SECURED AND UNSECURED DEBT, NET

3 Months Ended

Mar. 31, 2024

SECURED AND UNSECURED DEBT, NET

SECURED AND UNSECURED DEBT, NET

7. SECURED AND UNSECURED DEBT, NET

The following is a summary of our secured and unsecured debt at March 31, 2024 and December 31, 2023 (dollars in thousands):

	Principal Outstanding				As of March 31, 2024
					Weighted		Weighted
					Average		Average	Number of
	March 31,		December 31,		Interest		Years to	Communities
	2024		2023		Rate		Maturity	Encumbered
Secured Debt:
Fixed Rate Debt
Mortgage notes payable (a)	$	1,213,019	$	1,213,751	3.48	%	4.4	20
Deferred financing costs and other non-cash adjustments (b)		(3,196)		(3,009)
Total fixed rate secured debt, net		1,209,823		1,210,742	3.42	%	4.4	20
Variable Rate Debt
Mortgage notes payable (c)		—		40,017	—	%	—	—
Tax-exempt secured notes payable (d)		27,000		27,000	4.05	%	8.0	1
Deferred financing costs		(44)		(46)
Total variable rate secured debt, net		26,956		66,971	4.08	%	8.0	1
Total Secured Debt, net		1,236,779		1,277,713	3.44	%	4.5	21
Unsecured Debt:
Variable Rate Debt
Borrowings outstanding under unsecured credit facility due January 2026 (e) (n)		—		—	—	%	1.8
Borrowings outstanding under unsecured commercial paper program due April 2024 (f) (n)		390,000		408,075	5.53	%	0.1
Borrowings outstanding under unsecured working capital credit facility due January 2025 (g)		27,059		4,593	6.21	%	0.8
Term Loan due January 2027 (e) (n)		87,500		—	6.24	%	2.8
Fixed Rate Debt
Term Loan due January 2027 (e) (n)		262,500		350,000	2.68	%	2.8
8.50% Debentures due September 2024		15,644		15,644	8.50	%	0.5
2.95% Medium-Term Notes due September 2026 (h) (n)		300,000		300,000	2.89	%	2.4
3.50% Medium-Term Notes due July 2027 (net of discounts of $229 and $247, respectively) (i) (n)		299,771		299,753	4.03	%	3.3
3.50% Medium-Term Notes due January 2028 (net of discounts of $450 and $479, respectively) (n)		299,550		299,521	3.50	%	3.8
4.40% Medium-Term Notes due January 2029 (net of discounts of $3 and $3, respectively) (j) (n)		299,997		299,997	4.27	%	4.8
3.20% Medium-Term Notes due January 2030 (net of premiums of $7,951 and $8,294, respectively) (k) (n)		607,951		608,294	3.32	%	5.8
3.00% Medium-Term Notes due August 2031 (net of premiums of $8,810 and $9,109, respectively) (l) (n)		608,810		609,109	3.01	%	7.4
2.10% Medium-Term Notes due August 2032 (net of discounts of $294 and $303, respectively) (n)		399,706		399,697	2.10	%	8.3
1.90% Medium-Term Notes due March 2033 (net of discounts of $1,079 and $1,110, respectively) (n)		348,921		348,890	1.90	%	9.0
2.10% Medium-Term Notes due June 2033 (net of discounts of $916 and $941, respectively) (n)		299,084		299,059	2.10	%	9.2
3.10% Medium-Term Notes due November 2034 (net of discounts of $934 and $956, respectively) (m) (n)		299,066		299,044	3.13	%	10.6
Other		1		2
Deferred financing costs		(20,011)		(20,682)
Total Unsecured Debt, net		4,525,549		4,520,996	3.36	%	5.7
Total Debt, net	$	5,762,328	$	5,798,709	3.38	%	5.4

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.

Our secured debt instruments generally feature either monthly interest and principal or monthly interest-only payments with balloon payments due at maturity. As of March 31, 2024, secured debt encumbered approximately 13% of UDR’s total real estate owned based upon gross book value (approximately 87% of UDR’s real estate owned based on gross book value is unencumbered).

(a) At March 31, 2024, 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%.

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 three months ended March 31, 2024 and 2023, the Company had $0.4 million and $1.1 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, which was included in Interest expense on the Consolidated Statements of Operations. The unamortized fair market adjustment was a net premium of $1.1 million and $1.5 million at March 31, 2024 and December 31, 2023, respectively. The change in net premium was primarily due to the assumption of fixed rate mortgages discussed in footnote (a) above.

(c) During the three months ended March 31, 2024, the Company prepaid a variable rate mortgage with an outstanding balance of $40.0 million and an interest rate of 8.31% at the time of the payoff.

(d) The variable rate mortgage note payable of $27.0 million secures a tax-exempt housing bond issue that matures in March 2032. Interest on this note is payable in monthly installments. As of March 31, 2024, the variable interest rate on the mortgage note was 4.05%.

(e) 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.

Based on the Company’s current credit rating, the Revolving Credit Facility has an interest rate equal to Adjusted SOFR plus a margin of 75.5 basis points and a facility fee of 15 basis points, and the Term Loan has an interest rate equal to Adjusted SOFR plus a margin of 83.0 basis points. 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 upon the Company receiving certain green building certifications, which is reflected in the margins noted above.

In August 2021 and March 2023, the Company entered into five interest rate swaps totaling $350.0 million of notional value, which became effective in July 2022 and in March 2023, to hedge against interest rate risk on all or a portion of the Term Loan debt until July 2025. $350.0 million of the Term Loan debt has a weighted average interest rate, inclusive of the impact of the interest rate swaps, of 3.36% from March 2023 until January 2024, $262.5 million of the Term Loan debt has a weighted average interest rate, inclusive of the impact of interest rate swaps, of 2.68% from January 2024 until July 2024, and $175.0 million of the Term Loan debt has a weighted average interest rate, inclusive of the impact of interest rate swaps, of 1.43% from July 2024 until July 2025.

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 March 31, 2024 and December 31, 2023 (dollars in thousands):

	March 31,			December 31,
	2024			2023
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		—			2,055
Maximum daily borrowings during the period ended		—			250,000
Weighted average interest rate during the period ended		—	%		5.6	%
Interest rate at end of the period		—	%		—	%

(1) Excludes $3.8 million and $2.3 million of letters of credit at March 31, 2024 and December 31, 2023, respectively.

(f) 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 March 31, 2024 and December 31, 2023 (dollars in thousands):

	March 31,			December 31,
	2024			2023
Total unsecured commercial paper program	$	700,000		$	700,000
Borrowings outstanding at end of period		390,000			408,075
Weighted average daily borrowings during the period ended		423,478			384,068
Maximum daily borrowings during the period ended		560,000			505,000
Weighted average interest rate during the period ended		5.6	%		5.4	%
Interest rate at end of the period		5.5	%		5.7	%

(g) 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, 2025, with a one-year extension option. Based on the Company’s current credit rating, the Working Capital Credit Facility has an interest rate equal to Adjusted SOFR plus a margin of 77.5 basis points. 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 March 31, 2024 and December 31, 2023 (dollars in thousands):

	March 31,			December 31,
	2024			2023
Total working capital credit facility	$	75,000		$	75,000
Borrowings outstanding at end of period		27,059			4,593
Weighted average daily borrowings during the period ended		13,287			15,829
Maximum daily borrowings during the period ended		39,381			57,107
Weighted average interest rate during the period ended		6.2	%		5.9	%
Interest rate at end of the period		6.2	%		6.3	%

(h) 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%

(i) 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%.

(j) 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%.

(k) 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%.

(l) 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%.

(m) 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%.

(n) 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 calendar years subsequent to March 31, 2024 are as follows (dollars in thousands):

	Total Fixed		Total Variable		Total		Total		Total
Year	Secured Debt		Secured Debt		Secured Debt		Unsecured Debt		Debt
2024	$	97,222	$	—	$	97,222	$	405,644	$	502,866
2025		178,323		—		178,323		27,059		205,382
2026		56,672		—		56,672		300,000		356,672
2027		6,939		—		6,939		650,000		656,939
2028		166,526		—		166,526		300,000		466,526
2029		315,811		—		315,811		300,000		615,811
2030		230,596		—		230,596		600,000		830,596
2031		160,930		—		160,930		600,000		760,930
2032		—		27,000		27,000		400,000		427,000
2033		—				—		650,000		650,000
Thereafter		—		—		—		300,000		300,000
Subtotal		1,213,019		27,000		1,240,019		4,532,703		5,772,722
Non-cash (a)		(3,196)		(44)		(3,240)		(7,154)		(10,394)
Total	$	1,209,823	$	26,956	$	1,236,779	$	4,525,549	$	5,762,328

(a) Includes the unamortized balance of fair market value adjustments, premiums/discounts and deferred financing costs. The Company amortized $1.2 million and $1.0 million, respectively, during the three months ended March 31, 2024 and 2023, of deferred financing costs into Interest expense.

We were in compliance with the covenants of our debt instruments at March 31, 2024.