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UDR Announces Closing of West Coast Development Joint Venture

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UDR, Inc. (the “Company”) (NYSE:UDR), a leading multifamily real estate investment trust, today announced the closing of the previously disclosed west coast development joint venture with an initial investment of $136 million consisting of five under construction communities totaling 1,533 homes. The Company is in negotiation to add a sixth asset to the joint venture. The transaction is immediately accretive to 2015 FFO.

West Coast Development Joint Venture

The Company closed the previously announced joint venture agreement with real estate private equity firm, The Wolff Company, Scottsdale, AZ (the “Partner”). The Company invested $136 million for a 48 percent interest in a portfolio of five communities that are currently under construction. The communities are located in three of the Company’s core, coastal markets: Metro Seattle, Los Angeles and Orange County, CA. The Company’s investment is based on an initial all-in price of $559 million and the transaction is immediately accretive to FFO. The Company’s average stabilized yield on initial price is estimated at 5.4 percent. In addition, the Company will earn a 6.5 percent preferred return on its $136 million investment through each individual community’s date of stabilization, defined as when a community reaches 80 percent occupancy for ninety consecutive days, while the Partner is allocated all economics (income and expense) during the pre-stabilization period. Upon stabilization, economics will be shared based on each partner’s ownership percentage. The Company will serve as property manager and be paid a management fee during the lease-up phase and subsequent operation of each of the communities.

The Company has a fixed price option to acquire the Partner’s remaining interest in each community beginning one year after completion. If the options are exercised for all five communities, the Company’s total price will be $597 million and the Company’s all-in stabilized yield is estimated to be 5.0 percent. In the event the Company does not exercise its options to purchase at least two communities, the Partner will be entitled to a 6.5 percent return on its implied equity in the communities not acquired. The Partner is providing certain guaranties and there will be construction loans on all five communities.

Once completed the five communities will contain 1,533 homes with a weighted average size of 844 square feet and 29,136 square feet of retail.

Additional transaction details can be found on the Investor Relations page of the Company’s website, www.udr.com.

Community Location Homes

Average
Home Size

Retail SF
(000)

Going-In
Valuation
($M)

All-In Price
with Option
($M)

All-In Price
per Home
($000)

Constr.
Start

Est.
Compl.
Date

Est.
Stabil.
Date

8th and Republican

Seattle 211 768 13.6 $97 $103 $449 3Q14 1Q16 1Q17
Katella Grand I Orange County 399 996 N/A $138 $146 $365 4Q13 1Q16 1Q17
Columbia City Seattle 244 889 N/A $80 $85 $350 3Q14 2Q16 3Q16
12th & Olive Los Angeles 293 685 15.5 $129 $141 $448 2Q14 3Q16 4Q17
Katella Grand II Orange County 386 819 N/A $115 $123 $318 4Q14 2Q17 1Q18
Total 1,533 844

29.1

$559 $597 $381

About UDR, Inc.

UDR, Inc. (NYSE:UDR), an S&P 400 company, is a leading multifamily real estate investment trust with a demonstrated performance history of delivering superior and dependable returns by successfully managing, buying, selling, developing and redeveloping attractive real estate properties in targeted U.S. markets. As of March 31, 2015, UDR owned or had an ownership position in 48,086 apartment homes including 1,434 homes under development. For 43 years, UDR has delivered long-term value to shareholders, the best standard of service to residents and the highest quality experience for associates. Additional information can be found on the Company’s website at www.udr.com.

Forward Looking Statements

Certain statements made in this press release may constitute “forward-looking statements.” Words such as “expects,” “intends,” “believes,” “anticipates,” “plans,” “likely,” “will,” “seeks,” “estimates” and variations of such words and similar expressions are intended to identify such forward-looking statements. Forward-looking statements, by their nature, involve estimates, projections, goals, forecasts and assumptions and are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in a forward-looking statement, due to a number of factors, which include, but are not limited to, unfavorable changes in the apartment market, changing economic conditions, the impact of inflation/deflation on rental rates and property operating expenses, expectations concerning availability of capital and the stabilization of the capital markets, the impact of competition and competitive pricing, acquisitions, developments and redevelopments not achieving anticipated results, delays in completing developments, redevelopments and lease-ups on schedule, expectations on job growth, home affordability and demand/supply ratio for multifamily housing, expectations concerning development and redevelopment activities, expectations on occupancy levels, expectations concerning the joint ventures with third parties, expectations that automation will help grow net operating income, expectations on annualized net operating income and other risk factors discussed in documents filed by the Company with the Securities and Exchange Commission from time to time, including the Company’s Annual Report on Form 10-K and the Company’s Quarterly Reports on Form 10-Q. Actual results may differ materially from those described in the forward-looking statements. These forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this press release, and the Company expressly disclaims any obligation or undertaking to update or revise any forward-looking statement contained herein, to reflect any change in the Company’s expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based, except to the extent otherwise required under the U.S. securities laws.

This press release and these forward-looking statements include UDR’s analysis and conclusions and reflect UDR’s judgment as of the date of these materials. UDR assumes no obligation to revise or update to reflect future events or circumstances.

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