Reportable Segments

6 Months Ended

Jun. 30, 2011

REPORTABLE SEGMENTS

15. 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 total revenues less direct property operating expenses. UDR’s chief operating decision maker utilizes NOI as the key measure of segment profit or loss.

UDR’s two reportable segments are same communities and non-mature/other communities:

• Same communities represent those communities acquired, developed, and stabilized prior to April 1, 2010, and held as of June 30, 2011. 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/other communities represent those communities that were acquired or developed in 2009 or 2010, sold properties, redevelopment properties, properties classified as real estate held for disposition, condominium conversion properties, joint venture properties, properties managed by third parties and the non-apartment components of mixed use properties.

Management evaluates the performance of each of our apartment communities on a same community and non-mature/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 and six months ended June 30, 2011 and 2010.

The accounting policies applicable to the operating segments described above are the same as those described in Note 2, Significant Accounting Policies. The following table details rental income and NOI for UDR’s reportable segments for the three and six months ended June 30, 2011 and 2010, and reconciles NOI to loss from continuing operations per the Consolidated Statements of Operations (dollars in thousands):

	June 30,						June 30,
	2011			2010			2011			2010
Reportable apartment home segment rental income
Same Communities
Western Region	$	54,323		$	52,432		$	107,459		$	104,404
Mid-Atlantic Region		39,105			37,622			77,547			74,636
Southeastern Region		32,468			31,484			64,664			62,991
Southwestern Region		15,196			14,696			30,249			29,454
Non-Mature communities/Other		36,126			17,687			67,801			34,065
Total segment and consolidated rental income	$	177,218		$	153,921		$	347,720		$	305,550
Reportable apartment home segment NOI
Same Communities
Western Region	$	38,078		$	36,216		$	74,339		$	71,764
Mid-Atlantic Region		26,883			25,820			53,049			50,667
Southeastern Region		20,167			19,359			40,280			39,030
Southwestern Region		9,402			8,585			18,250			17,430
Non-Mature communities/Other		23,540			10,274			42,949			19,386
Total segment and consolidated NOI		118,070			100,254			228,867			198,277
Reconciling items:
Non-property income		2,855			2,056			7,391			5,376
Property management		(4,873	)		(4,233	)		(9,562	)		(8,403	)
Other operating expenses		(1,544	)		(1,457	)		(3,001	)		(2,942	)
Depreciation and amortization		(91,161	)		(73,726	)		(175,276	)		(145,933	)
Interest		(37,844	)		(37,945	)		(78,563	)		(74,811	)
General and administrative		(12,918	)		(10,293	)		(23,593	)		(19,933	)
Other depreciation and amortization		(986	)		(1,308	)		(2,029	)		(2,531	)
Loss from unconsolidated entities		(1,348	)		(1,185	)		(2,680	)		(1,922	)
Redeemable non-controlling interests in OP		(221	)		1,064			611			2,069
Non-controlling interests		(37	)		(45	)		(88	)		(80	)
Net gain on sale of depreciable property		44,658			197			44,699			156
Net income/(loss) attributable to UDR	$	14,651		$	(26,621	)	$	(13,224	)	$	(50,677	)

The following table details the assets of UDR’s reportable segments as of June 30, 2011 and December 31, 2010 (dollars in thousands):

	June 30,			December 31,
Reportable apartment home segment assets:	2011			2010
Same communities:
Western Region	$	2,317,600		$	2,308,491
Mid-Atlantic Region		1,269,193			1,264,314
Southeastern Region		1,059,639			1,054,130
Southwestern Region		555,424			553,176
Non-mature communities/Other		2,096,950			1,701,236
Total segment assets		7,298,806			6,881,347
Accumulated depreciation		(1,726,258	)		(1,638,326	)
Total segment assets — net book value		5,572,548			5,243,021
Reconciling items:
Cash and cash equivalents		21,634			9,486
Marketable securities		—			3,866
Restricted cash		20,220			15,447
Deferred financing costs, net		24,747			27,267
Notes receivable		7,800			7,800
Investment in unconsolidated joint ventures		177,404			148,057
Other assets		137,424			74,596
Total consolidated assets	$	5,961,777		$	5,529,540

Capital expenditures related to our same communities totaled $12.5 million and $20.5 million and $13.8 million and $22.1 million for the three and six months ended June 30, 2011 and 2010, respectively. Capital expenditures related to our non-mature/other communities totaled $1.2 million and $2.1 million and $1.6 million and $2.2 million for the three and six months ended June 30, 2011 and 2010, respectively.

Markets included in the above geographic segments are as follows:

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

ii. Mid-Atlantic — New York, Boston, Metropolitan DC, Richmond, Baltimore, Norfolk, and Other Mid-Atlantic

iii. Southeastern — Tampa, Orlando, Nashville, Jacksonville, and Other Florida

iv. Southwestern — Dallas, Phoenix, Austin, and Houston

United Dominion Reality.L.P [Member]

REPORTABLE SEGMENTS

12. REPORTABLE SEGMENTS

FASB ASC Topic 280, Segment Reporting, 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 net operating income (“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. 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 communities and non-mature/other communities:

• Same communities represent those communities acquired, developed, and stabilized prior to April 1, 2011 and held as of June 30, 2011. 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/other communities represent those communities that were acquired or developed in 2009 or 2010, sold properties, redevelopment properties, properties classified as real estate held for sale, condominium conversion properties, joint venture properties, properties managed by third parties, and the non-apartment components of mixed use properties.

Management evaluates the performance of each of our apartment communities on a same community and non-mature/other basis, as well as individually and geographically. This is consistent with the aggregation criteria of Topic 280 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 three and six months ended June 30, 2011 and 2010.

The accounting policies applicable to the operating segments described above are the same as those described in Note 2, “Significant Accounting Policies.” The following table details rental income and NOI for the Operating Partnership’s reportable segments for the three and six months ended June 30, 2011 and 2010, and reconciles NOI to income from continuing and discontinued operations per the consolidated statement of operations (dollars in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
Reportable apartment home segment rental income
Same Communities
Western Region	$	46,736		$	45,076		$	92,376		$	89,720
Mid-Atlantic Region		15,946			15,269			31,620			30,230
Southeastern Region		10,569			10,209			21,041			20,379
Southwestern Region		6,810			6,591			13,553			13,165
Non-Mature communities/Other		16,071			9,950			27,372			19,801
Total segment and consolidated rental income	$	96,132		$	87,095		$	185,962		$	173,295
Reportable apartment home segment NOI
Same Communities
Western Region	$	32,956		$	31,227		$	64,282		$	61,836
Mid-Atlantic Region		11,063			10,418			21,761			20,499
Southeastern Region		6,514			6,414			13,142			12,828
Southwestern Region		4,481			4,081			8,502			8,188
Non-Mature communities/Other		10,910			7,099			17,749			13,403
Total segment and consolidated NOI		65,924			59,239			125,436			116,754
Reconciling items:
Non-property income		—			—			—			1,849
Property management		(2,644	)		(2,395	)		(5,114	)		(4,766	)
Other operating expenses		(1,447	)		(1,160	)		(2,805	)		(2,761	)
Depreciation and amortization		(50,225	)		(41,692	)		(91,383	)		(83,123	)
Interest		(13,844	)		(12,966	)		(25,794	)		(26,041	)
General and administrative		(6,294	)		(3,614	)		(10,874	)		(7,494	)
Net gain on the sale of real estate		16,038			36			16,038			97
Non-controlling interests		(32	)		(18	)		(59	)		(35	)
Net (loss)/income attributable to OP unit holders	$	7,476		$	(2,570	)	$	5,445		$	(5,520	)

The following table details the assets of the Operating Partnership’s reportable segments as of June 30, 2011 and December 31, 2010 (dollars in thousands):

	June 30,			December 31,
	2011			2010
Reportable apartment home segment assets
Same Store Communities
Western Region	$	1,933,232		$	1,924,700
Mid-Atlantic Region		695,116			693,564
Southeastern Region		356,589			354,861
Southwestern Region		255,607			254,485
Non-Mature communities/Other		738,335			478,574
Total segment assets		3,978,879			3,706,184
Accumulated depreciation		(919,971	)		(884,083	)
Total segment assets — net book value		3,058,908			2,822,101
Reconciling items:
Cash and cash equivalents		7,692			920
Restricted cash		12,516			8,022
Deferred financing costs, net		8,886			7,465
Other assets		40,343			22,887
Total consolidated assets	$	3,128,345		$	2,861,395

Capital expenditures related to the Operating Partnership’s same communities totaled $6.8 million and $12.3 and $7.8 million and $12.6 million for the three months and six ended June 30, 2011 and 2010, respectively. Capital expenditures related to the Operating Partnership’s non-mature/other communities totaled $253,000 and $510,000 and $452,000 and $739,000 for the three and six months ended June 30, 2011 and 2010, respectively.

Markets included in the above geographic segments are as follows:

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

ii. Mid-Atlantic — New York, Boston, Metropolitan DC and Baltimore

iii. Southeastern — Nashville, Tampa, Jacksonville, and Other Florida

iv. Southwestern — Dallas and Phoenix