UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number

1-10524 (UDR, Inc.)
333-156002-01 (United Dominion Realty, L.P.)

UDR, Inc.
United Dominion Realty, L.P.

(Exact name of registrant as specified in its charter)

Maryland (UDR, Inc.)		54-0857512
Delaware (United Dominion Realty, L.P.)		54-1776887
(State or other jurisdiction of		(I.R.S. Employer
incorporation of organization)		Identification No.)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

		UDR, Inc.		Yes þ No o
		United Dominion Realty, L.P.		Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

		UDR, Inc.		Yes þ No o
		United Dominion Realty, L.P.		Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

UDR, Inc.:
Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o		Smaller reporting company o
				(Do not check if a smaller reporting company)

United Dominion Realty, L.P.:
Large accelerated filer o		Accelerated filer o		Non-accelerated filer þ		Smaller reporting company o
				(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

		UDR, Inc.		Yes o No þ
		United Dominion Realty, L.P.		Yes o No þ

The number of shares of UDR, Inc.’s common stock, $0.01 par value, outstanding as of October 28, 2011, was 219,042,841.

 

 

UDR, INC.
UNITED DOMINION REALTY, L.P.

INDEX

		PAGE
PART I — FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
UDR, INC.:
Consolidated Balance Sheets as of September 30, 2011 (unaudited) and December 31, 2010 (audited)			3
Consolidated Statements of Operations for the three and nine months ended September 30, 2011 and 2010 (unaudited)			4
Consolidated Statements of Equity and Comprehensive Income/(Loss) for the nine months ended September 30, 2011 (unaudited)			5
Consolidated Statements of Cash Flows for the nine months ended September 30, 2011 and 2010 (unaudited)			6
Notes to Consolidated Financial Statements (unaudited)			7
UNITED DOMINION REALTY, L.P.:
Consolidated Balance Sheets as of September 30, 2011 (unaudited) and December 31, 2010 (audited)			34
Consolidated Statements of Operations for the three and nine months ended September 30, 2011 and 2010 (unaudited)			35
Consolidated Statements of Capital and Comprehensive Income/(Loss) for the nine months ended September 30, 2011 (unaudited)			36
Consolidated Statements of Cash Flows for the nine months ended September 30, 2011 and 2010 (unaudited)			37
Notes to Consolidated Financial Statements (unaudited)			38
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			58
Item 3. Quantitative and Qualitative Disclosures About Market Risk			82
Item 4. Controls and Procedures			82
PART II — OTHER INFORMATION
Item 1. Legal Proceedings			83
Item 1A. Risk Factors			83
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			96
Item 3. Defaults Upon Senior Securities			97
Item 4. (Removed and Reserved)			97
Item 5. Other Information			97
Item 6. Exhibits			97
Signatures			98
Exhibit 12.1
Exhibit 12.2
Exhibit 31.1
Exhibit 31.2
Exhibit 31.3
Exhibit 31.4
Exhibit 32.1
Exhibit 32.2
Exhibit 32.3
Exhibit 32.4
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the quarter ended September 30, 2011 of UDR, Inc. a Maryland corporation, and United Dominion Realty, L.P., a Delaware limited partnership, of which UDR is the parent company and sole general partner. Unless the context otherwise requires, all references in this Report to “we,” “us,” “our,” the “Company”, “UDR” or UDR, Inc. refer collectively to UDR, Inc., together with its consolidated subsidiaries and joint ventures, including the Operating Partnership. Unless the context otherwise requires, the references in this Report to the “Operating Partnership” refer to United Dominion Realty, L.P. together with its consolidated subsidiaries. “Common stock” refers to the common stock of UDR and “stockholders” means the holders of shares of UDR’s common stock and preferred stock. The limited partnership interests of the Operating Partnership are referred to as “OP Units” and the holders of the OP Units are referred to as “unitholders”. This combined Form 10-Q is being filed separately by UDR and the Operating Partnership.

There are a number of differences between our company and our operating partnership, which are reflected in our disclosure in this report. UDR is a real estate investment trust (a “REIT”), whose most significant asset is its ownership interest in the Operating Partnership. UDR also conducts business through other subsidiaries and operating partnerships, including its subsidiary RE³, whose activities include development of land. UDR acts as the sole general partner of the Operating Partnership, holds interests in other operating partnerships, subsidiaries and joint ventures, owns and operates properties, issues securities from time to time and guarantees debt of certain of our subsidiaries. The Operating Partnership conducts the operations of a substantial portion of the business and is structured as a partnership with no publicly traded equity securities. The Operating Partnership has guaranteed certain outstanding securities of UDR.

As of September 30, 2011, UDR owned 110,883 units of the general partnership interests of the Operating Partnership and 174,741,015 units (or approximately 94.9%) of the limited partnership interests of the Operating Partnership (the “OP Units”). UDR conducts a substantial amount of its business and holds a substantial amount of its assets through the Operating Partnership, and, by virtue of its ownership of the OP Units and being the Operating Partnership’s sole general partner, UDR has the ability to control all of the day-to-day operations of the Operating Partnership. Separate financial statements and accompanying notes, as well as separate discussions under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” are provided for each of UDR and the Operating Partnership. This combined Form 10-Q is being filed separately by UDR and the Operating Partnership.

UDR, INC.

		September 30,				December 31,
		2011				2010
		(unaudited)				(audited)
ASSETS
Real estate owned:
Real estate held for investment		$	7,988,133			$	6,398,630
Less: accumulated depreciation			(1,794,150	)			(1,550,847	)
Real estate held for investment, net			6,193,983				4,847,783
Real estate under development (net of accumlated depreciation of $115 and $0)			192,815				97,912
Real estate held for sale (net of accumulated depreciation of $9,835 and $87,479)			36,366				297,326
Total real estate owned, net of accumulated depreciation			6,423,164				5,243,021
Cash and cash equivalents			13,482				9,486
Marketable securities			—				3,866
Restricted cash			19,641				15,447
Deferred financing costs, net			23,709				27,267
Notes receivable			7,800				7,800
Investment in unconsolidated joint ventures			187,176				148,057
Other assets			129,931				74,596
Total assets		$	6,804,903			$	5,529,540
LIABILITIES AND EQUITY
Liabilities:
Secured debt		$	2,004,525			$	1,840,872
Secured debt — real estate held for sale			17,159				122,798
Unsecured debt			1,967,661				1,603,834
Real estate taxes payable			28,729				14,585
Accrued interest payable			23,924				20,889
Security deposits and prepaid rent			37,685				26,046
Distributions payable			47,489				36,561
Deferred fees and gains on the sale of depreciable property			29,106				28,943
Accounts payable, accrued expenses, and other liabilities			109,066				105,925
Total liabilities			4,265,344				3,800,453
Redeemable non-controlling interests in operating partnership			208,766				119,057
Equity
Preferred stock, no par value; 50,000,000 shares authorized			46,571				46,571
2,803,812 shares of 8.00% Series E Cumulative Convertible issued and outstanding (2,803,812 shares at December 31, 2010)
3,264,362 shares of 6.75% Series G Cumulative Redeemable issued and outstanding (3,405,562 shares at December 31, 2010)			81,609				85,139
Common stock, $0.01 par value; 250,000,000 shares authorized 219,038,779 shares issued and outstanding (182,496,330 shares at December 31, 2010)			2,190				1,825
Additional paid-in capital			3,322,505				2,450,141
Distributions in excess of net income			(1,111,356	)			(973,864	)
Accumulated other comprehensive income/(loss), net			(15,427	)			(3,469	)
Total stockholders’ equity			2,326,092				1,606,343
Non-controlling interest			4,701				3,687
Total equity			2,330,793				1,610,030
Total liabilities and equity		$	6,804,903			$	5,529,540

See accompanying notes to consolidated financial statements.

UDR, INC.

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2011				2010				2011				2010
REVENUES
Rental income		$	187,320			$	150,139			$	521,679			$	435,152
Non-property income:
Other income			5,229				2,192				12,620				5,719
Total revenues			192,549				152,331				534,299				440,871
EXPENSES
Rental expenses:
Real estate taxes and insurance			22,548				17,832				63,040				53,933
Personnel			14,575				13,945				44,131				39,855
Utilities			10,185				8,537				28,014				24,268
Repair and maintenance			10,575				9,211				28,807				24,663
Administrative and marketing			3,684				3,904				11,773				11,182
Property management			5,152				4,129				14,347				11,967
Other operating expenses			1,539				1,403				4,540				4,342
Real estate depreciation and amortization			95,436				70,880				265,184				207,061
Interest
Expense incurred			39,617				36,129				112,281				105,678
Amortization of convertible debt discount			359				859				1,077				2,754
Other debt charges			(7	)			91				4,052				1,121
General and administrative			11,919				11,994				35,512				31,927
Other depreciation and amortization			983				1,224				3,012				3,755
Total expenses			216,565				180,138				615,770				522,506
Loss from operations			(24,016	)			(27,807	)			(81,471	)			(81,635	)
Loss from unconsolidated entities			(1,580	)			(835	)			(4,260	)			(2,757	)
Loss from continuing operations			(25,596	)			(28,642	)			(85,731	)			(84,392	)
Income from discontinued operations			11,810				4,037				58,198				7,121
Consolidated net loss			(13,786	)			(24,605	)			(27,533	)			(77,271	)
Net loss attributable to redeemable non-controlling interests in OP			581				870				1,192				2,939
Net income attributable to non-controlling interests			(46	)			(31	)			(134	)			(111	)
Net loss attributable to UDR, Inc.			(13,251	)			(23,766	)			(26,475	)			(74,443	)
Distributions to preferred stockholders — Series E (Convertible)			(931	)			(932	)			(2,793	)			(2,794	)
Distributions to preferred stockholders — Series G			(1,377	)			(1,436	)			(4,210	)			(4,325	)
(Premium)/discount on preferred stock repurchases, net			—				—				(175	)			25
Net loss attributable to common stockholders		$	(15,559	)		$	(26,134	)		$	(33,653	)		$	(81,537	)
Earnings per weighted average common share — basic and diluted:
Loss from continuing operations attributable to common stockholders			($0.13	)			($0.18	)			($0.47	)			($0.55	)
Income from discontinued operations		$	0.06			$	0.02			$	0.30			$	0.04
Net loss attributable to common stockholders			($0.07	)			($0.16	)			($0.17	)			($0.51	)
Common distributions declared per share		$	0.200			$	0.185			$	0.585			$	0.545
Weighted average number of common shares outstanding — basic and diluted			213,816				165,403				195,723				160,841

See accompanying notes to consolidated financial statements.

UDR, INC.

																										Accumulated
																						Distributions in				Other				Non-
		Preferred Stock								Common Stock								Paid-in				Excess of				Comprehensive				controlling
		Shares				Amount				Shares				Amount				Capital				Net Income				Income/(Loss)				interest				Total
Balance, December 31, 2010			6,209,374			$	131,710				182,496,330			$	1,825			$	2,450,141			$	(973,864	)		$	(3,469	)		$	3,687			$	1,610,030
Comprehensive income/(loss)
Net loss			—				—				—				—				—				(26,475	)			—				—				(26,475	)
Net income attributable to non-controlling interests			—				—				—				—				—				—				—				134				134
Other comprehensive income
Unrealized gain on sale of marketable securities reclassified into earnings			—				—				—				—				—				—				(3,492	)			—				(3,492	)
Change in unrealized gain on derivative financial instruments			—				—				—				—				—				—				(8,895	)			—				(8,895	)
Allocation to redeemable non-controlling interests			—				—				—				—				—				—				429				—				429
Comprehensive income/(loss)																											(11,958	)							(38,299	)
Issuance of common and restricted shares			—				—				642,057				6				8,646				—				—				—				8,652
Issuance of common shares through public offering			—				—				35,895,944				359				863,951				—				—				—				864,310
Redemption of 141,200 shares of 6.75% Series G Cumulative Redeemable Shares			(141,200	)			(3,530	)			—				—				108				(175	)			—				—				(3,597	)
Adjustment for conversion of non-controlling interest of unitholders in Operating Partnership			—				—				4,453				—				109				—				—				—				109
Acquisition of noncontrolling interest			—				—				—				—				(450	)			—				—				—				(450	)
Increase in non-controlling interest from business combination, net			—				—				—				—				—				—				—				880				880
Common stock distributions declared ($0.585 per share)			—				—				—				—				—				(118,364	)			—				—				(118,364	)
Preferred stock distributions declared-Series E ($0.6644 per share)			—				—				—				—				—				(2,793	)			—				—				(2,793	)
Preferred stock distributions declared-Series G ($0.843715 per share)			—				—				—				—				—				(4,210	)			—				—				(4,210	)
Adjustment to reflect redemption value of redeemable non-controlling interests			—				—				—				—				—				14,525				—				—				14,525
Balance, September 30, 2011			6,068,174			$	128,180				219,038,784			$	2,190			$	3,322,505			$	(1,111,356	)		$	(15,427	)		$	4,701			$	2,330,793

See accompanying notes to consolidated financial statements.

UDR, Inc.

		Nine Months Ended September 30,
		2011				2010
		(unaudited)				(unaudited)
Operating Activities
Consolidated net loss		$	(27,533	)		$	(77,271	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization			276,008				225,246
Net gain on sale of marketable securities			(3,123	)			—
Net gain on sale of cost investments			(2,550	)			—
Net gain on the sale of depreciable property			(56,063	)			(4,034	)
Loss on debt extinguishment			4,052				1,121
Write off of bad debt			2,322				2,036
Loss from unconsolidated entities			4,260				2,757
Amortization of deferred financing costs and other			6,401				5,861
Amortization of deferred compensation			7,650				9,079
Amortization of convertible debt discount			1,077				2,754
Changes in income tax accruals			1,011				(2,702	)
Changes in operating assets and liabilities:
Increase in operating assets			(30,395	)			(10,364	)
(Increase)/decrease in operating liabilities			(196	)			3,006
Net cash provided by operating activities			182,921				157,489
Investing Activities
Proceeds from sales of real estate investments, net			77,130				20,688
Proceeds from sale of marketable securities			4,541				—
Payments related to the buyout of joint venture partner			—				(16,141	)
Acquisition of real estate assets (net of liabilities assumed) and initial capital expenditures		(943,045		)			(342,697	)
Cash paid in nonmonetary asset exchange			(28,124	)			—
Development of real estate assets			(70,574	)			(79,718	)
Capital expenditures and other major improvements — real estate assets, net of escrow reimbursement		(68,125		)			(52,681	)
Capital expenditures — non-real estate assets			(12,260	)			(3,332	)
Investment in unconsolidated joint ventures			(47,509	)			(5,697	)
Distributions received from unconsolidated joint venture			4,592				730
Purchase deposits on pending real estate acquisitions			(3,410	)			—
Net cash used in investing activities			(1,086,784	)			(478,848	)
Financing Activities
Payments on secured debt			(222,767	)			(99,745	)
Proceeds from the issuance of secured debt			30,542				62,833
Proceeds from the issuance of unsecured debt			296,964				149,190
Payments on unsecured debt			(264,829	)			(79,488	)
Net proceeds/(repayment) of revolving bank debt			330,250				(76,700	)
Payment of financing costs			(4,192	)			(5,040	)
Issuance of common and restricted stock, net			3,832				4,680
Proceeds from the issuance of common shares through public offering, net			864,310				467,783
Payments for the repurchase of Series G preferred stock, net			(3,597	)			(637	)
Distributions paid to non-controlling interests			(8,717	)			(3,069	)
Distributions paid to preferred stockholders			(7,003	)			(7,119	)
Distributions paid to common stockholders			(106,934	)			(87,207	)
Net cash provided by financing activities			907,859				325,481
Net increase in cash and cash equivalents			3,996				4,122
Cash and cash equivalents, beginning of period			9,486				5,985
Cash and cash equivalents, end of period		$	13,482			$	10,107
Supplemental Information:
Interest paid during the period, net of amounts capitalized		$	128,021			$	120,424
Non-cash transactions:
Real estate acquired in asset exchange			268,853				—
Real estate disposed in asset exchange			192,576				—
Contingent consideration accrued in business combination			3,000
OP Units issued in partial consideration for property acquisition			111,034				—
Secured debt assumed in the acquisitions of properties, including asset exchange			247,805				91,442
Secured debt transferred in asset exchange			55,356				—
Fair market value of secured debt assumed in acquisitions of properties, including asset exchange		26,880					1,820
Fair market value of land contributed by non-controlling interest		4,078					—
Non-cash consideration to acquire non-real estate asset		6,864					—
Issuance of restricted stock awards			6				16
Conversion of operating partnership non-controlling interests to common stock (4,453 shares in 2011 and 445,560 shares in 2010)			109				8,320
Retirement of fully depreciated assets			—				8,680

See accompanying notes to consolidated financial statements.

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

1. CONSOLIDATION AND BASIS OF PRESENTATION

Consolidation and Basis of Presentation

UDR, Inc., collectively with our consolidated subsidiaries (“UDR”, the “Company”, “we”, “our”, or “us”) is a self-administered real estate investment trust, or REIT, that owns, acquires, renovates, develops, redevelops, and manages apartment communities. The accompanying consolidated financial statements include the accounts of UDR and its subsidiaries, including United Dominion Realty, L.P. (the “Operating Partnership”). As of September 30, 2011, there were 184,281,254 units in the Operating Partnership outstanding, of which 174,851,898 units or 94.9% were owned by UDR and 9,429,356 units or 5.1% were owned by limited partners. The consolidated financial statements of UDR include the non-controlling interests of the unitholders in the Operating Partnership.

The accompanying interim unaudited consolidated financial statements have been prepared according to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted according to such rules and regulations, although management believes that the disclosures are adequate to make the information presented not misleading. In the opinion of management, all adjustments and eliminations necessary for the fair presentation of our financial position as of September 30, 2011, and results of operations for the three and nine months ended September 30, 2011 and 2010 have been included. Such adjustments are normal and recurring in nature. The interim results presented are not necessarily indicative of results that can be expected for a full year. The accompanying interim unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes for the year ended December 31, 2010 appearing in UDR’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on August 5, 2011.

The accompanying interim unaudited consolidated financial statements are presented in accordance with U.S. generally accepted accounting principles (“GAAP”). GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the dates of the interim unaudited consolidated financial statements and the amounts of revenues and expenses during the reporting periods. Actual amounts realized or paid could differ from those estimates. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain previously reported amounts have been reclassified to conform to the current financial statement presentation.

The Company evaluated subsequent events through the date its financial statements were issued. Except as disclosed in Note 16, Subsequent Event, no other recognized or non-recognized subsequent events were noted.

2. SIGNIFICANT ACCOUNTING POLICIES

Accounting Policies

Revenue and real estate sales gain recognition

Rental income related to leases is recognized on an accrual basis when due from residents in accordance with FASB ASC 840, Leases and SEC Staff Accounting Bulletin No. 104, “Revenue Recognition”. Rental payments are generally due on a monthly basis and recognized when earned. The Company recognizes interest income, management and other fees and incentives when earned, and the amounts are fixed and determinable.

The Company accounts for sales of real estate in accordance with FASB ASC 360-20, Real Estate Sales. For sale transactions meeting the requirements for full accrual profit recognition, such as the Company no longer having continuing involvement in the property, we remove the related assets and liabilities from our Consolidated Balance Sheets and record the gain or loss in the period the transaction closes. For sale transactions that do not meet the full accrual sale criteria due to our continuing involvement, we evaluate the nature of the continuing involvement and account for the transaction under an alternate method of accounting. Unless certain limited criteria are met, non-monetary transactions, including property exchanges, are accounted for at fair value.

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

SEPTEMBER 30, 2011

Sales to entities in which we retain or otherwise own an interest are accounted for as partial sales. If all other requirements for recognizing profit under the full accrual method have been satisfied and no other forms of continuing involvement are present, we recognize profit proportionate to the outside interest in the buyer and defer the gain on the interest we retain. The Company recognizes any deferred gain when the property is sold to a third party. In transactions accounted by us as partial sales, we determine if the buyer of the majority equity interest in the venture was provided a preference as to cash flows in either an operating or a capital waterfall. If a cash flow preference has been provided, we recognize profit only to the extent that proceeds from the sale of the majority equity interest exceed costs related to the entire property.

Marketable Securities

Marketable securities represented common stock in a publicly held company. Marketable securities were classified as “available-for-sale,” and were carried at fair value with unrealized gains and losses reported as a component of stockholders’ equity. During the nine months ended September 30, 2011, the Company sold marketable securities for $3.5 million, resulting in a gross realized gain of $3.1 million, which is included in “Other Income” on the Consolidated Statements of Operations. The cost of securities sold was based on the specific identification method. Unrealized gains of $3.5 million were reclassified out of accumulated other comprehensive income/(loss) into earnings during the nine months ended September 30, 2011.

The amortization of any discount and interest income on previously held debt securities are included in “Other Income” on the Consolidated Statements of Operations for the three and nine months ended September 30, 2010.

Preferred Share repurchases

When repurchasing Preferred Stock, the Company recognizes share issuance costs as a charge to the Preferred Stock on a pro rata basis to the total costs incurred for the Preferred Stock offering as well as any premium or discount on the repurchase. The Company recognized a net decrease of $175,000 and a net increase of $25,000 to net loss attributable to common stockholders for nine months ended September 30, 2011 and 2010, respectively, and are reported in "(Premium)/discount on preferred stock repurchases, net” in the Consolidated Statements of Operations.

Income Taxes

Due to the structure of the Company as a REIT and the nature of the operations for the operating properties, no provision for federal income taxes has been provided for at UDR. Historically, the Company has generally incurred only state and local income, excise and franchise taxes. UDR has elected for certain consolidated subsidiaries to be treated as Taxable REIT Subsidiaries (“TRS”), primarily those engaged in development and property management activities.

Income taxes for our TRS are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities from a change in tax rate is recognized in earnings in the period of the enactment date. The Company’s deferred tax assets are generally the result of differing depreciable lives on capitalized assets and timing of expense recognition for certain accrued liabilities. As of September 30, 2011, UDR recorded a net current liability of $301,000 and a deferred tax asset of $6.6 million (net of a valuation allowance of $49.6 million). For the three and nine months ended September 30, 2011, UDR recorded income tax expense of $368,000 and $1.1 million, respectively. For the three and nine months ended September 30, 2010, UDR recorded income tax benefit of $3.0 million and $2.5 million, respectively, from the write-off of income tax payable. These are classified in “General and Administrative” expenses.

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

SEPTEMBER 30, 2011

FASB ASC 740, Income Taxes (“Topic 740”) defines a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Topic 740 also provides guidance on derecognition, classification, interest and penalties, accounting for interim periods, disclosure and transition.

The Company recognizes its tax positions and evaluates them using a two-step process. First, we determine whether a tax position is more likely than not (greater than 50 percent probability) to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Then the Company will determine the amount of benefit to recognize and record the amount that is more likely than not to be realized upon ultimate settlement.

UDR had no unrecognized tax benefit, accrued interest or penalties at September 30, 2011. UDR and its subsidiaries are subject to U.S. federal income tax as well as income tax of multiple state jurisdictions. The tax years 2007 — 2010 remain open to examination by the major taxing jurisdictions to which we are subject. When applicable, UDR recognizes interest and/or penalties related to uncertain tax positions in income tax expense.

3. REAL ESTATE OWNED

Real estate assets owned by the Company consist of income producing operating properties, properties under development, land held for future development, and properties held for sale. As of September 30, 2011, the Company owned and consolidated 172 communities in 11 states plus the District of Columbia totaling 49,674 apartment homes. The following table summarizes the carrying amounts for our real estate owned (at cost) as of September 30, 2011 and December 31, 2010 (dollar amounts in thousands):

		September 30,				December 31,
		2011				2010
Land		$	1,970,474			$	1,669,004
Depreciable property — held and used:
Building and improvements			5,715,898				4,444,310
Furniture, fixtures and equipment			301,761				285,316
Under development:
Land			91,051				62,410
Construction in progress			101,879				35,502
Held for sale:
Land			13,572				114,703
Building and improvements			26,399				252,104
Furniture, fixtures and equipment			6,230				17,998
Real estate owned			8,227,264				6,881,347
Accumulated depreciation			(1,804,100	)			(1,638,326	)
Real estate owned, net		$	6,423,164			$	5,243,021

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

SEPTEMBER 30, 2011

The following table summarizes UDR’s real estate community acquisitions for the nine months ended September 30, 2011.

														Purchase
Property Name				Market		Acquisition Date				Units				Price (a)
10 Hanover Square				New York, NY		April 2011					493			$	259,750
388 Beale				San Francisco, CA		April 2011					227				90,500
14 North				Boston, MA		April 2011					387				64,500
Inwood West				Boston, MA		April 2011					446				108,000
View 14				Metropolitan D.C.		June 2011					185				105,538
Rivergate				New York, NY		July 2011					706				443,403
21 Chelsea				New York, NY		August 2011					210				138,930
95 Wall				New York, NY		August 2011					507				328,914
											3,161			$	1,539,535

(a)		The purchase price is the contractual sales price between UDR and the third party and does not include any costs that the Company incurred in the pursuit of the property or the recorded difference between the agreed upon value and the fair value of the OP Units issued as part of the consideration paid.

In August 2011, the Company and the Operating Partnership closed on the acquisition of 95 Wall. The community was acquired for $328.9 million, which included the issuance of 1,802,239 operating partnership units (“OP Units”) of the Operating Partnership. The OP Units were deemed to have an agreed upon value equal to the greater of $25.00 or the volume weighted average closing price per share of the Company’s common stock for the 10 day period ended on (and including) the date one business day prior to the settlement date. For purchase price accounting purposes, the fair value of these OP units was $26.71 at the settlement date.

In April 2011, the Company and the Operating Partnership closed on the acquisition of 10 Hanover Square. The community was acquired for $259.8 million, which included assumed debt with a fair value of $208.1 million, and the issuance of 2,569,606 OP Units of the Operating Partnership. The OP Units were deemed to have an agreed upon value equal to the greater of $25.00 or the volume weighted average closing price per share of the Company’s common stock for the 10 day period ended on (and including) the date one business day prior to the settlement date. For purchase price accounting purposes, the fair value of these OP units was $24.47 at the settlement date.

In April 2011, the Company and the Operating Partnership completed a $500 million asset exchange whereby UDR acquired 388 Beale, and the Operating Partnership acquired 14 North, and Inwood West. The communities acquired were valued at $263.0 million representing their estimated fair value. The Company paid $28.1 million of cash and assumed debt with a fair value of $61.7 million. UDR sold two multifamily apartment communities (434 homes) and the Operating Partnership sold four multifamily apartment communities (984 homes) located in California as part of the transaction. (See Note 4, Discontinued Operations, for further discussion of real estate community dispositions.)

The Company allocates the purchase price to the tangible and identifiable intangible assets acquired based on their estimated fair value. When allocating cost to an acquired community, the Company first allocates costs to the estimated intangible value of the existing lease agreements and then to the estimated value of the land, building and fixtures assuming the community is vacant. The primary, although not only, identifiable intangible asset associated with our portfolio is the value of existing lease agreements. The Company estimates the intangible value of the lease agreements by determining the lost revenue associated with a hypothetical lease-up.

Total acquisition cost of the communities, including the difference between the agreed upon value of the OP Units and the fair value of the OP Units issued at the acquisition date (if applicable), was allocated $301.7 million to land; $1.2 billion to buildings and improvements; $6.1 million to furniture, fixtures, and equipment; $39.6 million to intangible assets; $3.1 million to intangible below market lease liabilities; and $305.5  million to assumed debt.

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

SEPTEMBER 30, 2011

The Company’s results of operations include operating revenues of $31.4 million and loss from continuing operations of $15.8 million of the acquired properties from the acquisition dates to September 30, 2011.

The unaudited pro forma information below summarizes the Company’s combined results of operations for the three and nine months ended September 30, 2011 and 2010 as though the above acquisitions were completed on January 1, 2010. The information for the three and nine months ended September 30, 2011 includes pro forma results for the portion of the period prior to the acquisition date and actual results from the date of acquisition through the end of the period. The supplemental pro forma operating data is not necessarily indicative of what the actual results of operations would have been assuming the transaction had been completed as set forth above, nor does it purport to represent the Company’s results of operations for future periods (in thousands except for per share amounts).

		Three months ended								Nine months ended
		September 30,								September 30,
		2011				2010				2011				2010
Pro forma revenues		$	193,352			$	177,906			$	561,949			$	534,228
Pro forma loss attributable to common stockholders			(16,053	)			(26,380	)			(45,764	)			(79,107	)
Proforma loss attributable to common stockholders — basic			(0.08	)			(0.16	)			(0.23	)			(0.48	)
Pro forma loss attributable to common stockholders — diluted			(0.08	)			(0.16	)			(0.23	)			(0.48	)

During the three and nine months ended September 30, 2010, the Company acquired five operating communities with 1,374 apartment homes for a total purchase price of $412 million and a parcel of land for a total gross purchase price of $23.6 million.

The Company incurred $2.0 million and $4.7 million of acquisition related costs during the three and nine months ended September 30, 2011, respectively, and $2.7 million of acquisition related costs during the three and nine months ended September 30, 2010. These expenses are classified on the Consolidated Statements of Operations in the line item entitled “General and administrative,” and have been excluded from the pro forma results as the costs do not have a continuing impact on the results of operations.

All development projects and related carrying costs are capitalized and reported on the Consolidated Balance Sheets as “Real estate under development.” The costs of development projects which include interest, real estate taxes, insurance and allocated development overhead related to support costs for personnel working directly on the development site are capitalized during the construction period. During the three and nine months ended September 30, 2011 and 2010, total interest capitalized was $3.4 million and $9.5 million and $2.6 million and $9.9 million, respectively.

4. DISCONTINUED OPERATIONS

Discontinued operations represent properties that UDR has either sold or which management believes meet the criteria to be classified as held for sale. In order to be classified as held for sale and reported as discontinued operations, a property’s operations and cash flows have been or will be divested to a third party by the Company whereby UDR will not have any continuing involvement in the ownership or operation of the property after the sale or disposition. The results of operations of the property are presented as discontinued operations for all periods presented and do not impact the net earnings reported by the Company. Once a property is deemed as held for sale, depreciation is no longer recorded. However, if the Company determines that the property no longer meets the criteria of held for sale, the Company will recapture any unrecorded depreciation for the property. The assets and liabilities of properties classified as held for sale are presented separately on the Consolidated Balance Sheets at the lower of their carrying amount or their estimated fair value less the costs to sell the assets.

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

SEPTEMBER 30, 2011

As discussed in Note 3, Real Estate Owned, in conjunction with the asset exchange that closed in April 2011, UDR sold six multifamily apartment communities (1,418 homes). In May 2011, UDR sold an apartment community with 289 homes located in Dallas, Texas. In September 2011, the Company sold two communities with 450 homes located in Dallas, Texas. The Company had two communities with 644 apartment homes that met the criteria to be classified as held for sale and included in discontinued operations at September 30, 2011. During the three and nine months ended September 30, 2011, UDR recognized gains on the sale of communities for financial reporting purposes of $11.4 million and $56.1 million, respectively, which are included in discontinued operations. The results of operations for the following properties are classified on the Consolidated Statements of Operations in the line item entitled “Income from discontinued operations.”

Discontinued operations for the three and nine months ended September 30, 2010 also includes operating activities related to one 149 unit community sold during the third quarter of 2010.

The following is a summary of income from discontinued operations for the three and nine months ended September 30, 2011 and 2010 (dollars in thousands):

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2011				2010				2011				2010
Rental income		$	3,127			$	10,186			$	16,488			$	30,723
Non-property income			—				10				—				1,856
			3,127				10,196				16,488				32,579
Rental expenses			1,367				3,868				6,022				10,669
Property management fee			86				280				453				845
Real estate depreciation			1,118				4,711				6,646				14,463
Interest			110				1,178				1,232				3,515
			2,681				10,037				14,353				29,492
Income before net gain on the sale of depreciable property			446				159				2,135				3,087
Net gain on the sale of depreciable property			11,364				3,878				56,063				4,034
Income from discontinued operations		$	11,810			$	4,037			$	58,198			$	7,121

5. JOINT VENTURES

UDR has entered into joint ventures with unrelated third parties to acquire real estate assets that are either consolidated and included in real estate owned on our Consolidated Balance Sheets or are accounted for under the equity method of accounting, and are included in investment in unconsolidated joint ventures on our Consolidated Balance Sheets. The Company consolidates an entity in which we own less than 100% but control the joint venture as well as any variable interest entity where we are the primary beneficiary. In addition, the Company would consolidate any joint venture in which we are the general partner or managing member and the third party does not have the ability to substantively participate in the decision-making process nor do they have the ability to remove us as general partner or managing member without cause.

UDR’s joint ventures are funded with a combination of debt and equity. Our losses are limited to our investment and except as noted below, the Company does not guarantee any debt, capital payout or other obligations associated with our joint venture portfolio.

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

SEPTEMBER 30, 2011

Consolidated Joint Ventures

In August 2011, the Company invested in a joint venture with an unaffiliated third party to acquire and redevelop an existing commercial property into a 173 apartment home community in Orange County, California. At closing the Company contributed $9 million and at September 30, 2011, UDR owned a 90% controlling interest in the investment. Under the terms of the operating agreement, our partner is required to achieve certain criteria as it relates to the entitlement process. If the criteria is met on or before 730 days after the site plan application is deemed complete by the city, the Company is obligated to contribute an additional $3 million to the joint venture for distribution to our partner. At the acquisition date, the Company accrued and capitalized $3 million related to the contingent consideration, which represents the difference between fair value of the property of $9.8 million on the formation date and the estimated fair value of the underlying property upon completion of the entitlement process of $12.8 million. The Company estimated the fair value based on Level 3 inputs utilized in a third party valuation.

During the three and nine months ended September 30, 2011, the Company paid $450,000 to acquire from our partner its remaining 2% noncontrolling interests in the 989 Elements, Elements Too, and Bellevue joint ventures. The consideration paid was in excess of the book value of the noncontrolling interest, and is reflected as a reduction of the Company’s equity.

Unconsolidated Joint Ventures

The Company recognizes earnings or losses from our investments in unconsolidated joint ventures consisting of our proportionate share of the net earnings or loss of the joint ventures. In addition, we may earn fees for providing management services to the unconsolidated joint ventures. As of September 30, 2011, UDR had investments in the following unconsolidated joint ventures which are accounted for under the equity method of accounting.

In November 2010, the Company acquired The Hanover Company’s (“Hanover”) partnership interests in the Hanover/MetLife Master Limited Partnership (the “UDR/MetLife Partnership”) at a cost of $100.8 million. The UDR/MetLife Partnership owns a portfolio of 26 operating communities containing 5,748 apartment homes and 10 land parcels with the potential to develop approximately 2,000 additional apartment homes. Under the terms of the UDR/MetLife Partnership, UDR acts as the general partner and earns fees for property and asset management and financing transactions.

UDR has a weighted average ownership interest of 12.27% in the operating communities and 4.11% in the land parcels. The initial investment of $100.8 million consisted of $71.8 million in cash, which included associated transaction costs, and a $30 million payable (includes present value discount of $1 million) to Hanover. UDR agreed to pay the $30 million balance to Hanover in two interest free installments in the amounts of $20 million and $10 million on the first and second anniversaries of the closing, respectively. The $30 million payable was recorded at its present value of $29 million using an effective interest rate of 2.67%. At September 30, 2011 and December 31, 2010, the net carrying value of the payable was $29.7 million and $29.1 million, respectively. Interest expense of $197,000 and $588,000 was recorded during the three and nine months ended September 30, 2011, respectively. At September 30, 2011 and December 31, 2010, the Company’s investment was $128.1 million and $122.2 million, respectively.

UDR’s total cost of its equity investment of $100.8 million differed from the proportionate share in the underlying net assets of the UDR/MetLife Partnership of $111.4 million. The difference of $10.6 million was attributable to certain assets and adjustments that were allocated to UDR’s proportionate share in the UDR/MetLife Partnership’s buildings of $8.4 million, land of $3.9 million, and ($1.6 million) of lease intangible assets. With the exception of land, the difference related to buildings is amortized and recorded as a component of loss from unconsolidated entities over 45 years and the difference related to lease intangible assets is amortized and recorded as a component of loss from unconsolidated entities over 11 months with the offset to the Company’s carrying value of its equity investment. During the three and nine months ended September 30, 2011, the Company recorded $396,000 and $1.2 million of amortization, respectively.

In connection with the purchase of Hanover’s interests in the UDR/MetLife Partnership, UDR agreed to indemnify Hanover from liabilities arising from Hanover’s guaranty of $506 million in loans ($156 million outstanding at September 30, 2011) which are secured by a security interest in the operating communities subject to the respective loans. The loans are to the sub-tier partnerships which own the 26 operating communities. The Company anticipates that the balance of these loans will be refinanced by the UDR/MetLife Partnership over the next twelve months.

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

SEPTEMBER 30, 2011

In October 2010, the Company entered into a joint venture with an affiliate of Hanover to develop a 240-home community in Stoughton, Massachusetts. At September 30, 2011 and December 31, 2010, UDR owned a noncontrolling interest of 95% in the joint venture. Our initial investment was $10 million. Our investment at September 30, 2011 and December 31, 2010 was $17.3 million and $10.3 million, respectively.

In May 2011, the Company entered into a joint venture with an affiliate of Hanover to develop a 263-home community in San Diego, California. At September 30, 2011 and at closing, UDR owned a noncontrolling interest of 95% in the joint venture. Our initial investment was $9.9 million and our investment at September 30, 2011 was $11.1 million.

In June 2011, the UDR/MetLife Partnership sold a parcel of land to a joint venture, which the Company entered into with an affiliate of Hanover, to develop a 256-home community in College Park, Maryland. At September 30, 2011 and at closing, UDR owned a noncontrolling interest of 95% in the joint venture. Our initial investment was $7.1 million and our investment at September 30, 2011 was $7.6 million.

UDR is a partner with an unaffiliated third party, which formed a joint venture for the investment of up to $450 million in multifamily properties located in key, high barrier to entry markets. The partners will contribute equity of $180 million of which the Company’s maximum equity will be 30% or $54 million when fully invested. In 2010, the joint venture acquired its first property (151 homes) and in August 2011, it acquired its second property (217 homes) in Metropolitan Washington D.C. At September 30, 2011 and December 31, 2010, the Company owned a 30% interest in the joint venture. Our investment at September 30, 2011 and December 31, 2010 was $15.3 million and $5.2 million, respectively.

UDR is a partner with an unaffiliated third party which owns and operates 10 operating properties located in Texas (3,992 homes). UDR contributed cash and a property equal to 20% of the fair value of the properties. The unaffiliated member contributed cash equal to 80% of the fair value of the properties comprising the joint venture, which was then used to purchase the nine operating properties from UDR. Our initial investment was $20.4 million. Our investment at September 30, 2011 and December 31, 2010 was $7.8 million and $10.3 million, respectively.

We evaluate our investments in unconsolidated joint ventures when events or changes in circumstances indicate that there may be an other-than-temporary decline in value. We consider various factors to determine if a decrease in the value of the investment is other-than-temporary. The Company did not recognize any other-than-temporary decrease in the value of its other investments in unconsolidated joint ventures during the three and nine months ended September 30, 2011 and 2010.

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

SEPTEMBER 30, 2011

Combined summary financial information relating to all of the unconsolidated joint ventures operations (not just our proportionate share), is presented below for the three and nine months ended September 30, (dollars in thousands):

		2011				2010
For the three months ended September 30,
Revenues		$	51,290			$	11,015
Real estate depreciation and amortization			17,327				5,753
Net loss			(4,507	)			(3,945	)
UDR recorded loss from unconsolidated entities			(1,580	)			(835	)
For the nine months ended September 30,
Revenues		$	146,295			$	31,647
Real estate depreciation and amortization			50,665				16,322
Net loss			(13,238	)			(12,610	)
UDR recorded loss from unconsolidated entities			(4,260	)			(2,757	)

Combined summary balance sheets relating to all of the unconsolidated joint ventures (not just our proportionate share) are presented below as of September 30, 2011 and December 31, 2010 (dollars in thousands):

		September 30,				December 31,
		2011				2010
Real estate, net		$	2,761,212			$	2,692,167
Total assets			2,916,812				2,807,886
Amount due to UDR			3,974				672
Third party debt			1,515,470				1,524,872
Total liabilities			1,574,625				1,580,733
Non-controlling interest			14,598				14,537
Equity			1,327,589				1,212,616

As of September 30, 2011, the Company had deferred fees and deferred profit from the sale of properties to a joint venture of $29.1 million, the majority of which the Company will not recognize until the underlying property is sold to a third party. The Company recognized $2.5 million and $6.4 million and $453,000 and $1.5 million of management fees during the three and nine months ended September 30, 2011 and 2010, respectively, for our management of the joint ventures. The management fees are classified in “Other Income” in the Consolidated Statements of Operations.

The Company may, in the future, make additional capital contributions to certain of our joint ventures should additional capital contributions be necessary to fund acquisitions and operating shortfalls.

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

SEPTEMBER 30, 2011

6. SECURED DEBT

Our secured debt instruments generally feature either monthly interest and principal or monthly interest-only payments with balloon payments due at maturity. For purposes of classification of the following table, variable rate debt with a derivative financial instrument designated as a cash flow hedge is deemed as fixed rate debt due to the Company having effectively established a fixed interest rate for the underlying debt instrument. Secured debt, including debt related to real estate held for sale, which encumbers $3.2 billion or 39.0% of UDR’s total real estate owned based upon gross book value ($5.0 billion or 61.0% of UDR’s real estate owned based on gross book value is unencumbered) consists of the following as of September 30, 2011 (dollars in thousands):

										Nine Months Ended September 30, 2011
		Principal Outstanding								Weighted				Weighted				Number of
		September 30,				December 31,				Average				Average				Communities
		2011				2010				Interest Rate				Years to Maturity				Encumbered
Fixed Rate Debt
Mortgage notes payable		$	616,430			$	292,236				4.91	%			4.7				10
Tax-exempt secured notes payable			—				13,325				N/A				—				—
Fannie Mae credit facilities			895,233				897,318				5.32	%			5.6				14
Total fixed rate secured debt			1,511,663				1,202,879				5.15	%			5.3				24
Variable Rate Debt
Mortgage notes payable			154,870				405,641				1.70	%			2.0				7
Tax-exempt secured note payable			94,700				94,700				0.83	%			10.9				2
Fannie Mae credit facilities			260,451				260,450				1.61	%			4.4				32
Total variable rate secured debt			510,021				760,791				1.49	%			4.9				41
Total secured debt		$	2,021,684			$	1,963,670				4.23	%			5.2				65

UDR has five secured credit facilities with Fannie Mae with an aggregate commitment of $1.4 billion at September 30, 2011. The Fannie Mae credit facilities are for an initial term of 10 years, bear interest at floating and fixed rates, and certain variable rate facilities can be extended for an additional five years at our option. We have $895.2 million of the outstanding balance fixed at a weighted average interest rate of 5.32% and the remaining balance on these facilities is currently at a weighted average variable interest rate of 1.61%. Further information related to these credit facilities is as follows:

		September 30, 2011				December 31, 2010
		(dollar amounts in thousands)
Borrowings outstanding		$	1,155,684			$	1,157,768
Weighted average borrowings during the period ended			1,156,606				1,198,771
Maximum daily borrowings during the period ended			1,157,557				1,209,739
Weighted average interest rate during the period ended			4.5	%			4.6	%
Weighted average interest rate at the end of the period			4.5	%			4.5	%

The Company will from time to time acquire properties subject to fixed rate debt instruments. In those situations, management will record the secured debt at its estimated fair value and amortize any difference between the fair value and par to interest expense over the life of the underlying debt instrument. The unamortized fair market adjustment was a net premium of $25.3 million and $694,000 at September 30, 2011 and December 31, 2010, respectively.

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

SEPTEMBER 30, 2011

Fixed Rate Debt

Mortgage notes payable. Fixed rate mortgage notes payable are generally due in monthly installments of principal and interest and mature at various dates from November 2011 through June 2032 and carry interest rates ranging from 1.93% to 6.76%. Mortgage notes payable includes debt associated with development activities.

Secured credit facilities. At September 30, 2011, the Company had $895.2 million outstanding of fixed rate secured credit facilities with Fannie Mae with a weighted average fixed interest rate of 5.32%.

Variable Rate Debt

Mortgage notes payable. Variable rate mortgage notes payable are generally due in monthly installments of principal and interest and mature at various dates from November 2011 through December 2015. The mortgage notes payable are based on LIBOR plus some basis points, which translate into interest rates ranging from 0.93% to 2.87% at September 30, 2011.

Tax-exempt secured notes payable. The variable rate mortgage notes payable that secure tax-exempt housing bond issues mature at various dates between August 2019 and March 2030. Interest on these notes is payable in monthly installments. The variable mortgage notes have interest rates ranging from 0.70% to 0.89% as of September 30, 2011.

Secured credit facilities. At September 30, 2011, the Company had $260.5 million outstanding of variable rate secured credit facilities with Fannie Mae with a weighted average floating interest rate of 1.61%.

The aggregate maturities, including amortizing principal payments, of our secured debt due during each of the next five calendar years and thereafter are as follows (dollars in thousands):

		Fixed								Variable
		Mortgage				Credit				Mortgage				Tax-Exempt				Credit				Total
Year		Notes				Facilities				Notes				Notes Payable				Facilities				Secured
2011		$	26,255			$	724			$	18,241			$	—			$	39,513			$	84,733
2012			65,468				177,944				22,693				—				59,529				325,634
2013			23,392				38,632				62,738				—				—				124,762
2014			81,097				3,328				35,443				—				—				119,868
2015			201,687				3,522				15,755				—				—				220,964
Thereafter			218,531				671,083				—				94,700				161,409				1,145,723
Total		$	616,430			$	895,233			$	154,870			$	94,700			$	260,451			$	2,021,684

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

SEPTEMBER 30, 2011

7. UNSECURED DEBT

A summary of unsecured debt as of September 30, 2011 and December 31, 2010 is as follows (dollars in thousands):

		September 30,				December 31,
		2011				2010
Commercial Banks
Borrowings outstanding under an unsecured credit facility due July 2012 (a)			362,000			$	31,750
Senior Unsecured Notes
3.625% Convertible Senior Notes due September 2011 (net of Subtopic 470-20 discount of $1,138 at December 31, 2010) (b), (g)			—				95,961
5.00% Medium-Term Notes due January 2012			100,000				100,000
2.97% Term Notes due December 2013			100,000				100,000
6.05% Medium-Term Notes due June 2013			122,500				122,500
5.13% Medium-Term Notes due January 2014			184,000				184,000
5.50% Medium-Term Notes due April 2014 (net of discount of $174 and $226)			128,326				128,274
5.25% Medium-Term Notes due January 2015 (includes discount of $422 and $519) (c)			324,753				324,656
5.25% Medium-Term Notes due January 2016			83,260				83,260
2.27% Term Notes due January 2016 (e)			—				150,000
3.48% Term Notes due January 2016 (e)			250,000				100,000
8.50% Debentures due September 2024			15,644				15,644
4.00% Convertible Senior Notes due December 2035 (f), (g)			—				167,750
4.25% Medium-Term Notes due June 2018 (net of discount of $2,858) (d)			297,142				—
Other			36				39
			1,605,661				1,572,084
		$	1,967,661			$	1,603,834

(a)		Our unsecured credit facility provides us with an aggregate borrowing capacity of $600 million, which at our election we can increase to $750 million under certain circumstances. Our unsecured credit facility with a consortium of financial institutions carries an interest rate equal to LIBOR plus a spread of 47.5 basis points (0.7% and 0.9% interest rate at September 30, 2011 and December 31, 2010, respectively) and matures in July 2012. In addition, the unsecured credit facility contains a provision that allows us to bid up to 50% of the commitment and we can bid out the entire unsecured credit facility once per quarter so long as we maintain an investment grade rating. See Note 16, “Subsequent Events.”
(b)		During the three months ended September 30, 2011, the Company paid $97.1 million at maturity.
(c)		On December 7, 2009, the Company entered into an Amended and Restated Distribution Agreement with respect to the issue and sale by the Company from time to time of its Medium-Term Notes, Series A Due Nine Months or More From Date of Issue. During the three months ended March 31, 2010, the Company issued $150 million of 5.25% senior unsecured medium-term notes under the Amended and Restated Distribution Agreement. These notes were priced at 99.46% of the principal amount at issuance and had a discount of $422,000 at September 30, 2011.
(d)		On May 3, 2011, the Company entered into a Second Amended and Restated Distribution Agreement with respect to the issue and sale by the Company from time to time of its Medium-Term Notes, Series A Due Nine Months or More From Date of Issue. During the three months ended June 30, 2011, the Company issued $300 million of 4.25% senior unsecured medium-term notes under the Amended and Restated Distribution Agreement. These notes were priced at 98.988% of the principal amount at issuance and had a discount of $2.9 million at September 30, 2011.

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

SEPTEMBER 30, 2011

(e)		During the three months ended March 31, 2011, the Company entered into a new interest rate swap agreement for the remaining $150 million balance. As a result, the $250 million term notes carry a fixed interest rate of 3.48% at September 30, 2011.
(f)		During the three months ended March 31, 2011, holders of the 4.00% Convertible Senior Notes due 2035 tendered $10.8 million of Notes. As a result, the Company retired debt with a notional value of $10.8 million and wrote off unamortized financing costs of $207,000.
		On March 2, 2011, the Company called all of its outstanding 4.00% Convertible Senior Notes due 2035. The redemption date for the Notes was April 4, 2011, and the redemption price was 100% of the principal amount of the outstanding Notes, plus accrued and unpaid interest on the Notes to, but not including, the date of redemption. Subject to and in accordance with the terms and conditions set forth in the Indenture governing the Notes dated as of December 19, 2005, holders of Notes had the right to convert their Notes at any time until March 31, 2011, at a conversion rate of 38.8650 shares of our common stock per $1,000 principal amount of Notes (equivalent to a conversion price of approximately $25.73 per share). The Company accelerated the amortization of the remaining financing costs of $3.0 million to the April 4, 2011 redemption date during the three months ended March 31, 2011.
(g)		ASC Subtopic 470-20 applies to all convertible debt instruments that have a “net settlement feature”, which means that such convertible debt instruments, by their terms, may be settled either wholly or partially in cash upon conversion. This guidance requires issuers of convertible debt instruments that may be settled wholly or partially in cash upon conversion to separately account for the liability and equity components in a manner reflective of the issuers’ nonconvertible debt borrowing rate. The guidance impacted the historical accounting for the 3.625% convertible senior notes due September 2011 and the 4.00% convertible senior notes due December 2035, and resulted in increased interest expense of $359,000 and $1.1 million and $859,000 and $2.8 million for the three and nine months ended September 30, 2011 and 2010, respectively.

The following is a summary of short-term bank borrowings under UDR’s bank credit facility at September 30, 2011 and December 31, 2010 (dollars in thousands):

		September 30,				December 31,
		2011				2010
Total revolving credit facility		$	600,000			$	600,000
Borrowings outstanding at end of period (1)			362,000				31,750
Weighted average daily borrowings during the period ended			169,023				161,260
Maximum daily borrowings during the period ended			433,000				337,600
Weighted average interest rate during the period ended			0.7	%			0.8	%
Interest rate at end of the period			0.7	%			0.9	%

(1)		Excludes $2.6 million of letters of credit at September 30, 2011.

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

SEPTEMBER 30, 2011

The convertible notes are convertible at the option of the holder, and as such are presented as if the holder will convert the debt instrument at the earliest available date. The aggregate maturities of unsecured debt for the five years subsequent to September 30, 2011 are as follows (dollars in thousands):

		Bank				Unsecured				Total
Year		Lines				Debt				Unsecured
2011		$	—			$	—			$	—
2012 (a)			362,000				99,386				461,386
2013			—				221,885				221,885
2014			—				311,930				311,930
2015			—				324,744				324,744
Thereafter			—				647,716				647,716
Total		$	362,000			$	1,605,661			$	1,967,661

(a)		See Note 16, “Subsequent Events.”

We were in compliance with the covenants of our debt instruments at September 30, 2011.

In 2010, the Operating Partnership guaranteed certain outstanding debt securities of UDR, Inc. These guarantees provide that the Operating Partnership, as primary obligor and not merely as surety, irrevocably and unconditionally guarantees to each holder of the applicable securities and to the trustee and their successors and assigns under the respective indenture (a) the full and punctual payment when due, whether at stated maturity, by acceleration or otherwise, of all obligations of the Company under the respective indenture whether for principal or interest on the securities (and premium, if any), and all other monetary obligations of the Company under the respective indenture and the terms of the applicable securities and (b) the full and punctual performance within the applicable grace periods of all other obligations of the Company under the respective indenture and the terms of applicable securities.

8. EARNINGS/(LOSS) PER SHARE

Basic and diluted loss per common share are computed based upon the weighted average number of common shares outstanding during the periods as the effect of adding stock options and other common stock equivalents such as the non-vested restricted stock awards is anti-dilutive.

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- (Continued)

SEPTEMBER 30, 2011

The following table sets forth the computation of basic and diluted loss per share for the periods presented (amounts in thousands, except per share data):

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2011				2010				2011				2010
Numerator for earnings per share — basic and diluted:
Net loss attributable to common stockholders		$	(15,559	)		$	(26,134	)		$	(33,653	)		$	(81,537	)
Denominator for earnings per share — basic and diluted:
Weighted average common shares outstanding			215,066				167,056				197,010				162,294
Non-vested restricted stock awards			(1,250	)			(1,653	)			(1,287	)			(1,453	)
Denominator for basic and diluted earnings per share			213,816				165,403				195,723				160,841
Net loss attributable to common stockholders- basic and diluted		$	(0.07	)		$	(0.16	)		$	(0.17	)		$	(0.51	)