United Dominion Realty Trust, Inc. (UDR)

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United Dominion Realty Trust Inc. (UDR)

Q2 FY08 Earnings Call

August 5, 2008, 1:00 PM ET


Larry Thede - VP IR

Thomas W. Toomey - President & CEO

Jerry A. Davis - Sr. VP of Property Operations

W. Mark Wallis - Senior EVP

David L. Messenger - Sr. VP & CFO

Warren Troupe - Senior EVP


Michael Gorman - Credit Suisse

Robert Stevenson - Fox-Pitt Kelton

Dustin Pizzo - Banc of America Securities

Richard Anderson - BMO Capital

Michael Salinsky - RBC Capital Market

Alexander Goldfarb - UBS

Paula Poskon - Robert W. Baird

Anthony Paolone - JP Morgan

Jeffrey Donnelly - Wachovia Securities



Good morning ladies and gentlemen. Thank you so much for standing by. Welcome to the UDR Inc. Second Quarter 2008 Earnings Conference Call. During today's presentation, all parties would be in a listen-only mode. Following the presentation, the conference will be open for questions. [Operator Instructions] As a reminder, this conference is being recorded today on Tuesday the 5th of August, 2008.

I'll now turn the conference over to Mr. Larry Thede, Vice President of Investor Relations. Please go ahead.

Larry Thede - Vice President Investor Relations

Thank you. And thanks to all of you for joining us for UDR's second quarter financial results conference call. Our second quarter press release and supplemental disclosure package were distributed yesterday and posted to our website www.udr.com. In the supplement, we have reconciled all non-GAAP financial measures to the most directly comparable GAAP measure in accordance with Reg G requirements.

We'll begin the call with management comments and then open the call to your questions. I would like to note that statements made during this call which are not historical, may constitute forward-looking statements. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be met. A discussion of risks and risk factors are detailed in yesterday's press release and included in our filings with the SEC. We do not undertake a duty to update any forward-looking statements.

I will now turn the call over to our President and CEO, Tom Toomey.

Thomas W. Toomey - President & Chief Executive Officer

Thank you Larry. I am joined on the call today by Mark Wallis, Warren Troupe, David Messenger and Jerry Davis. UDR had a very strong quarter on a number of fronts. I'll let the team fill in you on the details but first let me cover some highlights.

The operating team did a great job, in particular achieving our 16th consecutive quarter of revenue growth. Based on July's results, it looks like we're now on our way to 70. We performed well in a number of areas but to stick out. We nearly reached 70% in NOI margin and we're approaching average rents of $1200 a month.

On the development, redevelopment front, we delivered nearly 1000 homes, at returns exceeding our original underwriting. We've also provided enhanced disclosure in our earnings supplement to help investors understand the status of our activities. In the investment area, we continue to reap the benefits of our March 3rd portfolio sale.

Since, March 31st we closed on $280 million of West Coast acquisitions, bringing us very close to completing the redeployment of our sales proceeds. To improve transparency, we're now producing a quarterly portfolio update which details on each of our top 20 markets, which is available on our website.

On the capital front, we also continue to enjoy solid balance sheet. It's been great to be sitting on cash, especially during this very turbulent time. It is afforded us the chance to pick our spots and take advantage of market conditions. Now let me take a moment and share our views about the future.

Reading countless autonomous forecasts and listening to a number of earnings calls, this quarter from our industry and others, I find that everyone have their queries on the economy for the balance of the year. Simply stated, we at UDR see so many cross currents, it's hard to forecast trends. For the near term, we believe that business is solid and that our capital flexibility will keep us safe during these highly volatile times.

We intend to remain focus on what we can control. In particular, our value creation strategies in operations, development and redevelopment. Looking further out, we believe demographics limited new supply and portfolio positioning will work in our favor. And we remained very optimistic about our long term prospects.

Now I will like to turn the call over to the team. First, Jerry Davis will discuss operations. Then Mark will cover development and redevelopment, and David will cover our capital markets activity and then we'll open it up for questions. Jerry?

Jerry A. Davis - Senior Vice President of Property Operations

Thanks Tom, and good afternoon everyone. Today, I would like to cover several topics. First, our revenue performance during the quarter, next our expense management and finally, our guidance for the remainder of the year.

Because we're one of the last to reach to report, I won't spend time going over individual markets. We've heard what our piers have been telling you on their calls, generally we're in agreement with their views of the markets. One of our primary goals as an operating team here at UDR is to lead the individual markets and year-over-year revenue growth. Over the past several quarters, we've had great success doing this, primarily because of our superior location at the right price point.

Additionally, we consistently look for ways to reinvest in our real estate with various revenue enhancing initiatives. Critical to our continuing success, as the exceptional performance of our site and regional operating teams. I would like to take this term and to personally thank all of my fellow associates here at UDR, who are dedicated to keeping our performance at the top in the industry.

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