UDR, Inc. Q4 FY2024 earnings call

1. Promotions and Leadership Changes: Congratulated Mike Lacey on promotion to COO and Joe Fisher on appointment as CIO; commenced executive search for new CFO. 2. 2024 Results and 2025 Outlook: Fourth quarter and full year 2024 FFO met guidance midpoint; shifted to occupancy-focused strategy in Q4 2024. 2025 macro outlook includes resilient economic growth, supply pressures abating, ongoing innovation, and well-positioned balance sheet. 3. 2025 Guidance Building Blocks: Full year FFOA per share guidance $2.45 to $2.55; same-store revenue and expense growth expected to result in 1.75% NOI growth midpoint. 4. Innovation and Customer Experience: Proprietary customer experience project driving resident retention; rollout of property-wide Wi-Fi, etc., expected to add ~65 basis points to same-store revenue growth. 5. Regional Performance: East Coast, West Coast, and Sunbelt have different same-store revenue growth expectations, with Sunbelt facing higher new supply but down from 2024 completions.

Fourth quarter and full year 2024 FFO as adjusted per share were $0.63 and $2.48, achieving the midpoint of guidance. Same-store NOI growth was above the high end of the guidance range. Occupancy trended higher in Q4, with a 50 basis point sequential improvement vs Q3. In 2025, occupancy has remained above 97%, 30 basis points higher than Q4 average. Underlying market rent growth is positive sequentially, new lease rate growth has bottomed in regions, and renewal lease rate growth is healthy mid-4% range. Revenue contribution varies by region, with East Coast expected to grow same-store revenue 2%-4%, West Coast 1.25%-3.25%, and Sunbelt flat to positive 2%.

Full year 2025 FFOA per share guidance $2.45 to $2.55; same-store NOI growth midpoint 1.75%, 25 basis points better than 2024. Q1 FFOA per share guidance $0.60 to $0.62, ~3% sequential decrease. Blended lease rate growth forecast ~2.5% in 2025, with first half ~1.4%-1.8% and second half ~2.8%-3.2%. Same-store revenue guidance ranges 1.25%-3.25% midpoint 2.25%.

1. Investment Risks: 1,300 Fairmount in Philadelphia moved to nonaccrual status; two other investments on watchlist totaling ~$40 million. 2. Regulatory and Supply Risks: Regulatory uncertainties, including rent control; supply pressures in some markets, especially Sunbelt, but expected to abate in 2025.

Q: On blended rate growth trend through the year, especially Sunbelt vs other regions?

A: Mike Lacy said total company blended rate growth ~2.5%, first half ~1.4%-1.8%, second half ~2.8%-3.2%. East Coast blends ~2.5%-3%, West Coast ~2.5%, Sunbelt ~0.6%-0.9%.

Q: On investments and net seller guidance?

A: Joe Fisher said seller component is due to timing of sales in early 2024. Focus on redeploying capital with joint venture partner LaSalle, DPE, development, and OP unit transactions.

Q: On concessions trend and impact on fundamentals?

A: Michael Lacy said concessions are coming down, starting sub-1 week in January, pushing towards lower levels as occupancy and rents track expectations.

Q: On new CIO role and capital allocation?

A: Tom Toomey said change is to get better talent and fresh perspective, Joe Fisher brings new perspective to investment area, search for new CFO underway.

Q: On other income growth and future outlook?

A: Michael Lacy said other income has ~$60 million max potential, 8% growth in 2024, expecting strong year in 2025. Wi-Fi, package lockers, etc., driving growth. Customer experience project enhances other income through improved retention and pricing power.

Q: On supply impact on fundamentals?

A: Joseph Fisher said supply deltas vary by market, with green, yellow, red buckets. Sunbelt supply down from 2024, but still high, but expected to enhance pricing power in 2025.

Q: On development and capital deployment?

A: Joseph Fisher said development starts expected 2-3 this year, looking for high 5%-6% yields. Capital allocation opportunistic, working with joint venture partner LaSalle.

Q: On tech initiatives and funnel partnership?

A: Michael Lacy said funnel rollout will enhance customer experience project, allowing more focus on other innovation ideas by reducing back office work.

Q: On turnover reduction and costs?

A: Michael Lacy said turnover expected 100 basis points lower in 2025, driven by customer experience project and CapEx to fix recurring property issues.

Q: On development costs and pipeline?

A: Joseph Fisher said development costs factoring in inflation, 4-5 projects shovel-ready or could be in next 12 months, targeting high 5%-6% yields.

Q: On preferred equity and 1,000 Oaks?

A: Joseph Fisher said 1,000 Oaks project has strong demand, occupancy up, and equity partner likely to extend loan short term as project performs well.