-Atlantic Region	713,093			706,447
Northeast Region	447,269			443,483
Southeast Region	333,428			328,150
Southwest Region	228,996			226,252
Non-Mature Communities/Other	766,490			751,004
Total segment assets	4,238,770			4,188,480
Accumulated depreciation	(1,403,303		)	(1,241,574		)
Total segment assets - net book value	2,835,467			2,946,906
Reconciling items:
Cash and cash equivalents	502			1,897
Restricted cash	13,811			13,526
Deferred financing costs, net	4,475			5,848
Other assets	24,029			25,064
Total consolidated assets	$	2,878,284		$	2,993,241

Capital expenditures related to the Operating Partnership’s Same-Store Communities totaled $32.8 million and $25.8 million for the years ended December 31, 2014 and 2013, respectively. Capital expenditures related to the Operating Partnership’s Non-Mature Communities/Other totaled $1.0 million and $2.0 million for the years ended December 31, 2014 and 2013, respectively.

Markets included in the above geographic segments are as follows:

i. West Region — Orange County, San Francisco, Monterey Peninsula, Los Angeles, Seattle, Inland Empire, Portland, and San Diego

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

iii. Northeast Region — New York and Boston

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

v. Southwest Region — Dallas