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What changed in UDR, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of UDR, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+302 added−301 removedSource: 10-K (2024-02-20) vs 10-K (2023-02-13)

Top changes in UDR, Inc.'s 2023 10-K

302 paragraphs added · 301 removed · 236 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

43 edited+31 added−27 removed35 unchanged
Biggest changeFactors we consider in deciding whether to dispose of a property include: ● whether it is in a market targeted for divestment or a reduction in investment; ● current market price for an asset compared to projected economics for that asset; ● potential increases in new construction in the market area; ● areas with low job growth prospects; ● near- and long-term capital expenditure needs for the asset; and ● operating efficiencies. 9 Table of Contents The following table summarizes our apartment community acquisitions and dispositions and our consolidated year-end ownership position for the past five years ( dollars in thousands ): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 2019 2018 Homes acquired ​ 433 ​ 5,426 ​ 1,642 ​ 7,079 ​ — Homes disposed ​ 90 ​ 651 ​ 599 ​ — ​ 868 Homes owned at December 31, ​ 54,999 ​ 53,229 ​ 48,283 ​ 47,010 ​ 39,931 Total real estate owned, at cost ​ $ 15,570,072 ​ $ 14,740,803 ​ $ 13,071,472 ​ $ 12,602,101 ​ $ 10,196,159 ​ Development Activities Our objective in developing a community is to create value while improving the quality of our portfolio.
Biggest changeThe following table summarizes our apartment community acquisitions and dispositions and our consolidated year-end ownership position for the past five years ( dollars in thousands ): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 2021 2020 2019 Homes acquired ​ 1,889 (a) ​ 433 ​ 5,426 ​ 1,642 ​ 7,079 Homes disposed ​ 1,604 (b) ​ 90 ​ 651 ​ 599 ​ — Homes owned at December 31, ​ 55,550 ​ 54,999 ​ 53,229 ​ 48,283 ​ 47,010 Total real estate owned, at cost ​ $ 16,023,859 ​ $ 15,570,072 ​ $ 14,740,803 ​ $ 13,071,472 ​ $ 12,602,101 (a) Excludes 173 apartment homes related to the consolidation of a joint venture that owns one operating community.
We believe our competitive advantages include: ● a fully integrated organization with property management, development, redevelopment, acquisition, marketing, sales and financing expertise; ● scalable operating and support systems, which include automated systems to meet the changing needs of our residents and to effectively focus on our internet-based marketing efforts; ● access to sources of capital; ● geographic diversification with a presence in 21 markets across the country; and ● significant presence in many of our major markets that allows us to be a local operating expert.
We believe our competitive advantages include: ● a fully integrated organization with property management, development, redevelopment, acquisition, marketing, sales and financing expertise; ● scalable operating and support systems, which include automated systems to meet the changing needs of our residents and to effectively focus on our internet-based marketing efforts; ● access to diversified sources of capital; ● geographic diversification with a presence in 21 markets across the country; and ● significant presence in many of our major markets that allows us to be a local operating expert.
Moving forward, we will continue to optimize lease management, improve expense control, increase resident retention efforts and align employee incentive plans with metrics that impact our bottom-line performance. We believe this plan of operation, coupled with the portfolio’s strengths in targeting renters across a geographically diverse platform, should position us for continued operational upside.
Moving forward, we will continue to improve lease management, improve expense control, increase resident retention efforts and align employee incentive plans with metrics that impact our bottom-line performance. We believe this plan of operation, coupled with the portfolio’s strengths in targeting renters across a geographically diverse platform, should position us for continued operational upside.
Although an extreme or sustained escalation in costs could have a negative impact on our residents and their ability to absorb rent increases, we do not believe this had a material impact on our results for the year ended December 31, 2022 . Environmental Matters Various environmental laws govern certain aspects of the ongoing operation of our communities.
Although an extreme or sustained escalation in costs could have a negative impact on our residents and their ability to absorb rent increases, we do not believe this had a material impact on our results for the year ended December 31, 2023 . Environmental Matters Various environmental laws govern certain aspects of the ongoing operation of our communities.
Acquisitions and Dispositions When evaluating potential acquisitions, we consider a wide variety of factors, including: ● high working age population growth, relatively robust rental versus single-family home affordability, measured new supply growth, overall potential for strong total income growth; ● the tax and regulatory environment of the market in which the property is located; ● geographic location, including proximity to jobs, entertainment, transportation, and our existing communities which can deliver significant economies of scale; ● our climate assessments for the market and sub-market in which the property is located; ● construction quality, condition and design of the property; ● current and projected cash flow of the property and the ability to increase cash flow; ● ability of the property’s projected returns to exceed our cost of capital; ● potential for capital appreciation of the property; ● ability to increase the value and profitability of the property through operations and redevelopment; ● terms of resident leases, including the potential for rent increases; ● occupancy and demand by residents for properties of a similar type in the vicinity; ● prospects for liquidity through sale, financing or refinancing of the property; and ● competition from existing multifamily communities and the potential for the construction of new multifamily properties in the area.
Acquisitions and Dispositions When evaluating potential acquisitions, we consider a wide variety of factors, including: ● high working age population growth, relatively robust rental versus single-family home affordability, measured long-term new supply growth, overall potential for strong total income growth; 8 Table of Contents ● the tax and regulatory environment of the market in which the property is located; ● geographic location, including proximity to jobs, entertainment, transportation, and our existing communities which can deliver significant economies of scale; ● our climate assessments for the market and sub-market in which the property is located; ● construction quality, condition and design of the property; ● current and projected cash flow of the property and the ability to increase cash flow; ● ability of the property’s projected returns to exceed our cost of capital; ● potential for capital appreciation of the property; ● ability to increase the value and profitability of the property through operations and redevelopment; ● terms of resident leases, including the potential for rent increases; ● occupancy and demand by residents for properties of a similar type in the vicinity; ● prospects for liquidity through sale, financing or refinancing of the property; and ● competition from existing multifamily communities and the potential for the construction of new multifamily properties in the area.
Revenue growth in 2023 may be impacted by adverse developments affecting the general economy, inclusive of economic conditions as a result of a recession, reduced occupancy rates, increased rental concessions, new supply, increased bad debt and other factors which may adversely impact our ability to increase rents.
Revenue growth in 2024 may be impacted by adverse developments affecting the general economy, inclusive of economic conditions as a result of a recession, reduced occupancy rates, increased rental concessions, new supply, increased bad debt and other factors which may adversely impact our ability to increase rents.
The report’s ESG disclosures were, to the extent applicable, prepared in accordance with the Global Reporting Initiative (GRI) Standards (core), the Sustainability Accounting Standards Board (SASB) standards, and the Task Force for Climate-related Financial Disclosure (TCFD) framework. ​ Refer to Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, for further information on the Company’s activities in 2022. ​ Our Strategic Vision Our strategic vision is to be the multifamily public REIT of choice.
The report’s ESG disclosures were, to the extent applicable, prepared in accordance with the Global Reporting Initiative (GRI) Standards (core), the Sustainability Accounting Standards Board (SASB) standards, and the Task Force for Climate-related Financial Disclosure (TCFD) framework. ​ Refer to Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, for further information on the Company’s activities in 2023. ​ Our Strategic Vision Our strategic vision is to be the multifamily public REIT of choice for investors.
For additional information regarding our 6 Table of Contents operating segments, see Note 16, Reportable Segments , in the Notes to the UDR Consolidated Financial Statements included in this Report. Business Objectives Our principal business objective is to maximize the economic returns of our apartment communities to provide our stockholders with the greatest possible total return and value.
For additional information regarding our operating segments, see Note 16, Reportable Segments , in the Notes to the UDR Consolidated Financial Statements included in this Report. 6 Table of Contents Business Objectives Our principal business objective is to maximize the economic returns of our apartment communities in a sustainable manner to provide our stockholders with the greatest possible total return and value.
Consistently Driving Operational Excellence Investment in new technologies continues to drive operating efficiencies in our business and help us to better meet the changing needs of our business and our residents.
Consistently Driving Operational Excellence Investment in new technologies continues to drive operating efficiencies in our business and helps us to better meet the changing needs of our business and our residents.
Our Same-Store Community population is comprised of operating communities which we own and have stabilized occupancy, revenues and expenses as of the beginning of the prior year. Net income attributable to common stockholders was $82.5 million as compared to $145.8 million in the prior year.
Our Same-Store Community population is comprised of operating communities which we own and have stabilized occupancy, revenues and expenses as of the beginning of the prior year. Net income attributable to common stockholders was $439.5 million as compared to $82.5 million in the prior year.
Advancing a Strong Corporate Culture and Ensuring High Resident Satisfaction Maintaining a Diversified Portfolio and Allocating Capital to Accretive Investment Opportunities We believe greater portfolio diversification, as defined by geographic concentration, location within a market (i.e., urban or suburban) and property quality (i.e., A or B), reduces the volatility of our same-store growth throughout the real estate cycle, appeals to a wider renter and investor audience and lessens the market risk associated with owning a homogenous portfolio.
Advancing a Strong Corporate Culture and Striving for High Resident Satisfaction Maintaining a Diversified Portfolio and Allocating Capital to Accretive Investment Opportunities We believe greater portfolio diversification, as defined by geographic concentration, location within a market (i.e., urban or suburban) and property quality (i.e., A or B), reduces the volatility of our same-store growth throughout the real estate cycle, appeals to a wider renter and investor audience, lessens the market risk associated with owning a homogenous portfolio, and provides more opportunities for accretive external growth when appropriate.
Some competing communities offer amenities that our communities do not have. Competing communities can use rental concessions or lower rents to obtain temporary competitive advantages. Also, some competing communities are larger or newer than our communities. The competitive position of each community is different depending upon many factors, including sub-market supply and demand.
Competing communities can use rental concessions or lower rents to obtain temporary competitive advantages. Also, some competing communities are larger or newer than our communities. The competitive position of each community is different depending upon many factors, including sub-market supply and demand.
To achieve this objective, we intend to continue to pursue the following goals and strategies: ● own and operate a diversified portfolio of apartments in targeted markets in the United States, which are characterized by strong total income growth, high working age population growth, relatively robust rental versus single-family home affordability and measured new supply growth, thus enhancing stability and predictability of returns to our stockholders; ● manage real estate cycles by taking an opportunistic approach to buying, selling, renovating, redeveloping, and developing apartment communities; ● empower site associates to manage our communities efficiently and effectively; ● measure and reward associates based on specific performance targets; and ● manage our capital structure to provide a low relative cost of capital to enhance profitability and predictability of liquidity, earnings and dividends. 2022 Highlights Commitment to Shareholders ● In July 2022, the Company marked its 50 th year as a REIT and, in October 2022, paid its 200 th consecutive quarterly dividend.
To achieve this objective, we intend to continue to pursue the following goals and strategies: ● own and operate a diversified portfolio of apartments in targeted markets in the United States, which are characterized by strong total income growth, high working age population growth, relatively robust rental versus single-family home affordability and favorable demand/supply ratio for multifamily housing, thus enhancing stability and predictability of returns to our stockholders; ● manage real estate cycles by taking an opportunistic approach to buying, selling, renovating, redeveloping, and developing apartment communities; ● empower site associates to manage our communities efficiently and effectively; ● measure and reward associates based on specific performance targets; and ● manage our capital structure with the intent of lowering our relative cost of capital to enhance profitability and predictability of liquidity, earnings and dividends. 2023 Highlights Commitment to Shareholders ● In July 2023, the Company marked its 51 st year as a REIT and, in October 2023, paid its 204 th consecutive quarterly dividend.
Communities At December 31, 2022, our consolidated real estate portfolio included 165 communities with a total of 54,999 completed apartment homes. The overall quality of our portfolio generally enables us to raise rents and to attract residents with higher levels of disposable income who are more likely to absorb such rents.
Communities At December 31, 2023, our consolidated real estate portfolio included 168 communities with a total of 55,550 completed apartment homes. The overall quality of our portfolio generally enables us to raise rents and to attract residents with higher levels of disposable income who are more likely to absorb such rents.
At December 31, 2022, our consolidated real estate portfolio consisted of 165 communities located in 21 markets, consisting of 54,999 completed apartment homes, which are held directly or through our subsidiaries, including the Operating Partnership and the DownREIT Partnership, and consolidated joint ventures.
At December 31, 2023, our consolidated real estate portfolio consisted of 168 communities located in 21 markets, consisting of 55,550 completed apartment homes, which are held directly or through our subsidiaries, including the Operating Partnership and the DownREIT Partnership, and consolidated joint ventures.
As of December 31, 2022, there were 32.4 million units in the DownREIT Partnership (“DownREIT Units”) outstanding, of which 21.1 million, or 65.1%, were owned by UDR and its subsidiaries and 11.3 million, or 34.9%, were owned by outside limited partners.
As of December 31, 2023, there were 32.4 million units in the DownREIT Partnership (“DownREIT Units”) outstanding, of which 21.4 million, or 66.0%, were owned by UDR and its subsidiaries and 11.0 million, or 34.0%, were owned by outside limited partners.
ESG Report We have published our 2022 ESG Report on our website, which discloses our environmental and social programs and performance.
ESG Report We published our 2023 ESG Report on our website, which discloses our environmental and social initiatives, programs, and performance.
As of December 31, 2022, there were 186.1 million units in the Operating Partnership (“OP Units”) outstanding, of which 176.3 million OP Units (including 0.1 million of general partnership units), or 94.7%, were owned by UDR and 9.8 million OP Units, or 5.3%, were owned by outside limited partners.
As of December 31, 2023, there were 189.9 million units in the Operating Partnership (“OP Units”) outstanding, of which 176.4 million OP Units (including 0.1 million of general partnership units), or 92.9%, were owned by UDR and 13.5 million OP Units, or 7.1%, were owned by outside limited partners.
The Company’s annualized declared 2022 dividend of $1.52 represented a 4.8% increase over the previous year. Property Operations ● Net income attributable to common stockholders was $82.5 million as compared to $145.8 million in the prior year.
The Company’s annualized declared 2023 dividend of $1.68 represented a 10.5% increase over the previous year. Property Operations ● Net income attributable to common stockholders was $439.5 million as compared to $82.5 million in the prior year.
In 2022, we declared total distributions of $1.52 per common share and paid dividends of $1.5025 per common share. ​ ​ ​ ​ ​ ​ ​ ​ Dividends Dividends ​ ​ Declared in ​ Paid in ​ ​ 2022 ​ 2022 First Quarter ​ $ 0.3800 ​ $ 0.3625 Second Quarter ​ 0.3800 ​ 0.3800 Third Quarter ​ 0.3800 ​ 0.3800 Fourth Quarter ​ 0.3800 ​ 0.3800 Total ​ $ 1.5200 ​ $ 1.5025 ​ UDR was formed in 1972 as a Virginia corporation.
In 2023, we declared total distributions of $1.68 per common share and paid dividends of $1.64 per common share. ​ ​ ​ ​ ​ ​ ​ ​ Dividends Dividends ​ ​ Declared in ​ Paid in ​ ​ 2023 ​ 2023 First Quarter ​ $ 0.4200 ​ $ 0.3800 Second Quarter ​ 0.4200 ​ 0.4200 Third Quarter ​ 0.4200 ​ 0.4200 Fourth Quarter ​ 0.4200 ​ 0.4200 Total ​ $ 1.6800 ​ $ 1.6400 ​ UDR was formed in 1972 as a Virginia corporation.
However, the majority of our apartment leases have initial terms of 12 months or less, which generally enables us to compensate for inflationary effects by increasing rents on our apartment homes.
However, the majority of our apartment leases have initial terms of 12 months or less, which in an inflationary environment, and absent other factors such as increased supply, generally enables us to compensate for inflationary effects by increasing rents on our apartment homes.
In addition, we have an ownership interest in 9,099 completed or to-be-completed apartment homes through unconsolidated joint ventures or partnerships, including 6,262 apartment homes owned by entities in which we hold preferred equity investments. At December 31, 2022, the Company was developing three wholly-owned communities totaling 715 homes, of which 161 have been completed.
In addition, we have an ownership interest in 10,045 completed or to-be-completed apartment homes through unconsolidated joint ventures or partnerships, including 5,618 apartment homes owned by entities in which we hold preferred equity investments. At December 31, 2023, the Company was developing two wholly-owned communities totaling 415 homes, of which 56 have been completed.
Same-Store Community Comparison We believe that one pertinent quantitative measurement of the performance of our portfolio is tracking the results of our Same-Store Communities’ NOI, which is total rental revenue, less rental and other operating expenses excluding property management.
At December 31, 2023, the Company had no communities at which it was conducting substantial redevelopment activities . Same-Store Community Comparison We believe that one pertinent quantitative measurement of the performance of our portfolio is tracking the results of our Same-Store Communities’ NOI, which is total rental revenue, less rental and other operating expenses excluding property management.
The increase in NOI for the 47,360 Same-Store apartment homes, or 86.1% of our portfolio, was primarily driven by an increase in market rental rates, lower rent concessions, and an increase in reimbursement, ancillary and fee income, partially offset by higher repair and maintenance expense, insurance expense, utility expense, and real estate tax expense.
The increase in NOI for the 51,368 Same-Store apartment homes, or 92.5% of our portfolio, was primarily driven by an increase in market rental rates, an increase in reimbursement, ancillary and fee income and a decrease in insurance expense, partially offset by the impact from rent concessions, higher bad debt, higher vacancy loss, higher repair and maintenance expense, higher utility expense and higher real estate tax expense.
We believe that through professional 12 Table of Contents environmental inspections and testing for asbestos, lead paint and other hazardous materials, coupled with a relatively conservative posture toward accepting known environmental risk, we can minimize our exposure to potential liability associated with environmental hazards.
We believe that through professional environmental inspections and testing for asbestos, lead paint and other hazardous materials, coupled with a relatively conservative posture toward accepting known environmental risk, we can minimize our exposure to potential liability associated with environmental hazards. 12 Table of Contents Federal legislation requires owners and landlords of residential housing constructed prior to 1978 to disclose to potential residents or purchasers of the communities any known lead paint hazards and imposes treble damages for failure to provide such notification.
Web-based technologies have also resulted in declining marketing and advertising costs, improved cash management, and better pricing management of our available apartment homes. 10 Table of Contents Advancing a Strong Corporate Culture and Ensuring High Resident Satisfaction Refer to Human Capital Management section above , for further information on the Company’s corporate culture. ​ Competitive Conditions Competition for new residents is generally intense across our markets.
Advancing a Strong Corporate Culture and Ensuring High Resident Satisfaction Refer to Human Capital Management section above , for further information on the Company’s corporate culture. ​ 10 Table of Contents Competitive Conditions Competition for new residents is generally intense across our markets. Some competing communities offer amenities that our communities do not have.
Diversified characteristics of our portfolio include: ● our consolidated apartment portfolio includes 165 communities located in 21 markets throughout the U.S., including both coastal and sunbelt locations; ● our communities that are located proximate to each other within a market provide enhanced economics; and ● our mix of urban/suburban communities is approximately 31%/69% and our mix of A/B quality properties is approximately 43%/57%. 8 Table of Contents We are focused on increasing our presence in markets with favorable job formation, high propensity to rent, low single-family home affordability, and a favorable demand/supply ratio for multifamily housing.
Diversified characteristics of our portfolio include: ● our consolidated apartment portfolio includes 168 communities located in 21 markets throughout the U.S., including both coastal and sunbelt locations; ● our communities that are located proximate to each other within a market provide enhanced economics; and ● our mix of urban/suburban communities is approximately 31%/69% and our mix of A/B quality properties is approximately 44%/56%.
At December 31, 2022, the Company was developing three wholly-owned communities located in Washington, D.C., Addison, Texas, and Tampa, Florida, totaling 715 homes, of which 161 have been completed, with a budget of $332.5 million, in which we have an investment of $190.1 million.
At December 31, 2023, the Company was developing two wholly-owned communities located in Addison, Texas and Tampa, Florida, totaling 415 homes, of which 56 have been completed, with a budget of $187.5 million, in which we have an investment of $160.4 million. The communities are estimated to be completed in the second quarter of 2024.
Our residents can conduct business with us 24 hours a day, 7 days a week and complete online leasing applications and renewals throughout our portfolio using our web-based resident internet portal or, increasingly, a smart-device application. As a result of transforming our operations through technology, residents’ satisfaction has improved, and our operating teams have become more efficient.
Our residents can conduct business with us 24 hours a day, 7 days a week, including completing online leasing applications and renewals and submitting maintenance or other requests throughout our portfolio using our web-based resident internet portal or, increasingly, a smart-device application.
At December 31, 2022, the Company was developing three wholly-owned communities located in Washington, D.C., Addison, Texas, and Tampa, Florida, totaling 715 homes, of which 161 have been completed, with a budget of $332.5 million, in which we have an investment of $190.1 million.
At December 31, 2023, the Company was developing two wholly-owned communities located in Addison, Texas, and Tampa, Florida, totaling 415 homes, of which 56 have been completed, with a budget of $187.5 million, in which we have an investment of $160.4 million. The communities are estimated to be completed in the second quarter of 2024.
The communities are estimated to be completed between the first quarter of 2023 and the second quarter of 2024. At December 31, 2022, the Company had no communities at which it was conducting substantial redevelopment activities .
As of December 31, 2023, the Company had no communities at which it was conducting substantial redevelopment activities .
The consolidated financial statements of UDR include the noncontrolling interests of the unitholders in the Operating Partnership and DownREIT Partnership. Human Capital Management ​ As of February 8, 2023, we had 1,317 full-time associates and 9 part-time associates, all of whom were employed by UDR.
The consolidated financial statements of UDR include the noncontrolling interests of the unitholders in the Operating Partnership and DownREIT Partnership. Human Capital Management ​ As of December 31, 2023, our team at UDR comprises 1,397 full-time associates and 13 part-time associates, all of whom are dedicated to the success of our organization.
The decrease was primarily driven by lower gains from dispositions of real estate, higher depreciation expense due to communities acquired in 2022 and 2021, lower investment income from unconsolidated entities primarily due to 11 Table of Contents unrealized losses from SmartRent, a portfolio investment of an unconsolidated fund, and lower interest income and other income/(expense) primarily due to unrealized losses from our direct investment in SmartRent, partially offset by higher total NOI and lower interest expense.
The increase was primarily driven by higher gains from dispositions of real estate, higher total NOI, and higher interest income and other income/(expense) primarily due to realized and unrealized gains from our direct investment in SmartRent, Inc.
For the year ended December 31, 2022, our Same-Store NOI increased by $111.2 million compared to the prior year. Our Same-Store Community properties provided 89.7% of our total NOI for the year ended December 31, 2022.
Our Same-Store Community properties provided 93.1% of our total NOI for the year ended December 31, 2023.
The communities are estimated to be completed between the first quarter of 2023 and the second quarter of 2024. Redevelopment Activities Our objective in redeveloping a community is twofold: we aim to grow rental rates while also producing a higher yielding and more valuable asset through asset quality improvement.
Redevelopment Activities Our objective in redeveloping a community is twofold: we aim to grow rental rates while also producing a higher yielding and more valuable asset through asset quality improvement. During the year ended December 31, 2023, we incurred $123.3 million in major renovations, which included major structural changes and/or architectural revisions to existing buildings.
Accordingly, we offer a wide variety of training opportunities. In addition to training designed to address regulatory and statutory matters (e.g., harassment, cybersecurity, fair housing, etc.), associates have the option of participating in management development through our Certified Manager and the Level Up! Career Mobility Programs.
We offer a wide range of training opportunities tailored to individual needs. ​ In addition to mandatory regulatory training (e.g., harassment, cybersecurity, fair housing), associates can opt to receive management development training through programs like the ULEAD and the Level Up! Career Mobility Programs. These initiatives equip our associates with valuable skills for career advancement.
(“SmartRent”), a portfolio investment of an unconsolidated fund, and lower interest income and other income/(expense) primarily due to unrealized losses from our direct investment in SmartRent, partially offset by higher total net operating income (“NOI”) and lower interest expense primarily due to lower debt extinguishment costs, partially offset by higher interest rates. ● Total revenues increased 17.6% over the prior year primarily due to overall market rent growth and communities acquired during 2022 and 2021. ● We achieved Same-Store revenue growth of 11.1% and Same-Store NOI growth of 13.5%.
These were partially offset by higher depreciation expense primarily due to communities acquired and completion of developments in 2023 and 2022, and higher interest expense primarily due to higher average interest rates and higher overall debt balances. ● Total revenues increased 7.3% over the prior year primarily due to overall market rent growth and communities acquired and completion of developments during 2023 and 2022, partially offset by dispositions of real estate in 2023. ● We achieved Same-Store revenue growth of 5.6% and Same-Store NOI growth of 6.0%.
The decrease was primarily driven by lower gains from dispositions of real estate, higher depreciation expense due to communities acquired in 2022 and 2021, and lower investment income from unconsolidated entities primarily due to unrealized losses from SmartRent, Inc.
The increase was primarily driven by higher gains from dispositions of real estate, higher total net operating income (“NOI”), and higher interest income and other income/(expense) primarily due to realized and unrealized gains from our direct investment in SmartRent, Inc. (“SmartRent”) and higher interest income driven by higher notes receivable balances.
We have developed a number of integrated programs to help ensure the health, wellness and safety of our associates. ​ In early 2021, we rolled out access to a confidential on-demand behavioral health support mobile application, providing associates 24/7 access to a care team comprised of coaches and mental health professionals through text-based chats and self-guided activities at no cost to the associate.
In addition, we enhanced our behavioral health support mobile application, providing associates with 24/7 access to a care team of coaches and mental health professionals via text-based chats and self-guided activities at no additional cost to associates. This program was also expanded in 2023 to provide support to teen-age children for parents with teen-aged children.
Our S ame-Store Communities segment represents those communities acquired, developed, and stabilized prior to January 1, 2021, and held as of December 31, 2022.
We also provide a comprehensive set of employee benefits, including health, dental, and vision insurance coverage for all associates. ​ Reporting Segments We report in two segments: Same-Store Communities and Non-Mature Communities/Other . Our S ame-Store Communities segment represents those communities acquired, developed, and stabilized prior to January 1, 2022, and held as of December 31, 2023.
As of our 2022 year-end measurement, 97% of associates completed annual technology IT security training, 98% of associates completed fair housing training, 98% of associates completed annual harassment training, 98% of associates completed diversity and inclusion training, and 98% of associates completed our annual business ethics training. ​ Certifications are important in the apartment business, and we encourage our associates to become professionally certified in areas that interest them and are beneficial to the Company.
By the end of 2023, 95% of associates had completed annual technology IT security training, while 95% had completed fair housing, harassment, diversity and inclusion, and business ethics training. ​ Certifications play a crucial role in career progression in the apartment industry. We actively encourage our associates to pursue professional certifications that align with their interests and benefit the Company.
In 2022, UDR provided 1,072 hours of paid time off for our associates to be used for volunteer work with more than 20+ local organizations that make a difference in the communities in which we operate. UDR provides paid time off during specified, Company-wide volunteer days in 2022 and our associates responded with a 179% year-over-year increase in volunteer hours.
We find these surveys to be incredibly helpful and plan to continue conducting them to receive ongoing feedback. ​ We believe that our associates should be active in their communities, and we support their efforts. In 2023, UDR provided 1,041 hours of paid time off to associates for volunteer work with over 20 local organizations.
Certifications range from master’s degree programs to certified property manager programs, to technical licenses for HVAC systems, all of which equip our associates with knowledge and the potential for career-expansion opportunities. UDR offers partial tuition reimbursement related to attaining these certifications. ​ Each UDR associate is required to engage in an annual performance review with their direct supervisor.
These certifications range from master's degree programs to certified property manager programs to technical licenses. We offer partial tuition reimbursement to support associates in attaining these certifications.
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Of such number 916 associates are employed in roles that are located at or that are solely related to our communities and the remainder are employed in corporate roles. Recruiting and retaining our associates, as well as assisting them in their professional development, are critically important in successfully managing our business.
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Within this workforce, 991 associates are focused on roles directly associated with our communities, while the remaining associates contribute to various corporate functions. Our commitment to social responsibility extends to the entire employee lifecycle, encompassing recruitment, onboarding, development, engagement, and retention.
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UDR’s culture is one based on innovation, inclusion, empowerment, adaptability, and execution, and understanding and maintaining our culture is fundamental to recruiting and retaining associates.
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Our overarching objective is to enhance the associate experience, foster diversity, and maintain a motivated workforce that fuels our growth and talent retention.
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To that end, in 2020 we updated our culture statement and launched an associate facing culture website to ensure that our associates understand our culture and have an opportunity to participate in its evolution. ​ 4 Table of Contents Associate Compensation ​ Attracting, developing, and retaining high-quality and diverse associates are critical to the long-term success of our Company.
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This dedication to our UDR culture and values directly influences improved engagement, productivity, and the overall success of our organization. ​ Our UDR culture is defined by choice, transparency, and trust, empowering our associates to make decisions that align with their individual interests and benefit the Company as a whole.
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Implementing fair, non-biased compensation practices is our starting point. We also use various recruiting methods depending on job function, including an associate referral program, internet-based recruiting platforms, and third-party recruiting agencies. With respect to compensation, we utilize market surveys and other third-party information when determining salary ranges, and we design our compensation programs to include bonus potential to incentivize performance.
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By prioritizing and enhancing the associate experience, we hope to enhance engagement levels, leading to increased customer satisfaction, higher employee 4 Table of Contents retention, and superior results.
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In addition, we evaluate gender- and diversity-based job-title-specific compensation metrics quarterly to actively monitor pay equity, identify areas for improvement and as part of the Company’s evolving long-term Environmental, Social, and Governance (“ESG”) and People Strategy.
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We report to our Board of Directors at least annually with respect to our human capital initiatives, including evaluations and analyses. ​ Associate Compensation ​ Attracting, nurturing, and retaining top-tier, diverse talent across our organization is essential to our long-term success. An integral part of this process is our commitment to fair and attractive compensation practices.
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These results are provided annually to our Board of Directors. ​ In 2022, we implemented the CompAnalyst Enterprise solution, a compensation tool that assists us in identifying any changes in market pay and pay equity gaps, and helps us assess potential flight risks. Implementing this tool should help the Company in retaining quality associates and forecasting budgets.
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We continue to utilize our compensation market data tool that enables us to access near real-time market insights. This tool has been helpful in helping us to make informed decisions and adjust our salary ranges accordingly, helping us to remain competitive and attract and retain top talent.
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Results of this analysis will be incorporated into our annual communication to executive leadership and the Board of Directors. ​ Associate Growth and Development ​ We believe that training is important to our associates’ job satisfaction, is essential to furthering their effectiveness, and helps in career advancement and associate retention, helping us to create a more efficient workforce.
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By staying up-to-date with the latest trends in the job market, we seek to provide fair and competitive compensation packages to our associates. We also conduct annual assessments of pay equity across various dimensions, such as gender, age, and ethnicity, for each job title. Our compensation programs are designed to include performance-driven bonuses.
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These programs are designed to enable our associates to acquire skills that will be useful to them as they progress in their career. In total, there are over 5,000 courses available to our associates. Examples of program topics include: leasing skills, basic property maintenance, customer service, project management, and system applications.
Added
These metrics are presented annually to our executive leadership and Board of Directors for oversight purposes. ​ Associate Growth and Development ​ We firmly believe that frequent training is essential for associate job satisfaction, effectiveness, career progression, and retention. New associates participate in a comprehensive two-day onboarding process that covers our culture, values, mission, and administrative procedures.
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In aggregate, our associates engaged in 16,267 hours of training in 2022, or an average of 13 hours per associate. In addition, we enhanced our controls around required training to ensure that associates complete these courses in a timely manner.
Added
In total, over 6,000 courses are available to our associates, spanning topics such as leasing skills, property maintenance, customer service, project management, and system applications. In 2023, our associates collectively invested 13,924 hours in training, averaging 10 hours per full time associate. We also implemented improved controls around timely completion of required courses.
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Among other things, the performance review establishes the associate’s training plans for the upcoming year and provides feedback on career development for each associate. ​ In addition, we monitor associate turnover and take action when issues are identified if appropriate. ​ Diversity and Inclusion ​ We are committed to creating and maintaining a diverse and inclusive workplace environment that supports the development and advancement of all associates. ​ As of December 31, 2022, our total workforce is 60% male and 40% female.
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Each UDR associate participates in an annual performance review with their direct supervisor, providing feedback on career development and engagement levels. ​ Additionally, in 2023, the Company hired a Vice President of Organizational Development and Succession Planning.
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The ethnicity of our workforce is 55% White, 26% Hispanic/Latino, 12% Black, 2% Asian and 5% Other.
Added
Organizational development and succession planning are critical components of the Company's long-term strategy as they help UDR to have the right talent in the right positions to drive success and growth. ​ Diversity and Inclusion ​ We prioritize respect, fairness, and the promotion of diverse perspectives, which contribute to our Company's growth and success.
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“Other” includes: American Indian, Alaska Native, Native Hawaiian, Pacific Islander, Not Specified or two or more races. ​ As of December 31, 2022, our management team (associates with the title of community director or director and higher job classifications) is 57% male and 43% female.
Added
Our commitment extends to fostering a diverse and inclusive workplace environment that facilitates the development and advancement of all associates. ​ As of December 31, 2023, our workforce is comprised of 60% male and 40% female associates, with an ethnic composition of 53% White, 26% Hispanic/Latino, 13% Black, 2% Asian, and 6% Other.
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The ethnicity of our management team is 61% White and 39% non-White. ​ 5 Table of Contents Over the three-year period ending December 31, 2022, 582 associates were promoted.
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Our management team (including resident services managers and more senior job classifications) reflects a gender balance of 57% male and 43% female, with an ethnic breakdown of 61% White and 39% non-White.
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Of the associates that were promoted to the positions of community director, director, or a higher job classification during the period, 59% were female and 33% were non-White. ​ Associate Engagement and Outreach ​ We conduct an associate engagement survey every two to three years, which surveys all associates on a variety of issues.
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Over the three-year period ending December 31, 2023, 520 promotions occurred, with 48% of those promoted to resident services manager, director, or more senior job classifications being female and 26% non-White. ​ We provide resources, webinars, trainings, workshops, and tools to educate our associates on DEI-related topics.
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The results of our 2021 survey showed that 94% of associates feel that they can build relationships with colleagues, 89% of associates feel that they are treated fairly and 87% of associates feel that they can succeed and thrive at work. ​ We believe that our associates should also be involved in their communities and that we should assist with those efforts.
Added
Our commitment to promoting diversity and inclusion remains as we strive to create a healthy and diverse work environment and attract candidates from all backgrounds, ethnicities, and genders. 5 Table of Contents ​ Associate Engagement and Outreach ​ Throughout 2023, we placed greater emphasis on increasing associate engagement and focused efforts on achieving this goal.
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While the COVID-19 pandemic negatively affected the program in 2020, we were able to re-implement it on a limited basis in 2021 and fully re-implement it in 2022. ​ Employee Health, Wellness and Safety ​ The health, wellness, and safety of our associates is of utmost importance to UDR to maintain our inclusive culture and ensure our associates are engaged.
Added
We implemented a quarterly pulse survey program and several measures aimed at improving communication, making data-driven decisions, and promoting collaboration between our operations and corporate teams.
Removed
We publish a monthly Wellness Newsletter for our associates as part of our UDR Wellness Initiative. The Wellness Newsletters cover multiple topics, including preventative care, fitness and heart health, managing anxiety, mental health, fatigue, healthy eating habits, and provide an avenue for associates to access the CDC’s updates and recommendations related to COVID-19 and other illnesses.
Added
Centralizing information, creating an HR Monthly Newsletter, and initiating internal publications and recognition programs for associates were among the initiatives we undertook to facilitate better communication and foster a sense of community. ​ The quarterly pulse surveys we implemented in 2023 give us valuable insights into associate engagement, views on UDR culture, and work-life balance, among other key performance indicators.
Removed
The program was enhanced in 2022 to provide access to three additional free confidential visits (six total) with a counselor. ​ In early 2022, associates were invited to participate in a third-party benefits survey. This survey yielded that 72% of associates who responded believe that UDR offers benefits that meet their needs.
Added
We also organized food, clothing, and blood drives, as well as initiatives to promote non-profit organizations and causes, fostering a culture of giving back. ​ Employee Health, Wellness and Benefits ​ The health, wellness, and safety of our associates are paramount to UDR. We maintain an inclusive culture by prioritizing the well-being of our associates.
Removed
Utilizing feedback from this survey, as well as additional sources, including our most recent associate engagement survey, UDR introduced the Lifestyle Spending Account and Roth 401(k) retirement plan in 2022.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

96 edited+16 added−7 removed174 unchanged
Biggest changeContinued increases in interest rates would further increase our interest expenses and increase the costs of refinancing existing indebtedness and of issuing new debt, including unsecured commercial paper. The effect of prolonged interest rate increases could negatively impact our ability to service our indebtedness, make distributions to security holders, make acquisitions and develop properties.
Biggest changeThe effect of prolonged interest rate increases could negatively impact our ability to service our indebtedness, make distributions to security holders, make acquisitions and develop properties. Insufficient Cash Flow Could Affect Our Debt Financing and Create Refinancing Risk.
As a result, bankruptcies or defaults by these counterparties or their subcontractors have resulted in, and in the future could result in, services not being provided as expected, projects not being completed on time, or on budget, or at all, or contractual obligations to us not being satisfied.
As a result, bankruptcies or defaults by these counterparties or their subcontractors have resulted in, and in the future could result in, services not being provided as expected, projects not being completed on time, on budget, or at all, or contractual obligations to us not being satisfied.
Failure to Generate Sufficient Income Could Impair Debt Service Payments and Distributions to Stockholders. If our apartment communities do not generate sufficient revenue to meet rental expenses, our ability to make required payments of interest and principal on our debt and to pay dividends or distributions will be adversely affected.
Failure to Generate Sufficient Income Could Impair Debt Service Payments and Distributions to Stockholders. If our apartment communities do not generate sufficient revenue to meet rental expenses, our ability to make required payments of interest and principal on our debt and to pay dividends or distributions to our stockholders will be adversely affected.
Many of the factors listed above are beyond our control. These factors may cause the market price of shares of our common stock to decline, regardless of our financial condition, results of operations, business or our prospects. We May Change the Dividend Policy for Our Common Stock in the Future.
Many of the factors listed above are beyond our control. These factors may cause the market price of shares of our common stock to decline, regardless of our financial condition, results of operations, business or prospects. We May Change the Dividend Policy for Our Common Stock in the Future.
Our acquisition activities and their success are subject to the following risks, among others: ● we may be unable to obtain financing for acquisitions on favorable terms, or at all, which could cause us to delay or even abandon potential acquisitions; ● even if we are able to finance an acquisition, cash flow from the acquisition may be insufficient to meet our required principal and interest payments on the debt used to finance the acquisition; ● even if we enter into an acquisition agreement for an apartment community, we may not complete the acquisition for a variety of reasons after incurring certain acquisition-related costs; ● we may incur significant costs and divert management attention in connection with the evaluation and negotiation of potential acquisitions, including potential acquisitions that we subsequently do not complete; ● when we acquire an apartment community, we may invest additional amounts in it with the intention of increasing profitability, and these additional investments may not produce the anticipated improvements in profitability; ● the expected occupancy rates and rental rates may differ from actual results; and ● we may be unable to quickly and efficiently integrate acquired apartment communities and new personnel into our existing operations, and the failure to successfully integrate such apartment communities or personnel will result in inefficiencies that could materially and adversely affect our expected return on our investments and our overall profitability.
Our acquisition activities and their success are subject to the following risks, among others: ● we may be unable to obtain financing for acquisitions on favorable terms, or at all, which could cause us to delay or even abandon potential acquisitions; ● even if we are able to finance an acquisition, cash flow from the acquisition may be insufficient to meet our required principal and interest payments on the debt used to finance the acquisition; ● even if we enter into an acquisition agreement for an apartment community, we may not complete the acquisition for a variety of reasons after incurring certain acquisition-related costs; ● we may incur significant costs and divert management attention in connection with the evaluation and negotiation of potential acquisitions, including potential acquisitions that we subsequently do not complete; ● when we acquire an apartment community, we may invest additional amounts in it with the intention of increasing profitability, and these additional investments may not produce the anticipated improvements in profitability; ● the expected occupancy rates, rental rates and expenses may differ from actual results; and ● we may be unable to quickly and efficiently integrate acquired apartment communities and new personnel into our existing operations, and the failure to successfully integrate such apartment communities or personnel will result in inefficiencies that could materially and adversely affect our expected return on our investments and our overall profitability.
Laws and regulations regarding rent control, rent stabilization, eviction, tenants’ rights, and similar matters, as well as any lawsuits against us arising from such laws and regulations, may limit our ability to charge market rents, increase rents, evict delinquent tenants or change fees, or recover increases in our operating expenses, which could have an adverse effect on our results of operations and the value of our properties.
Laws and regulations regarding rent control, rent stabilization, eviction, tenants’ rights, and similar matters, as well as any lawsuits against us arising from such laws and regulations, may limit our ability to charge market rents, increase rents, evict delinquent tenants or charge fees, or recover increases in our operating expenses, which could have an adverse effect on our results of operations and the value of our properties.
We are subject to the risks normally associated with debt financing, including the risk that our operating income and cash flow will be insufficient to make required payments of principal and interest, could restrict or limit our ability to incur additional debt, or could restrict our borrowing capacity under our line of credit due to debt covenant restraints.
We are subject to the risks normally associated with debt financing, including the risk that our operating income and cash flow could be insufficient to make required payments of principal and interest, could restrict or limit our ability to incur additional debt, or could restrict our borrowing capacity under our line of credit due to debt covenant restraints.
If an uninsured loss or a loss in excess of insured limits occurs, we could lose all or a portion of the capital we have invested in a property, as well as the anticipated future revenue from the property. In such an event, we might nevertheless remain obligated for any mortgage debt or other financial obligations related to the property.
If an uninsured loss or a loss in excess of insured limits occurs, we could lose all or a portion of the capital we have invested in a property, as well as the future revenue from the property. In such an event, we might nevertheless remain obligated for any mortgage debt or other financial obligations related to the property.
Our partners have in the past failed, and may in the future fail, to develop or operate the real property, operate the entity, refinance property indebtedness or sell the real property in the manner intended and as a result the entity may not be able to redeem our investment or pay the return expected to us in a timely manner if at all.
Our partners have in the past failed, and may in the future fail, to develop or operate the real property, operate the entity, refinance property indebtedness or sell the real property in the manner intended and as a result the entity may not be able to redeem our investment or pay the return expected to us in a timely manner or at all.
We cannot predict whether we will be able to sell any property for the price or on the terms we set, or whether any price or other terms offered by a prospective purchaser would be acceptable to us. We also cannot predict the length of time needed to find a willing purchaser and to close the sale of a property.
We cannot predict whether we will be able to sell any property for the price or on the terms we set, or whether any price or other terms offered by a prospective purchaser would be acceptable to us. We also cannot predict the length of time needed to find a willing purchaser or to close the sale of a property.
Factors that may affect our occupancy levels, our rental revenues, and/or the value of our properties include the following, among others: ● downturns in global, national, regional and local economic conditions, particularly increases in unemployment; ● declines in mortgage interest rates, making alternative housing options more affordable; ● government or builder incentives with respect to home ownership, making alternative housing options more attractive; ● local real estate market conditions, including oversupply of, or reduced demand for, apartment homes; ● declines in the financial condition of our tenants, which may make it more difficult for us to collect rents from some tenants; ● changes in market rental rates; ● our ability to renew leases or re-lease space on favorable terms; ● the timing and costs associated with property improvements, repairs or renovations; ● changes in household formation; and ● rent control or stabilization laws, or other laws regulating or impacting rental housing, which could prevent us from raising rents to offset increases in operating costs or otherwise impact us.
Factors that have in the past and may in the future affect our occupancy levels, our rental revenues, and/or the value of our properties include the following, among others: ● downturns in global, national, regional and local economic conditions, particularly increases in unemployment; ● declines in mortgage interest rates, making alternative housing options more affordable; ● government or builder incentives with respect to home ownership, making alternative housing options more attractive; ● local real estate market conditions, including oversupply of, or reduced demand for, apartment homes; ● declines in the financial condition of our tenants, which may make it more difficult for us to collect rents from some tenants; ● changes in market rental rates; ● our ability to renew leases or re-lease space on favorable terms; ● the timing and costs associated with property improvements, repairs or renovations; ● changes in household formation; and ● rent control or stabilization laws, or other laws regulating or impacting rental housing, which could prevent us from raising rents to offset increases in operating costs or otherwise impact us.
We have in the past and may in the future develop and/or acquire properties in partnerships and joint ventures, including those in which we own a preferred interest, with other persons or entities when we believe circumstances warrant the use of such structures.
We have in the past and may in the future develop and/or acquire properties through partnerships and joint ventures, including those in which we own a preferred interest, with other persons or entities when we believe circumstances warrant the use of such structures.
Further, if we elect not to or are unable to satisfy such new criteria or do not meet the criteria of a specific third-party provider, some investors may conclude that our policies with respect to corporate responsibility are inadequate.
Further, if we elect not to or are unable to satisfy such new criteria or do not meet the criteria of a specific third-party provider or investor, some investors may conclude that our policies with respect to corporate responsibility are inadequate.
In general, we and our partners may each have the right to trigger a buy-sell or other similar arrangement, which could cause us to sell our interest, or acquire our partner’s interest, at a time when we otherwise would not have initiated such a transaction and may result in the valuation of our interest in the partnership or joint venture (if we are the seller) or of the other partner’s interest in the partnership or joint venture (if we are the buyer) at levels which may not be representative of the valuation that would result from an arm’s length marketing process and could cause us to recognize unanticipated capital gains or losses or the loss of fee income.
In general, we and our partners may each have the right to trigger a buy-sell or other similar arrangement, which arrangement or other factors could cause us to sell our interest, or acquire our partner’s interest or other property, at a time when we otherwise would not have initiated such a transaction and may result in the valuation of our interest in the partnership or joint venture (if we are the seller) or of the other partner’s interest in the partnership or joint venture (if we are the buyer) at levels which may not be representative of the valuation that would result from an arm’s length marketing process and could cause us to recognize unanticipated capital gains or losses or the loss of fee income.
Third party vendors may collect and hold personally identifiable information and other confidential information of our tenants, prospective tenants and employees. We also maintain financial and business information regarding us and persons and entities with which we do business on our information technology systems.
Third party vendors may collect and hold personally identifiable information and other confidential information of our tenants, prospective tenants and employees. We also maintain such information and financial and business information regarding us and persons and entities with which we do business on our information technology systems.
Expenses associated with our investment in an apartment community, such as debt service, real estate taxes, insurance and maintenance costs, are generally not reduced when circumstances cause a reduction in revenue from that community.
Expenses associated with our investment in an apartment community, such as debt service, real estate taxes, insurance, labor costs and maintenance costs, are generally not reduced when circumstances cause a reduction in revenue from that community.
If a borrower defaults on our mezzanine loan or debt senior to our loan, or in the event of a borrower bankruptcy, our mezzanine loan will be satisfied only after the senior debt. As a result, we may not recover some of or all our investment.
If a borrower defaults on our loan or debt senior to our loan, or in the event of a borrower bankruptcy, our mezzanine or other loan will be satisfied only after the senior debt. As a result, we may not recover some of or all our investment.
We intend that our current organization and method of operation enable us to continue to qualify as a REIT, but we may not so qualify or we may not be able to remain so qualified in the future.
We intend that our current organization and method of operation will enable us to continue to qualify as a REIT, but we may not so qualify or we may not be able to remain so qualified in the future.
The Operating Partnership and the DownREIT Partnership intend to qualify as partnerships for federal income tax purposes, and intend to take that position for all income tax reporting purposes. If classified as partnerships, the Operating Partnership and the DownREIT Partnership generally will not be taxable entities and will not incur federal income tax liability.
The Operating Partnership and the DownREIT Partnership intend to qualify as partnerships for federal income tax purposes, and we intend to take that position for all income tax reporting purposes. If classified as partnerships, the Operating Partnership and the DownREIT Partnership generally will not be taxable entities and will not incur federal income tax liability.
As a result, we may not have immediate access to all of the cash proceeds generated from our property sales; and ● federal tax laws limit our ability to profit on the sale of communities that we have owned for less than two years, and this limitation may prevent us from selling communities when market conditions are favorable. 15 Table of Contents Competition Could Limit Our Ability to Lease Apartment Homes or Increase or Maintain Rents.
As a result, we may not have immediate access to all of the cash proceeds generated from our property sales; and ● federal tax laws limit our ability to profit on the sale of communities or interests in communities that we have owned for less than two years, and this limitation may prevent us from selling communities when market conditions are favorable. 15 Table of Contents Competition Could Limit Our Ability to Lease Apartment Homes or Increase or Maintain Rents.
Similarly, compliance with or changes in (i) laws increasing the potential liability for environmental conditions existing on properties or the restrictions on discharges or other conditions, (ii) laws and regulations regulating housing, such as the Americans with Disabilities Act and the Fair Housing Amendments Act of 1988, or (iii) employment related laws, may result in significant unanticipated expenditures, which could adversely affect our financial condition and results of operations.
Similarly, compliance with or changes in (i) laws increasing the potential liability for environmental conditions existing on properties or the restrictions on discharges or other conditions, (ii) laws and regulations regulating housing, such as the Americans with Disabilities Act and the Fair Housing Amendments Act of 1988, or (iii) employment related laws, among others, may result in significant unanticipated expenditures, which could adversely affect our financial condition and results of operations.
Our rental revenue and operating results depend significantly on the occupancy levels at our properties and the ability of our residents and retail and commercial tenants to meet their rent obligations to us, which have been in certain cases, and could in the future be, adversely affected by, among other things, job losses, furloughs, store closures, lower incomes, uncertainty about the future as a result of an epidemic, pandemic or other health crisis and related governmental actions including eviction moratoriums, shelter-in-place orders, prohibitions on charging certain fees, and limitations on collection laws and rent increases, which have affected, and, if such restrictions are not lifted, or are reinstated, or new restrictions imposed, may continue to affect our ability to collect rent or enforce legal or contractual remedies for the failure to pay rent, which have negatively impacted, and may continue to negatively impact, our ability to remove residents or retail and commercial tenants who are not paying rent and our ability to rent their units or other space to new residents or retail and commercial tenants, respectively.
Our rental revenue and operating results depend significantly on the occupancy levels at our properties and the ability of our residents and retail and commercial tenants to meet their rent obligations to us, which have been in certain cases, and could in the future be, adversely affected by, among other things, job losses, furloughs, store closures, lower incomes, uncertainty about the future as a result of an epidemic, pandemic or other health crisis and related governmental actions, including eviction moratoriums, shelter-in-place orders, prohibitions or limits on charging certain fees, and limitations on collections and or rent increases, which have affected, and, if such restrictions are not lifted, or are reinstated, or new restrictions imposed, may continue to affect our ability to collect rent or enforce legal or contractual remedies for the failure to pay rent, which have negatively impacted, and may continue to negatively impact, our ability to remove residents or retail and commercial tenants who are not paying rent and our ability to rent their units or other space to new residents or retail and commercial tenants, respectively.
An epidemic, pandemic or other health crisis, including the COVID-19 pandemic, or related impacts thereof also could adversely affect the businesses and financial conditions of our counterparties, including our joint venture partners, participants in the Developer Capital Program, and general contractors and their subcontractors, and their ability to satisfy their obligations to us and to complete transactions or projects with us as intended. ​ Bankruptcy or Defaults of Our Counterparties Could Adversely Affect Our Performance.
An epidemic, pandemic or other health crisis, or related impacts thereof also could adversely affect the businesses and financial conditions of our counterparties, including our joint venture partners, participants in the Developer Capital Program, and general contractors and their subcontractors, and their ability to satisfy their obligations to us and to complete transactions or projects with us as intended. ​ Bankruptcy or Defaults of Our Counterparties Could Adversely Affect Our Performance.
In addition to the risks listed in this “Risk Factors” section, a number of factors could negatively affect the price per share of our common stock, including: ● general market and economic conditions; ● actual or anticipated variations in our quarterly operating results or dividends or our payment of dividends in shares of our stock; ● changes in our funds from operations or earnings estimates; ● difficulties or inability to access capital or extend or refinance existing debt; ● decreasing (or uncertainty in) real estate valuations; ● changes in market valuations of similar companies; ● publication of research reports about us or the real estate industry; ● the general reputation of REITs and the attractiveness of their equity securities in comparison to other equity securities (including securities issued by other real estate companies); ● general stock and bond market conditions, including changes in interest rates on fixed income securities, that may lead prospective purchasers of our stock to demand a higher annual yield from future dividends; ● a change in analyst ratings; ● additions or departures of key management personnel; ● adverse market reaction to any additional debt we incur in the future; ● speculation in the press or investment community; ● terrorist activity or geopolitical events (including the ongoing war between Russia and Ukraine), which may adversely affect the markets in which our securities trade, possibly increasing market volatility and causing the further erosion of business and consumer confidence and spending; ● failure to qualify as a REIT; ● strategic decisions by us or by our competitors, such as acquisitions, divestments, spin-offs, joint ventures, strategic investments or changes in business strategy; ● failure to satisfy listing requirements of the NYSE; ● governmental regulatory action and changes in tax laws; and ● the issuance of additional shares of our common stock, or the perception that such sales might occur, including under our at-the-market equity distribution program.
In addition to the risks listed in this “Risk Factors” section, a number of factors could negatively affect the price per share of our common stock, including: ● general market and economic conditions; ● actual or anticipated variations in our quarterly operating results or dividends or our payment of dividends in shares of our stock; ● changes in our funds from operations or earnings estimates; ● difficulties or inability to access capital or extend or refinance existing debt; ● decreasing (or uncertainty in) real estate valuations; ● changes in market valuations of similar companies; ● publication of research reports about us or the real estate industry; 29 Table of Contents ● the general reputation of REITs and the attractiveness of their equity securities in comparison to other equity securities (including securities issued by other real estate companies); ● general stock and bond market conditions, including changes in interest rates on fixed income securities, that may lead prospective purchasers of our common stock to demand a higher annual yield from future dividends; ● a change in analyst ratings; ● additions or departures of key management personnel; ● adverse market reaction to any additional debt we incur in the future; ● speculation in the press or investment community; ● terrorist activity or geopolitical events (including the ongoing war between Russia and Ukraine and the military conflict in Israel and Gaza), which may adversely affect the markets in which our securities trade, possibly increasing market volatility and causing the further erosion of business and consumer confidence and spending; ● failure to qualify as a REIT; ● strategic decisions by us or by our competitors, such as acquisitions, divestments, spin-offs, joint ventures, strategic investments or changes in business strategy; ● failure to satisfy listing requirements of the NYSE; ● governmental regulatory action and changes in tax laws; and ● the issuance of additional shares of our common stock, or the perception that such sales might occur, including under our at-the-market equity distribution program.
In addition, if claims arise, we may expend resources and incur costs in investigating and resolving such claims even if our property was in compliance with the law.
In addition, if claims arise, we may expend resources and incur costs in investigating and resolving such claims even if we or our property was in compliance with the law.
We believe the policy specifications and insured limits of these policies are adequate and appropriate. There are, however, certain types of extraordinary losses which may not be adequately covered under our insurance program. In addition, we will sustain losses due to insurance deductibles, self-insured retention, uninsured claims or casualties, or losses in excess of applicable coverage.
We believe the policy specifications and insured limits of these policies are adequate and appropriate. There are, however, certain types of extraordinary losses that may not be adequately covered under our insurance program. In addition, we will sustain losses due to insurance deductibles, self-insured retention, uninsured claims or casualties, or losses in excess of applicable coverage.
While we take steps, and generally require third party vendors to take steps, to protect the security of the information maintained in our and third party vendors’ information technology systems, including associate training and testing and the use of commercially available systems, software, tools and monitoring to provide security for processing, transmitting and 22 Table of Contents storing of the information, it is possible that our or our third party vendors’ security measures will not be able to prevent human error or the systems’ or software’s improper functioning, or the loss, misappropriation, disclosure or corruption of personally identifiable information or other confidential or sensitive information, including information about our tenants and employees.
While we take steps, and generally require third party vendors to take steps, to protect the security of the information maintained in our and third party vendors’ information technology systems, including associate training and testing and the use of commercially available systems, software, tools and monitoring to provide security for processing, transmitting and storing of the information, it is possible that our or our third party vendors’ security measures will not be able to prevent human error or the systems’ or software’s improper functioning, or the loss, misappropriation, disclosure or corruption of personally identifiable information or other confidential or sensitive information, including information about our tenants and employees.
In addition, the adverse effects that such violent acts and threats of future attacks could have on the U.S. economy could similarly have an adverse effect on our financial condition and results of operations. Mezzanine Loan Assets Involve Greater Risks of Loss than Senior Loans Secured by Income-Producing Properties.
In addition, the adverse effects that such violent acts and threats of future attacks could have on the U.S. economy could similarly have an adverse effect on our financial condition and results of operations. Mezzanine Loan or Other Loan Assets Involve Greater Risks of Loss than Senior Loans Secured by Income-Producing Properties.
If we fail to maintain the adequacy of our internal controls over financial reporting, including any failure to implement required new or improved controls as a result of changes to our business or otherwise, or if we experience difficulties in their implementation, our business, results of operations and financial condition could be materially adversely harmed and we could fail to meet our reporting obligations.
If we fail to maintain the adequacy of our internal controls over financial reporting, including any failure to implement required new or improved controls as a result of changes to our business or otherwise, or if we experience difficulties in their implementation, our business, results of operations and financial condition could be materially and adversely affected and we could fail to meet our reporting obligations.
In the event that the volatility of the financial markets adversely affects these financial institutions or counterparties, we or other parties to the transactions with us may be unable to complete transactions as intended, which could adversely affect our results of operations. Interest Rate Hedging Contracts May Be Ineffective and May Result in Material Charges.
In addition, in the event that the volatility of the financial markets adversely affects our financial institutions or other counterparties, we or other parties to the transactions with us may be unable to complete transactions as intended, which could adversely affect our results of operations. Interest Rate Hedging Contracts May Be Ineffective and May Result in Material Charges.
The following factors, among others, may affect the income generated by our apartment communities: ● the national and local economies; 24 Table of Contents ● local real estate market conditions, such as an oversupply of apartment homes; ● tenants’ perceptions of the safety, convenience, and attractiveness of our communities and the neighborhoods where they are located; ● our ability to provide adequate management, maintenance and insurance; ● rental expenses, including real estate taxes and utilities; ● competition from other apartment communities or alternative housing options; ● changes in interest rates and the availability of financing; ● changes in governmental regulations and the related costs of compliance; and ● changes in tax and housing laws, including the enactment of rent control laws or other laws regulating multifamily housing.
The following factors, among others, may affect the income generated by our apartment communities: ● the national and local economies; ● local real estate market conditions, such as an oversupply of apartment homes; ● tenants’ or prospective tenants’ perceptions of the safety, convenience, and attractiveness of our communities and the neighborhoods where they are located; ● our ability to provide adequate management, maintenance and insurance; ● rental expenses, including real estate taxes and utilities; ● competition from other apartment communities or alternative housing options; ● changes in interest rates and the availability of financing; ● changes in governmental regulations and the related costs of compliance; and ● changes in tax and housing laws, including the enactment of rent control laws or other laws regulating multifamily housing.
If, under the Americans with Disabilities Act, we are required to make substantial alterations and capital expenditures in one or more of our properties, including the removal of access barriers, it could adversely affect our financial condition and results of operations.
If, under the Americans with Disabilities Act, we are required to make substantial alterations and capital expenditures in one or more of our properties or otherwise related to our operations, including the removal of access barriers, it could adversely affect our financial condition and results of operations.
The decision to declare and pay dividends on our common stock, as well as the timing, amount and composition of any such future dividends, will be at the sole discretion of our board of directors and will depend on our earnings, funds from operations, liquidity, financial 29 Table of Contents condition, capital requirements, contractual prohibitions or other limitations under our indebtedness, the annual distribution requirements under the REIT provisions of the Code, state law and such other factors as our board of directors considers relevant.
The decision to declare and pay dividends on our common stock, as well as the timing, amount and composition of any such future dividends, will be at the sole discretion of our board of directors and will depend on our earnings, funds from operations, liquidity, financial condition, capital requirements, contractual prohibitions or other limitations under our indebtedness, the annual distribution requirements under the REIT provisions of the Code, state law and such other factors as our board of directors considers relevant.
From time to time, changes in state and local tax laws or regulations are enacted, which may result in an increase in our tax liability. A shortfall in tax revenues for states and local jurisdictions in which we own apartment communities may lead to an increase in the frequency and size of such changes.
From time to time, changes in state and local tax laws or regulations may result in an increase in our tax liability. A shortfall in tax revenues for states and local jurisdictions in which we own apartment communities may lead to an increase in the frequency and size of such changes.
However, individual U.S. stockholders generally may deduct 20% of such regular dividends under Section 199A of the Code, reducing the effective tax rate applicable to such dividends (although such provision will expire after 2025 absent future legislation). We Conduct a Portion of Our Business Through Taxable REIT Subsidiaries, Which Are Subject to Certain Tax Risks.
However, individual U.S. stockholders generally may deduct 20% of such regular dividends under Section 199A of the Code, reducing the effective tax rate applicable to such dividends (although such provision will expire after 2025 absent future legislation). 27 Table of Contents We Conduct a Portion of Our Business Through Taxable REIT Subsidiaries, Which Are Subject to Certain Tax Risks.
Our qualification as a REIT requires us to satisfy numerous requirements, some on an annual 26 Table of Contents and quarterly basis, established under highly technical and complex Code provisions for which there are only limited judicial or administrative interpretations, and involves the determination of various factual matters and circumstances not entirely within our control.
Our qualification as a REIT requires us to satisfy numerous requirements, some on an annual and quarterly basis, established under highly technical and complex Code provisions for which there are only limited judicial or administrative interpretations, and involves the determination of various factual matters and circumstances not entirely within our control.
We may not be able to refinance existing debt, or the terms of any refinancing may not be as favorable as the terms of the existing debt, which could create pressures to sell assets or to issue additional equity when we would otherwise not choose to do so.
We may not be able to refinance existing debt, or the terms of any refinancing may not be as favorable as the terms of the existing debt, which could create pressure to sell assets or to issue additional equity when we would otherwise not choose to do so.
We have relationships with and, from time to time, we execute transactions with or receive services from many counterparties, such as general contractors engaged in connection with our development activities, borrowers, or joint venture partners, among others.
We have relationships with and we execute transactions with or receive services from many counterparties, such as general contractors engaged in connection with our development activities, borrowers, or joint venture partners, among others.
In addition, income from a 27 Table of Contents prohibited transaction might adversely affect our ability to satisfy the income tests for qualification as a REIT for federal income tax purposes. Changes to the U.S. Federal Income Tax Laws, including the Enactment of Certain Tax Reform Measures, Could Have an Adverse Impact on Our Business and Financial Results.
In addition, income from a prohibited transaction might adversely affect our ability to satisfy the income tests for qualification as a REIT for federal income tax purposes. Changes to the U.S. Federal Income Tax Laws, including the Enactment of Certain Tax Reform Measures, Could Have an Adverse Impact on Our Business and Financial Results.
Indoor air quality issues can also stem from inadequate ventilation, chemical contamination from indoor or outdoor 19 Table of Contents sources, and other biological contaminants such as pollen, viruses and bacteria. Indoor exposure to airborne toxins or irritants can be alleged to cause a variety of adverse health effects and symptoms, including allergic or other reactions.
Indoor air quality issues can also stem from inadequate ventilation, chemical contamination from indoor or outdoor sources, and other biological contaminants such as pollen, viruses and bacteria. Indoor exposure to airborne toxins or irritants can be alleged to cause a variety of adverse health effects and symptoms, including allergic or other reactions.
Despite system redundancy and the existence of disaster recovery plans for our information technology systems, our information technology systems and the information technology systems maintained by our third party vendors are vulnerable to damage arising from any number of sources beyond our or our third party vendors’ control, including energy blackouts, natural disasters, terrorism, war, and telecommunication failures.
Despite system redundancy and the existence of disaster recovery plans for our information technology systems, our information 23 Table of Contents technology systems and the information technology systems maintained by our third party vendors are vulnerable to damage arising from any number of sources beyond our or our third party vendors’ control, including energy blackouts, natural disasters, terrorism, war, and telecommunication failures.
If we (or such entities) become subject to federal, state or local tax audits, the ultimate result of such audits could have an adverse effect on our financial condition and results of operations. The Operating Partnership and the DownREIT Partnership Intend to Qualify as Partnerships, but Cannot Guarantee That They Will Qualify.
If we (or such entities) become subject to federal, state or local tax audits, the ultimate result of such audits could have an adverse effect on our financial condition and results of operations. 28 Table of Contents The Operating Partnership and the DownREIT Partnership Intend to Qualify as Partnerships, but Cannot Guarantee That They Will Qualify.
Federal, state and local governments or courts also have made, and may make in the future, changes to laws related to allowable fees and rents, eviction and other tenants’ rights laws and regulations (including changes in response to COVID-19 and other changes that apply retroactively) that could adversely impact our results of operations and the value of our properties.
Federal, state and local governments or courts also have made, and may make in the future, changes to laws related to allowable fees and rents, eviction and other tenants’ rights laws and regulations (including changes that apply retroactively) that could adversely impact our results of operations and the value of our properties.
Our ability to satisfy the REIT income and asset tests depends upon our analysis of the characterization and fair market values of our assets, some of which are not susceptible to a precise determination and for which we will 28 Table of Contents not obtain independent appraisals, and upon our ability to successfully manage the composition of our income and assets on an ongoing basis.
Our ability to satisfy the REIT income and asset tests depends upon our analysis of the characterization and fair market values of our assets, some of which are not susceptible to a precise determination and for which we will not obtain independent appraisals, and upon our ability to successfully manage the composition of our income and assets on an ongoing basis.
In addition, changes in federal and state legislation and regulation on climate change may result in increased capital expenditures to improve the energy efficiency of our existing communities and also may require us to spend more on our new development communities without a corresponding increase in revenue.
In addition, changes in federal and state legislation and regulation on climate change may result in increased capital expenditures to improve the energy efficiency of our existing communities and also may require us to spend more on our new development communities 20 Table of Contents without a corresponding increase in revenue.
These changes could have a material impact on our reported financial 23 Table of Contents condition and results of operations. In some cases, we could be required to apply a new or revised standard retroactively, resulting in potentially material restatements of prior period financial statements.
These changes could have a material impact on our reported financial condition and results of operations. In some cases, we could be required to apply a new or revised standard retroactively, resulting in potentially material restatements of prior period financial statements.
Our charter contains ownership and transfer restrictions relating to our stock primarily to assist us in complying with this and other REIT ownership requirements; however, the restrictions may have the effect of preventing a change of control which does not threaten our REIT status.
Our charter contains ownership and transfer restrictions relating to our stock primarily to assist us in complying with this and other REIT ownership 30 Table of Contents requirements; however, the restrictions may have the effect of preventing a change of control which does not threaten our REIT status.
Claims have been asserted, and in the future claims may be asserted, against us with respect to some of our properties under the Americans with Disabilities Act.
Claims have been asserted, and in the future claims may be asserted, against us with respect to some of our properties or operations under the Americans with Disabilities Act.
When excessive moisture accumulates in buildings or on building materials, mold growth may occur, particularly if the moisture problem remains undiscovered or is not addressed over a period of time. Some molds may produce airborne toxins or irritants.
When excessive 19 Table of Contents moisture accumulates in buildings or on building materials, mold growth may occur, particularly if the moisture problem remains undiscovered or is not addressed over a period of time. Some molds may produce airborne toxins or irritants.
We manage our debt to be in compliance with these debt covenants, but subject to compliance with these covenants, we may increase the amount of our debt at any time without a concurrent improvement in our ability to service the additional debt. Financing May Not Be Available and Could Be Dilutive.
We manage our debt to be in compliance with these debt covenants, but subject to compliance with these 25 Table of Contents covenants, we may increase the amount of our debt at any time without a concurrent improvement in our ability to service the additional debt. Financing May Not Be Available and Could Be Dilutive.
If we are required to recognize asset impairment charges in the future, these charges could adversely affect our financial condition, liquidity, results of operations and the per share trading price of our common stock. Any Material Weaknesses Identified in Our Internal Control Over Financial Reporting Could Have an Adverse Effect on Our Stock Price.
If we are required to recognize asset impairment charges in the future, these charges could adversely affect our financial condition, liquidity, results of operations and the market price of our common stock. Any Material Weaknesses Identified in Our Internal Control Over Financial Reporting Could Have an Adverse Effect on the Market Price of Our Common Stock.
The Soundness of Financial Institutions Could Adversely Affect Us. We have relationships with many financial institutions, including lenders under our credit facilities, and, from time to time, we execute transactions with counterparties in the financial services industry.
The Soundness of Financial Institutions Could Adversely Affect Us. We have relationships with many financial institutions, including lenders under our credit facilities, and, from time to time, we execute transactions with 26 Table of Contents counterparties in the financial services industry.
(14.9%), Boston, MA (11.7%), Orange County, CA (11.1%), the San Francisco Bay Area, CA (7.8%), New York, NY (7.6%), Dallas, TX (7.2%), Seattle, WA (6.7%) and Tampa, FL (5.4%).
(14.9%), Boston, MA (11.3%), Orange County, CA (10.9%), Dallas, TX (8.6%),the San Francisco Bay Area, CA (8.2%), New York, NY (7.7%), Seattle, WA (6.3%) and Tampa, FL (5.4%).
The impact of an epidemic, pandemic or other health crisis, including the COVID-19 pandemic, and measures to prevent the spread of such an event could materially and adversely affect our business in a number of ways.
The impact of an epidemic, pandemic or other health crisis, and measures to prevent the spread of such an event, could materially and adversely affect our business in a number of ways.
We have entered into in the past and may in the future enter into, as either landlord or tenant, a long-term ground lease with respect to a property or a portion thereof.
Risks Related to Ground Leases. We have entered into in the past and may in the future enter into, as either landlord or tenant, a long-term ground lease with respect to a property or a portion thereof.
We and other companies in the real estate industry have experienced limited availability of financing from time to time, including due to regulatory changes directly or indirectly affecting financing markets, for example the changes in terms on construction loans brought about by the Basel III capital requirements and the associated “High Volatility Commercial Real Estate” designation, which has adversely impacted the availability of loans, including construction loans, and the proceeds of and the interest rate thereon.
We and other companies in the real estate industry have experienced limited availability of financing from time to time, including due to disruptions and uncertainty in the equity and credit markets and regulatory changes directly or indirectly affecting financing markets, for example the changes in terms on construction loans brought about by the Basel III capital requirements and the associated “High Volatility Commercial Real Estate” designation, which has adversely impacted the availability of loans, including construction loans, and the proceeds of and the interest rates thereon.
In addition, if we have one or more material weaknesses in our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, which in turn could have an adverse effect on the per share trading price of our common stock.
In addition, if we have one or more material weaknesses in our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, which in turn could have an adverse effect on the market price of our common stock.
In addition, mezzanine loans typically have higher loan-to-value ratios than conventional mortgage loans, resulting in less equity in the property and increasing the risk of loss of principal. Risk Related to Preferred Equity Investments.
In addition, mezzanine loans typically have higher loan-to-value ratios than conventional mortgage loans, resulting in less equity in the property and increasing the risk of loss of principal.
Substantial inflationary or deflationary pressures could have a negative effect on rental rates and property operating expenses. The U.S. economy is currently experiencing high rates of inflation, which has increased our operating expenses due to higher third party vendor costs and increased our interest expense due to higher interest rates on our variable rate debt.
Substantial inflationary or deflationary pressures could have a negative effect on rental rates and property operating expenses. The U.S. economy has recently experienced high rates of inflation, which has increased our operating expenses due to higher third party vendor costs and increased our interest expense due to higher interest rates on our variable rate debt.
An Epidemic, Pandemic or Other Health Crisis, Including the Ongoing COVID-19 Pandemic, and Measures Intended to Prevent the Spread of Such an Event Could Have a Material Adverse Effect on our Business, Results of Operations, Cash Flows and Financial Condition.
An Epidemic, Pandemic or Other Health Crisis, and Measures Intended to Prevent the Spread of Such an Event, Could Have a Material Adverse Effect on our Business, Results of Operations, Cash Flows and Financial Condition.
Our retail or commercial tenants have experienced in the past, and may experience in the future, financial distress or bankruptcy, or may fail to comply with their contractual obligations, seek concessions in order to continue operations, or cease their operations, which could adversely impact our results of operations and financial condition. ​ Risk of Inflation/Deflation.
Our retail or commercial tenants have experienced in the past, and may experience in the future, financial distress or bankruptcy, or may fail to comply with their contractual obligations, seek concessions in order to continue operations, or cease their operations, which could adversely impact our results of operations and financial condition. ​ We Face Risks Related to Inflation/Deflation.
In addition, there is an increased focus on such matters by various regulatory authorities, including the SEC, and the activities and expense required to comply with new regulations or standards may be significant.
In addition, there is an increased focus on such matters by various regulatory authorities, including the SEC and the state of California, and the activities and expense required to comply with new laws, regulations or standards may be significant.
We face risks related to an epidemic, pandemic or other health crisis, including the ongoing COVID-19 pandemic, which has impacted, and in the future could impact, the markets in which we operate and could have a material adverse effect on our business, results of operations, cash flows and financial condition.
We face risks related to an epidemic, pandemic or other health crisis, which have impacted, and in the future could impact, the markets in which we operate and could have a material adverse effect on our business, results of operations, cash flows and financial condition.
The Geographic Concentration of Our Communities in Certain Markets Could Have an Adverse Effect on Our Operations if a Particular Market is Adversely Impacted by Economic or Other Conditions. For the year ended December 31, 2022, approximately 72.4% of our total NOI was generated from communities located in Metropolitan D.C.
The Geographic Concentration of Our Communities in Certain Markets Could Have an Adverse Effect on Our Operations if a Particular Market is Adversely Impacted by Economic or Other Conditions. For the year ended December 31, 2023, approximately 73.3% of our total NOI was generated from communities located in Metropolitan D.C.
We have originated in the past and may in the future originate mezzanine loans, which take the form of subordinated loans secured by second mortgages on the underlying property or subordinated loans secured by a pledge of the ownership interests of either the entity owning the property or a pledge of the ownership interests of the entity that owns the interest in the entity owning the property.
We have originated in the past and may in the future originate mezzanine loans, which take the form of subordinated loans secured by second mortgages on the underlying property, which may be under development, or subordinated loans secured by a pledge of the ownership interests of either the entity owning the property, which may be under development, or a pledge of the ownership interests of the entity that owns the interest in the entity owning the property, which may be under development, or loans that are not secured.
Mezzanine loans may involve a higher degree of risk than a senior mortgage secured by real property, because the security for the loan may lose all or substantially all of its value as a result of foreclosure by the senior lender and because it is in second position and there may not be adequate equity in the property.
Mezzanine loans may involve a higher degree 21 Table of Contents of risk than a senior mortgage secured by real property, because the security for the loan may lose all or substantially all of its value as a result of foreclosure by the senior lender and because it is in second position and there may not be adequate equity in the property and unsecured loans involve higher risk by virtue of being unsecured.
In addition, the failure, or exit or partial exit from an insurance market, of one or more insurance companies may affect our ability to obtain insurance coverage in the amounts that we seek, or at all, increase the costs to renew or replace our insurance policies, cause us to self-insure a portion of the risk, or increase the cost of insuring properties. 18 Table of Contents Failure to Succeed in New Markets May Limit Our Growth.
In addition, the failure, or exit or partial exit from an insurance market, of one or more insurance companies or other changes in insurance markets in general may affect our ability to obtain insurance coverage in the amounts that we seek, or at all, increase the 18 Table of Contents costs to renew or replace our insurance policies, cause us to self-insure a portion of the risk, or increase the cost of insuring properties.
Various state and local governments have enacted and may continue to enact rent control, rent stabilization, or limitations, and similar laws and regulations that could limit our ability to raise rents or charge certain fees, including laws or court orders, either of which could have a retroactive effect.
Various state and local governments as well as the Federal government have enacted and may continue to enact rent control, rent stabilization, or limitations, and similar laws, regulations and policies that could limit our ability to raise rents or charge certain fees, including laws or court orders, either of which could have a retroactive effect.
We have made in the past and may in the future make preferred equity investments in corporations, limited partnerships, limited liability companies or other entities that have been 21 Table of Contents formed for the purpose of directly or indirectly acquiring, developing or managing real property.
Risk Related to Preferred Equity Investments. We have made in the past and may in the future make preferred equity investments in corporations, limited partnerships, limited liability companies or other entities that have been formed for the purpose of directly or indirectly acquiring, developing and/or managing real property.
These provisions of our charter may have the effect of delaying, deferring or preventing someone from taking control of us, even though a change of control might involve a premium price for our stockholders or might otherwise be in our stockholders’ best interests .
These provisions of our charter may have the effect of delaying, deferring or preventing someone from taking control of us, even though a change of control might involve a premium price for our stockholders or might otherwise be in our stockholders’ best interests . Item 1B. UNRESOLVED STAFF COMMENTS None. ​
Although the short-term nature of our apartment leases generally enables us to compensate for inflationary effects by increasing rents on our apartment homes, an extreme or sustained escalation in costs could have a negative impact on our residents and their ability to absorb rent increases.
Although the short-term nature of our apartment leases may, absent other factors, enable us to compensate for inflationary effects by increasing rents on our apartment homes, an extreme or sustained escalation in costs could have a negative impact on our residents and their ability to absorb rent increases.
As of December 31, 2022, we had active joint ventures and partnerships, including our preferred equity investments, with a total equity investment of $754.4 million. We have in the past, and could in the future, become engaged in a dispute with one or more of our partners which could adversely impact us.
As of December 31, 2023, we had active unconsolidated joint ventures and partnerships, including our preferred equity investments, with a total equity investment of $952.9 million. We have in the past, and could in the future, become engaged in a dispute with one or more of our partners which could adversely impact us.
In the past, other real estate investors, including insurance companies, pension and investment funds, developer partnerships, investment companies and other public and private apartment REITs, have competed with us to acquire existing properties and to develop new properties, and such competition in the future may make it more difficult for us to acquire attractive investment opportunities on favorable terms, which could adversely affect our ability to grow or acquire properties profitably or with attractive returns.
In the past, other real estate investors, including insurance companies, pension and investment funds, developer partnerships, investment companies and other public and private apartment REITs, have competed with us to acquire existing properties and to develop new properties, and such competition in the future may limit attractive investment opportunities, which could adversely affect our ability to grow or acquire properties profitably or with attractive returns.
It is uncertain how the rent relief programs will impact our business. ​ State, local, and federal governments also have increased, and may in the future increase, property taxes or other taxes or fees, or may enact new taxes or fees, in order to increase revenue, which has in the past increased, and may in the future increase, our expenses.
It is uncertain how any rent relief programs will impact our business in the future. ​ State, local, and federal governments also have increased, and may in the future increase, property taxes or other taxes or fees, or may enact new taxes or fees, in order to increase revenue in connection with an epidemic, pandemic or other health crisis, which has in the past increased, and may in the future increase, our expenses.
Disruptions and uncertainty in the equity and credit markets may negatively impact our ability to refinance existing indebtedness and access additional financing for acquisitions, development of our properties and other purposes at reasonable terms or at all, which may negatively affect our business and the market price of our common stock.
Disruptions and uncertainty in the equity and credit markets, including as a result of bank failures and uncertainty in the banking sector generally, may negatively impact our ability to refinance existing indebtedness and access additional financing for acquisitions, development of our properties and other purposes at reasonable terms or at all, which may negatively affect our business and the market price of our common stock.
Our development and construction projects, including those in our Developer Capital Program, also have been and could in the future be adversely affected by factors related to an epidemic, pandemic or other health crisis, including the COVID-19 pandemic, although, to date, such impacts have not been material.
Our development and construction projects, including those in our Developer Capital Program, also have been and could in the future be adversely affected by factors related to an epidemic, pandemic or other health crisis.
Our Debt Level May Be Increased. Our ability to incur debt is limited by covenants in our bank and other credit agreements.
Our ability to incur debt is limited by covenants in our bank and other credit agreements.
As of December 31, 2022, we had approximately $530.0 million of variable rate indebtedness outstanding, which constitutes approximately 9.6% of total outstanding indebtedness as of such date, and we have experienced increases in the interest rates on such indebtedness, which has increased our interest expense and adversely impacted our results of operations and cash flows.
As of December 31, 2023, we had approximately $479.7 million of variable rate indebtedness outstanding, which constitutes approximately 8.3% of total outstanding indebtedness as of such date, and we have experienced increases in the interest rates on such indebtedness, which has increased our interest expense and adversely impacted our results of operations and cash flows.
Future compliance with new laws of general applicability, laws applicable to companies 20 Table of Contents in our industry, or laws applicable to public companies generally could increase our costs and could have an adverse effect on our financial performance. Risk of Damage from Catastrophic Weather and Natural Events.
Future compliance with new laws of general applicability, laws applicable to companies in our industry, or laws applicable to public companies generally could increase our costs and could have an adverse effect on our financial performance. Risk of Litigation .
Due to changes in these factors and market conditions, we may not be able to maintain our current credit ratings, which could adversely affect our cost of funds and related margins, liquidity, and access to capital markets, including our ability to access the commercial paper market. 25 Table of Contents Disruptions in Financial Markets May Adversely Impact the Availability and Cost of Credit and Have Other Adverse Effects on Us and the Market Price of Our Stock.
Due to changes in these factors and market conditions, we may not be able to maintain our current credit ratings, which could adversely affect our cost of funds and related margins, liquidity, and access to capital markets, including our ability to access the commercial paper market.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeSUMMARY OF REAL ESTATE PORTFOLIO BY GEOGRAPHIC MARKET AT DECEMBER 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percentage Total ​ ​ ​ ​ ​ ​ ​ ​ Average ​ ​ Number of ​ Number of ​ of Total ​ Carrying ​ ​ ​ ​ ​ ​ ​ Average ​ Home Size ​ ​ Apartment ​ Apartment ​ Carrying ​ Value ​ Encumbrances ​ Cost per ​ Physical ​ (in square ​ ​ Communities ​ Homes ​ Value ​ (in thousands) ​ (in thousands) ​ Home ​ Occupancy ​ feet) WEST REGION ​ ​ ​ ​ Orange County, CA 9 4,595 9.2 % $ 1,440,030 ​ $ — ​ $ 313,391 96.9 % 860 San Francisco, CA 13 3,135 7.2 % 1,128,299 ​ 27,000 ​ 359,904 90.6 % 847 Seattle, WA 15 2,985 7.4 % 1,146,389 ​ — ​ 384,050 97.3 % 869 Los Angeles, CA 4 1,225 3.0 % 472,430 ​ — ​ 385,657 96.6 % 967 Monterey Peninsula, CA 7 1,567 1.2 % 192,299 ​ — ​ 122,718 96.2 % 728 Other Southern California 3 821 1.4 % 221,093 ​ — ​ 269,297 97.2 % 1,012 Portland, OR 3 752 0.8 % 122,856 ​ — ​ 163,372 97.6 % 903 MID-ATLANTIC REGION ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Metropolitan D.C. 25 9,393 17.1 % 2,650,010 ​ 288,530 ​ 282,126 97.1 % 925 Baltimore, MD 7 2,219 3.5 % 541,169 ​ 58,600 ​ 243,880 96.3 % 963 Richmond, VA 4 1,359 1.0 % 160,265 ​ — ​ 117,929 97.5 % 1,017 NORTHEAST REGION ​ ​ ​ ​ ​ ​ ​ ​ ​ Boston, MA 13 5,031 13.0 % 2,002,253 ​ 323,350 ​ 397,983 96.7 % 996 New York, NY 6 2,318 10.1 % 1,569,928 ​ — ​ 677,277 97.8 % 754 Philadelphia, PA ​ 4 ​ 1,172 ​ 2.8 % ​ 435,330 ​ ​ — ​ ​ 371,442 ​ 88.7 % 949 SOUTHEAST REGION ​ ​ ​ ​ ​ ​ ​ ​ ​ Tampa, FL 11 3,877 4.2 % 652,802 ​ — ​ 168,378 96.8 % 995 Orlando, FL 11 3,493 3.5 % 540,609 ​ — ​ 154,769 96.4 % 972 Nashville, TN 8 2,260 1.5 % 234,298 ​ — ​ 103,672 97.4 % 933 Other Florida 1 636 0.6 % 93,792 ​ — ​ 147,472 97.0 % 1,130 SOUTHWEST REGION ​ ​ ​ ​ ​ ​ ​ ​ ​ Dallas, TX 15 6,218 6.6 % 1,032,325 ​ 335,143 ​ 166,022 93.4 % 837 Austin, TX 4 1,272 1.2 % 181,477 ​ — ​ 142,671 97.7 % 913 Denver, CO 2 510 1.6 % 248,223 ​ — ​ 486,712 60.5 % 861 Total Operating Communities 165 54,838 96.9 % 15,065,877 ​ 1,032,623 ​ $ 274,734 95.7 % 912 Real Estate Under Development (a) — 161 1.2 % 190,105 ​ — ​ Land — — 1.3 % 206,018 ​ — ​ Held for Disposition — — 0.0 % 14,039 ​ — ​ Other — — 0.6 % 94,033 ​ 19,658 ​ Total Real Estate Owned 165 54,999 100.0 % $ 15,570,072 ​ $ 1,052,281 ​ (a) As of December 31, 2022, the Company was developing three wholly owned communities with a total of 715 apartment homes, of which 161 have been completed. ​ ​ ​ ​
Biggest changeSUMMARY OF REAL ESTATE PORTFOLIO BY GEOGRAPHIC MARKET AT DECEMBER 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percentage Total ​ ​ ​ ​ ​ ​ ​ ​ Average ​ ​ Number of ​ Number of ​ of Total ​ Carrying ​ ​ ​ ​ ​ ​ ​ Average ​ Home Size ​ ​ Apartment ​ Apartment ​ Carrying ​ Value ​ Encumbrances ​ Cost per ​ Physical ​ (in square ​ ​ Communities ​ Homes ​ Value ​ (in thousands) ​ (in thousands) ​ Home ​ Occupancy ​ feet) WEST REGION ​ ​ ​ ​ Orange County, CA 8 4,305 8.6 % $ 1,371,309 ​ $ — ​ $ 318,539 96.4 % 856 San Francisco, CA 14 3,309 7.5 % 1,209,227 ​ 67,017 ​ 365,436 93.7 % 837 Seattle, WA 14 2,702 6.9 % 1,111,182 ​ — ​ 411,244 97.2 % 859 Monterey Peninsula, CA 7 1,567 1.2 % 197,561 ​ — ​ 126,076 95.6 % 728 Los Angeles, CA 4 1,225 3.0 % 482,945 ​ — ​ 394,241 96.2 % 967 Other Southern California 3 821 1.4 % 224,842 ​ — ​ 273,864 96.8 % 1,016 Portland, OR 2 476 0.3 % 56,055 ​ — ​ 117,763 97.1 % 903 MID-ATLANTIC REGION ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Metropolitan D.C. 24 9,119 16.4 % 2,633,863 ​ 288,530 ​ 288,832 95.7 % 918 Baltimore, MD 7 2,221 3.5 % 562,075 ​ 58,600 ​ 253,073 95.7 % 963 Richmond, VA 4 1,359 1.0 % 166,013 ​ — ​ 122,158 96.9 % 1,017 NORTHEAST REGION ​ ​ ​ ​ ​ ​ ​ ​ ​ Boston, MA 12 4,667 12.2 % 1,947,236 ​ 323,350 ​ 417,235 96.7 % 994 New York, NY 6 2,318 9.9 % 1,584,275 ​ — ​ 683,466 97.8 % 754 Philadelphia, PA ​ 4 ​ 1,172 ​ 2.7 % ​ 438,465 ​ ​ — ​ ​ 374,117 ​ 96.6 % 949 SOUTHEAST REGION ​ ​ ​ ​ ​ ​ ​ ​ ​ Tampa, FL 11 3,877 4.2 % 673,942 ​ — ​ 173,831 96.7 % 995 Orlando, FL 11 3,493 3.5 % 559,956 ​ — ​ 160,308 96.2 % 974 Nashville, TN 8 2,260 1.6 % 249,705 ​ — ​ 110,489 96.2 % 933 Other Florida 1 636 0.6 % 95,798 ​ — ​ 150,626 96.7 % 1,130 SOUTHWEST REGION ​ ​ ​ ​ ​ ​ ​ ​ ​ Dallas, TX 19 7,363 8.0 % 1,283,970 ​ 476,227 ​ 174,381 96.6 % 845 Austin, TX 6 1,880 2.0 % 318,791 ​ 67,044 ​ 169,570 95.9 % 891 Denver, CO 2 510 1.6 % 249,653 ​ — ​ 489,516 93.5 % 861 Total Operating Communities 167 55,280 96.1 % 15,416,863 ​ 1,280,768 ​ $ 278,887 96.2 % 908 Real Estate Under Development (a) — 56 1.0 % 160,404 ​ — ​ Land — — 1.5 % 232,365 ​ — ​ Held for Disposition 1 214 0.7 % 105,999 ​ — ​ Other — — 0.7 % 108,228 ​ (3,055) ​ Total Real Estate Owned 168 55,550 100.0 % $ 16,023,859 ​ $ 1,277,713 ​ (a) As of December 31, 2023, the Company was developing two wholly owned communities with a total of 415 apartment homes, of which 56 have been completed. ​ ​ ​ ​
Item 2. PROPERTIES At December 31, 2022, our consolidated apartment portfolio included 165 communities located in 21 markets, with a total of 54,999 completed apartment homes. The table below set forth a summary of real estate portfolio by geographic market of the Company at December 31, 2022.
Item 2. PROPERTIES At December 31, 2023, our consolidated apartment portfolio included 168 communities located in 21 markets, with a total of 55,550 completed apartment homes. The table below set forth a summary of real estate portfolio by geographic market of the Company at December 31, 2023.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe believe that such liability, to the extent not provided for through insurance or otherwise, will not have a material adverse effect on our financial condition, results of operations or cash flow. Item 4. MINE SAFETY DISCLOSURES Not Applicable. ​ 31 Table of Contents PART II
Biggest changeWe believe that such liability, to the extent not provided for through insurance or otherwise, will not have a material adverse effect on our financial condition, results of operations or cash flow. Item 4. MINE SAFETY DISCLOSURES Not Applicable. ​ 34 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 31 ​ ​ PART II ​ ​ ​ Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 32 ​ ​ Item 6. [Reserved] 34 ​ ​ Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 35 ​ ​ Item 7A.
Biggest changeItem 4. Mine Safety Disclosures 34 ​ ​ PART II ​ ​ ​ Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 35 ​ ​ Item 6. [Reserved] 37 ​ ​ Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 38 ​ ​ Item 7A.
Quantitative and Qualitative Disclosures about Market Risk 55 ​ ​ Item 8. Financial Statements and Supplementary Data 55 ​ ​
Quantitative and Qualitative Disclosures about Market Risk 56 ​ ​ Item 8. Financial Statements and Supplementary Data 56 ​ ​

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following table summarizes all of UDR’s repurchases of shares of common stock under this program during the quarter ended December 31, 2022 ( shares in thousands ): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number Maximum ​ ​ ​ ​ ​ ​ of Shares ​ Number of ​ ​ ​ ​ ​ ​ Purchased as ​ Shares that ​ Total ​ ​ ​ ​ Part of ​ May Yet Be ​ Number of ​ Average ​ Publicly ​ Purchased ​ Shares ​ Price Paid ​ Announced Plan ​ Under the Plan Period Purchased ​ per Share ​ or Program ​ or Program (a) Beginning Balance 1,523 ​ $ 35.33 1,523 13,477 October 1, 2022 through October 31, 2022 827 ​ 40.96 827 12,650 November 1, 2022 through November 30, 2022 — ​ — — 12,650 December 1, 2022 through December 31, 2022 — ​ — — 12,650 Balance as of December 31, 2022 2,350 ​ $ 37.31 2,350 12,650 (a) This number reflects the number of shares that were available for purchase under our 15 million share repurchase program authorized in January 2008. ​ 33 Table of Contents Comparison of Five-year Cumulative Total Returns The following graph compares the five-year cumulative total returns for UDR common stock with the comparable cumulative return of the Nareit Equity REIT Index, Standard & Poor’s 500 Stock Index, the Nareit Equity Apartment Index and the MSCI U.S.
Biggest changeThe following table summarizes all of UDR’s repurchases of shares of common stock under this program during the quarter ended December 31, 2023 ( shares in thousands ): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number Maximum ​ ​ ​ ​ ​ ​ of Shares ​ Number of ​ ​ ​ ​ ​ ​ Purchased as ​ Shares that ​ Total ​ ​ ​ ​ Part of ​ May Yet Be ​ Number of ​ Average ​ Publicly ​ Purchased ​ Shares ​ Price Paid ​ Announced Plan ​ Under the Plan Period Purchased ​ per Share ​ or Program ​ or Program (a) Beginning Balance 2,973 ​ $ 37.90 2,973 12,027 October 1, 2023 through October 31, 2023 — ​ — — 12,027 November 1, 2023 through November 30, 2023 — ​ — — 12,027 December 1, 2023 through December 31, 2023 — ​ — — 12,027 Balance as of December 31, 2023 2,973 ​ $ 37.90 2,973 12,027 (a) This number reflects the number of shares that were available for purchase under our 15 million share repurchase program authorized in January 2008.
During the three months ended December 31, 2022, we did not issue any shares of our common stock upon redemption of OP Units in reliance upon an exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933. Purchases of Equity Securities In January 2008, UDR’s Board of Directors authorized a 15 million share repurchase program.
During the three months ended December 31, 2023, we did not issue any shares of our common stock upon redemption of OP Units in reliance upon an exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933. Purchases of Equity Securities In January 2008, UDR’s Board of Directors authorized a 15 million share repurchase program.
REIT Index. The graph assumes that $100 was invested on December 31, 2017, in each of our common stock and the indices presented. Historical stock price performance is not necessarily indicative of future stock price performance.
REIT Index. The graph assumes that $100 was invested on December 31, 2018, in each of our common stock and the indices presented. Historical stock price performance is not necessarily indicative of future stock price performance.
Distributions declared on the Series E for the years ended December 31, 2022 and 2021 were $1.6456 per share, or $0.4114 per quarter, and $1.5700 per share, or $0.3925 per quarter, respectively. The Series E is not listed on any exchange. At December 31, 2022, a total of 2.7 million shares of the Series E were outstanding.
Distributions declared on the Series E for the years ended December 31, 2023 and 2022 were $1.8192 per share, or $0.4548 per quarter, and $1.6456 per share, or $0.4114 per quarter, respectively. The Series E is not listed on any exchange. At December 31, 2023, a total of 2.7 million shares of the Series E were outstanding.
As of February 8, 2023, there were approximately 1,857 participants in the plan. 32 Table of Contents Unregistered Sales of Equity Securities From time to time we issue shares of our common stock in exchange for OP Units tendered to the Operating Partnership for redemption in accordance with the provisions of the Operating Partnership’s limited partnership agreement.
As of February 16, 2024, there were approximately 1,703 participants in the plan. 35 Table of Contents Unregistered Sales of Equity Securities From time to time we issue shares of our common stock in exchange for OP Units tendered to the Operating Partnership for redemption in accordance with the provisions of the Operating Partnership’s limited partnership agreement.
Certain OP/DownREIT unitholders were entitled to subscribe for and purchase one share of the Series F for each OP/DownREIT Unit held. As of December 31, 2022, a total of 12.1 million shares of the Series F were outstanding.
Certain OP/DownREIT unitholders were entitled to subscribe for and purchase one share of the Series F for each OP/DownREIT Unit held. As of December 31, 2023, a total of 11.9 million shares of the Series F were outstanding.
On February 8, 2023, there were 2,801 holders of record of the 329,165,608 outstanding shares of our common stock. We have determined that, for federal income tax purposes, approximately 89% of the distributions for 2022 represented ordinary income, 10% represented long-term capital gain and 1% represented unrecaptured section 1250 gain.
On February 16, 2024, there were 2,659 holders of record of the 329,224,105 outstanding shares of our common stock. We have determined that, for federal income tax purposes, approximately 88% of the distributions for 2023 represented ordinary income, 10% represented long-term capital gain and 2% represented unrecaptured section 1250 gain.
REIT Index 100.00 95.43 120.09 110.99 158.79 119.87 S&P 500 Index 100.00 95.62 125.72 148.85 191.58 156.88 FTSE Nareit Equity REITs Index 100.00 95.38 120.17 110.56 158.36 119.77 ​ The performance graph and the related chart and text, are being furnished solely to accompany this Annual Report on Form 10-K pursuant to Item 201(e) of Regulation S-K, and are not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and are not to be incorporated by reference into any filing of ours, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
The comparison assumes that all dividends are reinvested. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period Ending Index 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 UDR, Inc. 100.00 121.48 103.82 167.27 111.34 114.81 FTSE Nareit Equity Apartment Index 100.00 126.32 106.94 174.97 119.06 126.05 S&P 500 Index 100.00 131.49 155.68 200.37 164.08 207.21 FTSE Nareit Equity REITs Index 100.00 126.00 115.92 166.04 125.58 142.83 ​ The performance graph and the related chart and text, are being furnished solely to accompany this Annual Report on Form 10-K pursuant to Item 201(e) of Regulation S-K, and are not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and are not to be incorporated by reference into any filing of ours, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Removed
The comparison assumes that all dividends are reinvested. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period Ending Index 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 UDR, Inc. 100.00 106.40 129.26 110.47 177.98 118.47 FTSE Nareit Equity Apartment Index 100.00 103.70 130.99 110.89 181.44 123.47 MSCI U.S.
Added
During the three months ended December 31, 2023, certain of our employees surrendered shares of common stock owned by them to satisfy their statutory federal and state tax obligations associated with the vesting of restricted shares of common stock issued under our 1999 Long-Term Incentive Plan (the “LTIP”).
Added
The following table summarizes all of these repurchases during the three months ended December 31, 2023 ( shares in thousands ): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number Maximum ​ ​ ​ ​ ​ ​ of Shares ​ Number of ​ ​ ​ ​ ​ ​ Purchased as ​ Shares that ​ Total ​ ​ ​ ​ Part of ​ May Yet Be ​ Number of ​ Average ​ Publicly ​ Purchased ​ Shares ​ Price Paid ​ Announced Plans ​ Under the Plans Period Purchased ​ per Share (a) ​ or Programs ​ or Programs October 1, 2023 through October 31, 2023 2 ​ $ 35.14 N/A N/A November 1, 2023 through November 30, 2023 — ​ — N/A N/A December 1, 2023 through December 31, 2023 1 ​ 38.29 N/A N/A Total 3 ​ $ 36.50 (a) The price paid per share is based on the closing price of our common stock as of the date of the determination of the federal and state tax obligations. ​ 36 Table of Contents Comparison of Five-year Cumulative Total Returns The following graph compares the five-year cumulative total returns for UDR common stock with the comparable cumulative return of the Nareit Equity REIT Index, Standard & Poor’s 500 Stock Index, the Nareit Equity Apartment Index and the MSCI U.S.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeAFFO should not be considered as an alternative to net income/(loss) (determined in accordance with GAAP) as an indication of financial performance, or as an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make distributions. 53 Table of Contents The following table outlines our reconciliation of Net income/(loss) attributable to common stockholders to FFO, FFOA, and AFFO for the years ended December 31, 2022, 2021, and 2020 ( dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2022 2021 2020 Net income/(loss) attributable to common stockholders ​ $ 82,512 ​ $ 145,787 ​ $ 60,036 Real estate depreciation and amortization ​ 665,228 ​ 606,648 ​ 608,616 Noncontrolling interests ​ 5,655 ​ 10,977 ​ 4,704 Real estate depreciation and amortization on unconsolidated joint ventures ​ 30,062 ​ 31,967 ​ 35,023 Net gain on the sale of unconsolidated depreciable property ​ — ​ (2,460) ​ — Net gain on the sale of depreciable real estate owned, net of tax ​ (25,494) ​ (136,001) ​ (118,852) FFO attributable to common stockholders and unitholders, basic ​ $ 757,963 ​ $ 656,918 ​ $ 589,527 Distributions to preferred stockholders — Series E (Convertible) ​ 4,412 ​ 4,229 ​ 4,230 FFO attributable to common stockholders and unitholders, diluted ​ $ 762,375 ​ $ 661,147 ​ $ 593,757 Income/(loss) per weighted average common share, diluted ​ $ 0.26 ​ $ 0.48 ​ $ 0.20 FFO per weighted average common share and unit, basic ​ $ 2.21 ​ $ 2.04 ​ $ 1.86 FFO per weighted average common share and unit, diluted ​ $ 2.20 ​ $ 2.02 ​ $ 1.85 Weighted average number of common shares and OP/DownREIT Units outstanding — basic ​ 343,149 ​ 322,744 ​ 316,855 Weighted average number of common shares, OP/DownREIT Units, and common stock equivalents outstanding — diluted ​ 347,094 ​ 327,039 ​ 320,187 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Impact of adjustments to FFO: ​ ​ ​ ​ ​ ​ Debt extinguishment and other associated costs ​ $ — ​ $ 42,336 ​ $ 49,190 Debt extinguishment and other associated costs on unconsolidated joint ventures ​ ​ — ​ ​ 1,682 ​ ​ — Variable upside participation on DCP, net ​ ​ (10,622) ​ ​ — ​ ​ — Legal and other ​ 1,493 ​ 5,319 ​ 8,973 Realized (gain)/loss on real estate technology investments, net of tax ​ ​ (6,992) ​ ​ (1,980) ​ ​ 1,005 Unrealized (gain)/loss on real estate technology investments, net of tax ​ ​ 52,663 ​ ​ (55,947) ​ ​ (4,587) Severance costs ​ 441 ​ 2,280 ​ 1,948 Casualty-related charges/(recoveries), net ​ 9,733 ​ 3,960 ​ 2,545 Casualty-related charges/(recoveries) on unconsolidated joint ventures, net ​ — ​ — ​ 31 ​ ​ $ 46,716 ​ $ (2,350) ​ $ 59,105 FFOA attributable to common stockholders and unitholders, diluted ​ $ 809,091 ​ $ 658,797 ​ $ 652,862 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ FFOA per weighted average common share and unit, diluted ​ $ 2.33 ​ $ 2.01 ​ $ 2.04 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Recurring capital expenditures ​ (77,710) ​ (63,820) ​ (56,924) AFFO attributable to common stockholders and unitholders, diluted ​ $ 731,381 ​ $ 594,977 ​ $ 595,938 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ AFFO per weighted average common share and unit, diluted ​ $ 2.11 ​ $ 1.82 ​ $ 1.86 ​ 54 Table of Contents The following table is our reconciliation of FFO share information to weighted average common shares outstanding, basic and diluted, reflected on the UDR Consolidated Statements of Operations for the years ended December 31, 2022, 2021, and 2020 (shares in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2022 2021 2020 Weighted average number of common shares and OP/DownREIT Units outstanding — basic 343,149 322,744 316,855 Weighted average number of OP/DownREIT Units outstanding (21,478) (22,418) (22,310) Weighted average number of common shares outstanding — basic per the Consolidated Statements of Operations 321,671 300,326 294,545 ​ ​ ​ ​ ​ ​ ​ Weighted average number of common shares, OP/DownREIT Units, and common stock equivalents outstanding — diluted 347,094 327,039 320,187 Weighted average number of OP/DownREIT Units outstanding (21,478) (22,418) (22,310) Weighted average number of Series E Cumulative Convertible Preferred shares outstanding (2,916) (2,918) (2,950) Weighted average number of common shares outstanding — diluted per the Consolidated Statements of Operations 322,700 301,703 294,927 ​ ​ ​ ​ ​
Biggest changeThe following table outlines our reconciliation of Net income/(loss) attributable to common stockholders to FFO, FFOA, and AFFO for the years ended December 31, 2023, 2022, and 2021 ( dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 2021 Net income/(loss) attributable to common stockholders ​ $ 439,505 ​ $ 82,512 ​ $ 145,787 Real estate depreciation and amortization ​ 676,419 ​ 665,228 ​ 606,648 Noncontrolling interests ​ 30,135 ​ 5,655 ​ 10,977 Real estate depreciation and amortization on unconsolidated joint ventures ​ 42,622 ​ 30,062 ​ 31,967 Net (gain)/loss on consolidation ​ ​ 24,257 ​ ​ — ​ ​ — Net gain on the sale of unconsolidated depreciable property ​ — ​ — ​ (2,460) Net gain on the sale of depreciable real estate owned, net of tax ​ (349,993) ​ (25,494) ​ (136,001) FFO attributable to common stockholders and unitholders, basic ​ $ 862,945 ​ $ 757,963 ​ $ 656,918 Distributions to preferred stockholders — Series E (Convertible) ​ 4,848 ​ 4,412 ​ 4,229 FFO attributable to common stockholders and unitholders, diluted ​ $ 867,793 ​ $ 762,375 ​ $ 661,147 Income/(loss) per weighted average common share, diluted ​ $ 1.34 ​ $ 0.26 ​ $ 0.48 FFO per weighted average common share and unit, basic ​ $ 2.46 ​ $ 2.21 ​ $ 2.04 FFO per weighted average common share and unit, diluted ​ $ 2.45 ​ $ 2.20 ​ $ 2.02 Weighted average number of common shares and OP/DownREIT Units outstanding — basic ​ 351,175 ​ 343,149 ​ 322,744 Weighted average number of common shares, OP/DownREIT Units, and common stock equivalents outstanding — diluted ​ 354,422 ​ 347,094 ​ 327,039 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Impact of adjustments to FFO: ​ ​ ​ ​ ​ ​ Debt extinguishment and other associated costs ​ $ — ​ $ — ​ $ 42,336 Debt extinguishment and other associated costs on unconsolidated joint ventures ​ ​ — ​ ​ — ​ ​ 1,682 Variable upside participation on DCP, net ​ ​ (204) ​ ​ (10,622) ​ ​ — Legal and other costs ​ 2,869 ​ 1,493 ​ 5,319 Realized (gain)/loss on real estate technology investments, net of tax ​ ​ (9,864) ​ ​ (6,992) ​ ​ (1,980) Unrealized (gain)/loss on real estate technology investments, net of tax ​ ​ 6,813 ​ ​ 52,663 ​ ​ (55,947) Severance costs ​ 4,164 ​ 441 ​ 2,280 Casualty-related charges/(recoveries), net ​ 3,138 ​ 9,733 ​ 3,960 Total impact of adjustments to FFO ​ $ 6,916 ​ $ 46,716 ​ $ (2,350) FFOA attributable to common stockholders and unitholders, diluted ​ $ 874,709 ​ $ 809,091 ​ $ 658,797 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ FFOA per weighted average common share and unit, diluted ​ $ 2.47 ​ $ 2.33 ​ $ 2.01 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Recurring capital expenditures ​ (90,917) ​ (77,710) ​ (63,820) AFFO attributable to common stockholders and unitholders, diluted ​ $ 783,792 ​ $ 731,381 ​ $ 594,977 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ AFFO per weighted average common share and unit, diluted ​ $ 2.21 ​ $ 2.11 ​ $ 1.82 ​ 55 Table of Contents The following table is our reconciliation of FFO share information to weighted average common shares outstanding, basic and diluted, reflected on the UDR Consolidated Statements of Operations for the years ended December 31, 2023, 2022, and 2021 (shares in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 2021 Weighted average number of common shares and OP/DownREIT Units outstanding — basic 351,175 343,149 322,744 Weighted average number of OP/DownREIT Units outstanding (22,410) (21,478) (22,418) Weighted average number of common shares outstanding — basic per the Consolidated Statements of Operations 328,765 321,671 300,326 ​ ​ ​ ​ ​ ​ ​ Weighted average number of common shares, OP/DownREIT Units, and common stock equivalents outstanding — diluted 354,422 347,094 327,039 Weighted average number of OP/DownREIT Units outstanding (22,410) (21,478) (22,418) Weighted average number of Series E Cumulative Convertible Preferred shares outstanding (2,908) (2,916) (2,918) Weighted average number of common shares outstanding — diluted per the Consolidated Statements of Operations 329,104 322,700 301,703 ​ ​ ​ ​ ​
The following factors, among others, could cause our future results to differ materially from those expressed in the forward-looking statements: ● general economic conditions; ● the impact of inflation/deflation; ● unfavorable changes in apartment market and economic conditions that could adversely affect occupancy levels and rental rates, including as a result of COVID-19; ● the failure of acquisitions, developments or redevelopments to achieve anticipated results; ● possible difficulty in selling apartment communities; ● competitive factors that may limit our ability to lease apartment homes or increase or maintain rents; ● insufficient cash flow that could affect our debt financing and create refinancing risk; ● failure to generate sufficient revenue, which could impair our debt service payments and distributions to stockholders; ● development and construction risks that may impact our profitability; ● potential damage from natural disasters, including hurricanes and other weather-related events, which could result in substantial costs to us; ● risks from climate change that impacts our properties or operations; ● risks from extraordinary losses for which we may not have insurance or adequate reserves; ● risks from cybersecurity breaches of our information technology systems and the information technology systems of our third party vendors and other third parties; ● the availability of capital and the stability of the capital markets; ● changes in job growth, home affordability and the demand/supply ratio for multifamily housing; 35 Table of Contents ● the failure of automation or technology to help grow net operating income; ● uninsured losses due to insurance deductibles, self-insurance retention, uninsured claims or casualties, or losses in excess of applicable coverage; ● delays in completing developments and lease-ups on schedule or at expected rent and occupancy levels; ● our failure to succeed in new markets; ● risks that third parties who have an interest in or are otherwise involved in projects in which we have an interest, including mezzanine borrowers, joint venture partners or other investors, do not perform as expected; ● changing interest rates, which could increase interest costs and affect the market price of our securities; ● potential liability for environmental contamination, which could result in substantial costs to us; ● the imposition of federal taxes if we fail to qualify as a REIT under the Code in any taxable year; ● our internal control over financial reporting may not be considered effective which could result in a loss of investor confidence in our financial reports, and in turn have an adverse effect on our stock price; and ● changes in real estate laws, tax laws, rent control or stabilization laws or other laws affecting our business.
The following factors, among others, could cause our future results to differ materially from those expressed in the forward-looking statements: ● general market and economic conditions; ● the impact of inflation/deflation; ● unfavorable changes in apartment market and economic conditions that could adversely affect occupancy levels and rental rates; ● the failure of acquisitions, developments or redevelopments to achieve anticipated results; ● possible difficulty in selling apartment communities; ● competitive factors that may limit our ability to lease apartment homes or increase or maintain rents; ● insufficient cash flow that could affect our debt financing and create refinancing risk; ● failure to generate sufficient revenue, which could impair our debt service payments and distributions to stockholders; ● development and construction risks that may impact our profitability; ● potential damage from natural disasters, including hurricanes and other weather-related events, which could result in substantial costs to us; ● risks from climate change that impacts our properties or operations; ● risks from extraordinary losses for which we may not have insurance or adequate reserves; ● risks from cybersecurity breaches of our information technology systems and the information technology systems of our third party vendors and other third parties; ● the availability of capital and the stability of the capital markets; ● changes in job growth, home affordability and the demand/supply ratio for multifamily housing; ● the failure of automation or technology to help grow net operating income; 38 Table of Contents ● uninsured losses due to insurance deductibles, self-insurance retention, uninsured claims or casualties, or losses in excess of applicable coverage; ● delays in completing developments and lease-ups on schedule or at expected rent and occupancy levels; ● our failure to succeed in new markets; ● risks that third parties who have an interest in or are otherwise involved in projects in which we have an interest, including mezzanine borrowers, joint venture partners or other investors, do not perform as expected; ● changing interest rates, which could increase interest costs and affect the market price of our securities; ● potential liability for environmental contamination, which could result in substantial costs to us; ● the imposition of federal taxes if we fail to qualify as a REIT under the Code in any taxable year; ● our internal control over financial reporting may not be considered effective which could result in a loss of investor confidence in our financial reports, and in turn have an adverse effect on our stock price; and ● changes in real estate laws, tax laws, rent control or stabilization laws or other laws affecting our business.
Funds from Operations, Funds from Operations as Adjusted, and Adjusted Funds from Operations Funds from Operations Funds from operations (“FFO”) attributable to common stockholders and unitholders is defined as Net income/(loss) attributable to common stockholders (computed in accordance with GAAP), excluding impairment write-downs of depreciable real estate related to the main business of the Company or of investments in non-consolidated investees that are directly attributable to decreases in the fair value of depreciable real estate held by the investee, gains and losses from sales of depreciable real estate related to the main business of the Company and income taxes directly 52 Table of Contents associated with those gains and losses, plus real estate depreciation and amortization, and after adjustments for noncontrolling interests, and the Company’s share of unconsolidated partnerships and joint ventures.
Funds from Operations, Funds from Operations as Adjusted, and Adjusted Funds from Operations Funds from Operations Funds from operations (“FFO”) attributable to common stockholders and unitholders is defined as Net income/(loss) attributable to common stockholders (computed in accordance with GAAP), excluding impairment write-downs of depreciable real estate related to the main business of the Company or of investments in non-consolidated investees that are directly attributable to decreases in the fair value of depreciable real estate held by the investee, gains and losses from sales of depreciable real estate related to the main business of the Company and income taxes directly associated with those gains and losses, plus real estate depreciation and amortization, and after adjustments for noncontrolling interests, and the Company’s share of unconsolidated partnerships and joint ventures.
A critical accounting policy is one that is both important to our financial condition and 36 Table of Contents results of operations as well as involves some degree of uncertainty. Estimates are prepared based on management’s assessment after considering all evidence available. Changes in estimates could affect our financial position or results of operations.
A critical accounting policy is one that is both important to our financial condition and results of operations as well as involves some degree of uncertainty. Estimates are prepared based on management’s assessment after considering all evidence available. Changes in estimates could affect our financial position or results of 39 Table of Contents operations.
Discussions of 2020 items and year-to-year comparisons between 2021 and 2020 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
F urther, the Credit Agreement includes sustainability adjustments pursuant to which the applicable margin for the Revolving Credit Facility and the Term Loan were reduced by two basis points in September 2022 upon the Company receiving certain green building certifications, which is reflected in the margins noted above .
F urther, the Credit Agreement includes sustainability adjustments pursuant to which the applicable margin for the Revolving Credit Facility and the Term Loan were reduced by two basis points upon the Company receiving certain green building certifications, which is reflected in the margins noted above .
Although an extreme or sustained escalation in costs could have a negative impact on our residents and their ability to absorb rent increases, we do not believe this had a material impact on our results for the year ended December 31, 2022 .
Although an extreme or sustained escalation in costs could have a negative impact on our residents and their ability to absorb rent increases, we do not believe this had a material impact on our results for the year ended December 31, 2023 .
However, due to the uncertainty of the specific actions that would be taken and their possible effects, the sensitivity analysis assumes no change in our financial structure. The Company also utilizes derivative financial instruments to manage interest rate risk and generally designates these financial instruments as cash flow hedges.
However, due to the uncertainty of the specific actions that would be taken and their possible effects, the sensitivity analysis assumes no change in our financial structure. 49 Table of Contents The Company also utilizes derivative financial instruments to manage interest rate risk and generally designates these financial instruments as cash flow hedges.
Our payment of amounts due on the notes also is effectively subordinated to all liabilities, whether secured or unsecured, of any of our non-guarantor subsidiaries because, in the event of a bankruptcy, liquidation, dissolution, reorganization or similar proceeding with respect to such subsidiaries, we, as an equity holder of such subsidiaries, would not receive distributions from such subsidiaries until claims of any creditors of such subsidiaries are satisfied. ​ 42 Table of Contents The following tables present the summarized financial information for the Operating Partnership as of December 31, 2022 and 2021, and for the years ended December 31, 2022, 2021, and 2020.
Our payment of amounts due on the notes also is effectively subordinated to all liabilities, whether secured or unsecured, of any of our non-guarantor subsidiaries because, in the event of a bankruptcy, liquidation, dissolution, reorganization or similar proceeding with respect to such subsidiaries, we, as an equity holder of such subsidiaries, would not receive distributions from such subsidiaries until claims of any creditors of such subsidiaries are satisfied. ​ The following tables present the summarized financial information for the Operating Partnership as of December 31, 2023 and 2022, and for the years ended December 31, 2023, 2022, and 2021.
The Operating Partnership may, without the consent of the holders of the notes, assume all of our rights and obligations under the notes and, upon such assumption, we will be released from our liabilities under the indenture and the notes. ​ The notes are UDR’s unsecured general obligations and rank equally with all of UDR’s other unsecured and unsubordinated indebtedness outstanding from time to time.
The Operating Partnership may, without the consent of the holders of the notes, assume all of our rights and obligations under the notes and, upon such assumption, we will be released from our liabilities under the indenture and the notes. 44 Table of Contents ​ The notes are UDR’s unsecured general obligations and rank equally with all of UDR’s other unsecured and unsubordinated indebtedness outstanding from time to time.
Adjusted Funds from Operations Adjusted FFO (“AFFO”) attributable to common stockholders and unitholders is defined as FFOA less recurring capital expenditures on consolidated communities that are necessary to help preserve the value of and maintain functionality at our communities.
Adjusted Funds from Operations Adjusted FFO (“AFFO”) attributable to common stockholders and unitholders is defined as FFOA less recurring capital expenditures on consolidated communities that are necessary to help preserve the value of and maintain 54 Table of Contents functionality at our communities.
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with our consolidated financial statements appearing elsewhere herein and is based primarily on our consolidated financial statements for the years ended December 31, 2022, and 2021.
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the consolidated financial statements appearing elsewhere herein and is based primarily on the consolidated financial statements for the years ended December 31, 2023, and 2022.
As of December 31, 2022, we had 14.0 million shares of common stock available for future issuance under the ATM program.
As of December 31, 2023, we had 14.0 million shares of common stock available for future issuance under the ATM program.
As of December 31, 2022, we had no outstanding borrowings under the Revolving Credit Facility, leaving $1.3 billion of unused capacity (excluding $2.6 million of letters of credit at December 31, 2022), and $350.0 million of outstanding borrowings under the Term Loan.
As of December 31, 2023, we had no outstanding borrowings under the Revolving Credit Facility, leaving $1.3 billion of unused capacity (excluding $2.3 million of letters of credit at December 31, 2023), and $350.0 million of outstanding borrowings under the Term Loan.
(b) Same-Store consists of 45,143 apartment homes. (c) Excludes depreciation, amortization, and property management expenses. (d) Represents non-mature communities that have achieved 90% occupancy for three consecutive months but do not meet the criteria to be included in Same-Store Communities.
(b) Same-Store consists of 47,360 apartment homes. (c) Excludes depreciation, amortization, and property management expenses. (d) Represents non-mature communities that have achieved 90% occupancy for three consecutive months but do not meet the criteria to be included in Same-Store Communities.
If such indicators of impairment are present and the carrying value exceeds the undiscounted cash flows of the community, an 37 Table of Contents impairment loss is recognized equal to the excess of the carrying amount of the asset over its estimated fair value.
If such indicators of impairment are present and the carrying value exceeds the undiscounted cash flows of the community, an impairment loss is recognized equal to the excess of the carrying amount of the asset over its estimated fair value.
Our estimates of fair value represent our best estimate based primarily upon unobservable inputs related to rental rates, operating costs, growth rates, discount rates, capitalization rates, industry trends and reference to market rates and transactions.
Our estimates of fair value represent our best estimate based primarily upon unobservable inputs related to rental rates, 40 Table of Contents operating costs, growth rates, discount rates, capitalization rates, industry trends and reference to market rates and transactions.
This section of this Form 10-K generally discusses 2022 and 2021 items and year-to-year comparisons between 2022 and 2021 of UDR, Inc.
This section of this Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022 of UDR, Inc.
Amounts capitalized during the years ended December 31, 2022, 2021, and 2020 were $31.3 million, $21.0 million, and $19.0 million, respectively. Investment in Unconsolidated Entities We may enter into various joint venture agreements and/or partnerships with unrelated third parties to hold or develop real estate assets.
Amounts capitalized during the years ended December 31, 2023, 2022, and 2021 were $23.2 million, $31.3 million, and $21.0 million, respectively. Investment in Unconsolidated Entities We may enter into various joint venture agreements and/or partnerships with unrelated third parties to hold or develop real estate assets.
The Company did not recognize any other-than-temporary impairments in the value of its investments in unconsolidated joint ventures or partnerships during the years ended December 31, 2022 and 2021. Financing Activities For the years ended December 31, 2022 and 2021, Net cash provided by/(used in) financing activities was $111.2 million and $612.5 million, respectively.
The Company did not recognize any other-than-temporary impairments in the value of its investments in unconsolidated joint ventures or partnerships during the years ended December 31, 2023 and 2022 . Financing Activities For the years ended December 31, 2023 and 2022, Net cash provided by/(used in) financing activities was $(538.9) million and $111.2 million, respectively.
Inflation Inflation primarily impacts our results of operations as a result of wage pressures and increases in utilities and repair and maintenance costs.
Inflation 53 Table of Contents Inflation primarily impacts our results of operations as a result of wage pressures and increases in utilities and repair and maintenance costs.
Unless the context otherwise requires, all references in this Report to “we,” “us,” “our,” “the Company,” or “UDR” refer collectively to UDR, Inc., its consolidated subsidiaries and its consolidated joint ventures. At December 31, 2022, our consolidated real estate portfolio included 165 communities in 13 states plus the District of Columbia totaling 54,999 apartment homes.
Unless the context otherwise requires, all references in this Report to “we,” “us,” “our,” “the Company,” or “UDR” refer collectively to UDR, Inc., its consolidated subsidiaries and its consolidated joint ventures. At December 31, 2023, our consolidated real estate portfolio included 168 communities in 13 states plus the District of Columbia totaling 55,550 apartment homes.
We report in two segments: Same-Store Communities and Non-Mature Communities/Other . 39 Table of Contents Our Same-Store Communities segment represents those communities acquired, developed, and stabilized prior to January 1, 2021 and held as of December 31, 2022.
We report in two segments: Same-Store Communities and Non-Mature Communities/Other . Our Same-Store Communities segment represents those communities acquired, developed, and stabilized prior to January 1, 2022 and held as of December 31, 2023.
We anticipate repaying the debt due in 2023 with cash flow from our operations, proceeds from debt or equity offerings, proceeds from dispositions of properties, or from borrowings under our credit agreements and our unsecured commercial paper program.
We anticipate repaying the debt due in 2024 with cash 43 Table of Contents flow from our operations, proceeds from debt or equity offerings, proceeds from dispositions of properties, or from borrowings under our credit agreements and our unsecured commercial paper program.
Based on the Company’s current credit rating, the Revolving Credit Facility has an interest rate equal to SOFR plus a margin of 85.5 basis points and a facility fee of 15 basis points, and the Term Loan has an interest rate equal to SOFR plus a margin of 93.0 basis points.
Based on the Company’s current credit rating, the Revolving Credit Facility has an interest rate equal to Adjusted SOFR plus a margin of 75.5 basis points and a facility fee of 15 basis points, and the Term Loan has an interest rate equal to Adjusted SOFR plus a margin of 83.0 basis points.
Gain/(Loss) on Sale of Real Estate Owned During the year ended December 31, 2022, the Company recognized a gain of $25.5 million from the sale of one operating community located in Orange County, California .
During the year ended December 31, 2022, the Company recognized a gain of $25.5 million from the sale of one operating community located in Orange County, California .
During 2022, we incurred gross interest costs of $169.3 million, of which $13.4 million was capitalized. 41 Table of Contents ​ We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources that are material. ​ Guarantor Subsidiary Summarized Financial Information ​ UDR has certain outstanding debt securities that are guaranteed by the Operating Partnership.
During 2023, we incurred gross interest costs of $191.0 million, of which $10.1 million was capitalized. ​ We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources that are material. ​ Guarantor Subsidiary Summarized Financial Information ​ UDR has certain outstanding debt securities that are guaranteed by the Operating Partnership.
The operating margin (property net operating income divided by property rental income) was 69.8% and 68.3% for the years ended December 31, 2022 and 2021, respectively.
The operating margin (property net operating income divided by property rental income) was 69.6% and 69.3% for the years ended December 31, 2023 and 2022, respectively.
Operating Activities For the year ended December 31, 2022, our Net cash provided by/(used in) operating activities was $820.1 million compared to $664.0 million for 2021.
Operating Activities For the year ended December 31, 2023, our Net cash provided by/(used in) operating activities was $832.7 million compared to $820.1 million for 2022.
Interest income and other income/(expense), net For the years ended December 31, 2022 and 2021, the Company recognized interest income and other income/(expense), net of $(6.9) million and $15.1 million, respectively.
Interest income and other income/(expense), net For the years ended December 31, 2023 and 2022, the Company recognized interest income and other income/(expense), net of $17.8 million and $(6.9) million, respectively.
Net Income/(Loss) Attributable to Common Stockholders Net income/(loss) attributable to common stockholders was $82.5 million ($0.26 per diluted share) for the year ended December 31, 2022, as compared to $145.8 million ($0.48 per diluted share) for the prior year.
Net Income/(Loss) Attributable to Common Stockholders Net income/(loss) attributable to common stockholders was $439.5 million ($1.34 per diluted share) for the year ended December 31, 2023, as compared to $82.5 million ($0.26 per diluted share) for the prior year.
In addition, we have an ownership interest in 9,099 completed or to-be-completed apartment homes through unconsolidated joint ventures or partnerships, including 6,262 apartment homes owned by entities in which we hold preferred equity investments. The Same-Store Community apartment home population for the year ended December 31, 2022, was 47,360.
In addition, we have an ownership interest in 10,045 completed or to-be-completed apartment homes through unconsolidated joint ventures or partnerships, including 5,618 apartment homes owned by entities in which we hold preferred equity investments. The Same-Store Community apartment home population for the year ended December 31, 2023, was 51,368.
The decrease in 2022 as compared to 2021 was primarily due to $(35.5) million of investment income/(loss) from RETV I during the year ended December 31, 2022 as compared to $50.8 million during the year ended December 31, 2021, which primarily related to unrealized gains/(losses) from one portfolio investment held by RETV I, SmartRent, partially offset by $10.6 million of net variable upside participation recorded on the sale of a DCP community in 2022 and an increase in income from our preferred equity investments .
During the year ended December 31, 2022, the Company recognized income/(loss) from unconsolidated entities of $4.9 million, which was primarily due to net income from our operating joint ventures and preferred equity investments and $10.6 million of net variable upside participation recorded on the sale of a DCP community, partially offset by $(35.5) million of investment income/(loss) from RETV I, which primarily related to unrealized gains/(losses) from one portfolio investment held by RETV I, SmartRent .
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 communities are not classified as held for disposition at year end. A community is considered to have stabilized occupancy once it achieves 90% occupancy for at least three consecutive months.
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 communities are not classified as held for disposition at year end.
(e) Primarily non-residential revenue and expense and straight-line adjustment for concessions. ​ 50 Table of Contents The following table is our reconciliation of Net income/(loss) attributable to UDR, Inc. to total property NOI for each of the periods presented ( dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2022 2021 2020 Net income/(loss) attributable to UDR, Inc. ​ $ 86,924 ​ $ 150,016 ​ $ 64,266 Joint venture management and other fees ​ (5,022) ​ (6,102) ​ (5,069) Property management ​ 49,152 ​ 38,540 ​ 35,538 Other operating expenses ​ 17,493 ​ 21,649 ​ 22,762 Real estate depreciation and amortization ​ 665,228 ​ 606,648 ​ 608,616 General and administrative ​ 64,144 ​ 57,541 ​ 49,885 Casualty-related charges/(recoveries), net ​ 9,733 ​ 3,748 ​ 2,131 Other depreciation and amortization ​ 14,344 ​ 13,185 ​ 10,013 (Gain)/loss on sale of real estate owned ​ (25,494) ​ (136,052) ​ (119,277) (Income)/loss from unconsolidated entities ​ (4,947) ​ (65,646) ​ (18,844) Interest expense ​ 155,900 ​ 186,267 ​ 202,706 Interest income and other (income)/expense, net ​ ​ 6,933 ​ ​ (15,085) ​ ​ (6,274) Tax provision/(benefit), net ​ 349 ​ 1,439 ​ 2,545 Net income/(loss) attributable to redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership ​ 5,613 ​ 10,873 ​ 4,543 Net income/(loss) attributable to noncontrolling interests ​ 42 ​ 104 ​ 161 Total property NOI ​ $ 1,040,392 ​ $ 867,125 ​ $ 853,702 ​ Same-Store Communities Our Same-Store Community properties (those acquired, developed, and stabilized prior to January 1, 2021 and held on December 31, 2022) consisted of 47,360 apartment homes and provided 89.7% of our total NOI for the year ended December 31, 2022.
(e) Primarily non-residential revenue and expense and straight-line adjustment for concessions. ​ 51 Table of Contents The following table is our reconciliation of Net income/(loss) attributable to UDR, Inc. to total property NOI for each of the periods presented ( dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 2021 Net income/(loss) attributable to UDR, Inc. ​ $ 444,353 ​ $ 86,924 ​ $ 150,016 Joint venture management and other fees ​ (6,843) ​ (5,022) ​ (6,102) Property management ​ 52,671 ​ 49,152 ​ 38,540 Other operating expenses ​ 20,222 ​ 17,493 ​ 21,649 Real estate depreciation and amortization ​ 676,419 ​ 665,228 ​ 606,648 General and administrative ​ 69,929 ​ 64,144 ​ 57,541 Casualty-related charges/(recoveries), net ​ 3,138 ​ 9,733 ​ 3,748 Other depreciation and amortization ​ 15,419 ​ 14,344 ​ 13,185 (Gain)/loss on sale of real estate owned ​ (351,193) ​ (25,494) ​ (136,052) (Income)/loss from unconsolidated entities ​ (4,693) ​ (4,947) ​ (65,646) Interest expense ​ 180,866 ​ 155,900 ​ 186,267 Interest income and other (income)/expense, net ​ ​ (17,759) ​ ​ 6,933 ​ ​ (15,085) Tax provision/(benefit), net ​ 2,106 ​ 349 ​ 1,439 Net income/(loss) attributable to redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership ​ 30,104 ​ 5,613 ​ 10,873 Net income/(loss) attributable to noncontrolling interests ​ 31 ​ 42 ​ 104 Total property NOI ​ $ 1,114,770 ​ $ 1,040,392 ​ $ 867,125 ​ Same-Store Communities Our Same-Store Community properties (those acquired, developed, and stabilized prior to January 1, 2022 and held on December 31, 2023) consisted of 51,368 apartment homes and provided 93.1% of our total NOI for the year ended December 31, 2023.
The following significant financing activities occurred during the year ended December 31, 2022: ● issued 11.4 million shares of common stock at an average price of $55.29 per share under forward sales agreements for aggregate net proceeds, after deducting related expenses, of approximately $629.6 million; ● repurchased 1.2 million shares of common stock at an average price of $41.14 per share for approximately $49.0 million; ● net proceeds of $80.0 million on our unsecured commercial paper program; and ● paid $483.6 million of distributions to our common stockholders.
The following significant financing activities occurred during the year ended December 31, 2022: ● issued 11.4 million shares of common stock at an average price of $55.29 per share under forward sales agreements for aggregate net proceeds, after deducting related expenses, of approximately $629.6 million; ● repurchased 1.2 million shares of common stock at an average price of $41.14 per share for approximately $49.0 million; ● received net proceeds of $80.0 million on our unsecured commercial paper program; ● paid $34.3 million of distributions to redeemable noncontrolling interests; and ● paid $483.6 million of distributions to our common stockholders. 48 Table of Contents Credit Facilities and Commercial Paper Program The Company has a $1.3 billion unsecured revolving credit facility (the “Revolving Credit Facility”) and a $350.0 million unsecured term loan (the “Term Loan”).
Property management expense covers costs directly related to consolidated property operations, inclusive of corporate management, regional supervision, accounting and other costs. 49 Table of Contents Management considers NOI a useful metric for investors as it is a more meaningful representation of a community’s continuing operating performance than net income as it is prior to corporate-level expense allocations, general and administrative costs, capital structure and depreciation and amortization.
Management considers NOI a useful metric for investors as it is a more meaningful representation of a community’s continuing operating performance than net income as it is prior to corporate-level expense allocations, general and administrative costs, capital structure and depreciation and amortization.
However, the majority of our apartment leases have initial terms of 12 months or less, which generally enables us to compensate for inflationary effects by increasing rents on our apartment homes.
However, the majority of our apartment leases have initial terms of 12 months or less, which in an inflationary environment, and absent other factors such as increased supply, generally enables us to compensate for inflationary effects by increasing rents on our apartment homes.
Aggregate net proceeds from such forward sales, after deducting related expenses, were $629.6 million. ​ During the year ended December 31, 2022, the Company repurchased 1.2 million shares of its common stock at an average price of $41.14 per share for total consideration of approximately $49.0 million under its share repurchase program. ​ Future Capital Needs Future development and redevelopment expenditures may be funded through unsecured or secured credit facilities, unsecured commercial paper, proceeds from the issuance of equity or debt securities, sales of properties, joint ventures, and, to a lesser extent, from cash flows provided by property operations.
The Company does not initially receive any proceeds from any sale of borrowed shares by the forward seller. ​ During the year ended December 31, 2023, the Company repurchased 0.6 million shares of its common stock at an average price of $40.13 per share for total consideration of approximately $25.0 million under its share repurchase program. ​ Future Capital Needs Future development and redevelopment expenditures may be funded through unsecured or secured credit facilities, unsecured commercial paper, proceeds from the issuance of equity or debt securities, sales of properties, joint ventures, and, to a lesser extent, from cash flows provided by property operations.
The increase in 2022 as compared to 2021 was primarily attributable to communities acquired in 2022 and 2021, partially offset by assets that became fully depreciated in 2022 and 2021.
The increase in 2023 as compared to 2022 was primarily due to communities acquired and completions of developments in 2023 and 2022, partially offset by communities sold in 2023 and assets that became fully depreciated in 2023 and 2022.
The remaining 10.3%, or $107.5 million, of our total NOI during the year ended December 31, 2022 was generated from our Non-Mature Communities/Other . NOI from Non-Mature Communities/Other increased by 136.7%, or $62.1 million, for the year ended December 31, 2022 as compared to the same period in 2021.
The remaining 6.9%, or $77.1 million, of our total NOI during the year ended December 31, 2023 was generated from our Non-Mature Communities/Other . NOI from Non-Mature Communities/Other increased by 25.3%, or $15.6 million, for the year ended December 31, 2023 as compared to the same period in 2022.
These amounts are determined by considering the impact of hypothetical interest rates on our borrowing cost. This analysis does not consider the effects of the adjusted level of overall economic activity that could exist in such an environment or actions we may take to further mitigate our exposure to the change.
This analysis does not consider the effects of the adjusted level of overall economic activity that could exist in such an environment or actions we may take to further mitigate our exposure to the change.
Consolidated Real Estate Under Development and Redevelopment At December 31, 2022, our development pipeline consisted of three wholly-owned communities located in Washington D.C., Addison, Texas and Tampa, Florida, totaling 715 homes, of which 161 have been completed, with a budget of $332.5 million, in which we have a gross carrying value of $190.1 million.
Consolidated Real Estate Under Development and Redevelopment At December 31, 2023, our development pipeline consisted of two wholly-owned communities located in Addison, Texas and Tampa, Florida, totaling 415 homes, of which 56 have been completed, with a budget of $187.5 million, in which we have a gross carrying value of $160.4 million.
The information presented below excludes eliminations necessary to arrive at the information on a consolidated basis (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ 2022 2021 Total real estate, net $ 2,353,509 $ 2,262,108 Cash and cash equivalents ​ 9 ​ 21 Operating lease right-of-use assets ​ 195,296 ​ 198,835 Other assets ​ 67,186 ​ 96,553 Total assets $ 2,616,000 $ 2,557,517 ​ ​ ​ ​ ​ ​ ​ Secured debt, net ​ $ 187,537 ​ $ 143,745 Notes payable to UDR (a) ​ ​ 1,162,308 ​ ​ 972,283 Operating lease liabilities ​ ​ 190,495 ​ ​ 193,892 Other liabilities ​ 118,103 ​ 108,076 Total liabilities ​ 1,658,443 ​ 1,417,996 Total capital ​ $ 957,557 ​ $ 1,139,521 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ 2022 2021 ​ 2020 Total revenue ​ $ 511,560 $ 440,631 ​ $ 428,747 Property operating expenses ​ (217,048) ​ (189,543) ​ (172,704) Real estate depreciation and amortization ​ (155,451) ​ (152,520) ​ (143,005) Gain/(loss) on sale of real estate ​ ​ — ​ ​ — ​ ​ 57,960 Operating income/(loss) ​ 139,061 ​ 98,568 ​ 170,998 Interest expense (a) ​ (37,792) ​ (33,098) ​ (29,357) Other income/(loss) ​ (3,589) ​ 9,316 ​ (5,543) Net income/(loss) ​ $ 97,680 $ 74,786 $ 136,098 (a) All $1.2 billion and $972.3 million notes payable to UDR as of December 31, 2022 and 2021, respectively, and $35.7 million, $30.8 million and $26.5 million of interest expense on notes payable to UDR for the years ended December 31, 2022, 2021, and 2020, respectively, eliminate upon consolidation of UDR’s consolidated financial statements. ​ Statements of Cash Flows The following discussion explains the changes in Net cash provided by/(used in) operating activities , Net cash provided by/(used in) investing activities , and Net cash provided by/(used in) financing activities that are presented in our Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2021.
The information presented below excludes eliminations necessary to arrive at the information on a consolidated basis (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ 2023 2022 Total real estate, net $ 2,629,267 $ 2,353,509 Cash and cash equivalents ​ 5 ​ 9 Operating lease right-of-use assets ​ 191,673 ​ 195,296 Other assets ​ 75,464 ​ 67,186 Total assets $ 2,896,409 $ 2,616,000 ​ ​ ​ ​ ​ ​ ​ Secured debt, net ​ $ 377,262 ​ $ 187,537 Notes payable to UDR (a) ​ ​ 1,298,903 ​ ​ 1,162,308 Operating lease liabilities ​ ​ 186,939 ​ ​ 190,495 Other liabilities ​ 133,595 ​ 118,103 Total liabilities ​ 1,996,699 ​ 1,658,443 Total capital ​ $ 899,710 ​ $ 957,557 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ 2023 2022 ​ 2021 Total revenue ​ $ 561,441 $ 511,560 ​ $ 440,631 Property operating expenses ​ (243,842) ​ (217,048) ​ (189,543) Real estate depreciation and amortization ​ (166,744) ​ (155,451) ​ (152,520) Operating income/(loss) ​ 150,855 ​ 139,061 ​ 98,568 Interest expense (a) ​ (55,729) ​ (37,792) ​ (33,098) Other income/(loss) ​ 6,231 ​ (3,589) ​ 9,316 Net income/(loss) ​ $ 101,357 $ 97,680 $ 74,786 (a) All $1.3 billion and $1.2 billion notes payable to UDR as of December 31, 2023 and 2022, respectively, and $47.2 million, $35.7 million and $30.8 million of interest expense on notes payable to UDR for the years ended December 31, 2023, 2022, and 2021, respectively, eliminate upon consolidation of UDR’s consolidated financial statements. ​ Statements of Cash Flows The following discussion explains the changes in Net cash provided by/(used in) operating activities , Net cash provided by/(used in) investing activities , and Net cash provided by/(used in) financing activities that are presented in our Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022.
Upon entering into the ATM sales agreement, the Company simultaneously terminated the sales agreement for its prior at-the-market equity offering program, which was entered into in July 2017. During the year ended December 31, 2022, the Company settled 4.4 million shares of common stock through its ATM program pursuant to the Company’s forward sales agreements described below.
Upon entering into the ATM sales agreement, the Company simultaneously terminated the sales agreement for its prior at-the-market equity offering program, which was entered into in July 2017. During the year ended December 31, 2023, the Company did not sell any shares of common stock through its ATM program.
(b) As of December 31, 2022, the Company was developing three wholly owned communities with a total of 715 apartment homes, of which 161 have been completed. (c) The retail component of a development community located in Washington D.C. met the criteria to be classified as held for disposition at December 31, 2022.
(b) As of December 31, 2023, the Company was developing two wholly owned communities with a total of 415 apartment homes, of which 56 have been completed. (c) The Company had one community located in Arlington, Virginia that met the criteria to be classified as held for disposition at December 31, 2023.
NOI for our Same-Store Community properties increased 13.5%, or $111.2 million, for the year ended December 31, 2022 compared to the same period in 2021. The increase in property NOI was attributable to an 11.1%, or $133.1 million, increase in property rental income, which was partially offset by a 5.7%, or $21.9 million, increase in operating expenses .
NOI for our Same-Store Community properties increased 6.0%, or $58.8 million, for the year ended December 31, 2023 compared to the same period in 2022. The increase in property NOI was attributable to a 5.6%, or $79.3 million, increase in property rental income, which was partially offset by a 4.7%, or $20.5 million, increase in operating expenses .
The Company increased its real estate assets owned by approximately $122.6 million and recorded $2.7 million of in-place lease intangibles. ​ Dispositions In November 2022, the Company sold an operating community located in Orange County, California with a total of 90 apartment homes for gross proceeds of $41.5 million, resulting in a gain of approximately $25.5 million. ​ In February 2021, the Company sold an operating community located in Anaheim, California, with a total of 386 apartment homes for gross proceeds of $156.0 million, resulting in a gain of approximately $50.8 million. ​ In October 2021, the Company sold an operating community located in Anaheim, California, with a total of 265 apartment homes for a sales price of $126.0 million, resulting in a gain of approximately $85.2 million. ​ We plan to continue to pursue our strategy of exiting markets where long-term growth prospects are limited and redeploying capital to primary locations in markets we believe will provide the best investment returns.
In November 2022, the Company sold an operating community located in Orange County, California with a total of 90 apartment homes for gross proceeds of $41.5 million, resulting in a gain of approximately $25.5 million. ​ 46 Table of Contents We plan to continue to pursue our strategy of exiting markets where long-term growth prospects are limited and redeploying capital to primary locations in markets we believe will provide the best investment returns.
Our Non-Mature Communities/Other segment represents those communities that do not meet the criteria to be included in Same-Store Communities, including, but not limited to, recently acquired, developed and redeveloped communities, and the non-apartment components of mixed use properties.
A community is considered to have stabilized occupancy once it achieves 90% occupancy for at least three consecutive months. 42 Table of Contents Our Non-Mature Communities/Other segment represents those communities that do not meet the criteria to be included in Same-Store Communities, including, but not limited to, recently acquired, developed and redeveloped communities, and the non-apartment components of mixed use properties.
The following table outlines capital expenditures and repair and maintenance costs for all of our communities, excluding real estate under development, for the years ended December 31, 2022 and 2021 ( dollars in thousands except Per Home amounts ): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Per Home ​ ​ Year Ended December 31, ​ Year Ended December 31, ​ 2022 2021 % Change 2022 2021 % Change Turnover capital expenditures ​ $ 17,148 ​ $ 15,407 11.3 % $ 320 ​ $ 305 4.9 % Asset preservation expenditures ​ 56,713 ​ 48,413 17.1 % 1,060 ​ 959 10.5 % Total recurring capital expenditures ​ 73,861 ​ 63,820 15.7 % 1,380 ​ 1,264 9.2 % NOI enhancing improvements (a) ​ 72,165 ​ 44,727 61.3 % 1,349 ​ 886 52.3 % Major renovations (b) ​ 84,048 ​ 40,339 108.4 % 1,571 ​ 799 96.6 % Operations platform ​ ​ 3,917 ​ ​ 4,371 ​ (10.4) % ​ 73 ​ ​ 87 ​ (16.1) % Total capital expenditures (c) ​ $ 233,991 ​ $ 153,257 52.7 % $ 4,373 ​ $ 3,036 44.0 % Repair and maintenance expense ​ $ 84,663 ​ $ 71,147 19.0 % $ 1,582 ​ $ 1,409 12.3 % Average home count (d) ​ 53,514 ​ 50,488 6.0 % ​ ​ ​ ​ ​ ​ ​ ​ (a) NOI enhancing improvements are expenditures that result in increased income generation or decreased expense growth.
The following table outlines capital expenditures and repair and maintenance costs for all of our communities, excluding real estate under development, for the years ended December 31, 2023 and 2022 ( dollars in thousands except Per Home amounts ): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Per Home ​ ​ Year Ended December 31, ​ Year Ended December 31, ​ 2023 2022 % Change 2023 2022 % Change Turnover capital expenditures ​ $ 17,595 ​ $ 17,148 2.6 % $ 323 ​ $ 320 0.9 % Asset preservation expenditures ​ 68,017 ​ 56,713 19.9 % 1,249 ​ 1,060 17.8 % Total recurring capital expenditures ​ 85,612 ​ 73,861 15.9 % 1,572 ​ 1,380 13.9 % NOI enhancing improvements (a) ​ 90,627 ​ 72,165 25.6 % 1,664 ​ 1,349 23.4 % Major renovations (b) ​ 123,324 ​ 84,048 46.7 % 2,264 ​ 1,571 44.1 % Operations platform ​ ​ 4,144 ​ ​ 3,917 ​ 5.8 % ​ 76 ​ ​ 73 ​ 4.1 % Total capital expenditures (c) ​ $ 303,707 ​ $ 233,991 29.8 % $ 5,576 ​ $ 4,373 27.5 % Repair and maintenance expense ​ $ 94,958 ​ $ 84,663 12.2 % $ 1,743 ​ $ 1,582 10.2 % Average home count (d) ​ 54,476 ​ 53,514 1.8 % ​ ​ ​ ​ ​ ​ ​ ​ (a) NOI enhancing improvements are expenditures that result in increased income generation or decreased expense growth.
The Company has a working capital credit facility, which provides for a $75.0 million unsecured revolving credit facility (the “Working Capital Credit Facility”) with a scheduled maturity date of January 12, 2024. In September 2022, the Company amended its Working Capital Credit Facility to change the interest rate benchmark from LIBOR to SOFR.
The Company has a working capital credit facility, which provides for a $75.0 million unsecured revolving credit facility (the “Working Capital Credit Facility”) with a scheduled maturity date of January 12, 2025.
The increase in operating expenses was primarily driven by an 11.0%, or $7.3 million, increase in repair and maintenance expense due to the increased use of third party vendors and an increase in the number of homes that turned as well as the impact of inflation on those third party vendor costs, a 25.5%, or $5.1 million, increase in insurance expense due to increased claims, a 7.9%, or $4.0 million, increase in utilities, which was primarily due an increase in energy costs, and a 2.7%, or $4.4 million, increase in real estate taxes due to higher assessed valuations .
The increase in operating expenses was primarily driven by a 10.3%, or $8.3 million, increase in repair and maintenance expense due to an increase in the cost per home of those that were turned during the year, the impact of inflation on third party vendor costs, and weather-related events, a 10.6%, or $6.2 million, increase in utilities, which was primarily due an increase in energy costs, a 3.2%, or $5.7 million, increase in real estate taxes due to higher assessed valuations, and a 6.9%, or $2.0 million, increase in administrative and marketing expense, partially offset by a $2.5 million decrease in insurance expense primarily due to a decrease in the impact from claims.
See Note 14, Derivatives and Hedging Activities , in the Notes to the UDR Consolidated Financial Statements included in this Report for additional discussion of derivative instruments. 48 Table of Contents A presentation of cash flow metrics based on GAAP is as follows ( dollars in thousands ): ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2022 2021 Net cash provided by/(used in) operating activities $ 820,071 $ 663,960 Net cash provided by/(used in) investing activities ​ (929,528) (1,272,253) Net cash provided by/(used in) financing activities ​ 111,233 612,540 ​ ​ Results of Operations The following discussion explains the changes in results of operations that are presented in our Consolidated Statements of Operations for the years ended December 31, 2022 and 2021.
A presentation of cash flow metrics based on GAAP is as follows ( dollars in thousands ): ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2023 2022 Net cash provided by/(used in) operating activities $ 832,664 $ 820,071 Net cash provided by/(used in) investing activities ​ (289,138) (929,528) Net cash provided by/(used in) financing activities ​ (538,854) 111,233 ​ ​ Results of Operations The following discussion explains the changes in results of operations that are presented in our Consolidated Statements of Operations for the years ended December 31, 2023 and 2022.
In addition, we may earn fees for providing management services to the communities held by the unconsolidated joint ventures and partnerships. 46 Table of Contents The Company’s Investment in and advances to unconsolidated joint ventures and partnerships, net , are accounted for under the equity method of accounting.
The Company’s Investment in and advances to unconsolidated joint ventures and partnerships, net , are accounted for under the equity method of accounting.
The following table summarizes the operating performance of our total property NOI for each of the periods presented (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ Year Ended ​ ​ ​ ​ ​ December 31, (a) ​ ​ ​ December 31, (b) ​ ​ ​ ​ 2022 2021 % Change 2021 2020 % Change ​ Same-Store Communities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Same-Store rental income ​ $ 1,337,003 $ 1,203,921 11.1 % $ 1,147,259 $ 1,130,760 ​ 1.5 % Same-Store operating expense (c) ​ (404,150) (382,226) 5.7 % (356,761) (344,149) ​ 3.7 % Same-Store NOI ​ 932,853 821,695 13.5 % 790,498 786,611 ​ 0.5 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-Mature Communities/Other NOI: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stabilized, non-mature communities NOI (d) ​ ​ 88,767 33,789 ​ 162.7 % ​ 62,906 ​ ​ 24,645 ​ 155.2 % Acquired communities NOI ​ — — — ​ 4,156 — ​ N/A ​ Development communities NOI ​ 2,306 (418) NM * (417) (127) ​ NM * Non-residential/other NOI (e) ​ ​ 14,801 5,296 ​ 179.5 % ​ 5,114 ​ ​ 27,689 ​ (81.5) % Sold and held for disposition communities NOI ​ ​ 1,665 6,763 ​ (75.4) % ​ 4,868 ​ ​ 14,884 ​ (67.3) % Total Non-Mature Communities/Other NOI ​ 107,539 45,430 136.7 % 76,627 67,091 ​ 14.2 % Total property NOI ​ $ 1,040,392 $ 867,125 20.0 % $ 867,125 $ 853,702 ​ 1.6 % * Not meaningful (a) Same-Store consists of 47,360 apartment homes.
The following table summarizes the operating performance of our total property NOI for each of the periods presented (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ Year Ended ​ ​ ​ ​ ​ December 31, (a) ​ ​ ​ December 31, (b) ​ ​ ​ ​ 2023 2022 % Change 2022 2021 % Change ​ Same-Store Communities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Same-Store rental income ​ $ 1,490,837 $ 1,411,495 5.6 % $ 1,337,003 $ 1,203,921 ​ 11.1 % Same-Store operating expense (c) ​ (453,144) (432,630) 4.7 % (404,150) (382,226) ​ 5.7 % Same-Store NOI ​ 1,037,693 978,865 6.0 % 932,853 821,695 ​ 13.5 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-Mature Communities/Other NOI: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stabilized, non-mature communities NOI (d) ​ ​ 34,726 17,651 ​ 96.7 % ​ 88,767 ​ ​ 33,789 ​ 162.7 % Development communities NOI ​ 258 (1,387) NM * 2,306 (418) ​ NM * Non-residential/other NOI (e) ​ ​ 18,287 14,801 ​ 23.6 % ​ 14,801 ​ ​ 5,296 ​ 179.5 % Sold and held for disposition communities NOI ​ ​ 23,806 30,462 ​ (21.9) % ​ 1,665 ​ ​ 6,763 ​ (75.4) % Total Non-Mature Communities/Other NOI ​ 77,077 61,527 25.3 % 107,539 45,430 ​ 136.7 % Total property NOI ​ $ 1,114,770 $ 1,040,392 7.1 % $ 1,040,392 $ 867,125 ​ 20.0 % * Not meaningful (a) Same-Store consists of 51,368 apartment homes.
Words such as “expects,” “anticipates,” “intends,” “plans,” “likely,” “will,” “believes,” “seeks,” “estimates,” and variations of such words and similar expressions are intended to identify such forward-looking statements.
Such forward-looking statements include, without limitation, statements concerning property acquisitions and dispositions, development activity and capital expenditures, capital raising activities, rent growth, occupancy and rental expense growth. Words such as “expects,” “anticipates,” “intends,” “plans,” “likely,” “will,” “believes,” “seeks,” “estimates,” and variations of such words and similar expressions are intended to identify such forward-looking statements.
The increase was primarily attributable to a $55.0 million increase in NOI from stabilized, non-mature communities, primarily due to communities acquired in 2022 and 2021, and a $9.5 million increase in non-residential/other primarily due to changes in straight-line rent as a result of decreased tenant rent concessions during 2021, partially offset by a $5.1 million decrease in sold and held for disposition communities. 51 Table of Contents Real estate depreciation and amortization For the years ended December 31, 2022 and 2021, the Company recognized real estate depreciation and amortization of $665.2 million and $606.6 million, respectively.
The increase was primarily attributable to a $17.1 million increase in NOI from stabilized, non-mature communities, primarily due to development communities completed in 2023 and 2022 and becoming stabilized, and a $3.5 million increase in non- 52 Table of Contents residential/other NOI due to changes in straight-line rent as a result of a decrease in tenant rent concessions during 2023, partially offset by a $6.7 million decrease in sold and held for disposition communities NOI due to the partial sale of four operating communities and the sale of one operating community in 2023, and one operating community held for disposition at December 31, 2023, as compared to the sale of one operating community in 2022.
Apartment Community Operations Our net income results are primarily from NOI generated from the operation of our apartment communities. The Company defines NOI, which is a non-GAAP financial measure, as rental income less direct property rental expenses. Rental income represents gross market rent less adjustments for concessions, vacancy loss and bad debt.
The Company defines NOI, which is a non-GAAP financial measure, as rental income less direct property rental expenses. Rental income represents gross market rent less adjustments for concessions, vacancy loss and bad debt. Rental expenses include real estate taxes, insurance, personnel, utilities, repairs and maintenance, administrative and marketing.
Weighted average physical occupancy remained the same at 97.0% and total monthly income per occupied home increased 11.1% to $2,425.
Weighted average physical occupancy decreased by 0.1% to 96.7% and total monthly income per occupied home increased 5.7% to $2,501.
We had $530.0 million in variable rate debt that is not subject to interest rate swap contracts as of December 31, 2022. If market interest rates for variable rate debt increased by 100 basis points, our interest expense would increase by $5.9 million based on the average balance outstanding during the year.
If market interest rates for variable rate debt increased by 100 basis points, our interest expense would increase by $5.0 million based on the average balance outstanding during the year. These amounts are determined by considering the impact of hypothetical interest rates on our borrowing cost.
For the year ended December 31, 2022: ● we made investments totaling $201.4 million in our unconsolidated joint ventures and partnerships, including contributions of $183.4 million to certain unconsolidated investments under our Developer Capital Program, each of which earns a preferred return; ● our proportionate share of the net income/(loss) of the joint ventures and partnerships was $4.9 million; and ● we received cash distributions of $103.8 million, of which $22.4 million were operating cash flows and $81.4 million were investing cash flows.
For the year ended December 31, 2023: ● we made cash investments totaling $71.4 million in our unconsolidated joint ventures and partnerships; ● our proportionate share of the net income/(loss) of the joint ventures and partnerships was $4.7 million, which included a $24.3 million loss due to the consolidation of one of our preferred equity investment joint venture (described below); and ● we received cash distributions of $30.3 million, of which $15.9 million were operating cash flows and $14.4 million were investing cash flows.
The Company has an unsecured commercial paper program. Under the terms of the program, the Company may issue unsecured commercial paper up to a maximum aggregate amount outstanding of $700.0 million. The notes are sold under customary terms in the United States commercial paper market and rank pari passu with all of the Company’s other unsecured indebtedness.
The notes are sold under customary terms in the United States commercial paper market and rank pari passu with all of the Company’s other unsecured indebtedness. The notes are fully and unconditionally guaranteed by the Operating Partnership.
The Company increased its real estate assets owned by approximately $28.2 million and recorded $0.8 million of in-place lease intangibles. ​ In January 2021, the Company acquired a 300 apartment home operating community located in Franklin, Massachusetts, for approximately $77.4 million.
The Company increased its real estate assets owned by approximately $28.2 million and recorded $0.8 million of in-place lease intangibles. ​ Dispositions In January 2023, the Company sold the retail component of a development community located in Washington D.C. for gross proceeds of approximately $14.4 million, resulting in a gain of less than $0.1 million.
Interest Rate Risk We are exposed to interest rate risk associated with variable rate notes payable and maturing debt that has to be refinanced. We do not hold financial instruments for trading or other speculative purposes, but rather issue these financial instruments to finance our portfolio of real estate assets and operations.
We do not hold financial instruments for trading or other speculative purposes, but rather issue these financial instruments to finance our portfolio of real estate assets and operations. Interest rate sensitivity is the relationship between changes in market interest rates and the fair value of market rate sensitive assets and liabilities.
As of December 31, 2022, we had $28.0 million of outstanding borrowings under the Working Capital Credit Facility, leaving $47.0 million of unused capacity. The bank revolving credit facilities and the term loan are subject to customary financial covenants and limitations, all of which we were in compliance with at December 31, 2022.
The bank revolving credit facilities and the term loan are subject to customary financial covenants and limitations, all of which we were in compliance with at December 31, 2023. The Company has an unsecured commercial paper program. Under the terms of the program, the Company may issue unsecured commercial paper up to a maximum aggregate amount outstanding of $700.0 million.
For the year ended December 31, 2022, total capital expenditures of $234.0 million or $4,373 per stabilized home, which in aggregate include recurring capital expenditures and major renovations, were spent across our portfolio, excluding development, as compared to $153.3 million or $3,036 per stabilized home for the prior year. 45 Table of Contents The increase in total capital expenditures was primarily due to: ● an increase of 108.4%, or $43.7 million, in major renovations, which includes major structural changes and/or architectural revisions to existing buildings; ● an increase of 61.3%, or $27.4 million, in NOI enhancing improvements, such as kitchen and bath remodels and upgrades to common areas; and ● an increase of 15.7%, or $10.0 million, in recurring capital expenditures, which include asset preservation and turnover related expenditures.
The increase in total capital expenditures was primarily due to: ● an increase of 46.7%, or $39.3 million, in major renovations, which includes major structural changes and/or architectural revisions to existing buildings; ● an increase of 25.6%, or $18.5 million, in NOI enhancing improvements, such as kitchen and bath remodels and upgrades to common areas; and ● an increase of 15.9%, or $11.8 million, in recurring capital expenditures, which includes asset preservation and turnover-related expenditures.
During 2023, we have approximately $1.2 million of secured debt maturing, inclusive of principal amortization, and $300.0 million of unsecured debt maturing, comprised solely of unsecured commercial paper.
During 2024, we have approximately $97.6 million of secured debt maturing, inclusive of principal amortization, and $423.7 million of unsecured debt maturing.
The Company increased its real estate assets owned by approximately $169.9 million, recorded $4.1 million of in-place lease intangibles, and recorded a $7.1 million debt premium in connection with the above-market debt assumed. ​ In June 2021, the Company acquired a 468 apartment home operating community located in Germantown, Maryland, for approximately $121.9 million.
The Company increased its real estate assets owned by approximately $344.8 million, recorded $9.8 million of in-place lease intangibles, and recorded a $17.6 million debt discount in connection with the below-market debt assumed . ​ In April 2022, the Company acquired a to-be-developed parcel of land located in Fort Lauderdale, Florida for approximately $16.0 million. ​ In June 2022, the Company acquired a 433 apartment home operating community located in Danvers, Massachusetts for approximately $207.5 million.
The decrease in cash used in investing activities was primarily due to a decrease in acquisitions during 2022 and an increase in distributions received from unconsolidated joint ventures and partnerships, partially offset by a decrease in proceeds from the sale of real estate, an increase in investments in unconsolidated joint ventures and partnerships, an increase in spend for development and capital expenditures of real estate assets, and an increase from the net issuance of notes receivable during 2022 compared to the net repayment of notes receivable in 2021. 43 Table of Contents Acquisitions In April 2022, the Company acquired a to-be-developed parcel of land located in Fort Lauderdale, Florida for approximately $16.0 million. ​ In June 2022, the Company acquired a 433 apartment home operating community located in Danvers, Massachusetts for approximately $207.5 million.
The decrease in cash used in investing activities was primarily due to a decrease in acquisitions, an increase in proceeds from sales of real estate, a decrease in spend for development of real estate assets, and a decrease in cash investments in unconsolidated joint ventures, partially offset by an increase in spend for capital expenditures and a decrease in distributions received from unconsolidated joint ventures and partnerships.
The following table summarizes our material cash requirements as of December 31, 2022 (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Payments Due by Period Material Cash Requirements 2023 2024-2025 2026-2027 Thereafter Total Long-term debt obligations ​ $ 301,242 ​ $ 315,199 ​ $ 1,005,604 ​ $ 3,854,236 ​ $ 5,476,281 Interest on debt obligations (a) ​ 162,003 ​ 312,641 ​ 268,920 ​ 333,131 ​ 1,076,695 Letters of credit ​ 2,617 ​ — ​ — ​ — ​ 2,617 Operating lease obligations: ​ ​ ​ ​ ​ Ground leases (b) ​ 12,442 ​ 24,884 ​ 24,884 ​ 417,895 ​ 480,105 ​ ​ $ 478,304 ​ $ 652,724 ​ $ 1,299,408 ​ $ 4,605,262 ​ $ 7,035,698 (a) Interest payments on variable rate debt instruments are based on each debt instrument’s respective year-end interest rate at December 31, 2022.
The following table summarizes our material cash requirements as of December 31, 2023 (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Payments Due by Period Material Cash Requirements 2024 2025-2026 2027-2028 Thereafter Total Long-term debt obligations ​ $ 521,297 ​ $ 579,843 ​ $ 1,123,449 ​ $ 3,584,491 ​ $ 5,809,080 Interest on debt obligations (a) ​ 171,344 ​ 318,937 ​ 243,384 ​ 236,674 ​ 970,339 Letters of credit ​ 2,235 ​ 76 ​ — ​ — ​ 2,311 Operating lease obligations: ​ ​ ​ ​ ​ Ground leases (b) ​ 12,442 ​ 24,884 ​ 24,884 ​ 405,452 ​ 467,662 ​ ​ $ 707,318 ​ $ 923,740 ​ $ 1,391,717 ​ $ 4,226,617 ​ $ 7,249,392 (a) Interest payments on variable rate debt instruments are based on each debt instrument’s respective year-end interest rate at December 31, 2023.
Interest rate sensitivity is the relationship between changes in market interest rates and the fair value of market rate sensitive assets and liabilities. Our earnings are affected as changes in short-term interest rates impact our cost of variable rate debt and maturing fixed rate debt.
Our earnings are affected as changes in short-term interest rates impact our cost of variable rate debt and maturing fixed rate debt. We had $479.7 million in variable rate debt that is not subject to interest rate swap contracts as of December 31, 2023.
The notes are fully and unconditionally guaranteed by the Operating Partnership. As of December 31, 2022, we had issued $300.0 million of commercial paper, for one month terms, at a weighted average annualized rate of 4.7%, leaving $400.0 million of unused capacity.
As of December 31, 2023, we had issued $408.1 million of commercial paper, for one month terms, at a weighted average annualized rate of 5.7%, leaving $291.9 million of unused capacity. Interest Rate Risk We are exposed to interest rate risk associated with variable rate notes payable and maturing debt that has to be refinanced.
The decrease resulted primarily from the following items, all of which are discussed in further detail elsewhere within this Report: ● a gain of $25.5 million from the sale of one operating community located in Orange County, California , during the year ended December 31, 2022 as compared to gains of $136.1 million from the sale of two operating communities located in Anaheim, California , during the year ended December 31, 2021; ● an increase in depreciation expense of $58.6 million primarily due to communities acquired in 2022 and 2021, partially offset by assets that became fully depreciated in 2022 and 2021; ● a decrease in income from unconsolidated entities of $60.7 million primarily due to $(35.5) million of investment income/(loss) from RETV I during the year ended December 31, 2022 as compared to $50.8 million during the year ended December 31, 2021, which primarily related to unrealized gains/(losses) from one portfolio investment held by RETV I, SmartRent, partially offset by $10.6 million of net variable upside participation recorded on the sale of a DCP community in 2022 and an increase in income from our preferred equity investments ; and ● a decrease in interest income and other income/(expense), net of $22.0 million primarily due to a $(15.7) million unrealized loss due to the decrease in SmartRent’s public share price during the year ended December 31, 2022 as compared to a $6.6 million unrealized gain due to the increase in SmartRent’s public share price during the year ended December 31, 2021.
The increase resulted primarily from the following items, all of which are discussed in further detail elsewhere within this Report: ● gains on the sale of real estate of $351.2 million from the partial sale of four operating communities located in various markets and the sale of an operating community located in Hillsboro, Oregon, during the year ended December 31, 2023, as compared to a gain of $25.5 million from the sale of one operating community located in Orange County, California , during the year ended December 31, 2022; ● an increase in total property NOI of $74.4 million primarily due to higher revenue per occupied home and NOI from additional operating communities, partially offset by a decrease in weighted average physical occupancy and an increase in property operating expenses; and ● an increase in interest income and other income/(expense), net of $24.7 million primarily due to realized and unrealized gains/(losses) of $3.5 million from our direct investment in SmartRent during the year ended December 31, 2023, as compared to $(15.7) million during the year ended December 31, 2022, and $11.0 million of higher interest income from our notes receivables, partially offset by a $5.9 million gain from the sale of a technology investment in 2022.
Based on the net earnings reported for the year ended December 31, 2022 in our Consolidated Statements of Operations, we would have incurred federal and state GAAP income taxes if we had failed to qualify as a REIT. 38 Table of Contents Summary of Real Estate Portfolio by Geographic Market The following table summarizes our market information by major geographic markets as of and for the year ended December 31, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ Year Ended December 31, 2022 ​ ​ ​ Percentage Total ​ Monthly Net ​ ​ Number of ​ Number of ​ of Total ​ Carrying ​ Average ​ Income per ​ Operating ​ ​ Apartment ​ Apartment ​ Carrying ​ Value (in ​ Physical ​ Occupied ​ Income Same-Store Communities ​ Communities ​ Homes ​ Value ​ thousands) ​ Occupancy ​ Home (a) ​ (in thousands) West Region ​ ​ ​ Orange County, CA 9 4,595 9.3 % $ 1,439,802 96.9 % $ 2,844 ​ $ 118,539 San Francisco, CA 11 2,779 5.9 % ​ 914,296 96.0 % ​ 3,345 ​ ​ 76,249 Seattle, WA 14 2,726 6.2 % 968,150 97.5 % 2,709 ​ 63,538 Los Angeles, CA 4 1,225 3.0 % 472,430 96.6 % 3,031 ​ 31,437 Monterey Peninsula, CA 7 1,567 1.2 % 192,299 96.2 % 2,199 ​ 30,856 Other Southern California 3 821 1.5 % 220,987 97.2 % 2,700 ​ 19,366 Portland, OR 3 752 0.8 % 122,856 97.6 % 1,974 ​ 12,690 Mid-Atlantic Region ​ ​ ​ ​ Metropolitan D.C. 23 8,381 15.2 % 2,372,091 97.2 % 2,260 ​ 152,139 Baltimore, MD 5 1,597 2.3 % 350,542 96.6 % 1,824 ​ 22,451 Richmond, VA 4 1,359 1.0 % 160,265 97.5 % 1,709 ​ 20,336 Northeast Region ​ ​ ​ ​ Boston, MA 11 4,298 10.9 % 1,701,117 96.8 % 2,978 ​ 106,135 New York, NY 6 2,318 10.0 % 1,559,006 98.0 % 4,231 ​ 65,731 Philadelphia, PA ​ 1 ​ 313 ​ 0.7 % ​ 108,463 ​ 96.8 % ​ 2,484 ​ ​ 6,290 Southeast Region ​ ​ ​ ​ Tampa, FL 11 3,877 4.2 % 652,790 96.8 % 1,975 ​ 58,384 Orlando, FL 9 2,500 1.6 % 251,978 96.8 % 1,707 ​ 35,360 Nashville, TN 8 2,260 1.5 % 234,298 97.4 % 1,636 ​ 30,903 Other Florida 1 636 0.6 % 93,792 97.0 % 2,116 ​ 10,666 Southwest Region ​ ​ ​ ​ Dallas, TX 11 3,866 3.9 % 600,425 97.0 % 1,715 ​ 48,749 Austin, TX 4 1,272 1.2 % 181,477 97.7 % 1,824 ​ 16,469 Denver, CO ​ 1 ​ 218 ​ 0.9 % ​ 146,736 ​ 95.3 % ​ 3,551 ​ ​ 6,565 Total/Average Same-Store Communities 146 47,360 81.9 % 12,743,800 97.0 % $ 2,425 ​ 932,853 Non-Mature, Commercial Properties & Other 19 7,478 16.8 % 2,622,128 ​ ​ 108,209 Total Real Estate Held for Investment 165 54,838 98.7 % 15,365,928 ​ ​ 1,041,062 Real Estate Under Development (b) — 161 1.2 % 190,105 ​ ​ (670) Real Estate Held for Disposition (c) — — 0.1 % 14,039 ​ ​ — Total Real Estate Owned 165 54,999 100.0 % 15,570,072 ​ ​ $ 1,040,392 Total Accumulated Depreciation ​ (5,762,501) ​ ​ Total Real Estate Owned, Net of Accumulated Depreciation ​ $ 9,807,571 ​ ​ (a) Monthly Income per Occupied Home represents total monthly revenues divided by the average physical number of occupied apartment homes in our Same-Store portfolio.
Based on the net earnings reported for the year ended December 31, 2023 in our Consolidated Statements of Operations, we would have incurred federal and state GAAP income taxes if we had failed to qualify as a REIT. 41 Table of Contents Summary of Real Estate Portfolio by Geographic Market The following table summarizes our market information by major geographic markets as of and for the year ended December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ Year Ended December 31, 2023 ​ ​ ​ Percentage Total ​ Monthly Net ​ ​ Number of ​ Number of ​ of Total ​ Carrying ​ Average ​ Income per ​ Operating ​ ​ Apartment ​ Apartment ​ Carrying ​ Value (in ​ Physical ​ Occupied ​ Income Same-Store Communities ​ Communities ​ Homes ​ Value ​ thousands) ​ Occupancy ​ Home (a) ​ (in thousands) West Region ​ ​ ​ Orange County, CA 8 4,305 8.6 % $ 1,370,945 96.4 % $ 3,013 ​ $ 116,798 San Francisco, CA 11 2,780 5.8 % ​ 926,601 96.5 % ​ 3,490 ​ ​ 79,700 Seattle, WA 14 2,702 6.9 % 1,101,692 97.2 % 2,817 ​ 65,697 Los Angeles, CA 4 1,225 3.0 % 482,945 96.2 % 3,122 ​ 31,952 Monterey Peninsula, CA 7 1,567 1.2 % 197,561 95.6 % 2,289 ​ 31,798 Other Southern California 3 821 1.4 % 224,733 96.8 % 2,883 ​ 20,542 Portland, OR 2 476 0.3 % 56,055 97.1 % 1,949 ​ 7,833 Mid-Atlantic Region ​ ​ ​ ​ Metropolitan D.C. 23 8,819 15.4 % 2,473,552 97.2 % 2,298 ​ 162,251 Baltimore, MD 7 2,221 3.5 % 562,075 95.7 % 1,898 ​ 32,610 Richmond, VA 4 1,359 1.0 % 166,013 96.9 % 1,827 ​ 21,518 Northeast Region ​ ​ ​ ​ Boston, MA 11 4,234 10.9 % 1,724,245 96.7 % 3,145 ​ 111,009 New York, NY 6 2,318 9.8 % 1,573,293 97.8 % 4,640 ​ 73,093 Philadelphia, PA ​ 3 ​ 972 ​ 2.3 % ​ 372,000 ​ 96.8 % ​ 2,552 ​ ​ 20,145 Southeast Region ​ ​ ​ ​ Tampa, FL 11 3,877 4.2 % 673,742 96.7 % 2,118 ​ 63,085 Orlando, FL 11 3,493 3.5 % 559,956 96.2 % 1,914 ​ 53,283 Nashville, TN 8 2,260 1.6 % 249,705 96.2 % 1,760 ​ 33,664 Other Florida 1 636 0.6 % 95,798 96.7 % 2,350 ​ 12,058 Southwest Region ​ ​ ​ ​ Dallas, TX 14 5,813 6.1 % 983,508 96.7 % 1,777 ​ 76,557 Austin, TX 4 1,272 1.2 % 193,911 96.3 % 1,924 ​ 17,585 Denver, CO ​ 1 ​ 218 ​ 0.9 % ​ 147,523 ​ 95.7 % ​ 3,587 ​ ​ 6,515 Total/Average Same-Store Communities 153 51,368 88.2 % 14,135,853 96.7 % $ 2,502 ​ 1,037,693 Non-Mature, Commercial Properties & Other 14 3,912 10.1 % 1,621,603 ​ ​ 71,455 Total Real Estate Held for Investment 167 55,280 98.3 % 15,757,456 ​ ​ 1,109,148 Real Estate Under Development (b) — 56 1.0 % 160,404 ​ ​ (387) Real Estate Held for Disposition (c) 1 214 0.7 % 105,999 ​ ​ 6,009 Total Real Estate Owned 168 55,550 100.0 % 16,023,859 ​ ​ $ 1,114,770 Total Accumulated Depreciation ​ (6,267,830) ​ ​ Total Real Estate Owned, Net of Accumulated Depreciation ​ $ 9,756,029 ​ ​ (a) Monthly Income per Occupied Home represents total monthly revenues divided by the average physical number of occupied apartment homes in our Same-Store portfolio.
At December 31, 2022, the Company had no communities at which it was conducting substantial redevelopment activities . Unconsolidated Joint Ventures and Partnerships The Company recognizes income or losses from our investments in unconsolidated joint ventures and partnerships consisting of our proportionate share of the net income or losses of the joint ventures and partnerships.
Unconsolidated Joint Ventures and Partnerships The Company recognizes income or losses from our investments in unconsolidated joint ventures and partnerships consisting of our proportionate share of the net income or losses of the joint ventures and partnerships. In addition, we may earn fees for providing management services to the communities held by the unconsolidated joint ventures and partnerships.
The communities are estimated to be completed between the first quarter of 2023 and the second quarter of 2024. During 2022, we incurred $198.0 million for development costs, an increase of $20.0 million as compared to costs incurred in 2021 of $178.0 million.
The communities are estimated to be completed in the second quarter of 2024. During 2023, we incurred $159.3 million for development costs, a decrease of $38.7 million as compared to costs incurred in 2022 of $198.0 million. 47 Table of Contents At December 31, 2023, the Company had no communities at which it was conducting substantial redevelopment activities .
The decrease in 2022 as compared to 2021 was primarily attributable to $42.3 million of extinguishment cost from the prepayment of debt during the year ended December 31, 2021 as compared to none for the year ended December 31, 2022, partially offset by an increase in average interest rates during the year ended December 31, 2022 as compared to the year ended December 31, 2021 .
Interest expense For the years ended December 31, 2023 and 2022, the Company recognized interest expense of $180.9 million and $155.9 million, respectively. The increase in 2023 as compared to 2022 was primarily due to an increase in average interest rates and higher overall debt balances during the year ended December 31, 2023 as compared to 2022.
Interest expense For the years ended December 31, 2022 and 2021, the Company recognized interest expense of $155.9 million and $186.3 million, respectively.
Real estate depreciation and amortization For the years ended December 31, 2023 and 2022, the Company recognized real estate depreciation and amortization of $676.4 million and $665.2 million, respectively.
The increase in property rental income was primarily driven by a 9.2%, or $105.2 million, increase in rental rates, an $18.0 million decrease in rent concessions and a 9.4%, or $12.5 million, increase in reimbursement and ancillary and fee income .
The increase in property rental income was primarily driven by a 6.1%, or $80.9 million, increase in rental rates, and a 6.4%, or $9.7 million, increase in reimbursement and ancillary and fee income, partially offset by a $4.9 million increase in bad debt based on probability of collection and a $3.4 million impact from higher concessions.
Based on the Company’s current credit rating, the Working Capital Credit Facility has an interest rate equal to SOFR plus a margin of 87.5 basis points. The margin noted for the current interest rate includes a 10 basis point adjustment related to the SOFR transition. Depending on the Company’s credit rating, the margin ranges from 70 to 140 basis points.
In November 2023, the Company amended the Working Capital Credit Facility to extend the maturity date from January 12, 2024 to January 12, 2025, plus a one-year extension option. Based on the Company’s current credit rating, the Working Capital Credit Facility has an interest rate equal to Adjusted SOFR plus a margin of 77.5 basis points.

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