UDR, Inc. (NYSE:UDR) Q4 2022 Earnings Call Transcript

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Rich Anderson: Okay. And then, Joe, on the DCP, what would you say the exit strategy is for the $480 million of commitments that you have currently in terms of getting paid off or participating in the development? Like is there any change to what you are thinking in terms of strategy as it relates to those investments as it stands today?

Joe Fisher: I wouldn’t say any change overall. When we go into those, obviously, we are looking to make sure we have a partner in an asset that we want to be there with. It’s an asset that we ultimately want to own, and we have done that. I think those have come through maturity over the last €“ we started that program in 2013, so the last 9 years. And I think we have had about a 50-50 hit rate on buying those out. I would say the only change in dynamic today has to do with as we go through this period of price discovery and figuring out where cost of borrowing is. We have got some upcoming maturities and equity partners that, while they may have been thinking about exiting the asset and either us buying it or selling it to the market, they are maybe looking for a little bit more time to wait to get through that price discovery mode and optimized pricing and economics for themselves and of course, us.

So, we are going to work with some partners on potentially extending and making sure we get to a better window to transact. But in terms of our desire to buy out, it’s going to be case-by-case as we move through those.

Thomas Toomey: Hey Rich, this is Toomey. I would just add. Think about it as an option. It’s an option that we get paid for, why we sit there and collect it. So, not a bad position to be in. And if our cost of capital responds, we could be aggressive on that opportunity set because we know it, assets we would want to own. And if it isn’t, we are glad to just cash our check and go away to the next opportunity.

Rich Anderson: Fair enough. Okay. Thanks everyone.

Operator: Thank you. And our next question is from Wes Golladay with Baird. Please proceed with your question.

Wes Golladay: Hey. Good morning everyone. A lot of good things on this quarter and in the year and the outlook, but I just had one, I guess minor negative following up on DCP. It looks like junction was extended. And can you give us a little bit of an update there? Was it just driven by the financing markets? Is the project still under construction? Just a little more details there.

Joe Fisher: Yes. It really goes back to kind of that prior comment and response. It’s just trying to find an optimal window for them to potentially transact. So, they do have certain rights from a senior extension perspective. And so, in some cases, you are going to have borrowers that look to extend for their rights. In other cases, we will work with them and the senior lender to figure out what the right extension is. So, they did extend, and we are still in discussions with them to actually extend even further to ensure that we have perhaps a year or 2 years window by which to evaluate the market and figure out what the exit is.

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