6. RELATED PARTY TRANSACTIONS

Advances (To)/From the General Partner

The Operating Partnership participates in the General Partner’s central cash management program, wherein all the Operating Partnership’s cash receipts are remitted to the General Partner and all cash disbursements are funded by the General Partner. In addition, other miscellaneous costs such as administrative expenses are incurred by the General Partner on behalf of the Operating Partnership. Prior to December 2018, the net Advances (to)/from the General Partner were reflected as increases/(decreases) of capital on the Consolidated Balance Sheets.

In December 2018, the Operating Partnership converted the net balance of Advances(to)/from the General Partner into a revolving note payable with the General Partner. (See “Notes Payable to the General Partner” section below for further detail).

As a result of these various transactions between the Operating Partnership and the General Partner, the Operating Partnership had net Advances (to)/from the General Partner of zero and $397.9 million as of December 31, 2018 and 2017, respectively.

Allocation of General and Administrative Expenses

The General Partner shares various general and administrative costs, employees and other overhead costs with the Operating Partnership including legal assistance, acquisitions analysis, marketing, human resources, IT, accounting, rent, supplies and advertising, and allocates these costs to the Operating Partnership first on the basis of direct usage when identifiable, with the remainder allocated based on the reasonably anticipated benefits to the parties. The general and administrative expenses allocated to the Operating Partnership by UDR were $13.5 million, $14.0 million, and $15.4 million during the years ended December 31, 2018, 2017 and 2016, respectively, and are included in General and administrative on the Consolidated Statements of Operations. In the opinion of management, this method of allocation reflects the level of services received by the Operating Partnership from the General Partner.

During the years ended December 31, 2018, 2017 and 2016, the Operating Partnership reimbursed the General Partner $15.2 million, $15.4 million, and $14.5 million, respectively, for shared services related to corporate level property management costs incurred by the General Partner. These shared cost reimbursements are initially recorded within the line item General and administrative on the Consolidated Statements of Operations, and a portion related to management costs is reclassified to Property management on the Consolidated Statements of Operations. (See further discussion below.)

Shared Services

The Operating Partnership self-manages its own properties and is party to an Inter-Company Employee and Cost Sharing Agreement with the General Partner. This agreement provides for reimbursements to the General Partner for the Operating Partnership’s allocable share of costs incurred by the General Partner for (a) shared services of corporate level property management employees and related support functions and costs, and (b) general and administrative costs. As discussed above, the reimbursement for shared services is classified in Property management on the Consolidated Statements of Operations.

Notes Payable to the General Partner

The following table summarizes the Operating Partnership’s Notes payable due to General Partner as of December 31, 2018 and 2017 (dollars in thousands):


	Interest rate at		Balance Outstanding
	December 31,		December 31,		December 31,
	2018		2018		2017
Note due August 2021	5.34	%	$	5,500	$	5,500
Note due December 2023	5.18	%		83,196		83,196
Note due April 2026	4.12	%		184,638		184,638
Note due November 2028 (a)	4.69	%		133,205		—
Note due December 2028 (b)	3.72	%		293,576		—
Total notes payable due to General Partner			$	700,115	$	273,334

(a)

On October 31, 2018, the Operating Partnership entered into an unsecured note payable with the General Partner with an aggregate commitment of $133.2 million. Interest is incurred at a rate of 4.69% and is paid monthly. The note matures on November 1, 2028.

(b)

In December 2018, the Operating Partnership converted the remaining outstanding portion of the Advances (to)/from the General Partner capital balance in connection with entering into an unsecured revolving note payable with the General Partner. There is no limit on the total commitments under this note. The initial balance upon conversion of the note was $257.2 million and the balance as of December 31, 2018 was $293.6 million. Interest is incurred on the unpaid principal balance at a variable interest rate equivalent to the General Partner’s weighted average interest rate on borrowings, or 3.72% as of December 31, 2018. The note matures on December 1, 2028. To the extent there is an outstanding principal balance on the revolving note payable, the General Partner, at its discretion, can demand payment at any time prior to the stated maturity date of the note.

Certain limited partners of the Operating Partnership have provided guarantees or reimbursement agreements related to these notes payable. The guarantees were provided by the limited partners in conjunction with their contribution of properties to the Operating Partnership. The Operating Partnership recognized interest expense on the notes payable of $14.1 million, $12.2 million and $12.2 million for the years ended December 31, 2018, 2017, and 2016, respectively.