Q4 2025 UDR Inc Earnings Call

February 10, 2026

[Company Representative] (ViaVid): Greetings and welcome to UDR's fourth quarter and full year 2025 earnings call. At this time, all lines are placed on mute to prevent any background noise. A question and answer session will follow the formal presentation. If you should need operator assistance during the call, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Vice President of Investor Relations, Trent Trujillo. Thank you, sir. Please go ahead.

Operator: Greetings and welcome to UDR's fourth quarter and full year 2025 earnings call. At this time, all lines are placed on mute to prevent any background noise. A question and answer session will follow the formal presentation. If you should need operator assistance during the call, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Vice President of Investor Relations, Trent Trujillo. Thank you, sir. Please go ahead.

Speaker #1: UDR's fourth quarter and full year 2025 earnings call. At this time, all lines are placed on mute to prevent any background noise. A question and answer session will follow the formal presentation.

Speaker #1: If you should need operator assistance during the call, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.

Speaker #1: It is now my pleasure to introduce your host, Vice President of Investor Relations, Trent Trujillo. Thank you, sir. Please go

Speaker #1: ahead. Thank you and welcome to

Trent Trujillo: Thank you and welcome to UDR's quarterly financial results conference call. Our press release, supplemental disclosure package, and related investor presentation were distributed yesterday afternoon and posted to the investor relations section of our website, irudr.com. In the supplement, we have reconciled all non-GAAP financial measures to the most directly comparable GAAP measure in accordance with Reg G requirements. Statements made during this call, which are not historical, may constitute forward-looking statements. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be met. A discussion of risks and risk factors are detailed in our press release and included in our filings with the SEC. We do not undertake a duty to update any forward-looking statements.

Q4 2025 UDR Inc Earnings Call

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Earnings

Q4 2025 UDR Inc Earnings Call

UDR

Tuesday, February 10th, 2026 at 5:00 PM

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Speaker #2: UDR's quarterly financial results conference call. Our press release supplemental disclosure package and related investor presentation were distributed yesterday afternoon and posted to the investor relations section of our website ir dot udr dot com.

Speaker #2: In the supplement, we have reconciled all non-GAAP financial measures to the most directly comparable GAAP measure in accordance with Reg G requirements. Statements made during this call, which are not historical, may constitute forward-looking statements.

Speaker #2: Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be met.

Speaker #2: A discussion of risks and risk factors are detailed in our press release and included in our filings with the SEC. We do not undertake a duty to update any forward-looking statements.

Speaker #2: When we get to the question-and-answer portion, to be respectful of everyone's time and in an attempt to complete our call within one hour, we will limit questions to one per analyst.

Trent Trujillo: When we get to the question and answer portion, to be respectful for everyone's time and in an attempt to complete our call within 1 hour, we will limit questions to 1 per analyst. We kindly ask that you rejoin the queue if you have a follow-up question or additional items to discuss. Management will be available after the call to address any questions that did not get answered during the Q&A session today. I will now turn the call over to UDR's Chairman, President, and CEO, Tom Toomey.

Speaker #2: We kindly ask that you rejoin the queue if you have a follow-up question or additional items to discuss. Management will be available after the call to address any questions that did not get answered during the Q&A session today.

Speaker #2: I will now turn the call over to UDR's Chairman, President, and

Speaker #3: Thank you, Trent, and welcome to UDR's fourth quarter 2025 conference call. Presenting on the call with me today are Chief Financial Officer, Dave Bragg, and Chief Operating Officer, Mike Lacy.

Thomas Toomey: Thank you, Trent, and welcome to UDR's Q4 2025 conference call. Presenting on the call with me today are Chief Financial Officer Dave Bragg and Chief Operating Officer Mike Lacy. Senior Vice President Chris Van Ens will also be available during the Q&A portion of the call. In conjunction with our earnings release, we published a presentation that highlights the value proposition of UDR, our 2025 results, and our outlook for 2026. Our preparatory remarks align with the presentation, and those of you participating on our webcast should see the slides on your screen. Let's begin. On slide 4, we highlight the investment case for UDR. In short, our proven track record of generating attractive shareholder return is strengthened by our culture of continual innovation and disciplined capital allocation, which are further enhanced by a variety of AI tools.

Speaker #3: Senior Officer, Chris Van Ens, will also be available during the Q&A portion of the call. In conjunction with our earnings release, we published a presentation that highlights the value proposition of UDR, our 2025 results, and our outlook for 2026.

Speaker #3: Our prepared remarks align with the presentation and those of you participating on our webcast should see the slides on your screen. Let's begin. On slide four, we highlight the investment case for UDR.

Speaker #3: In short, our proven track record of generating attractive shareholder return is strengthened by our culture of continual innovation and disciplined capital allocation. Which are further tools.

Speaker #3: This combination leads to a data-driven, and collaborative actions that translate into margin expansion and cash flow growth. These areas of strategic focus are supported by a strong balance sheet that enables multiple avenues to drive value creation.

Thomas Toomey: This combination leads to data-driven and collaborative actions that translate into margin expansion and cash flow growth. These areas of strategic focus are supported by a strong balance sheet that enables multiple avenues to drive value creation. To that end, and turning to slide 5, data is increasingly at the center of every decision we make, and we have developed a heightened focus and skill set on converting data into actions that drive cash flow growth. One example is elevating our customer experience. Our approach to enhance resident satisfaction has already driven 1,000 basis points improvement in resident retention compared to historical levels, resulting in approximately $35 million of higher annualized cash flow. In addition to our focus on customer experience, we are increasingly utilizing data and inform our investment and capital allocation decisions.

Speaker #3: To that end, and turning to slide five, data is increasingly at the center of every decision we make and we have developed a heightened focus and skill set on converting data into actions that drive cash flow growth.

Speaker #3: I want to example is elevating our customer experience. Our approach to enhance resident satisfaction has already driven 1,000 basis points improvement in resident retention compared to historical levels.

Speaker #3: Resulting in approximately $35 million of higher annualized cash flow. In addition to our focus on customer experience, we are increasingly utilizing data to form our investment and capital allocation decisions.

Speaker #3: While this effort continues to evolve, we are excited about the framework we have established that marries data-driven decisions with collaboration to drive resident, associate, and shareholder value.

Thomas Toomey: While this effort continues to evolve, we are excited about the framework we have established that marries data-driven decisions with collaboration to drive resident, associate, and shareholder value. Next, key takeaways from our release and 2026 outlook are summarized on slide 6. These are, first, full year 2025 FFOA per share and our same-store revenue, expense, and NOI growth results exceeded our initial guidance at midpoint. Additionally, fourth quarter 2025 same-store NOI exceeds expectations set last quarter. Second, the positive operating momentum we achieved in the final months of 2025 has continued into 2026 with further acceleration in lease rate growth coupled with high occupancy and outsized other income growth. Mike will provide additional color about operating results and recent trends in his remarks. Third, we have entered a window of less competitive supply, which should bolster our growth profile.

Speaker #3: Next, key takeaways for our release and 26 outlook are summarized on slide six. These are: first, full year 2025 FFOA per share and our same store revenue expense and NOI growth results exceeded our initial guidance at midpoint.

Speaker #3: Additionally, fourth quarter 2025 same store NOI exceeds expectations set last quarter. Second, the positive operating momentum we achieved in the final months of 2025 has continued into 2026.

Speaker #3: With further acceleration in lease rate growth, coupled with high occupancy and outsized other income growth, Mike will provide additional color about operating results and recent trends in his remarks.

Speaker #3: Third, we have entered a window of less competitive supply, which should bolster our growth profile. Fourth, our flexible approach to capital allocation led us to repurchase nearly $120 million of our stock during 2025.

Thomas Toomey: Fourth, our flexible approach to capital allocation led us to repurchase nearly 120 million of our stock during 2025. We will continue to utilize our capital allocation heat map, which Dave will discuss to evaluate sources and uses. Fifth, our balance sheet is well positioned to fund our capital needs into 2026 and beyond. Sixth, ongoing investments in innovation, including advancing our customer experience project and the various ways we can integrate AI tools, should continue to drive incremental NOI and excessive market level growth. Finally, on behalf of the board and management, I would like to formally welcome Ellen M. Goitia to UDR as a newest board member. Ellen joined us a month ago and brings a wealth of accounting and corporate governance expertise, having served on senior leadership roles at KPMG, and on several boards over the course of her career.

Speaker #3: We will continue to utilize our capital allocation heat map, which Dave will discuss, to evaluate sources and uses. Fifth, our balance sheet is well positioned to fund our capital needs into 2026 and beyond.

Speaker #3: And sixth, ongoing investments in innovation, including advancing our customer experience project and the various ways we can integrate AI tools, should continue to drive incremental NOI and excessive market-level growth.

Speaker #3: Finally, on behalf of the board and management, I would like Gauthier, to UDR as a newest board member. Helen joined us a month ago and brings a wealth of accounting and corporate governance expertise, having served on senior leadership roles at KPMG and on several boards over the course of her career.

Speaker #3: Helen's appointment follows Rick Clark's appointment in October. These additions were made in coordination with the departure of two long-tenured board members in to ensure the skills and perspectives of our board properly align with our strategic priorities.

Thomas Toomey: Ellen's appointment follows Rick Clark's appointment in October. These additions were made in coordination with the departure of two long-tenured board members in 2025 and reflect our continued effort to ensure the skills and perspectives of our board properly align with our strategic priorities. With that, I will turn the call over to Dave.

Speaker #3: With that, I will turn the call over to Dave.

Speaker #4: Thank you, Tom. The topics I will cover today include: first, our fourth quarter and full year 2025 results, including recent transactions; second, the 2026 macro outlook that drives our full year guidance; and third, the building blocks of our 2026 guidance.

David Bragg: Thank you, Tom. The topics I will cover today include, first, our fourth quarter and full year 2025 results, including recent transactions. Second, the 2026 macro outlook that drives our full year guidance. And third, the building blocks of our 2026 guidance. To begin, on slide 7, with our fourth quarter and full year FFO as adjusted per share of $0.64 and $2.54 respectively, achieved the midpoints of our previously provided guidance ranges. Additionally, our same-store expense and NOI growth results beat expectations while same-store revenue growth met guidance. Our operations team's impressive navigation of a choppy fourth quarter in the apartment market reflected their preparation, agility, and execution. This positions us well for 2026, as Mike will explain shortly. During the fourth quarter, we completed the following transaction and capital markets activity.

Speaker #4: To begin, on slide seven, our fourth quarter and full year FFO as adjusted per share, of $0.64 and $2.54 respectively, achieved the midpoints of our previously provided guidance ranges.

Speaker #4: Additionally, our same-store expense and NOI growth result beat expectations, while same-store revenue growth met guidance. Our operations team's impressive navigation of a choppy fourth quarter in the apartment market reflected their preparation, agility, and execution.

Speaker #4: This positions us well for 2026, as Mike will explain shortly. During the fourth quarter, we completed the following transaction and capital markets activity: we completed the acquisition of The Enclave at Potomac Club, a 406-apartment home community located in Northern Virginia, for $147 million.

David Bragg: We completed the acquisition of the Enclave at Potomac Club, a 406-apartment home community located in Northern Virginia, for $147 million. We identified this community based on insights from our predictive analytics platform, our assessment of future CapEx needs, our operations team's on-the-ground perspective, including the efficiencies that come with owning the property directly across the street. Early operational results indicate outperformance relative to the market, as we expected. Also, we contributed four apartment communities to expand our joint venture with LaSalle by approximately $230 million, which increased the size of the venture to roughly $850 million. And with more than $200 million in proceeds from that joint venture expansion, we repaid $128 million of consolidated secured property debt at maturity and repurchased approximately $93 million of common stock at a weighted average share price of $35.56, reflecting a sizable discount to NAV.

Speaker #4: We identified this community based on insights from our predictive analytics platform, our assessment of future CapEx needs, and our operations team's on-the-ground perspective, including the efficiencies that come with owning the property directly across the street.

Speaker #4: Early operational results indicate outperformance relative to the market, as we expected. Also, we contributed four apartment communities to expand our joint venture with LaSalle by approximately $230 million.

Speaker #4: Which increased the size of the venture to roughly $850 million. And with more than $200 million in proceeds from that joint venture expansion, we repaid $128 million of consolidated secured property debt at maturity and repurchased approximately $93 million of common stock at a weighted average share price of $35.56, reflecting the sizable discount to NAV.

Speaker #4: Turning to slide eight and our macro outlook, we utilize a top-down and bottom-up approach to set our 2026 forecasts. Our internal forecasting models are informed by our proprietary perspective on our portfolio as well as third-party forecasts for economic factors that drive rent growth.

David Bragg: Turning to slide 8 and our macro outlook, we utilize a top-down and bottom-up approach to set our 2026 forecasts. Our internal forecasting models are informed by our proprietary perspective on our portfolio, as well as third-party forecasts for economic factors that drive rent growth. Among the positive factors are inflationary growth for GDP and wages, as well as continued declines in homeownership, in part due to challenging affordability. Importantly, after a couple of years of outsized new apartment supply, this factor is now working in our favor. On the other hand, we anticipate a more muted job growth environment relative to recent years, and we are mindful of regulatory risk, not just at the market level but at the federal level, given continued uncertainty over tariffs, immigration, and more. This has affected consumer confidence, which recently hit its lowest level in a decade.

Speaker #4: Among the positive factors are inflationary growth for GDP and wages, as well as continued declines in homeownership, in part due to challenging affordability. Importantly, after a couple of years of outsized new apartment supply, this factor is now working in our favor.

Speaker #4: On the other hand, we anticipate a more muted job growth environment relative to recent years. And we are mindful of regulatory risk, not just at the market level, but at the federal level given continued uncertainty over tariffs, immigration, and more.

Speaker #4: This has affected consumer confidence, which recently hit its lowest level in a decade. Building on this, we turn to slide nine, which dives a bit deeper into key tailwinds for our business.

David Bragg: Building on this, we turn to slide 9, which dives a bit deeper into key tailwinds for our business. First, at the top left, our residents' financial health remains strong, with the average rent-to-income ratio below the long-term average. This suggests that our residents can comfortably accept rent increases reflective of the value and exceptional living experience at a UDR apartment community. Second, at the top right, the relative affordability of apartments remains decidedly in our favor in near all-time high levels of attractiveness versus homeownership due to sustained elevated home prices and mortgage rates. Then, at the bottom left, we show that the largest US age cohort remains in its prime renter years. This is supportive of demand for our apartments.

Speaker #4: First, at the top left. Our residents’ financial health remains strong, with the average rent-to-income ratio below the long-term average. This suggests that our residents can comfortably accept rent increases reflective of the value and exceptional living experience at a UDR apartment community.

Speaker #4: Second, at the top right, the relative affordability of apartments remains decidedly in our favor, at near all-time high levels of attractiveness versus homeownership, due to sustained elevated home prices and mortgage rates.

Speaker #4: Then, at the bottom left, we show that the largest U.S. age cohort remains in its prime renter years. This is supportive of demand for our apartments.

Speaker #4: And fourth, at the bottom right, supply completions have meaningfully slowed across UDR's markets to a level below the long-term average and the outlook for 2027 is even more promising.

David Bragg: And fourth, at the bottom right, supply completions have meaningfully slowed across UDR's markets to a level below the long-term average, and the outlook for 2027 is even more promising, with completions 60% below that of 2025. Combining these factors, we arrive at our 2026 guidance, which is summarized on slide 10. Primary expectations include full year FFOA per share guidance of $2.47 to $2.57 and same-store revenue and expense growth expectations that translate to 0.125% year-over-year NOI growth at the midpoint. Our full year 2026 FFOA per share guidance at the $2.52 midpoint represents a two-penny or less than 1% year-over-year decline from the $2.54 achieved in 2025. As a reminder, 2025 featured two pennies from items we do not expect to repeat in 2026: executive severance and the collection of previously unaccrued interest on a prior debt and preferred equity investment.

Speaker #4: With completions 60% below that of 2025. Combining these factors, we arrive at our 2026 guidance, which is summarized on slide 10. Primary expectations include full year FFOA per share guidance of $2.47 to $2.57, and same store revenue and expense growth expectations that translate to 0.125% year-over-year NOI growth at the midpoint.

Speaker #4: Our full-year 2026 FFOA per share guidance at the $2.52 midpoint represents a 2-penny, or less than 1%, year-over-year decline from the $2.54 achieved in 2025.

Speaker #4: As a reminder, 2025 featured two pennies from items we do not expect to repeat in 2026: executive severance, and the collection of previously unaccrued interest on a prior debt and preferred equity investment.

Speaker #4: From there, key differences in 2026 versus 2025 FFOA per share include a 1 penny per share increase from accretive share repurchases executed in 2025, a 1 penny increase from lower GNA, which is expected to decline by approximately 5% year-over-year as we emphasize cost control throughout the organization, this is offset by two items, a 1 penny decrease related to dispositions as we expect to be net sellers in 2026, and a 1 penny decline from debt and preferred equity activities due to a lower average balance as we expect to reduce the size of the book as investments mature and are repaid.

David Bragg: From there, key differences in 2026 versus 2025 FFOA per share include a $0.01 per share increase from accretive share repurchases executed in 2025, a $0.01 increase from lower G&A, which is expected to decline by approximately 5% year-over-year, as we emphasize cost control throughout the organization. This is offset by two items: a $0.01 decrease related to dispositions, as we expect to be net sellers in 2026, and a $0.01 decline from debt and preferred equity activities due to a lower average balance, as we expect to reduce the size of the book as investments mature and are repaid. Moving on to slide 11, our heat map reflects our priorities as it relates to capital. Currently, the uses of capital that we believe offer the best risk-adjusted returns include investment in our operating platform, share repurchases, and NOI-enhancing CapEx.

Speaker #4: Moving on to slide 11. Our heat map reflects our priorities as it relates to capital. Currently, the uses of capital that we believe offer the best risk-adjusted returns include investment in our operating platform, share repurchases, and NOI-enhancing CapEx.

Speaker #4: Conversely, JV capital and dispositions screen as relatively attractive sources of capital. At the same time, debt is significantly more attractive than equity. year guidance, we plan to be a net As contemplated in our full seller of assets in 2026.

David Bragg: Conversely, JV capital and dispositions screen as relatively attractive sources of capital. At the same time, debt is significantly more attractive than equity. As contemplated in our full year guidance, we plan to be a net seller of assets in 2026. We are actively marketing for sale numerous apartment communities, and we're generally pleased with the market's reaction. We look forward to sharing details on closings in the coming months. Lastly, on slide 12, we provide our debt maturity schedule and liquidity. 12% of our total consolidated debt matures through 2027, thereby reducing future refinancing risk. Combined with nearly $1 billion of liquidity at 2025's year-end, minimal committed capital, and strong free cash flow, our balance sheet is in a strong position. In all, 2025 was a highly productive year for UDR.

Speaker #4: We are actively marketing for sale numerous apartment communities and we're generally pleased with the market's reaction. We look forward to sharing details on closings in the coming months.

Speaker #4: Lastly, on slide 12, we provide our debt maturity schedule and liquidity. 12% of our total consolidated debt matures through 2027, thereby reducing future refinancing risk.

Speaker #4: Combined with nearly $1 billion of liquidity at 2025's year-end, minimal committed capital, and strong free cash flow, our balance sheet is in a strong position.

Speaker #4: In all, 2025 was a highly productive year for UDR. We continue to execute on our strategic priorities with an emphasis on data-driven decisions that drive long-term cash flow per share accretion.

David Bragg: We continue to execute on our strategic priorities with an emphasis on data-driven decisions that drive long-term cash flow per share accretion. With that, I will turn the call over to Mike.

Speaker #4: And with that, I will turn the call over to

Speaker #4: Mike.

Speaker #1: Thanks, Dave. Today, I'll cover the following topics: the building blocks of our full-year 2026 same-store revenue growth guidance, our 2026 outlook for same-store expense growth, and recent operating trends as well as our strategic positioning for 2026.

Mike Lacy: Thanks, Dave. Today, I'll cover the following topics: the building blocks of our full year 2026 same-store revenue growth guidance, our 2026 outlook for same-store expense growth, and recent operating trends, as well as our strategic positioning for 2026. Turning to slide 13, the primary building blocks of our 2026 same-store revenue growth guidance include blended lease rate growth, contributions from our other income innovation, and sustained occupancy and bad debt. The largest driver is blended lease rate growth, which we forecast to be between 1.5% and 2% on average in 2026. This is approximately 100 basis points higher than we achieved in 2025, which reflects a 35% year-over-year reduction in supply completions coupled with a less certain employment outlook, as Dave touched on earlier.

Speaker #1: Turning to slide 13, the primary building blocks of our 2026 same store revenue growth guidance include blended lease rate growth, contributions from our other income innovation, and sustained occupancy and bad debt.

Speaker #1: The largest driver is blended lease rate growth, which we forecast to be between 1.5% and 2% on average in 2026. This is approximately 100 basis points higher than we achieved in 2025.

Speaker #1: Which reflects a 35% year-over-year reduction in supply completions, coupled with a less certain employment outlook, as Dave touched on earlier. We expect first half blended lease rate growth will be similar to the second half.

Mike Lacy: We expect first-half blended lease rate growth will be similar to the second-half, each at 1.5% to 2%, with the potential for upside as residual supply pressures lessen and market concessions burn off towards the end of the year. This dynamic means blended lease rate growth should contribute approximately 80 basis points to our full year 2026 same-store revenue growth and have a positive flow-through impact on 2027's earnings. The other primary driver of revenue growth is innovation and other operating initiatives, which are expected to add approximately 45 basis points to our 2026 same-store revenue growth. This equates to approximately $10 million or nearly 5% year-over-year growth for this line item. The bulk of this contribution should come from the continued rollout of our property-wide Wi-Fi and the delivery of value-added services to our residents.

Speaker #1: Each at 1.5% to 2%, with the potential for upside as residual supply pressures lessen and market concessions burn off towards the end of the year.

Speaker #1: This dynamic means blended lease rate growth should contribute approximately 80 basis points to our full year 2026 same store revenue growth. And have a positive flow-through impact on 2027's earnings.

Speaker #1: The other primary driver of revenue growth is innovation and other operating initiatives, which are expected to add approximately 45 basis points to our 2026 same-store revenue growth.

Speaker #1: This equates to approximately $10 million, or nearly 5% year-over-year growth for this line item. The bulk of this contribution should come from the continued rollout of our property-wide Wi-Fi and the delivery of value-added services to our residents.

Speaker #1: Rolling this up, our 2026 same-store revenue guidance ranges from 0.25% to 2.25%, with a midpoint of 1.25%. The 2.25% high end of the range is achievable through higher blended lease rate growth than our initial forecast.

Mike Lacy: Rolling this up, our 2026 same-store revenue guidance ranges from 0.25% to 2.25%, with a midpoint of 1.25%. The 2.25% high end of the range is achieved both through higher blended lease rate growth than our initial forecast, improved year-over-year occupancy, and additional accretion from innovation. Conversely, the low end of 0.25% reflects the inverse scenario, with full year blended lease rate growth closer to flat, some level of occupancy loss, and delayed income recognition from our innovation initiatives. Turning to slide 14, we expect 2026 same-store expense growth of 3.75% at the midpoint. This is primarily driven by growth in three categories. First, real estate taxes, which comprise 40% of our total property expenses. We were successful with many tax appeals in 2025, which resulted in below-trend growth and created a tough year-over-year comparison.

Speaker #1: Improved year-over-year occupancy and additional accretion from innovation. Conversely, the low end of 0.25% reflects the inverse scenario, with full-year blended lease rate growth closer to flat, some level of occupancy loss, and delayed income recognition from our innovation initiatives.

Speaker #1: Turning to slide 14, we expect 2026 same store expense growth of 3.75% at the midpoint. This is primarily driven by growth in three categories.

Speaker #1: First, real estate taxes. Which comprise 40% of our total property expenses. We were successful with many tax appeals in 2025, which resulted in below-trend growth and created a tough year-over-year comparison.

Speaker #1: As such, we expect 2026 real estate tax growth will approximate the long-term average, in the high 3% at the midpoint. Second, repairs and maintenance, which comprise 20% of our total property expenses.

Mike Lacy: As such, we expect 2026 real estate tax growth will approximate the long-term average in the high 3% at the midpoint. Second, repairs and maintenance, which comprises 20% of our total property expenses. With the success of our customer experience project and increased resident satisfaction, we dramatically reduced resident turnover in 2025, which led to less than 2% repair and maintenance growth, well below the long-term average. While this creates a difficult year-over-year comparison, we continue to effectuate actions that improve the UDR resident experience and lead to higher retention. Therefore, we see an opportunity for repairs and maintenance costs to be better than we currently forecast. And third, administrative and marketing expenses, which comprise 8% of our total property expenses. Similar to 2024 and 2025, elevated growth of 8% would be halved if adjusting for our costs affiliated with our ongoing rollout of property-wide Wi-Fi.

Speaker #1: With the success of our customer experience project and increased resident satisfaction, we dramatically reduced resident turnover in 2025, which led to less than 2% repair and maintenance growth.

Speaker #1: Well below the long-term average. While this creates a difficult year-over-year comparison, we continue to effectuate actions that improve the UDR resident experience and lead to higher retention.

Speaker #1: Therefore, we see an opportunity for repairs and maintenance costs to be better than we currently forecast. And third, administrative and marketing expenses, which comprise 8% of our total property expenses.

Speaker #1: Similar to 2024 and 2025, elevated growth of 8% would be halved if adjusting for our cost-affiliated with our ongoing rollout of property-wide Wi-Fi. This initiative is NOI accretive after considering the revenue benefits.

Mike Lacy: This initiative is NOI-accretive after considering the revenue benefits, and we would expect the growth rate of this category to normalize after installations are complete. Moving on, on slide 15, we highlight our 2026 operating successes. These results are a direct reflection of our team's data-driven preparation, agility, and execution. Recall that in early 2025, we prepared for a weak fourth quarter by strategically shifting approximately 25% of our fourth quarter 2025 lease expirations into higher demand months in 2026. As we entered the late third quarter, demand weakened beyond typical seasonality, and we pivoted towards building occupancy, which increased to nearly 97%. Lease rate growth bottomed October, with new lease rate growth of -8% and renewals of +2%, leading to blended lease rate growth of -3%.

Speaker #1: And we would expect the growth rate of this category to normalize after installations are complete. Moving on, on slide 15, we highlight our 2026 operating successes.

Speaker #1: These results are a direct reflection of our team's data-driven preparation, agility, and execution. Recall that in early 2025, we prepared for a weak fourth quarter by strategically shifting approximately 25% of our fourth quarter 2025 lease expirations into higher demand months in 2026.

Speaker #1: As we entered the late third quarter, demand weakened beyond typical seasonality, and we pivoted towards building occupancy, which increased to nearly 97%. Lease rate growth bottomed in October, with new lease rate growth of negative 8% and renewals of positive 2%, leading to blended lease rate growth of negative 3%.

Speaker #1: Operating from a position of occupancy strength and with fewer lease expirations than typical, we have been able to meaningfully accelerate lease rate growth over the last four months.

Mike Lacy: Operating from a position of occupancy strength and with fewer lease expirations than typical, we have been able to meaningfully accelerate lease rate growth over the last 4 months. Since the October lows, new lease rate growth has improved 550 basis points. Renewals have increased 300 basis points, and blended lease rate growth has improved by 400 basis points to positive 1%. Our sequential monthly momentum suggests first-quarter blended lease rate growth should be between 1.5% and 2%, which is nearly twice as strong as the first quarter of 2025. Additionally, we're accomplishing this rate growth while occupancy remains strong in the mid to high 96% range. Other income continues to exhibit mid-single-digit growth, and resident turnover continues to improve. I'm encouraged by these trends, which are a direct result of our team's data-driven preparation, agility, and execution.

Speaker #1: Since the October lows, new lease rate growth has improved 550 basis points. Renewals have increased 300 basis points, and blended lease rate growth has improved by 400 basis points to positive 1%.

Speaker #1: Our sequential monthly momentum suggests first quarter blended lease rate growth should be between 1.5% and 2%, which is nearly twice as strong as the first quarter of 2025.

Speaker #1: Additionally, we are accomplishing this rate growth while occupancy remains strong in the mid to high 96% range. Other income continues to exhibit mid-single-digit growth and resident turnover continues to improve.

Speaker #1: I'm encouraged by these trends, which are a direct result of our team's data-driven preparation, agility, and execution. Turning to slide 16, UDR has a strong culture of innovation that drives initiatives to enhance our growth profile.

Mike Lacy: Turning to slide 16, UDR has a strong culture of innovation that drives initiatives to enhance our growth profile. Historically, we have generated approximately 50 basis points of NOI growth per year from initiatives. Top areas of focus for innovation currently include elevating the customer experience, pricing, and enterprise effectiveness. In the effort to maximize these opportunities, we are currently piloting AI initiatives. There are dozens of incremental AI-related ideas on our list to explore and execute on, and we look forward to providing updates as our journey continues. UDR is and has been an innovative company, and we believe these enhanced tools will further differentiate our innovation to create a lasting advantage. To conclude, as summarized on slide 17, our full year 2025 results across FFOA per share and same-store growth exceeded our initial guidance midpoints, and Q4 same-store NOI exceeded expectations.

Speaker #1: Historically, we have generated approximately 50 basis points of NOI growth per year from initiatives. Top areas of focus for innovation currently include elevating the customer experience, pricing, and enterprise effectiveness.

Speaker #1: In the effort to maximize these opportunities, we are currently piloting AI initiatives. There are dozens of incremental AI-related ideas on our list to explore and execute on.

Speaker #1: And we look forward to providing updates as our journey continues. UDR is, and has been, an innovative company, and we believe these enhanced tools will further differentiate our innovation to create a lasting advantage.

Speaker #1: To conclude, as summarized on slide 17, our full year 2025 results across FFOA per share and same store growth exceeded our initial guidance midpoints and fourth quarter same store NOI exceeded expectations.

Speaker #1: The operating strategies we deployed in 2025 established the foundation for positive operating momentum in 2026, with accelerating blended rate growth and occupancy in the high 96% range.

Mike Lacy: The operating strategies we deployed in 2025 established the foundation for positive operating momentum in 2026, with accelerating blended rate growth and occupancy in the high 96% range. This operating momentum, coupled with lessening supply pressures, sets the stage for favorable fundamentals as the year progresses. We are positioned to take advantage of external growth opportunities and will continue to utilize various sources of capital to accretively grow the company while heeding costs of capital signals. We continue to innovate with the intention of increasing revenue growth, improving resident retention, and further expanding our operating margin over time. Our unique approach to converting data into actions that increase cash flow reinforces our stature as a full-cycle investment that appeals to shareholders. Finally, I give special thanks to our teams across the country for your hard work and ability to drive results.

Speaker #1: This operating momentum coupled with lessening supply pressures sets the stage for favorable fundamentals as the year progresses. We are positioned to take advantage of external growth opportunities and will continue to utilize various sources of capital to accretively grow the company while heeding costs of capital signals.

Speaker #1: And we continued to innovate with the intention of increasing revenue growth, improving resident retention, and further expanding our operating margin over time. Our unique approach to converting data into actions that increase cash flow reinforces our stature as a full-cycle investment that appeals to shareholders.

Speaker #1: Finally, I give special thanks to our teams across the country for your hard work and ability to drive results. In 2025, our same-store revenue growth was at or above peer median across 13 of the 14 markets that we share with public peers.

Mike Lacy: In 2025, our same-store revenue growth was at or above peer median across 13 of the 14 markets that we share with public peers. This is an accomplishment we have never seen before. When pairing this with constrained same-store expense growth, UDR generated the second-highest year-over-year same-store NOI growth among the peer group in 2025. We set a commitment to win and executed at the highest level to achieve an exceptional outcome. With that, I'll open it up for Q&A. Operator?

Speaker #1: This is an accomplishment we have never seen before. When pairing this with constrained same store expense growth, UDR generated the second highest year-over-year same store NOI growth among the peer group in 2025.

Speaker #1: We set a commitment to win and executed at the highest level to achieve an exceptional outcome. With that, I'll open it up for Q&A.

Speaker #1: Operator?

Speaker #2: Thank you. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

Operator: Thank you. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, we ask that you each keep to one question. Thank you. Our first question comes from the line of Eric Wolf with Citi. Please proceed with your question.

Speaker #2: You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker #2: Once again, we ask that you each keep to one question. Thank you. Our first question comes from the line of Eric Wolf with Citi.

Speaker #2: Please proceed with your

Speaker #2: question. Hey,

Speaker #3: thanks for taking my question. Can you just talk about your blended rate growth expectation for the full year? It's coming up a lot in the first quarter and you talked about some of the reasons why, but then it's holding constant.

Eric Wolfe: Hey, thanks for taking my question. Can you just talk about your blended rate growth expectation for the full year? It's coming up a lot in Q1, and you talked about some of the reasons why, but then it's holding constant. It seems like for the rest of the year, maybe up a little bit and then down the Q4. It's just a bit different than that sort of normal seasonal pattern that you see, so I was hoping you could talk about why you're seeing that.

Speaker #3: It seems like for the rest of the year, maybe up a little bit and then down in the fourth quarter. It's just a bit different than that sort of normal seasonal pattern that you see.

Speaker #3: So I was hoping you could talk about why you're seeing

Speaker #3: that. Yeah, maybe a few

Mike Lacy: Yeah, maybe a few points on that. I think, first, we're cognizant of the past few years where we've actually experienced more of a downturn in the back half of the year. So that's one thing that we are looking at. In addition, I mean, we've got the teams in place. We have the systems in place. We think that if the market continues to do what it's doing today, we're going to take advantage of it. And then the other thing I'd point to is we're off to a better start than we would have expected. And so when you think about that 1% that we just achieved in January, that's about 50 to 75 basis points better than we originally thought. So we're off to a really good start. A lot of that has to do with the strategy we deployed.

Speaker #4: Points on that. I think, first, we're cognizant of the past few years where we've actually experienced more of a downturn in the back half of the year.

Speaker #4: So that's one thing that we are looking at. In addition, I mean, we've got the teams in place. We have the systems in place.

Speaker #4: We think that if the market continues to do what it's doing today, we're going to take advantage of it. And then the other thing I'd point to is we're off to a better start than we would have expected.

Speaker #4: And so, when you think about that 1% that we just achieved in January, that's about 50 to 75 basis points better than we originally thought.

Speaker #4: So we're off to a really good start. A lot of that has to do with the strategy we deployed and so our expectations 2% in the first half should be very similar in the back half.

Mike Lacy: Our expectations are, again, that 1.5% to 2% in the first half should be very similar in the back half. If it happens to be better, we're going to be in a position to take advantage of it.

Speaker #4: If it happens to be better, we're going to be in a position to take advantage of it.

Speaker #2: Thank you. Our next question comes from the line of Jamie Feldman with Wells Fargo. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Jamie Feldman with Wells Fargo. Please proceed with your question.

Speaker #5: Great. Thanks for taking the question. I wanted to dig a little deeper into your thoughts on occupancy. You think it's going to remain elevated.

James Feldman: Great. Thanks for taking the question. I wanted to dig a little deeper into your thoughts on occupancy. You think it's going to remain elevated. Just what are you thinking on retention here? What gives you comfort on that level, especially given all the push for affordable housing and everything we're going to see in the headlines this year and whether things do or do not happen? But just wanted to get your big-picture thoughts on retention.

Jamie Feldman: Great. Thanks for taking the question. I wanted to dig a little deeper into your thoughts on occupancy. You think it's going to remain elevated. Just what are you thinking on retention here? What gives you comfort on that level, especially given all the push for affordable housing and everything we're going to see in the headlines this year and whether things do or do not happen? But just wanted to get your big-picture thoughts on retention.

Speaker #5: Just what are you thinking on retention here? What gives you comfort on that level, especially given all the push for affordable housing and everything we're going to see in the headlines this year?

Speaker #5: And whether things do or do not happen, but just wanted to get your big picture thoughts on retention.

Speaker #4: Yeah, a couple of things there, Jamie. I think first, with occupancy, the way that we think about it is how we can be more efficient and how we can optimize it.

Mike Lacy: Yeah, a couple of things there, Jamie. I think first with occupancy, the way that we think about it is how we can be more efficient and how we can optimize it. We think in terms of vacant days. And in a lot of ways, what we're trying to accomplish is being more efficient as it relates to the turn process. And so how can we reduce those days? And then from there, how can we move people in faster, which typically doesn't have anything to do with touching rents. It's just being more efficient around those two items. From there, we've been doing a lot with driving our occupancy up in the fourth quarter. We're upwards of 97% around October-November timeframe. Since then, we've been really pushing the gas on our renewals.

Speaker #4: We think in terms of vacant days. And in a lot of ways, what we're trying to accomplish is being more efficient as it relates to the turn process.

Speaker #4: And so, how can we reduce those days? And then from there, how can we move people in faster? Which typically doesn't have anything to do with touching rents.

Speaker #4: It's just being more efficient around those two items. From there, we've been doing a lot with driving our occupancy up in the fourth quarter.

Speaker #4: We're upwards of 97% around the October–November timeframe. Since then, we've been really pushing the gas on our renewals. And what you're going to see from us going forward is sending out between, call it, five and a half to 6%.

Mike Lacy: What you're going to see from us going forward is sending out between, call it, 5.5% to 6%. Our expectations are achieving somewhere close to that 5% range, at least through April. So when we think about turnover and where it can go, we're really focused on total cash flow as well as total revenue growth. You're going to see us continue to try to see what we can get on the renewals, also knowing that we want to try to reduce turnover even further. But it all comes back to cash flow and how we can continue to try to drive our operating margins.

Speaker #4: And our expectations are achieving somewhere close to that 5% range, at least through April. And so, when we think about turnover and where it can go, we're really focused on growth.

Speaker #4: And so you're going to see us continue to try to see what we can get on the renewals. Also, knowing that we want to try to reduce turnover even further, but it all comes back to cash flow and how we can continue to try to drive our operating.

Speaker #4: margins. Thank you.

Operator: Thank you. Our next question comes from the line of Jana Galan with Bank of America. Please proceed with your question.

Speaker #2: Our next question comes from the line of Yana Gallen with Bank of America. Please proceed with your question.

Speaker #6: Hi, thank you. Also, a question for Mike following up on your comments on the sequential monthly momentum. I was wondering if you could give us some detail on the variance across your regions kind of call out which markets had kind of a stronger acceleration versus others.

Jana Galan: Hi. Thank you. Also, a question for Mike, following up on your comments on the sequential monthly momentum. I was wondering if you could give us some detail on the variance across your regions, kind of call out which markets had kind of a stronger acceleration versus others?

Speaker #4: Yeah, Yana, good question. I think first, maybe high level, just to walk through what we experienced, because it was pretty impressive going from October to January.

Mike Lacy: Yeah. Yeah, good question. I think first, maybe high-level, just to walk what we experienced because it was pretty impressive going from October to January. So when I think about total company blends, and I mentioned it in my prepared remarks, up around 400 BIPs. October was our low at -3%. November saw a little bit of improvement to -2.5%. And then December is when we really started to see it move, and it was closer to -50 BIPs. And then you heard what I said on January. We're in positive territory at 1%. When I think about the regions, I've seen a little bit more of an inflection in the Sunbelt over the last couple of months. And I think for us, where we already had a really strong point on coastal, the growth is still there.

Speaker #4: So when I think about total company blends—and I mentioned in my prepared remarks—they're up around 400 bps. October was our low at negative three.

Speaker #4: November saw a little bit of improvement to negative two and a half percent. And then December is when we really started to see it move.

Speaker #4: And it was closer to negative 50 bps. And then you heard what I said on January—where we're in positive territory at 1%. When I think about the regions, I've seen a little bit more of an inflection in the Sunbelt over the last couple of months.

Speaker #4: And I think for us, where we already had a really strong point on coastal, the growth is still there—it's just not seeing as much of an inflection as, say, places like Dallas, where we've actually seen that market go positive more recently.

Mike Lacy: It's just not seeing as much of an inflection as, say, places like Dallas where we've actually seen that market go positive more recently. So my expectation going forward is Sunbelt's going to continue to improve to some degree. But again, we haven't modeled much of an inflection in the back half of the year. We hope it happens, and we're going to be ready to push if it does. But right now, those back half are very similar to the first half.

Speaker #4: So, my expectation going forward is Sunbelt's going to continue to improve to some degree, but again, we haven't modeled much of an inflection in the back half of the year.

Speaker #4: We hope it happens, and we're going to be ready to push if it does. But right now, those back half are very similar to the first half.

Speaker #2: Thank you. Our next question comes from the line of Steve Sakwa with Evercore ISI. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Steve Sakwa with Evercore ISI. Please proceed with your question.

Speaker #5: Yeah, thanks. Just maybe touching on the transaction market and the buyback—kind of putting those two together. You clearly are signaling being a net seller.

James Feldman: Yeah, thanks. Just maybe touching on the transaction market and the buyback, kind of putting those two together. You clearly are signaling being a net seller. I guess, how much could you step on the gas on the dispositions this year without having maybe tax consequences for gains? And what does that mean for kind of volume of share buybacks in 2026?

Steve Sakwa: Yeah, thanks. Just maybe touching on the transaction market and the buyback, kind of putting those two together. You clearly are signaling being a net seller. I guess, how much could you step on the gas on the dispositions this year without having maybe tax consequences for gains? And what does that mean for kind of volume of share buybacks in 2026?

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Q4 2025 UDR Inc Earnings Call

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