UDR, Inc. Q4 FY2025 earnings call

Investment case for UDR with proven track record, culture of innovation, disciplined capital allocation and AI tools. Data-driven decisions driving cash flow growth, e.g., 1,000 basis points improvement in resident retention. Key takeaways from 2025 release and '26 outlook: 2025 results exceeded guidance, positive operating momentum continued into 2026, less competitive supply window, capital allocation including stock repurchase, strong balance sheet, ongoing innovation. Welcomed Ellen Gauthier to board. Capital allocation heat map shows priorities for capital uses. 2026 same store revenue growth building blocks include blended lease rate growth, innovation, occupancy and bad debt. Same store expense growth expected at 3.75% midpoint driven by real estate taxes, repairs and maintenance, administrative and marketing expenses. 2025 operating successes like strategic shift of lease expirations, increased occupancy, accelerated lease rate growth. Strong culture of innovation with AI initiatives piloted.

Full year 2025 FFOA per share and same store revenue expense and NOI growth results exceeded initial guidance at midpoint. Fourth quarter 2025 same store NOI exceeded expectations. Completed acquisition of The Enclave at Potomac Club (406 apartment home community in Northern Virginia) for $147 million. Contributed four apartment communities to expand joint venture with LaSalle by approximately $230 million, increased venture size to roughly $850 million. Repaid $128 million of consolidated secured property debt at maturity and repurchased approximately $93 million of common stock. Resident retention improved 1,000 basis points, resulting in ~$35 million higher annualized cash flow.

2026 full year FFOA per share guidance $2.47 to $2.57. Same store revenue and growth expectations translate to 0.25% - 2.25% midpoint NOI growth. Plan to be net seller of assets in 2026, actively marketing numerous apartment communities. Capital allocation heat map shows priorities for operating platform investment, share repurchases, NOI enhancing CapEx, with JV capital and dispositions as sources, debt more attractive than equity.

Regulatory risk at market and federal level affecting consumer confidence. Legal and political risks in certain markets like Massachusetts and Salinas, potential impact on rent expectations and advocacy costs.

Q: Talk about blended rate growth expectation for full year.

A: Blended rate growth expected 1.5% - 2% in first half, similar in back half, off to good start with 1% achieved in January.

Q: Thoughts on occupancy and retention.

A: Occupancy thought in terms of vacant days and turn process, retention focused on renewals sending out 5.5 - 6%, expecting ~5% range through April.

Q: Variance across regions in sequential monthly momentum.

A: Sunbelt seeing more inflection recently, coastal growth still there but less inflection, e.g., Dallas market positive.

Q: Transaction mark, buyback and dispositions.

A: Selected disposition candidates based on criteria, started with ~$1B, pulled one asset, left ~$700M, expect to close first slug in first quarter, second in second quarter.

Q: Factors driving 2026 other revenues.

A: WiFi, parking, package lockers, storage, pet rent initiatives expected to drive mid single digit growth.

Q: Breakout of lease rate growth between Sunbelt and coastal markets.

A: Coast blends ~2 - 2.5%, Sunbelt flat to up 50 bps, Sunbelt other income higher.

Q: Debt and preferred equity investment book.

A: DPE business with focus on recaps of cash flowing assets, outlook for 2026 includes continued paybacks and book decline of 10 - 25%.

Q: Expense breakdown between controllable and noncontrollable.

A: 2025 was strong for cost control, 2026 affected by WiFi rollout and prior year tax appeals, customer experience project impacting turnover and related expenses.

Q: Blend improvement from October to January.

A: Concessions abating, from October low to January positive, e.g., Dallas blends positive.

Q: Key coastal markets outlook.

A: Coast blends 2 - 2.5%, Sunbelt starts to see inflection, various markets within regions performing well.

Q: Prepayment risk of debt and preferred equity program.

A: No outsized prepayment risk expected, methodical pace of paybacks.

Q: Employment outlook.

A: Employment forecast ~30,000 jobs per month, Sunbelt generally better than coastal.

Q: Seattle market performance.

A: Diversified portfolio in Seattle, 6% of NOI, 60% urban 40% suburban, concessions down, supply down, positive momentum.

Q: Reasons for sequential performance improvement and need for new lease rate growth.

A: Combination of strategy, reducing expirations, renewal growth, other income initiatives, and AI applications in multiple areas to drive growth.