REPORTABLE SEGMENTS

3 Months Ended

Mar. 31, 2024

REPORTABLE SEGMENTS

REPORTABLE SEGMENTS

14. 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 net operating income (“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 3.25% of property revenue, and land rent. Property management expense covers costs directly related to consolidated property operations, inclusive of corporate management, regional supervision, accounting and other costs. 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, 2023 and held as of March 31, 2024. 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 period, there is no plan to conduct substantial redevelopment activities, and the community is not classified as 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 three months ended March 31, 2024 and 2023.

The following is a description of the principal streams from which the Company generates its revenue:

Lease Revenue

Lease revenue related to leases is recognized on an accrual basis when due from residents or tenants in accordance with ASC 842, Leases. Rental payments are generally due on a monthly basis and recognized on a straight-line basis over the noncancellable lease term because collection of the lease payments was probable at lease commencement, inclusive of any periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option. In addition, in circumstances where a lease incentive is provided to tenants, the incentive is recognized as a reduction of lease revenue on a straight-line basis over the lease term.

Lease revenue also includes all pass-through revenue from retail and residential leases and common area maintenance reimbursements from retail leases. These services represent non-lease components in a contract as the Company transfers a service to the lessee other than the right to use the underlying asset. The Company has elected the practical expedient under the leasing standard to not separate lease and non-lease components from its resident and retail lease contracts as the timing and pattern of revenue recognition for the non-lease component and related lease component are the same and the combined single lease component would be classified as an operating lease.

Other Revenue

Other revenue is generated by services provided by the Company to its retail and residential tenants and other unrelated third parties. Revenue is measured based on consideration specified in contracts with customers. The Company recognizes revenue when it satisfies a performance obligation by providing the services specified in a contract to the customer. These fees are generally recognized as earned.

Joint venture management and other fees

The Joint venture management and other fees revenue consists of management fees charged to our equity method joint ventures per the terms of contractual agreements and other fees. Joint venture fee revenue is recognized

monthly as the management services are provided and the fees are earned or upon a transaction whereby the Company earns a fee. Joint venture management and other fees are not allocable to a specific reportable segment or segments.

The following table details rental income and NOI for UDR’s reportable segments for the three months ended March 31, 2024 and 2023, and reconciles NOI to Net income/(loss) attributable to UDR, Inc. on the Consolidated Statements of Operations (dollars in thousands):

	Three Months Ended
	March 31, (a)
	2024		2023
Reportable apartment home segment lease revenue
Same-Store Communities
West Region	$	117,899	$	114,289
Mid-Atlantic Region		76,811		74,122
Northeast Region		80,330		77,342
Southeast Region		56,784		55,799
Southwest Region		37,615		37,678
Non-Mature Communities/Other		29,740		27,787
Total segment and consolidated lease revenue	$	399,179	$	387,017
Reportable apartment home segment other revenue
Same-Store Communities
West Region	$	2,974	$	2,783
Mid-Atlantic Region		3,124		2,472
Northeast Region		1,735		1,742
Southeast Region		2,414		2,133
Southwest Region		1,566		1,379
Non-Mature Communities/Other		677		781
Total segment and consolidated other revenue	$	12,490	$	11,290
Total reportable apartment home segment rental income
Same-Store Communities
West Region	$	120,873	$	117,072
Mid-Atlantic Region		79,935		76,594
Northeast Region		82,065		79,084
Southeast Region		59,198		57,932
Southwest Region		39,181		39,057
Non-Mature Communities/Other		30,417		28,568
Total segment and consolidated rental income	$	411,669	$	398,307
Reportable apartment home segment NOI
Same-Store Communities
West Region	$	89,413	$	88,369
Mid-Atlantic Region		54,705		53,441
Northeast Region		52,634		52,398
Southeast Region		40,275		39,785
Southwest Region		24,791		24,600
Non-Mature Communities/Other		17,578		16,910
Total segment and consolidated NOI		279,396		275,503
Reconciling items:
Joint venture management and other fees		1,965		1,242
Property management		(13,379)		(12,945)
Other operating expenses		(6,828)		(3,032)
Real estate depreciation and amortization		(169,858)		(169,300)
General and administrative		(17,810)		(17,480)
Casualty-related (charges)/recoveries, net		(6,278)		(4,156)
Other depreciation and amortization		(4,316)		(3,649)
Gain/(loss) on sale of real estate owned		16,867		1
Income/(loss) from unconsolidated entities		9,085		9,707
Interest expense		(48,062)		(43,742)
Interest income and other income/(expense), net		5,865		1,010
Tax (provision)/benefit, net		(337)		(234)
Net (income)/loss attributable to redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership		(3,149)		(1,953)
Net (income)/loss attributable to noncontrolling interests		(12)		(8)
Net income/(loss) attributable to UDR, Inc.	$	43,149	$	30,964

(a) Same-Store Community population consisted of 51,802 apartment homes.

The following table details the assets of UDR’s reportable segments as of March 31, 2024 and December 31, 2023 (dollars in thousands):

	March 31,		December 31,
	2024		2023
Reportable apartment home segment assets:
Same-Store Communities (a):
West Region	$	4,376,985	$	4,366,038
Mid-Atlantic Region		3,214,861		3,205,036
Northeast Region		3,899,854		3,890,762
Southeast Region		1,599,068		1,589,605
Southwest Region		1,334,198		1,330,063
Non-Mature Communities/Other		1,566,230		1,642,355
Total segment assets		15,991,196		16,023,859
Accumulated depreciation		(6,407,111)		(6,267,830)
Total segment assets — net book value		9,584,085		9,756,029
Reconciling items:
Cash and cash equivalents		2,116		2,922
Restricted cash		29,850		31,944
Notes receivable, net		235,382		228,825
Investment in and advances to unconsolidated joint ventures, net		954,301		952,934
Operating lease right-of-use assets		189,729		190,619
Other assets		195,025		209,969
Total consolidated assets	$	11,190,488	$	11,373,242

(a) Same-Store Community population consisted of 51,802 apartment homes.

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 and Richmond

iii. Northeast Region — Boston, New York and Philadelphia

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

v. Southwest Region — Dallas, Austin and Denver