2026 Global Property CEO conference. I'm Eric Wolfe with Citi Research. We are pleased to have with us UDR and CEO Tom Toomey. This session is for Citi clients only. Disclosures have been made available at the corporate access desk. To ask a question, you can raise your hand or go to liveqa.com and enter code GPC 26 to submit questions. Tom, we'll turn it over to you to introduce your team, give some opening remarks. Tell investors the top reasons to own your stock today. I think it's confusing 'cause it has to be red. I think you just gotta press that button there. All right. There you go. Again, thank you for all attending this. We look forward to our conversations and the Q&A portion of it. Eric, a special thanks to you, the team. I'm thinking back that I might have been to 30 of these now. You guys do a great job at that, congratulations. Let me begin with introductions. To my left is Dave Bragg, our CFO. To my right is Mike Lacy, our COO, and Chris Van Ens, who does a lot of things. We'll leave it at that for Chris. All of you should have, if not, please raise your hand, focus on our value creation mechanisms, primarily through operations, continual innovation, and capital allocation. Where are we at in this part of the cycle? How do we see the business evolving and strategies? I think we'll get into more of it, but I think it can be summarized. You ask for three. We're in a company that lives in a data world, and we are on a mission to convert data to cash flow through better operations and better capital allocation decisions. I'll stop there, and we'll open it up to Q&A. Let's go with that, because I think it's interesting, and I think in the past you've talked about how a winner sort of in a developed space, mature space, are those that control costs and expand their margins. Given that your margins are already high and your turnover is already very low, I guess the question is: How much further can you push this? How much further can you push the data and to increase cash flow and margins? All right. Let me start with two elements. I'll start with Mike covering the operations aspect of it. Then I'll ask Chris and Dave to talk about the capital allocation piece and how we're converting data to cash flow. I think specific to operations, what I would point to is maybe page eight, where we've clearly demonstrated our ability to drive down turnover. The way we think about it over the last couple of years, you can see we've reduced our turnover by about 800 basis points. At the same time, our peer group has reduced it by about 400 basis points. Clearly, everybody's benefited from the affordability piece of the equation, but we're obviously doing something a bit different. Eric, there's not necessarily a certain number we're trying to get to as it relates to turnover. What we're trying to do is drive cash flow and continue to lean into those margins. What you're going to see from us a little bit more going forward is how we can continue to push our rents, specifically, you can see that in our renewal growth. For the first quarter, my expectation is we're going to average around ±5% what's going to be signed. As we go into the second quarter, we're actually pushing a little bit further. We're sending out between 5.5%-6% growth there. The intention is to continue to try to lean into our customer experience project, understand where our residents are in the life cycle, continue to drive turnover down where we can, but we want to capture more on the rent growth side of the equation as well. That's where we're at right now with that. I guess what gives you the comfort to. Oh, sorry. Go ahead. Did you. Just to add a couple of points, I think. First, when you say 400 basis points improvement, that's literally $12 million-$14 million of annual cash flow, okay? Which you're capturing other people. Can you go lower? Well, Mike doesn't take enough credit for one of the critical elements about data is our customers are constantly giving us feedback. We collect over 1 million pieces of data a day on what our customer is. From there, we started this about three years ago. We build out a sentiment score about how each customer feels about us. Before we send a renewal, we look at how we're improving that score and increasing the likelihood of a better pricing match with their sentiment. What's critical about that? We have 40,000 residents that continually live with us. We know the quality, the profitability of those customers. We also know where we're failing and where we can get better through that day-to-day feedback of how they feel about us. Ask yourself, is it cheaper to service a new customer, increase margin, or to get a new customer? Every new customer costs me at least $5,000 to secure. Keeping the one is critical. That's one aspect of converting data into actions that enhance cash flow and margin. If we lead the industry in low turnover, we're gonna lead it in cash flow. Does that increase the pricing power for the new customer? Absolutely. I have less apartments to lease every day compared to the marketplace. I can be more thoughtful about how I'm marketing, how I'm pricing that new product, and it will ultimately feed to stronger pricing power, which is what data's all about. What I'd like to add is on the capital allocation front. As a longtime observer of the apartment space in UDR, when I arrived at UDR, I thought, like many of us do, that the focus should be, in terms of optimizing a portfolio, should be around market allocations. Upon spending time with Chris and the model that he and his team have built, I've come to appreciate the opportunity to play an asset-level game. I'll give you an example. As we focus on our disposition efforts, we put $1 billion on the market at the end of last year, purposely more than we ultimately thought that we would sell, because we wanted to provide ourselves with optionality and remain disciplined sellers. That process of identifying the group of assets for sale was not driven by a perspective on, necessarily on a market from the top-down or asset type. It was very granular and built from the bottom up, and it was based on the predictive analytics tool's outlook for rent growth on a relative basis, Mike and team's operational perspective and the degree to which they've squeezed the juice out of an asset, as well as the team's outlook for the CapEx burden going forward. When we stack up those three criteria and others and think about the sources of capital, we're pairing it up with a use of capital and seeking to drive cash flow accretion. Right now, a very attractive use of capital for us, of course, is the buyback. Chris can talk about the intricacies of the model and how it resulted in an acquisition opportunity, which is on page nine of our presentation from last fall, that we think is differentiated. And- Chris, Go- I'm happy to do that. Just checking, is this mic working? It's blinking green. I can hear you. Yeah. Okay. There's three of them on the... Maybe you can't have all four at the same time. There we go. There you go. Sorry about that. As we think about investment analytics, you know, we think about the opportunity set when we use investment analytics. You know, what we see, and Mike was talking about margin expansion, turnover going down, et cetera, but what we see is that as you look at the top tercile of assets within markets, and you look at the bottom tercile of assets within markets and how they do on a forward rent growth basis, that top tercile over time typically outperforms the bottom tercile by about 600 basis points on an annualized basis. That is a huge opportunity to take advantage of. Obviously, our tools are not perfect. They don't capture 600 basis points, but we do capture about 80% of that over time. We feel very good about that. Another thing that we talk about in analytics a lot is that we really are, you know, playing more of an asset-level game. Of course, identifying markets that are gonna outperform or underperform is incredibly important. At the asset level, that's actually 2 times more impactful to forward rent growth, identifying the right asset than identifying the right market. That's really what, you know, Dave was alluding to on page 9 of our presentation. You know, in the 4th quarter, we bought The Enclave. It's in D.C. It was a market that was out of favor for a number of reasons, DOGE, government shutdown, et cetera. We really liked the sub-market, and we really liked the asset. At the market level, this was kind of a neutral to a neutral plus market, D.C. was. This is southern suburban D.C. Once again, this asset had the characteristics that we said that generally leads to outsized rent growth going forward. You know, we're not going to crow about two to three months of data so far, but that's what we've seen. You know, as you look at these stats on the page, blends 130 basis points so far above our D.C. portfolio, 80 basis points above the same-store portfolio. You get into the occupancy upside that Dave Bragg was talking about. You know, Mike Lacy has increased occupancy by 100 basis points. We've had expense efficiencies 'cause we actually have an asset that truly is next door. We can share resources. Other income and initiatives are ahead of schedule thus far. The CapEx profile is different. This is one of those assets that while it might not check the market box as far as an outperform, it's an asset we thought would outperform. It has the operational upside, and it has a great CapEx profile going forward, and that's really what we're trying to do as we get into more capital recycling. I have to admit that when I saw that, I was like, "Why are they buying in D.C. right now?" Your point, I guess, like, to think about sort of why the asset specifically is to understand that is more valuable than just, you know, picking the right market, what are the typical sources of upside that you normally see at an asset-specific level that you can take advantage of? We're gonna have to charge you if we tell you all that, right? Okay. That is a lot of the secret sauce. When you think about, you know, listen, at the market level, it's gonna be your general economic factors, right? They may be manipulated in slightly different ways than what you would think, but there's nothing that's, like, esoteric out there that we're finding these spurious correlations, anything like that. When you get down to the asset level, you know, it is gonna be things like base rent level. It's gonna be unit mix. It's gonna be rent per square foot. It's gonna be growth over time. It's gonna be. Unit sizes. There are certain characteristics of assets in certain micro markets, and it's different all over the country or the 35 markets that we follow. If we can identify those, it's not a you know, adding a 1,000 on it, but there is a much higher probability that you're gonna generate better fundamental or intrinsic rent growth going forward than an asset that doesn't have those characteristics. That's proven out over time. Then maybe I could follow up on the pricing side. You said the renewals, you know, going out at over 5%. I guess we'll talk about sort of the details in a second. One of the things that's interesting to me, it seems like maybe the way that you price renewals has changed a bit over the years. Can you just talk about sort of how you're pricing renewals now, how you're pricing new leases now versus what that process looked like a year or two ago? Then when you think about where it can go from here, what would you like to see one to two years from now? Eric, I think it's important maybe to take a step back too, because everything that we have experienced as of late has a lot to do with what we started doing a year ago. Our intention this time last year was to try to drive our expirations down in the fourth quarter of 2025. A lot of that was in preparation of obviously peak supply, working through that in a period of time where demand was coming down. We prepared for that. What we didn't know was how much demand was gonna impact us during that same period of time. Fortunate for us, we didn't need as many leases expiring. We were able to drive our occupancy up in the fourth quarter of last year, put us in a position of strength. We ended the year right around 97%. What you've seen from us as of late, drive our occupancy down a little bit. We're closer to that 96.5 to 96.7 range and get more aggressive on our rents. We've been pushing our market rents. At the same time, we sent out renewals 60, 90 days ago. At this point we've sent them out through May. A lot of that has to do with our strategy around lease expirations as well as just our understanding of our customer. Again, when we think about the customer experience, all of the data that we've been able to capture, the fact that we've been able to bring our turnover down, we know a lot about the individuals. We know how long they've been with us. We know what attributes lead to more turnover. What we've done is gotten a little bit more aggressive with some of these individuals where we're placing a little bit more of a bigger bet. Right now you're gonna continue to see more of that push on our renewals and at the same time look at the quality of our resident. If we don't need as many individuals coming through the front door, we can also get more aggressive on our screening practices, our security deposits, as well as just some of the other things that relate to the front door. If we can capture that and improve our bad debt, we're creating a better rent roll, if you will, for the future. We're gonna continue to lean into the pricing decisions that make it a better rent roll going forward. You mentioned that it's a lot more expensive to replace a tenant that leaves. You have the downtime, the lower occupancy. You have the expenses associated with it, and you also just potentially gave up a resident that might, you know, stay into the future and absorb, you know, good increases. I guess, what gives you the confidence to sort of boost your renewals at this point in time when demand seemingly feels like a little bit weak? I mean, maybe you can correct me if I'm wrong, but it feels like the job market is somewhat weak right now. What gives you that confidence, and at what point would you sort of pull back on that and say, "You know, we shouldn't be giving 5.5% renewals. We're seeing, you know, increased turnover, there's a cost with that. Here's the thing. When you send out a renewal, you can always negotiate if people start coming through the door and they do have an issue and they wanna have a conversation around it. You can't go back and increase that renewal. Our intention is go out a little bit higher. We do feel like we have the data in place, and these are strategic and well-placed bets. We have a better understanding of that resident. We can see it happening in front of us today. I would tell you that back half of last year, we were negotiating on 40%-45% of the renewals going out, and it was amounting to about a 100 basis point degradation in what we sent. Today, we're negotiating on about 30%. We're only negotiating on about 30 to 40 basis points on what was sent out. We're not negotiating as much as we were at the back half of last year, which puts us in a position of strength. We do feel like we've placed some pretty well strategic bets. Eric, if I can add a couple things. There you go. Can I add? Think about this. We have a centralized operation. Yeah, we manage 45 apartment homes per employee. I think that leads the industry. What Mike's not pointing to that he should take more credit for, that centralized team acts as a cohesive team with the people in the field. The old days of the manager sending out a renewal and then their favorite resident walking in and negotiating it because they liked them versus the inconsistency of the next resident, et cetera, is now standardized. Actually, a lot of our renewal activity is before the renewal notice goes out. We have an understanding of the sentiment that individual feels, and we understand at that point, are they in a positive area. They're more likely to receive it. We're focused way from the first day of your occupancy to that notice about keeping your score as high as possible that you'll take that. We've seen a direct correlation. That's pretty common sense. What is intriguing is, this is a small group in Denver that coordinates that pricing and then instantaneously gets feedback about customers. If 40% of them are not happy with that renewal notice, was it a sentiment or a price point conversation? That feedback's recorded in ours, and then it generates another way of attacking the next renewal. Okay? It's a real-time adjustment by a centralized team that's aided by our data, our dashboards, and our interaction with that customer. That's why we're going to be able to get more capture on the renewals. At least from what I'm hearing thus far, it seems like most of the sort of better pricing power, if you will, better results in the early part of the year is really because of the decisions you made last year, your processes, sort of the alpha that you're generating above the market. I guess the question is the market overall getting better? Is demand getting a little bit better? Or is it still at those sort of low levels that we started to see, call it around, you know, September of last year? Has the environment improved at all? Let me start with that and ask Mike to clean it up a little bit. I'd say this, Mike mentioned his strategy starting last year. What we saw that was very unusual in what I'll call the late leasing season of 2025 is a pattern that's been going on for the last three years, an abbreviated leasing season. Okay? It really hinges around the May, June timeframe. What we've noticed in a pattern of the data was that our traffic from people that are 18 to 30 was literally evaporating, signaling to us recent college grads, summer internships were on the wane for the last three years. We probably expect that to see in 2026 as well. We'll see how it plays out. We can adjust real time. What's happened in the marketplace last summer was peak supply. Same time that you're not having a whole lot of traffic in that 18 to 30-year-old. People cut price dramatically. two, three months concession a common occurrence. The question for this year was, as we were building up our plan and thinking about it, what's going to happen to that customer who comes up on that two, three-month renewal in August, September? They're going to probably be looking for a similar deal. The good news, we won't be faced new supply, but that customer is going to be pretty price sensitive in our view. We wanted to move our leases out of that window of time. Second, capture as much in an abbreviated leasing season as we could for pricing, and then build our strategy on the back-year managing for occupancy, if you will. I think that's where data starts to aid you in thinking farther down the road by the pattern that has been occurring recently. We'll see how it plays out. If there is a job growth window, those people 18 to 30 show up this time again, we'll be able to turn on to pricing power on new stronger than we have forecasted. We'll see how that plays out. A little unique, I think, for us compared to the peers, and Tom's referencing it, is when you think about the guidance of 1.5%-2% blends for the year, we are basing 1.5%-2% in the first half and 1.5%-2% in the back half. Unlike others where expectations are that there could be a hockey stick, a recovery on what were muted growth numbers last year, we have a different take on that. We hope that it happens, and we'll be ready. We've got the teams. We've got the resources in place to take advantage of it, but a little bit different approach going into the year. Specific to some of the regions and where we're seeing some strength, we've put it out there. Original expectations were for 1% blends in the first quarter. We're tracking closer to that plus 1.5 to a little bit higher. That's our expectation right now. We are ahead right now on a lot of fronts, but it really comes down to a few anchors where we're beating our own internal expectations. Probably not a big surprise to a lot of you in this room, but it does come down to San Francisco on the West Coast, New York on the East Coast, and for us, Dallas down in the Sun Belt. Just to kind of size that a little bit, when I think about Dallas today, our blends are close to flat, which is about a 200-300 basis point difference from what we're experiencing in Florida, Austin, as well as Nashville. Dallas is leading the way for us down there. Specific to San Francisco, we're seeing blends of upwards of 8% today. Occupancy still above 97%. Obviously a big anchor for the West Coast for us. New York, we're seeing blends of ±6%. Occupancy still close to 98%. That's been leading the charge for us out on the East Coast. Those three markets are above our expectations today, and that's what's led to have that positive inflection versus our original expectations. Maybe tie a couple things together. The last six years, the investment community, it's been pretty easy to follow, was making bets either on the coast we recover, the Sun Belt we recover one way or the other. Okay? They may recall before that it used to be markets moved independently, not regions. What you're going to find in the next couple years is quickly we're going to start seeing the number of markets that I'll call green shoots starting to spread out as supply job growth starts to move back to its normal patterns, meaning specific markets move up, specific markets down. I think a national company has a better chance of hitting more of those darts that are moving up. Second, with our investment analytics, we'll be able to move our capital more quickly than we have historically in being able to take advantage of those upswings as they occur. I think the combination of data matched with the investment with the number of markets hitting recovery and growth give us a great platform for the future. I'm grateful we made the investment, more importantly, execute on the event. Tom, you mentioned that last year you saw the 18- to 30-year-old traffic sort of go down. Maybe you could just tell us sort of like, you know, how much, you know, how noticeable it was. It sounds like it's too early in the year to really know whether it's coming back. I guess my question is, do you just have to have that come back in order to get some of the sort of acceleration and other sort of bullish projections that many are predicting? Or is the supply coming down enough, you know, you just don't need to see that same level of demand as you had, call it, two years ago? I'll take a shot and ask the guys to weigh in. I think first and foremost, the supply aspect is a known factor. It is on the diminishing aspect. The question of the employment picture changing, I think we're relatively conservative in view it. When we meet with every investor, I'd ask this room, are you guys hiring in 2026? Are you hiring interns? The answer is probably no, we're going to see how it plays out a little bit. You're a good indicator. I think from my perspective, do I need it? No, my average customer is 37 years old. What happens is the general marketplace panics and those people don't show up. They start cutting price and they start pulling from my resident base into theirs for value. The value shopper, if you will seek out a concession. Supply's down. The employment picture, let's just call it half of last year. That's our current forecast. Seems like a prudent thing to be. If it does change, we'll adjust. We have the capability of doing so. Don't have enough data yet. One concern that, you know, you saw this in how things traded, but after the Block announcement was like, okay, well, we're starting to see this sort of replacement of white collar growth. I don't expect anyone to sort of have an answer on it. People are going to have, you know, very different opinions. I guess my question is really like, you know, across any of your markets, do you see sort of evidence, like you just talked about evidence of seeing less traffic from 18 to 30-year-olds makes a lot of sense. The unemployment rate there has gone up. They're not getting jobs at the same numbers they were before. Do you see any evidence of sort of like white collar replacement, any type of, you know, fear among your tenants from, you know, layoffs that are yet to happen? Do you see any evidence of that? I'm guessing no, since your blends in San Francisco are 8%. That's kind of the center of things. I thought I'd ask. I can start out and share our thought process on drivers of demand. We would categorize them as being in one of three buckets, cyclical, structural, and to be determined. Let's take an example, immigration. Our view is that that is cyclical. Our country has been built on immigration and the contributions that have been made to our economy. We believe that that will continue. A political cycle could cause that to be disrupted temporarily. Okay. AI, I think you're alluding to with your question. We would put that in the to be determined bucket because we're not experts, but we do have a point of view. Our point of view is informed by research that we've read. What we subscribe to is that the long history of humankind has been littered with examples of technological innovation that disrupted jobs and resulted in enhanced productivity and the creation of new jobs that did not exist before. 125 years ago, about half the people in the U.S. were associated with farming. As we look at AI today, Mike is not sharing anecdotes of residents walking into his communities and saying that they lost their job last week to the AI, although we recognize that there is some near-term disruption that is occurring. That's why it's critical that he and team have the tools that they have developed to help them identify and retain residents. As we look over a multi-year time horizon, we think it will be a beneficial driver of our business. I guess switching to capital allocation, we touched on the sort of the where you're directionally moving with that process in terms of AI and asset sort of specific underwriting more than just trying to choose the right market. That all makes sense. On the buyback side, can you help us sort of understand sort of the scale of what you're looking at, how aggressive you want to be with this opportunity, sort of how wide the sort of spread is between where you can sell assets today versus buy your stock? I guess I'll just layer on the very last piece of it, which is there's going to be some limitation based on asset sales just given tax consequences. Are you willing to take up leverage at all just given the disconnect in your stock? Yeah, great question. Very much so on our mind, Eric. We recognized the opportunity in September of last year to sell assets for $0.100 on the dollar on Main Street and buy back the stock for approximately $0.80 on the dollar on Wall Street. We moved forward with about $120 million of buybacks between September and December of last year. That playbook still resonates with us, and we're back in the market after earnings buying the stock again. To fund it, we put $1 billion of assets for sale on the market, not with the intention of selling them all, but to create optionality so we can remain disciplined as sellers. As we look at our guidance range for dispositions of $300 million-$600 million, I would suggest that we're more likely to hit the high end of the range than the low end of the range. We look across the potential uses for that capital. First, leverage, we actually did take leverage up a little bit in the fourth quarter to execute on the buybacks. Our overarching goal at this time is to remain relatively leverage neutral, although we're open-minded and we'll evaluate that as we go. So that's a priority. Buybacks are a high priority. We're back in the market. As it relates to tax gain capacity, we are mindful of that. As you look at our guidance, we suggested that there may be an acquisition, and the purpose there would be a 1031 exchange to help us manage that tax gain capacity. Even with that asset, should we buy one, it would be something that we think stacks up really well, as compared to the dispositions from a cash flow accretion opportunity. As the stock gets back to a more normalized level over relative to NAV over time, we're excited about the opportunity to deploy the tools and the discipline and the collaboration that we have developed in the effort to recycle assets more often. Any questions from the audience? I don't want to hog the whole thing. If anyone has a question coming up in the last couple of minutes, I was going to ask maybe one more before going into rapid fire. I guess you mentioned that you might be on the upper end of the sort of disposition guidance. I guess what's a good sort of cap rate to consider there? And is it, you know, similar to the acquisition side, is it less of a, you know, a market sort of type of analysis that you're doing there? It's more you're going to be selling sort of asset-specific stuff that you think will result in those assets specifically underperforming within those markets. If we were to show you the entire disposition list, you would not notice a pattern as it relates to market or asset quality, and that's because it was driven by that bottom-up approach. As it relates to a cap rate, we'll have more to share with first quarter earnings, but I would suggest a buyer cap rate in the mid-5% range. Asset pricing on the whole has been only off our expectations by a few% for the group of assets that we're likely to sell. Got it. Would you say that, you know, I think debt spreads have come down a bit. Would you say that the sort of level of interest is similarly strong as last year? No change in the acquisition market? Yes. Certainly expectations for 2026 rent growth are more moderate as compared to last year, but there's optimism around 2027 and 2028, and a nice offsetting factor would be the robust debt market. Okay. Great. We have our rapid fire questions, the hallmark of the Citi conference, if there is one. What will Same-store NOI growth be for the apartment sector in 2027? You know, I think 27 consensus estimates are 2.5%. I think that's a fair number for the group. I think we'll do better than that. Got it. Will there be the same, more, or less apartment companies a year from now? This one's getting easier. It's getting easier because it's been consistent for the last five years, fewer. Fewer. Great. Thanks for your time today. Thank you. Thank you.