As filed with the Securities and Exchange Commission on November 10, 2011.

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A
(Amendment No. 2)

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

UDR, Inc.

(Exact name of registrant as specified in its charter)

Maryland		1-10524		54-0857512
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

1745 Shea Center Drive, Suite 200, Highlands Ranch, Colorado		80129
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (720) 283-6120

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 8.01 Other Events.

On May 2, 2011, UDR Inc. (“UDR” or “the Company”) filed with the Securities and Exchange Commission (“SEC”) a Current Report on Form 8-K dated April 1, 2011 (Commission File No. 1-10524), reporting that the Company and its subsidiary United Dominion Realty L.P. (the “Operating Partnership”), had during the 2011 fiscal year acquired various apartment communities located in New York City, New York; San Francisco, California; Peabody, Massachusetts; and Woburn, Massachusetts. On November 1, 2011, the Company filed with the SEC a Current Report on Form 8-K/A dated April 1, 2011 (Commission File No. 1-10524), reporting that the Company had acquired an additional apartment community in New York City, New York. These apartment community acquisitions are referred to as “Previously Acquired Communities” in this report, and include: 10 Hanover, 388 Beale, 14 North, Inwood West and Rivergate.

This Current Report on Form 8-K/A is being filed to report that on August 31, 2011, the Company and the Operating Partnership closed on an acquisition of a multifamily apartment community referred to as 95 Wall, located in New York City, New York. The community, which is comprised of 507 homes, was acquired for $328.9 million. This transaction is considered individually significant at the time of the transaction under the rules governing the reporting of transactions on Form 8-K. In addition, this transaction, together with the transactions reported on the Form 8-K dated May 2, 2011 and the Form 8-K/A dated November 1, 2011, and other unrelated acquisitions completed during 2011, in the aggregate were significant pursuant to Rule 3-14 of Regulation S-X. The Company is therefore filing this Current Report on Form 8-K/A to include certain financial information with respect to the additional property acquired on August 31, 2011 and to provide updated pro forma financial statements for the year ended December 31, 2010 and the nine months ended September 30, 2011.

Item 9.01 Financial Statements and Exhibits.

The following financial statements are being filed in connection with the acquisition of certain communities as described in Item 8.01 as required by Sections 210.3-14 and 210.11-01 of Regulation S-X.

(a) Financial Statements of Real Estate Property Acquired
95 Wall
Report of Independent Auditors			5
Statements of Revenues and Certain Operating Expenses for the year ended December 31, 2010 (audited) and the eight months ended August 31, 2011 (unaudited)			6
Notes to Statement of Revenues and Certain Operating Expenses			7
(b) Unaudited Pro Forma Financial Information
Pro Forma Consolidated Balance Sheet as of September 30, 2011			10
Pro Forma Consolidated Statement of Operations for the year ended December 31, 2010 (unaudited)			11
Pro Forma Consolidated Statement of Operations for the nine months ended September 30, 2011 (unaudited)			12
Notes to Pro Forma Consolidated Financial Statements (unaudited)			13
(c) Exhibits
23.1 Consent of Independent Auditors

SIGNATURES

Pursuant to the requirements of the Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.

Report of Independent Auditors

Board of Directors
UDR, Inc.

We have audited the accompanying statement of revenues and certain operating expenses of 95 Wall for the year ended December 31, 2010. The statement of revenues and certain operating expenses is the responsibility of 95 Wall’s management. Our responsibility is to express an opinion on the statement of revenues and certain operating expenses based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement of revenues and certain operating expenses is free of material misstatement. We were not engaged to perform an audit of 95 Wall’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of 95 Wall’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the statement of revenues and certain operating expenses, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

The accompanying statement of revenues and certain operating expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in a Form 8-K to be filed by UDR, Inc. as described in Note 1, and is not intended to be a complete presentation of the 95 Wall’s revenues and expenses.

In our opinion, the statement of revenues and certain operating expenses referred to above presents fairly, in all material respects, the revenues and certain operating expenses described in Note 1 of 95 Wall for the year ended December 31, 2010, in conformity with U.S. generally accepted accounting principles.

Denver, Colorado		/s/ Ernst & Young LLP
November 9, 2011

95 Wall

Statements of Revenues and Certain Operating Expenses
(In thousands)

		Eight Months
		Ended				Year Ended
		August 31,				December 31,
		2011				2010
		(Unaudited)
Revenues:
Rental income		$	11,391			$	17,419
Other property income			954				1,562
Total revenues			12,345				18,981
Certain operating expenses:
Personnel			935				1,477
Utilities			1,240				1,694
Repairs and maintenance			508				953
Administrative and marketing			1,043				1,320
Real estate taxes and insurance			77				261
Total certain operating expenses			3,803				5,705
Revenues in excess of certain operating expenses		$	8,542			$	13,276

See accompanying notes to financial statements.

95 Wall

Notes to the Statements of Revenues and Certain Operating Expenses

December 31, 2010

1. Basis of Presentation

On August 31, 2011, UDR, Inc. acquired 95 Wall (the Community), a 22-story, 507-home apartment community located in New York, New York from 95 Wall Associates LLC. The accompanying unaudited statement of revenues and ceratin operating expenses for the eight months ended August 31, 2011 reflects the operations of the Community through the date of acquisition.

The statements of revenues and certain operating expenses relate to the operations of the Community and were prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission (SEC), including Rule 3-14 of Regulation S-X (Rule 3-14). Accordingly, the accompanying statements of revenues and certain expenses is not intended to be a complete presentation and certain expenses such as depreciation, amortization, mortgage interest expense, property management fees, income taxes, and entity expenses are not reflected in the statements of revenues and certain operating expenses in accordance with Rule 3-14. Consequently, the statements of revenues and certain operating expenses for the periods presented is not representative of the actual operations for the periods presented, as certain revenues and expenses which may not be in the proposed future operations of the Community have been excluded.

2. Summary of Significant Accounting Policies

Basis of Accounting

The statements of revenues and certain operating expenses are prepared on the accrual basis of accounting.

Use of Estimates

The preparation of the statements of revenues and certain operating expenses in conformity with U. S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts and disclosure of revenues and certain operating expenses of the Community. Actual results could differ from those estimates.

Revenue Recognition

The Community leases space to residential and commercial tenants under noncancelable operating lease agreements. As such, the Community recognizes rental revenue on a straight-line basis over the term of the lease. Rental income related to leases is recognized on an accrual basis when due from tenants. The apartment homes are leased with terms of generally one year. Advanced receipts of rental income are deferred and classified as liabilities until earned.

Repairs and Maintenance

Significant improvements, renovations or betterments that extend the economic useful life of the assets are capitalized. Expenditures for repairs and maintenance are expensed as incurred.

3. Commitment and Contingencies

From time to time, the Community is a party to legal proceedings and claims incidental to the ordinary course of business. While the outcome of these legal proceedings and claims cannot be predicted with certainty, management of the Community does not believe the ultimate resolution of these matters would have a material adverse effect on the Community’s statements of revenues and certain operating expenses.

95 Wall

Notes to the Statements of Revenues and Certain Operating Expenses

December 31, 2010

4. Tax Exemption and Abatement

The Community was converted from an office property to a residential property in 2008 under the Section 421-g Program (the Program) administered by the NYC Department of Housing Preservation and Development to promote more productive use of non-residential buildings in Lower Manhattan. A partial tax exemption and abatement was given for the conversion of non-residential buildings to residential use in the eligible Lower Manhattan revitalization area. Under the terms of the Program, the Community is eligible for a tax abatement until 2023, as well as an exemption from real estate taxes until 2021, both of which include a four year phase out period. As a result, no real estate tax expense was recorded during the year ended December 31, 2010.

5. Subsequent Events

Management of the Community has evaluated subsequent events through November 9, 2011, the date on which the statements of revenues and certain operating expenses was issued.

(b) Pro Forma Financial Information

The Unaudited Pro Forma Consolidated Financial Statements (including notes thereto) are qualified in their entirety by reference to, and should be read in conjunction with, the Company’s Current Report on Form 8-K filed with the SEC on August 5, 2011, the Form 8-K filed on May 2, 2011, the Form 8-K/A filed on November 1, 2011, and the financial statements included in Item 9.01(a) of this Current Report on Form 8-K/A.

The accompanying Unaudited Pro Forma Consolidated Balance Sheet as of September 30, 2011, reflects the financial position of the Company as if the acquisition described in the Notes to the Unaudited Pro Forma Consolidated Financial Statements had been completed on September 30, 2011. The accompanying Unaudited Consolidated Statements of Operations for the twelve months ended December 31, 2010 and the nine months ended September 30, 2011 present the results of operations of the Company as if the transactions described in the Notes to the Unaudited Pro Forma Consolidated Financial Statements had been completed on January 1, 2010.

The accompanying Unaudited Pro Forma Consolidated Financial Statements are subject to a number of estimates, assumptions, and other uncertainties, and do not purport to be indicative of the actual results of operations that would have occurred had the acquisitions reflected therein in fact occurred on the dates specified, nor do such financial statements purport to be indicative of the results of operations that may be achieved in the future. In addition, the Unaudited Pro Forma Consolidated Financial Statements include pro forma allocations of the purchase price for the properties discussed in the accompanying notes based upon preliminary estimates of the fair values of the assets acquired and liabilities assumed in connection with the acquisitions and are subject to change.

UDR, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 2011
(In thousands, except share and per share data)
(unaudited)

		UDR				Pro Forma
		(Historical)				Adjustments (a)				Pro Forma
ASSETS
Real estate owned:
Real estate held for investment		$	7,988,133			$	—			$	7,988,133
Less: accumulated depreciation			(1,794,150	)			—				(1,794,150	)
Real estate held for investment, net			6,193,983				—				6,193,983
Real estate under development (net of accumulated depreciation of $115)			192,815				—				192,815
Real estate held for sale (net of accumulated depreciation of $9,835)			36,366								36,366
Total real estate owned, net of accumulated depreciation			6,423,164				—				6,423,164
Cash and cash equivalents			13,482				—				13,482
Marketable securities			—				—				—
Restricted cash			19,641				—				19,641
Deferred financing costs, net			23,709				—				23,709
Notes receivable			7,800				—				7,800
Investment in unconsolidated joint ventures			187,176				—				187,176
Other assets			129,931				—				129,931
Total assets		$	6,804,903			$	—			$	6,804,903
LIABILITIES AND STOCKHOLDERS’ EQUITY
Secured debt		$	2,004,525			$	—			$	2,004,525
Secured debt — real estate held for disposition			17,159				—				17,159
Unsecured debt			1,967,661				—				1,967,661
Real estate taxes payable			28,729				—				28,729
Accrued interest payable			23,924				—				23,924
Security deposits and prepaid rent			37,685				—				37,685
Distributions payable			47,489				—				47,489
Deferred fees and gains on the sale of depreciable property			29,106				—				29,106
Accounts payable, accrued expenses, and other liabilities			109,066				—				109,066
Total liabilities			4,265,344				—				4,265,344
Redeemable non-controlling interests in operating partnership			208,766				—				208,766
Stockholders’ equity
Preferred stock, no par value; 50,000,000 shares authorized
2,803,812 shares of 8.00% Series E Cumulative Convertible issued and outstanding (2,803,812 shares at December 31, 2010)			46,571				—				46,571
3,264,362 shares of 6.75% Series G Cumulative Redeemable issued and outstanding (3,405,562 shares at December 31, 2010)			81,609				—				81,609
Common stock, $0.01 par value; 250,000,000 shares authorized											—
219,038,779 shares issued and outstanding			2,190				—				2,190
Additional paid-in capital			3,322,505				—				3,322,505
Distributions in excess of net income			(1,111,356	)			—				(1,111,356	)
Accumulated other comprehensive loss, net			(15,427	)			—				(15,427	)
Total UDR, Inc. stockholders’ equity			2,326,092				—				2,326,092
Non-controlling interest			4,701								4,701
Total equity			2,330,793				—				2,330,793
Total liabilities and stockholders’ equity		$	6,804,903			$	—			$	6,804,903

See accompanying notes.

UDR, Inc.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2010
(In thousands, except per share data)

		Historical
						Previously
						Acquired								Pro Forma
		UDR				Communities				95 Wall				Adjustments				Pro Forma
		(audited)				(audited)								(unaudited)				(unaudited)
REVENUES
Rental income		$	605,295			$	69,198			$	18,981				(177	)(a)			693,297
Non-property income:
Other income			12,494				—				—				—				12,494
Total revenues			617,789				69,198				18,981				(177	)			705,791
EXPENSES
Rental expenses:
Real estate taxes and insurance			75,041				11,109				261				—				86,411
Personnel			55,411				4,886				1,477				—				61,774
Utilities			33,140				4,438				1,694				—				39,272
Repair and maintenance			34,369				4,246				953				—				39,568
Administrative and marketing			15,814				2,877				1,320				—				20,011
Property management			16,646				407				—				—				17,053
Other operating expenses			5,848				—				—				72	(b)			5,920
Real estate depreciation and amortization			289,957				—				—				78,800	(c)			368,757
Interest
Expense incurred			142,984				—				—				19,397	(d)			162,381
Net loss/(gain) on debt extinguishment			1,204				—				—				—				1,204
Amortization of convertible debt discount			3,530				—				—				—				3,530
General and administrative			42,710				—				—				—				42,710
Severance costs and other restructuring charges			6,803				—				—				—				6,803
Other depreciation and amortization			4,843				—				—				—				4,843
Total expenses			728,300				27,963				5,705				98,269				860,237
Income/(loss) from operations			(110,511	)			41,235				13,276				(98,446	)			(154,446	)
Loss from unconsolidated entities			(4,204	)			—				—				—				(4,204	)
Income/(loss) from continuing operations			(114,715	)			41,235				13,276				(98,446	)			(158,650	)
Income from discontinued operations			8,127				—				—				—				8,127
Consolidated net (loss)/income			(106,588	)			41,235				13,276				(98,446	)			(150,523	)
Net loss attributable to redeemable non-controlling interests in OP			3,835				—				—				4,718	(e)			8,553
Net income attributable to non-controlling interests			(146	)			—				—				—				(146	)
Net (loss)/income attributable to UDR, Inc.			(102,899	)			41,235				13,276				(93,728	)			(142,116	)
Distributions to preferred stockholders — Series E (Convertible)			(3,726	)			—				—								(3,726	)
Distributions to preferred stockholders — Series G			(5,762	)			—				—								(5,762	)
Discount on preferred stock repurchases, net			25				—				—								25
Net (loss)/income attributable to common stockholders		$	(112,362	)		$	41,235			$	13,276			$	(93,728	)		$	(151,579	)
Earnings/(loss) per weighted average common share — basic:
Loss from continuing operations attributable to common stockholders		$	(0.73	)														$	(0.96	)
Income from discontinued operations		$	0.05															$	0.05
Net loss attributable to common stockholders		$	(0.68	)														$	(0.91	)
Earnings/(loss) per weighted average common share — diluted:
Loss from continuing operations attributable to common stockholders		$	(0.73	)														$	(0.96	)
Income from discontinued operations		$	0.05															$	0.05
Net loss attributable to common stockholders		$	(0.68	)														$	(0.91	)
Weighted average number of common shares outstanding — basic			165,857																165,857
Weighted average number of common shares outstanding — diluted			165,857																165,857

See accompanying notes.

UDR, INC.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011
(In thousands, except per share data)

										Pro Forma
										Adjustments -
										Previously
		Historical								Acquired				Pro Forma				Pro Forma
		UDR				95 Wall (f)				Communities (g)				Adjustments				Consolidated
		(unaudited)				(unaudited)				(unaudited)				(unaudited)				(unaudited)
REVENUES
Rental income		$	521,679			$	12,345			$	27,099			$	(250	)(a)		$	560,873
Non-property income:
Other income			12,620				—				—				—				12,620
Total revenues			534,299				12,345				27,099				(250	)			573,493
EXPENSES
Rental expenses:
Real estate taxes and insurance			63,040				77				5,525				—				68,642
Personnel			44,131				935				2,459				—				47,525
Utilities			28,014				1,240				875				—				30,129
Repair and maintenance			28,807				508				591				—				29,906
Administrative and marketing			11,773				1,043				350				—				13,166
Property management			14,347				—				745				—				15,092
Other operating expenses			4,540				—				18				—				4,558
Real estate depreciation and amortization			265,184				—				24,020				10,421	(c)			299,625
Interest
Expense incurred			112,281				—				2,781				1,504	(d)			116,566
Amortization of convertible debt discount			1,077				—				—				—				1,077
Other debt charges			4,052				—				—				—				4,052
General and administrative			35,512				—				—				—				35,512
Other depreciation and amortization			3,012				—				—				—				3,012
Total expenses			615,770				3,803				37,364				11,925				668,862
Income/(loss) from operations			(81,471	)			8,095				(10,265	)			(12,175	)			(95,369	)
Loss from unconsolidated entities			(4,260	)			—				—				—				(4,260	)
Income/(loss) from continuing operations			(85,731	)			8,542				(10,265	)			(12,175	)			(99,629	)
Income from discontinued operations			58,198				—				—				—				58,198
Consolidated net income/(loss)			(27,533	)			8,542				(10,265	)			(12,175	)			(41,431	)
Net (income)/loss attributable to redeemable non-controlling interests in OP			1,192				—				—				701				1,893
Net income attributable to non-controlling interests			(134	)			—				—				—				(134	)
Net income/(loss) attributable to UDR, Inc.			(26,475	)			8,542				(10,265	)			(11,474	)			(39,672	)
Distributions to preferred stockholders — Series E (Convertible)			(2,793	)			—				—				—				(2,793	)
Distributions to preferred stockholders — Series G			(4,210	)			—				—				—				(4,210	)
(Premium)/discount on preferred stock repurchases, net			(175	)			—				—				—				(175	)
Net income/(loss) attributable to common stockholders		$	(33,653	)		$	8,542			$	(10,265	)		$	(11,474	)		$	(46,850	)
Earnings/(loss) per weighted average common share — basic and diluted:
Loss from continuing operations attributable to common stockholders		$	(0.47	)														$	(0.54	)
Income from discontinued operations		$	0.30															$	0.30
Net loss attributable to common stockholders		$	(0.17	)														$	(0.24	)
Weighted average number of common shares outstanding-basic and diluted			195,723																195,723

See accompanying notes.

UDR, INC.
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Unaudited Pro Forma Consolidated Balance Sheet Adjustments

(a)

95 Wall was acquired in August 2011; therefore, the effect of the acquisition is included in our historical consolidated balance sheet as of September 30, 2011. We financed this acquisition with the issuance of operating partnership units (“OP units”) and borrowings under our revolving credit facility. The Operating Partnership issued 1,802,239 OP units which 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. The fair value of these OP units was $26.71 at the settlement date. The purchase price allocations included in the September 30, 2011 balance sheet are as follows (amounts in thousands):

														Leases in Place for
														Residential				Above Market
Property		Purchase Price (1)				Land				Building				and Retail				Retail Leases
95 Wall		$	328,914			$	57,565			$	263,668			$	3,245			$	4,436

Unaudited Pro Forma Consolidated Statement of Operations Adjustments

	(a)		Reflects amortization of the net above-market lease intangibles recorded as part of the acquisitions.
	(b)		Reflects ground lease expense for 10 Hanover Square.
	(c)		Reflects the estimated depreciation and amortization that would have been recorded by UDR based on the depreciable basis of the acquired communities, assuming asset lives ranging from five to thirty-five years as well as the amortization of the identifiable intangible values recorded with an estimated useful life of approximately one year.
	(d)		Reflects estimated interest expense that would have been recorded for the increase in our revolving credit facility, deferred financing costs and assumed debt, including the impact of amortizing the fair market adjustment on fixed rate debt over the term of the related debt instrument.
	(e)		Reflects the difference between historical non-controlling interest and what would have been recorded by the Company as a result of the pro forma adjustments to reported earnings for the acquired communities.
	(f)		Reflects the actual results of 95 Wall for the eight months ended August 31, 2011, the date of acquisition. UDR’s historical Statement of Operations for the nine months ended September 30, 2011 contains the property results for the month of September 2011.
	(g)		Reflects an adjustment for the Previously Acquired Communities for January 1, 2011 through the date of acquisition.

Exhibit Index

	23.1			Consent of Ernst & Young LLP Independent Auditors