Discontinued Operations

6 Months Ended

Jun. 30, 2011

DISCONTINUED OPERATIONS

4. DISCONTINUED OPERATIONS

Discontinued operations represent properties that UDR has either sold or which management believes meet the criteria to be classified as held for sale. In order to be classified as held for sale and reported as discontinued operations, a property’s operations and cash flows have been or will be divested to a third party by the Company whereby UDR will not have any significant continuing involvement in the ownership or operation of the property after the sale or disposition. The results of operations of the property are presented as discontinued operations for all periods presented and do not impact the net earnings reported by the Company. Once a property is deemed as held for sale, depreciation is no longer recorded. However, if the Company determines that the property no longer meets the criteria of held for sale, the Company will recapture any unrecorded depreciation for the property. The assets and liabilities of properties classified as held for sale are presented separately on the Consolidated Balance Sheets at the lower of their carrying amount or their estimated fair value less the costs to sell the assets.

As discussed in Note 3, Real Estate Owned, in conjunction with the asset exchange that closed on April 5, 2011, UDR sold six multifamily apartment communities (1,418 homes). In May 2011, UDR also sold an apartment community (289 homes) located in Dallas, Texas. During the three and six months ended June 30, 2011, UDR recognized gains for financial reporting purposes of $44.7 million on these transactions, which are included in discontinued operations. The results of operations for the following properties are classified on the Consolidated Statements of Operations in the line item entitled “Income from discontinued operations.”

The Company did not dispose of any communities during the three and six months ended June 30, 2010. Discontinued operations for the three and six months ended June, 2010 also includes operating activities related to one 149 unit community sold during the third quarter of 2010.

The following is a summary of income from discontinued operations for the three months ended June 30, 2011 and 2010 (dollars in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2011		2010		2011		2010
Rental income	$	451	$	7,274	$	7,258	$	14,578
Non-property income		—		—		1		1,849
		451		7,274		7,259		16,427
Rental expenses		161		2,169		2,367		4,511
Property management fee		12		200		199		401
Real estate depreciation		54		3,472		2,651		6,940
Interest		64		769		817		1,540
		291		6,610		6,034		13,392
Income before net gain on the sale of depreciable property		160		664		1,225		3,035
Net gain on the sale of depreciable property		44,658		197		44,699		156
Income from discontinued operations	$	44,818	$	861	$	45,924	$	3,191

United Dominion Reality.L.P [Member]

DISCONTINUED OPERATIONS

4. DISCONTINUED OPERATIONS

Discontinued operations represent properties that the Operating Partnership has either sold or which management believes meet the criteria to be classified as held for sale. In order to be classified as held for sale and reported as discontinued operations, a property’s operations and cash flows have or will be divested to a third party by the Operating Partnership whereby the Operating Partnership will not have any significant continuing involvement in the ownership or operation of the property after the sale or disposition. The results of operations of the property are presented as discontinued operations for all periods presented and do not impact the net earnings reported by the Operating Partnership. Once a property is deemed as held for sale, depreciation is no longer recorded. However, if the Operating Partnership determines that the property no longer meets the criteria of held for sale, the Operating Partnership will recapture any unrecorded depreciation for the property. The assets and liabilities of properties deemed as held for sale are presented separately on the Consolidated Balance Sheets. Properties deemed as held for sale are reported at the lower of their carrying amount or their estimated fair value less the costs to sell the assets.

As discussed in Note 3, Real Estate Owned, in conjunction with the asset exchange that closed on April 5, 2011, the Operating Partnership sold four multifamily apartment communities (984 homes). During the three and six months ended June 30, 2011, the Operating Partnership recognized gains for financial reporting purposes of $16.0 million on these transactions, which is included in discontinued operations. The results of operations for the following properties are classified on the Consolidated Statements of Operations in the line item entitled “Income from discontinued operations.”

The Operating Partnership had no apartment homes classified as held for disposition at June 30, 2011. The Operating Partnership did not dispose of any communities during the three and six months ended June 30, 2010.

	Three Months Ended June 30,					Six Months Ended June 30,
	2011		2010			2011		2010
Rental income	$	188	$	4,120		$	4,334	$	8,251
Non-Property income		—		—			—		1,849
		188		4,120			4,334		10,100
Rental expenses		113		1,234			1,453		2,496
Property management fee		5		113			119		227
Real estate depreciation		—		2,048			1,564		4,099
Interest		64		770			815		1,536
		182		4,165			3,951		8,358
Income before net gain on the sale of property		6		(45	)		383		1,742
Net gain on the sale of property		16,038		36			16,038		97
Income/(loss) from discontinued operations	$	16,044	$	(9	)	$	16,421	$	1,839