Reportable Segments

12 Months Ended

Dec. 31, 2011

REPORTABLE SEGMENTS

15. REPORTABLE SEGMENTS

FASB ASC Topic 280, Segment Reporting (“Topic 280”), 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 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 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 store communities represent those communities acquired, developed, and stabilized prior to January 1, 2010, and held as of December 31, 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 sale 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, 2010 or 2011, 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 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 years ended December 31, 2011, 2010, or 2009.

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 from continuing and discontinued operations for UDR’s reportable segments for the years ended December 31, 2011, 2010, and 2009, and reconciles NOI to loss from continuing operations per the consolidated statement of operations (dollars in thousands):

	For the Years Ended December 31,
	2011			2010			2009
Reportable apartment home segment rental income
Same Communities
Western Region	$	185,759		$	177,771		$	182,120
Mid-Atlantic Region		153,913			147,643			144,401
Southeastern Region		126,604			122,412			121,659
Southwestern Region		49,223			47,202			46,674
Non-Mature communities/Other		215,459			138,840			108,045
Total segment and consolidated rental income	$	730,958		$	633,868		$	602,899
Reportable apartment home segment NOI
Same Communities
Western Region	$	129,292		$	121,338		$	127,653
Mid-Atlantic Region		106,393			100,875			98,483
Southeastern Region		79,369			76,560			74,853
Southwestern Region		29,395			27,527			26,058
Non-Mature communities/Other		140,311			84,764			71,413
Total segment and consolidated NOI		484,760			411,064			398,460
Reconciling items:
Non-property income		17,422			14,347			14,274
Property management		(20,101	)		(17,432	)		(16,581	)
Other operating expenses		(6,217	)		(5,848	)		(6,485	)
Depreciation and amortization		(370,343	)		(303,446	)		(278,391	)
Interest, net		(158,333	)		(150,796	)		(142,152	)
General and administrative		(45,915	)		(45,243	)		(39,035	)
Severance costs and other restructuring charges		(1,342	)		(6,803	)		—
Other depreciation and amortization		(3,931	)		(4,843	)		(5,161	)
Loss from unconsolidated entities		(6,352	)		(4,204	)		(18,665	)
Redeemable noncontrolling interests in OP		(395	)		3,835			4,282
Non-controlling interests		(167	)		(146	)		(191	)
Tax (expense)/ benefit		(7,571	)		2,533			(311	)
Gain on the sale of depreciable property		138,508			4,083			2,424
Net income/(loss) attributable to UDR, Inc.	$	20,023		$	(102,899	)	$	(87,532	)

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

	December 31,
	2011			2010
Reportable apartment home segment assets
Same Communities
Western Region	$	1,958,108		$	1,920,742
Mid-Atlantic Region		1,257,778			1,245,737
Southeastern Region		1,041,658			1,003,830
Southwestern Region		476,812			461,015
Non-Mature communities/Other		3,340,115			2,250,023
Total segment assets		8,074,471			6,881,347
Accumulated depreciation		(1,831,727	)		(1,638,326	)
Total segment assets — net book value		6,242,744			5,243,021
Reconciling items:
Cash and cash equivalents		12,503			9,486
Marketable securities		—			3,866
Restricted cash		24,634			15,447
Deferred financing costs, net		30,068			27,267
Notes receivable		—			7,800
Investment in unconsolidated joint ventures		213,040			148,057
Other assets		198,365			74,596
Total consolidated assets	$	6,721,354		$	5,529,540

Capital expenditures related to our same communities totaled $48.3 million, $42.6 million, and $48.0 million for the years ended December 31, 2011, 2010, and 2009, respectively. Capital expenditures related to our non-mature/other communities totaled $9.5 million, $6.0 million, and $8.3 million for the years ended December 31, 2011, 2010, and 2009, 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 — Metropolitan DC, Richmond, Baltimore, Norfolk, and Other Mid-Atlantic
iii.	Southeastern — Tampa, Orlando, Nashville, Jacksonville, and Other Florida
iv.	Southwestern — Dallas, Phoenix, and Austin

United Dominion Realty L.P

REPORTABLE SEGMENTS

11. 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 January 1, 2010 and held as of December 31, 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 sale 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, 2010, or 2011 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 years ended December 31, 2011, 2010, and 2009.

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 from continuing and discontinued operations for the Operating Partnership’s reportable segments for the years ended December 31, 2011, 2010, and 2009, and reconciles NOI to income from continuing and discontinued operations per the consolidated statement of operations (dollars in thousands):

	December 31,
	2011			2010			2009
Reportable apartment home segment rental income
Same Store Communities
Western Region	$	158,280		$	151,244		$	155,745
Mid-Atlantic Region		64,020			61,262			58,774
Southeastern Region		42,631			40,846			41,210
Southwestern Region		27,559			26,428			26,669
Non-Mature communities/Other		94,567			70,614			70,658
Total segment and consolidated rental income	$	387,057		$	350,394		$	353,056
Reportable apartment home segment NOI
Same Store Communities
Western Region	$	110,631		$	103,600		$	109,713
Mid-Atlantic Region		44,400			41,908			39,556
Southeastern Region		26,722			25,659			25,984
Southwestern Region		17,127			16,175			16,271
Non-Mature communities/Other		65,378			46,774			49,044
Total segment and consolidated NOI		264,258			234,116			240,568
Reconciling items:
Non-property income		—			1,695			5,695
Property management		(10,644	)		(9,636	)		(9,709	)
Other operating expenses		(5,484	)		(5,028	)		(4,868	)
Depreciation and amortization		(197,964	)		(166,480	)		(166,773	)
Interest		(53,632	)		(52,222	)		(53,547	)
General and administrative		(26,370	)		(23,291	)		(16,886	)
Net gain on the sale of real estate		60,065			152			1,475
Non-controlling interests		(70	)		(41	)		(131	)
Net income/(loss) attributable to OP unit holders	$	30,159		$	(20,735	)	$	(4,176	)

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

	December 31,
	2011			2010
Reportable apartment home segment assets
Same Store Communities
Western Region	$	1,608,006		$	1,591,585
Mid-Atlantic Region		697,217			693,564
Southeastern Region		360,045			354,861
Southwestern Region		257,077			254,485
Non-Mature communities/Other		1,282,953			811,689
Total segment assets		4,205,298			3,706,184
Accumulated depreciation		(976,358	)		(884,083	)
Total segment assets - net book value		3,228,940			2,822,101
Reconciling items:
Cash and cash equivalents		704			920
Restricted cash		12,568			8,022
Deferred financing costs, net		8,184			7,465
Other assets		41,771			22,887
Total consolidated assets	$	3,292,167		$	2,861,395

Capital expenditures related to our same communities totaled $26.5 million, $22.5 million, and $28.0 million for the years ended December 31, 2011, 2010, and 2009, respectively. Capital expenditures related to our non-mature/other communities totaled $3.2 million, $2.5 million, and $3.9 million for the years ended December 31, 2011, 2010, and 2009, 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 —Metropolitan DC and Baltimore
iii.	Southeastern — Nashville, Tampa, Jacksonville, and Other Florida
iv.	Southwestern — Dallas and Phoenix