UDR Inc (UDR) 2013 Q4 法說會逐字稿

Good day, Ladies and Gentlemen. Thank you for standing by.

Welcome to UDR's Fourth Quarter 2013 Conference Call. During today's presentation all participants will be in a listen only mode. Following the presentation the conference will be open for questions.

(Operator Instructions)

This conference is being recorded today, Tuesday, February 4, 2014.

I would now like to turn the conference over to Chris Van Ens, Vice President of Investor Relations.

Welcome to UDR's Fourth Quarter financial results Conference Call.

Our Fourth Quarter Press Release, supplemental disclosure package and updated three-year strategy overview document were distributed earlier today and posted to the Investor Relations section of our website, www.UDR.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.

Prior to reading our Safe Harbor disclosure, I would like to direct you to the Webcast of this call located in the Investor Relations section of our website, www.UDR.com. The Webcast includes a slide presentation that will accompany our three year strategic outlook commentary.

On to our Safe Harbor, I would like to note 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. The discussion of risks and Risk Factors are detailed in this morning's Press Release and included in our filings with the SEC. We do not undertake a duty to update any forward-looking statements.

When we get to the question and answer portion we ask that you be respectful of everyone's time and limit your questions and follow-ups. Management will be available after the call for your questions that did not get answered on the call. I will now turn the call over to our President and CEO, Tom Toomey.

Thank you, Chris and good afternoon, everyone. Welcome to UDR's Fourth Quarter Conference Call.

On the call with me today are Tom Herzog, Chief Financial Officer and Jerry Davis, Chief Operating Officer who will discuss our results as well as Senior Officer Warren Troupe and Harry Alcock, who will be available to answer questions during the Q & A portion of the call. My comments will be brief.

First, all aspects of our business continue to perform well in the Fourth Quarter which concluded in outstanding 2013. Department fundamentals in the majority of our Markets remain favorable and we have strong momentum going into 2014, as is reflected in our guidance which is above street estimates.

Second, we met or exceeded all first year objectives as presented in our initial three-year plan that was introduced last February. Following Tom's and Jerry's remarks, we will update you on a new three-year plan which covers the period from 2014 through 2016.

Finally, I'd like to thank all my fellow associates for their hard work in producing a great year for UDR. We look forward to 2014.

With that, I'll turn the call over to Tom.

Thanks, Tom.

The topics I will cover today include first, our Fourth Quarter and full year 2013 results; second, a balance sheet and debt maturity update; third, development and redevelopment updates; fourth, an overview of fourth quarter and post year-end transactions and last, a First Quarter and full year 2014 guidance.

I will begin with our Fourth Quarter results. FFO, FFO as adjusted and AFFO per share were $0.36, $0.35 and $0.30 respectively. Full year 2013 FFO per share was $1.44 inclusive of $0.05 of Hurricane Sandy insurance recovery. Our 2013 FFO as adjusted per share was $1.39, inclusive of $0.01 of Hurricane Sandy business interruption recoveries relative to lost rental revenues in 2013, and full year AFFO per share was $1.23.

Moving on to the balance sheet. At year-end our financial leverage on an undepreciated cost basis was 39%. On a fair value basis, it was 32%. Our net debt to EBITDA was 7.0 times, consistent with our expectation at the beginning of 2013. Moving ahead we will continue to manage to triple B plus credit metrics, or gradually deleveraging in our balance sheet through non-dilutive action.

From a liquidity perspective our balance sheet remains in good shape with $930 million of available funds at the end of the Fourth Quarter consisting of cash and Credit Facility capacity. Including extensions we have $312 million of maturing debt in 2014 at a weighted average interest rate of 5.3%. $184 million of this was paid off by the revolver on January 15th. We intend to refinance these obligations in the unsecured Markets during the Second Quarter of 2014.

Turning to development, before I provide an update, I would like to remind everyone how we define our pipelines. Our development pipeline includes all projects at our pro-rata ownership share outlined on attachment 9 or page 21 of our quarterly supplement. This equates to a $1.2 billion pipeline at year-end, 64% of which has been funded.

We completed three projects or $275 million of development during the Fourth Quarter at a weighted average spread between expected trended yields and current market cap rates of approximately 185 basis points. Of these completions, Bella Terra and Huntington Beach and 13th and Market in San Diego are estimated to perform at or above the upper end of our targeted 150-200 basis point trended range.

Fiori, a Vitruvian Park Community in Addison, Texas is coming in below our targeted range, but will still be accretive to earnings and NAV. Our remaining pipeline, $300 million of which is expected to be completed in the First Quarter of 2014 is trending as a whole within our targeted range.

During the quarter we announced two new projects both in core Markets. The first, 399 Fremont, a $318 million development in San Francisco, broke ground in Mid January. 399 Fremont is a 51/49 development partnership with MetLife. UDR's share of the project equates to $162 million.

The second is Steel Creek, $108 million development in Denver which broke ground in the Fourth Quarter. Steel Creek is being constructed under a participating debt structure, which is a new structure for UDR but the economics are advantageous. There's a substantial equity piece in front of our participating loan, we are paid at 6.5% current and we will receive 50% of the upside upon subsequent purchase of the asset by UDR or sale to a third party.

As to future development projects, we are carefully underwriting opportunities. In addition to our land bank outlined on Attachment 11 or Page 23, we recently acquired for $78 million the land for the development of Pacific City, a fully entitled 516 home community located in Huntington Beach, California. The site has immediate access to the Pacific Coast Highway and is only three blocks from the Huntington Beach Pier. Looking ahead we expect to announce a couple of new starts in the second half of 2014.

On to redevelopment, we increased the scope and budget of our River Gate redevelopment in Manhattan. The revised budget is $98 million and includes limited scope renovations on additional units. The addition of 33 homes as some large floor plans have split into two homes, upgraded corridors, as well as other revenue generating opportunities. At 2775 Mesa Verde in Orange County we are choosing to table for the foreseeable future the redevelopment of 216 homes that were in the original scope of the project given current demand trends in that particular sub market.

Next, we sold $132 million in non-core assets in the Fourth Quarter. We exited the Sacramento market and disposed of a non-core asset in the Boston Metro area. The average age of the Sacramento assets was 31 years and the three communities were sold at a weighted average cap rate of approximately 6%. In addition to the sales, we consolidated our 13th and Market and Domain College Park joint venture development as we assume the role of Managing Partner in both ventures during the quarter.

Following year-end we closed on the sale of Presidio for approximately $49 million, a non-core community located in North County, San Diego. The 27-year-old property had an average revenue per occupied home of $1,485.00 in the Fourth Quarter and was sold at a 5.4% cap rate.

On to 2014 guidance, our 2014 FFO and FFO as adjusted guidance per share are $1.47 to $1.53. Our 2014 AFFO guidance is $1.30 to $1.36 per share, an 8% increase at the mid point over 2013 and includes $1,100.00 of maintenance CapEx for stabilized homes.

There are a number of moving parts but the primary drivers of our expected AFFO growth from 2013 to 2014 of $1.23 to $1.33 at the mid point includes mature and nonmature NOI growth of $0.08, development and redevelopment earn-ins net of funding costs of $0.03, and a reduction and development and redevelopment drag of $0.01. These benefits are offset by a penny in dilution from expected recycling of non-core assets via 1031 transactions and a penny from higher CapEx.

In 2014 we anticipate same-store revenue growth of 3.5% to 4.25%, same-store expense growth of 2.75% to 3.25% and same-store NOI growth up 3.75% to 5.0%. Other primary assumptions can be found on Attachment 15, or Page 27 of our supplement.

First Quarter 2014 FFO, FFO as adjusted and AFFO per share guidance are $0.34 to $0.36, $0.33 to $0.35, and $0.30 to $0.32 respectively. Finally we are increasing our 2014 declared dividend by 11% year-over-year to an annualized $1.04 per share from $0.94 per share in 2014. With that I'll turn the call over to Jerry.

Thanks, Tom. Good afternoon, everyone.

In my remarks I'll cover the following topics. First, Fourth Quarter and full year 2013 operating results; second, the performance of our core Markets during the Fourth Quarter; third, brief update on our development lease ups and lastly, market performance expectations for 2014.

We're pleased to announce another strong quarter of operating results. In the Fourth Quarter, same-store net operating income grew 5.4% driven by a 4.5% year-over-year increase in revenue against a 2.4% increase in expenses.

Our same-store revenue per occupied home increased by 4.2% year-over-year to $1,509.00 per month, while same-store occupancy of 96.2% was 30 basis points higher year-over-year. For the full year 2013, same-store revenue grew 4.9%, expenses increased 2.6% and NOI grew by 6%, all exceeding our original forecast at the mid point from last February.

Turning to new and renewal lease rates, Fourth Quarter effective rental rates on new leases increased by 1.3%. Renewal rate growth remained strong at 5.2%. San Francisco, Seattle, and Portland performed well, while the Mid Atlantic region struggled. Further details can be found on Attachment 8g or Page 20 of our supplement.

Annualized turnover in the Fourth Quarter decreased by 220 basis points year-over-year, and was 80 basis points lower on a full year basis. Lower turnover for the Fourth Quarter was the result of our efforts in 2012 to move lease expirations out of the Fourth Quarter and into the Second and Third Quarters. This was done because new lease rate growth is typically more than 200 basis points higher in those quarters than in the Fourth Quarter.

Rent as a percentage of our residents' incomes held steady at roughly 17%. Move outs to home purchase were up 50 basis points year-over-year at 13.9% in the Fourth Quarter. Next we'll talk about quarterly performance in our primary core Markets.

New supply in Metro D.C. continues to be an issue, with significant deliveries expected in 2014. While we are not immune to the negative effects of new supply, we continue to believe our diverse mix of A & B product, as well as less direct sub market exposure to new supply, will help us fare better than many of our peers in 2014.

New York City experienced some pricing pressure in late 4Q 2013 through Mid January of 2014 as we anniversaried off of Hurricane Sandy. With many units out of service throughout lower Manhattan and Zone A during late 2012 and early 2013, pricing was abnormally strong at unaffected properties on the island.

In the Fourth Quarter of 2013, all of these apartments that were offline last year were fully recovered, so 12 month commanded less pricing power throughout the city. We have cycled through this issue and expect to see normalized demand over the remainder of 2014.

Orange County and Los Angeles employment growth is improving and with limited new supply, both Markets are expected to perform well in 2014. We achieved 90% stabilized occupancy at our 467 home Bella Terra development in Huntington Beach in December, and we're currently 96% leased. This is just seven months after accepting our first unit, which means we averaged 60 move-ins per month and have yet to offer a concession.

San Francisco remains very strong with expected 2014 job growth of more than 3% primarily consisting of higher paying professional jobs. We're seeing good demand throughout the city, the peninsula, and Silicon Valley with some moderate pricing pressure in North San Jose where new supply is more prominent.

Channel, our new development in Mission Bay, is 43% leased just one month after opening its doors at higher rates than initially expected. New supply is coming to downtown Seattle, the job growth is expected to absorb it. Our A & B properties in Metro Seattle continue to perform well.

Boston was one of our better Markets in 2013. Currently, it has been a seasonally slower period of the year, and it has been negatively affected by abnormally poor weather over the past 45 days.

Lastly, Dallas is generating a significant number of jobs right now, but it's also facing heavy new supply. We are feeling some effects from supply in uptown and Plano, but believe Dallas will be an above average market for us in 2014.

Turning to development, during the quarter, we completed 725 homes and spent approximately $76 million. As of the end of 2013, we spent $800 million on our $1.2 billion development pipeline.

Bella Terra and Huntington Beach, Channel at Mission Bay in San Francisco, and 13th and Market in San Diego comprise $371 million in aggregate estimated cost. Weighted average effective rents are currently 10% above plan, and leasing velocity was 16% ahead of expectations. Each of these lease-ups continues to go well.

Los Alisos in Mission Viejo, Domain College Park across the street from the University of Maryland Business School and Fiori, at our Petruvian Park JV in Addison, Texas comprised $201 million in aggregate estimated cost. Weighted average effective rents are 3% below plan, while leasing velocity is 19% below where we would have expected at this point. As the Spring leasing season arrives we expect that leasing of these projects will pick up. Still, all-in, we're comfortable with how the lease ups are progressing in aggregate.

Finally, I have a couple of comments regarding market revenue growth expectations in 2014. We expect San Francisco and Seattle to be among our best performing Markets. Southern California, Texas, and the Northeast are expected to grow in excess of the 4.25% top end of our portfolio same-store guidance. These Markets comprise over 50% of our total NOI.

The Mid Atlantic region is expected to be our weakest region once again. Page 13 of our updated three-year strategic outlook has additional information on our market growth expectations. With that, I'll remind those listening that there is a link to our updated three-year strategic document on the Investor Relations page of our website. We'll pause for a moment so that everyone can gather the three-year plan materials. I'll now turn the call back over to Tom Toomey to present our updated lead three-year plan.

Thanks, Jerry.

Let's move on to our 2014-2016 strategic plan. Last February we communicated that the heavy lifting of our portfolio and balance sheet repositioning was largely completed. At that time we rolled out our 2013-2015 strategic plan.

As we measure our actual 2013 results against the plan, I'm pleased to tell you that we met or exceeded each of our 2013 goals. We view our updated plan merely as an extension of last year's plan, given that strategic priorities are unchanged.

We have four primary strategic priorities, which you will find on Page 3. These are one, investing our shareholders capital in accretive growth opportunities that improve our portfolio; second, continuing to generate best-in-class operating results; third drive cash flow dividend and NAV growth; and fourth, continuing to strengthen our balance sheet. We believe successful execution of these priorities will optimize total shareholder return for our investors over time.

With that I'll turn the call over to Tom to discuss the details of the plan.

Thanks, Tom.

Please turn to Page 4 of the Strategic Outlook Presentation. As Tom mentioned, we met or exceeded all 2013 primary objectives in our original plan. First we completed approximately $400 million of accretive development in 2013 and expect that our remaining pipeline will continue to create value.

Second, we ended 2013 ahead of all original annual guidance expectations for same-store and cash flow growth. In addition, during 2013 we raised our dividend by 7%, and we'll raise it an additional 11% in 2014. Third, all of our primary year-end balance sheet metrics were in line with our expectations set forth at the outset of 2013. We continue to manage the triple B plus, BAA1 metrics. Please turn to Page 5.

Development remains accretive and will continue to be a primary means to which we improve our portfolio and grow our Company. Our primarily coastal and urban pipeline of $1.2 billion will be completed over the next three years, a size of less than 10% of our enterprise value and a 64% funded. The remaining span of $440 million will come from either equity issuance or sale of assets. We continue to target annual spend in the range of $400 million to $600 million per year and a trended spread versus cap rates of 150 to 200 basis points.

Recently, we have tightened our underwriting standards to reflect rising costs and less robust forward rent growth assumptions. Fewer deals will pencil in today's environment but we are still finding accretive opportunities. Please turn to Page 6.

On this page we provide Seattle pipeline statistics. Our pipeline is primarily coastal and urban. Including our land with MetLife for Seattle pipeline totals $1 billion to $1.3 billion at 100% ownership. 85% of this potential pipeline is owned in partnership with MetLife. Our current ownership share in seven UDR /MetLife 1 JV land parcels is just 4%. This provides optionality at the conclusion of the entitlement processes for these parcels.

When assessing the optimal size of our development pipeline we weigh balance sheet risk, drag to our earnings frame, and AFFO and NAV accretion from the successful completion of current and potential projects. Please turn to Page 7.

In 2014, we anticipate our development projects will generate $0.05 of FFO per share drag and $0.025 cents of accretion. Upon stabilization of each project at our targeted trended spreads, we expect annual FFO accretion of $0.06 per share and continued growth thereafter. Cumulative NAV accretion is estimated at $2.10 per share during the construction and lease up phases of our development. Please turn to Page 8.

Our operations remain strong as exhibited by the chart in the middle of the page. We have consistently produced better top line growth over an extended time period than the multi-family average, but we are not sitting idle. Jerry and his team continue to improve our operations. Our focus on technology, and more recently our emphasis on driving repair and maintenance efficiencies are two examples.

These investments are enhancing our margin and continue to improve our residents' experience. Moving follow ward we expect to generate strong operating results as evidenced by the same-store growth assumptions presented over the life of the plan in the chart at the bottom of the page. Please turn to Page 9.

Our primary tenant of our three year plan is to drive AFFO, NAV, and CV&I growth. We anticipate 2014 & 2015 being good years.

Looking at the top chart, AFFO per share growth was forecasted at 7% to 9% in 2014. I discussed the 2014 drivers in my earlier remarks. Growth in 2015 is expected to be similar to 2014.

Our 2016 expectations are negatively affected by fewer development starts in 2013 and higher interest rate assumptions; however, our crystal ball gets hazier the further out we look. The bottom two charts show expected NAV per share growth and CV& I, both assuming a flat cap rate environment.

Applying our next three years expected growth to our 2013 NAV per share implies a NAV of approximately $36.00 in 2016, a 30% increase over 2013. We anticipate annual CV&I of approximately 12% through 2016. This is consistent with our long term average historical growth; however, historical cap rate compression contributed significantly to CV& I, whereas going forward, accretive development returns are expected to help drive CV&I. Please turn to Page 10.

We continue to focus on net debt to EBITDA, leverage and fixed charge coverage when evaluating the strength of our balance sheet, and anticipate our metrics will further improve over the life of the plan. Same-store growth and development earn-in are the primary drivers of our forecasted improvements and net debt to EBITDA and fixed charge coverage. Please turn to Page 11.

Pages 11 and 12 provide our 2014 guidance and 2015/2016 cumulative expectations. Please turn to Page 13.

Our 2014 growth assumptions for our Markets are presented on the map. The West Coast and Northeast are expected to grow at an above average rate in 2014 while the Mid Atlantic is likely to continue to struggle but is still expected to perform better than our peers due to our 50/50 mix of A' s and B' s in D.C. and less direct exposure to new supply. Please turn to Page 14.

As Tom indicated earlier, we view this update as a continuation of our previous strategic plan. In the charts, the mid points of our cumulative three-year expectations for the 2013-2015 time period are relatively similar or improved when compared to our updated plan for these years to our previous plan.

Now I'll turn it back over to Tom for final remarks.

Thank you, Tom.

I've had the pleasure of being UDR's CEO for 13 years now. Our mission over the first decade was to reposition the portfolio and the balance sheet. The last couple of years we've spent finalizing the transition of the previous decade, as well as positioning the Company for strong cash flow growth.

The next decade, we'll continue to focus on long term cash flow growth, which is the focus of this plan. In our view this plan remains the best avenue for creating value for our shareholders. Our team remains highly focused every day on executing it.

From time to time during discussions with our investors and analysts, we were asked what differentiates UDR from our peers. I believe there are several value creation drivers that are applicable to the multi-family space and currently UDR is uniquely positioned to take advantage of each of them.

First, we have the necessary scale to Garner cost of capital and G & A efficiencies, but are small enough that moderately-sized transactions still move the value creation needle. Second, we have a best-in-class operating platform. Third, we have substantially and accretive development programs. Fourth, our portfolio is primarily bicoastal, but diverse enough to generate strong results and a variety of economic environments. And lastly we have a unique relationship with a Fortune 50 Company in MetLife that affords us favorable capital along with opportunities unavailable to many others.

I will conclude my remarks by observing that the most vital component of successful execution of our plan is our people. I'm fortunate to have in place an experienced and dedicated team of customer focused associates, and believe we will achieve outstanding results against each of our priorities we have set forth today.

With that I'll open up the call to Q & A.

Thank you, sir.

(Operator Instructions)

Our first question comes from the line of Nick Joseph with Citigroup.

Thanks, in terms of the equity issuance assumed in 2014 guidance in the three year plan, your stock continues to trade at a discount. Will you forego that equity and if so how do you expect to replace that capital?

Hey, Nick. It's Tom Herzog. Yes, if we're not trading at or above NAV, we will forego that equity issuance and would replace it with additional asset sales from our capital warehouse or co-markets.

Okay, thanks. And Jerry can you give the new and renewal rate growth by month and for January and where renewals are going up for February and March?

By every market?

No, total portfolio.

Sure, January new rent growth was 0.1%, the lows were once again the Mid Atlantic where it was in the 4%s, down 4%. We did have strength in the Pacific Northwest as well as San Francisco, where it was up around 5% to 6%. And then renewals in January were signed at 4.9%. We're sending out 5% to 5.2% for the remainder of this quarter.

Okay, great, thank you.

I would add we do expect new lease growth for the quarter to average out to about 1.3%. It does look like it's going to accelerate the following two months, and that compares to about 2.2% in the first quarter of last year. We think renewals will average for the first quarter of this year 5%, and that's down from about 5.8% last year.

Okay and then where's occupancy at the end of January?

At the end of January, it was about 96.1, 96.2. As of yesterday, after we had some month end move outs, it was 95.9, and that's 20 basis points higher than the same time last year.

Great, thanks.

Sure.

Thank you, our next question comes from the line of Alexander Goldfarb with Sandler O'Neill.

Good morning out there. The first question is on Slide 7, Tom, you guys talk about $1.2 billion development pipeline that should be about $0.06 accretive. If my quick math, which is always a dangerous thing, is right, that seems to imply about a 1.3% spread. Last week, Avalon talked about a 250 basis point spread on their development program versus funding source. So can you just comment a little bit more? Is this just adding in cushion just because it's a forward projection and, therefore, you have no way of knowing where disposition pricing may be or equity pricing may be? Or is this just -- or is there something else going on here?

No, Alex as we look at the development program, that $0.06 is based on our current portfolio, which would, call it, it's in the middle of the range between the 150 to 200 basis point spread. And if you run that math, you'll see the drag that results from it, you'll see the accretion that builds in that at the point of stabilization it will produce that $0.06. So that is based on pretty much right down the middle of 175 basis point spread from the cap rates in those corresponding Markets. That's how the math will work.

So it's 175?

Yes. It's actually slightly higher than 175, I think we're running more like just maybe 10 basis points higher than that on average across the modeling that we've done in our portfolio currently, but just call it in that range it will be about $0.06.

Okay so the $0.06 is not the 175. The $0.06 more reflects the impact of timing?

Timing, but probably call it 180 to185 basis point spread.

Okay, next question is for Mr. Toomey. Putting on your big picture hat, if you took a read of the SXBRE proxy, it looks like there were only four companies that were sort of interested BRE and only one bid. In your view, looking over the history of M&A and REIT-Land, is it your view that it's typical that M&A only comes down to maybe one maybe two people who actually throw in bids, or you think it's a reflection of where pricing is today, or companies' hesitancy to engage in deals because of where stock prices are?

Boy, Alex, been out a long time, even through the 94 window where we started out with 36 public companies, and there it was a race to get larger, and it was a cost of capital, multiple gain. I think what you have today is 10 companies that are very well run, very efficient, not a lot of upside in the companies and so that brings down how we can create value for the future investor to really cost capital advantage, and that shrinks the pool of potential buyers. I think there's probably more value to be bought in the private space and that's where people are headed today and you can see it in their accumulation of portfolios. So I think these just well run companies hard to see a lot of upside in it, and that just shrinks the pool of buyers, that's all I'd observe.

Okay, thank you.

Thank you. Our next question comes from the line of Nick [Likho] with UBS.

Oh, thanks, hello, everyone. A couple just quick modeling questions. One, could you get the capitalized interest estimate for 2014?

Yes, that's something that we normally don't layout in detail, but you can take what we had last year and then we speak to the change in cap interest from one year to the next. So I think you can back into it.

Okay, sorry what was the change in cap interest this year versus last year you said? You talked about that?

It's a penny on the development redevelopment project.

Okay got you, thanks and then on DC, I was hoping to get a little bit more detail on what your same-store revenue expectation is for the market this year?

Sure, this is Jerry. Our expectation is in 2014 we, like everyone else, will see a deceleration in DC, due to new supply. We do continue to believe DC will be positive, albeit a low positive revenue growth, probably call it in the 1% to 2% range.

What we think we have that some of our peers don't is locations that are less than direct path of new supply, as well as a portfolio that is a little over half of B quality rather than A, and those definitely don't go head to head as much. But, you have two or three Markets where new supply is coming out at us. One is out in Manassas, one is the U-street corridor and the third one is in Woodbridge.

Many of our properties are in within true Washington DC, are not in the same neighborhoods as the new supply. But I can't tell you and you see it in the supplement where we show what new rents were in fourth quarter. We have seen a deceleration on what we can get on new rents, but we are continuing to see renewals go out in the 3% to 4% range, and we are holding occupancy.

Just one last question on the three year plan. It looks like, based on some of the development spend projections, that you're going to start, I guess target to start roughly $1 billion of additional development. And what I'm wondering is, going back to that $0.06 FFO benefit once stabilized on the current $1.2 billion development pipeline, is that going to be a similar type of FFO benefit if you do in fact start $1 billion and a little over $1 billion of development?

You got to remember that if we take the $1.2 billion pipeline, that's completed over a period of about 3 years, 2.5 years to 3 years let's say. So we assume $400 million to $600 million of spend per year, you're correct that the $0.06 is the completion of the existing $1.2 billion development. We had starts at the end of 2013 of about $250 million.

We expect a couple more projects to be announced probably the latter half of 2014, but we haven't announced a specific dollar amount of new development starts in 2014 at this state yet. But we're still underwriting to the 150, 200 basis point trend in spread over cap rates, so the kind of accretion that you would see for the types of projects that we're approving on a relative size basis would be similar.

I guess I was just trying to figure out if the development spending is supposed to total $1.5 billion from 2014 to 2016, you have about $450 million left on the existing pipeline, that seems to imply about $1 billion of incremental starts.

Yes, you've got to go to our shadow pipeline page and you'll find in, where's that at?

Page 6.

Page 6, if you took the ownership affected numbers and assume that the MetLife numbers were at 50/50 by the time we started development, along with our 100% owned stuff you get an ownership effective number in the $600million to $750 million range. Plus you've got Pacific City on top of that so those -- we do have already a shadow pipeline in place on top of what's already under development.

So for the time frame that we're looking at, I think we're in good shape for what we're speaking to with the $600 million per year.

Okay thanks.

Thank you. Our next question comes from the line of Karin Ford with KeyBanc Capital Markets.

Hi, good morning. Just looking at Page 8 of the slides, it looks like your 2015, 2016 same-store revenue growth expectations are roughly in line just a little bit below what you're expecting for 2014. Can you just talk about what fundamental underpinning gives you the confidence that revenue growth will stay steady here for three years, and what you think the biggest risks to that are?

Yes, again this is Tom Herzog, and I'm going to pass this to Jerry. But a variety of different things, and the further out we go, of course, the harder it is to make these estimates. But we looked at the Axio data, the Moody' s data, all the way from pieces that you guys write and have put our own views toward that. We've got an improved job market that should more than offset the new supply estimates in the vast majority of our Markets over the next 2 to 3 years. In the markets being hit harder, like DC and Seattle and Austin, our specific locations within each of these markets has sheltered us from the rent deceleration experienced by some of our peers.

We see supply flattening out in the latter half of 2014 and first half of 2015, due to the higher construction costs, interest rates, the less explosive rate growth. And another point that I think is worth making is just take a look at what's happened with single family housing. If you took a home 12 months ago and then looked at the year-over-year increase in value, it's about 12%. Higher in some of our Markets but 12% across all Markets.

And if you took mortgage rates they're up 120 basis points from a 3.5 base, add that together and do the math it's about a 30% increase in mortgage payments. That along with social patterns that continue to favor rent in, we're just seeing that the growth is going to continue to be favorable. So when we look at a 3.9% 2014 growth flattening out to 3.75% in 2015, 2016 is kind of a long ways to look out, but we're not seeing anything that looks different than that, but again it's easier. We feel pretty good about it, but Jerry, maybe more on specifics as to how you see it.

Sure, hi, Karin.

Just a few things I would add to what Tom Herzog said. First, when we look out into 2015 and 2016, what's projected for job growth, we look in our core Markets and we see that job growth is projected to be 20 to 30 basis points higher in our core Markets. In addition to that, we see that new supply growth is probably going to be a little below average in 2015 and 2016, after being above the national average in 2013 and 2014.

Also, when we go back and look at what percentage of households are renters in our core market it's 42% compared to 35% as a national average. So we see those stats and it's encouraging.

One other thing is, when you look at an urban platform that we've really moved towards, many of our residents don't own cars. They reply on public transportation and one interesting tidbit I picked up a few weeks ago at the National Multi Housing Conference was that transportation costs are the second largest cost component of households. So when I look at a suburban household of renters that have two drivers, you're probably talking transportation cost when you include car payment, insurance, gas, repairs, tolls, parking, things like that, are well over $1,000 a month.

Most of my residents don't have that cost, and in addition, when I look at my percentage of rent to income across all of my markets, it typically has fallen out anywhere between 15% and 20%, regardless of the market. So we do feel that those urban renters, if they are getting normal pay increases of 2% to 3% across the board, better be able to handle increases over time than our suburban peers. Tom anything you would add?

Yes, Karin, I think it's a very good question, and when I back up and look through all of the detail at Tom and Jerry go through to build this up, what you realize about our 2014, 2015 and 2016 outlook, I'd throw this observation at it.

2014 and 1205 are going to look very much alike in our view. And why do we have a lot of high comfort around that aspect of it? It's clearly that we have high visibility on new supply, a very good feel about employment picture, about our individual markets. So we feel very good about 2014, 2015 aspects of it. And, as you get out to 2016, it's very hard to ask our site teams to build up a projection to understand supply and growth dynamics, and so we ended up defaulting to a lot of third-party analysis to arrive at 2016.

And I think that's a relatively conservative view, but one that is easily explained, and as I would take it away from your chair, I'd say these guys feel very confident about their 2014, 2015 forecast, and they are going to look a lot a like at this point in time. And 2016 is just a wild card that's a long time off in the future, and certainly as we get closer we'll have a better visibility and we hope a more optimistic view of it.

Thanks for the color. I appreciate that.

My second question just on guidance, question for Jerry. On Page 13 you give a lot of nice market specific information. Are there any of your Markets that you're expecting to accelerate from a same-store revenue growth perspective versus 2013?

Yes, I tell you there's a few that could accelerate slightly. Right now, Orlando is very strong as we enter this year. I could see it holding up well.

I'm hopeful, although I say this every year, about orange County and LA, we've had modest results there the last year or so. We've had a good start in January of this year, and I think those potentially could be a little bit better. And the other one that just continues to chug, even though it's a very small market for us, is Portland.

And would Boston potentially be in that category as well, or because you had a good year in 2013, maybe not?

No. It will not be. I tell you, we killed it in 2013. I want to say our total full year revenue growth was upwards of 8%, if I remember correctly, and to replicate it was 7.7%.

To replicate this year, things would have to turn around quite a bit. It's going to be a good market but won't be as great as last year.

Great. Thank you very much.

Thank you. Our next question comes from the line of Dave Bragg with Green Street Advisors.

Hi, good afternoon to you.

Hi, Dave.

I wanted to follow-up on Nick's earlier question, and I'm hoping that you can point us in the right direction, as it relates to the equity issuance, assumptions that you have in 2015, 2016 if it's unfortunate circumstance that the stock is not there for you over that time period, can you just walk us through what the alternatives are, whether it's significantly more dispositions than you plan here or higher leverage?

Yes, Dave, thanks for that. It definitely is not higher leverage. That's not the direction we're going. We have the benefit of having a $1.2 billion capital warehouse portfolio that we're in no rush to sell, but yet those are assets over time that will prune in a $300 million non-core portfolio.

When I think about equity issuance of course we think about it on a cost of equity, but when you look at it on an annual cost as it might apply to this plan, it's probably right around a 5% cost of -- an annual cost of funds on an AFFO yield basis. You compare that to sales and assume that we've got a six cap NOI cap rate, and that would include some sprinkling too of some non-core assets in core markets. That equates to about a 5.5% cash flow cap rate. So not terribly different than what the equity would look like to the bottom line of our plan in that particular year. ¶ So it comes down to this. We've got $1.5 billion of stuff that, over some period of time, we intend to prune and put into more higher growth assets, development assets, the type of assets that Harry's producing. So if we're not able to issue the equity, that's fine, we will sell assets.

But I will remind you guys one thing, or at least express to you one thing. We've done studies in 63% of the time over the last decade, we've traded at a premium to NAV, and there has only been one year in the last decade that we have not, that was 2013. So we do expect that, some time during the period of the plan, we probably will trade above NAV, and we'll utilize that opportunity to continue to grow the Company, which is something that we would intend to do over time, as well.

Okay, thank you for that. And my second question is on River Gate. How did the changes there affect the yield that you expect to achieve or that you are achieving on that asset?

Yes, let's take River Gate for a minute, Dave. River Gate was acquired as an acquisition rehab asset, and with that, as we think about that, we target a stabilized yield in excess of what we could have acquired a similar asset for that didn't require the rehab in that same market. Inclusive of this expanded budget, we believe we'll trend to about a 5% yield on a fully stabilized basis some time in 2016, which we feel really good about.

So that's just kind of the background, Harry what might you add to that?

Dave this is Harry, so just to speak specifically about the rehab. Our initial budget was $60 million and that was to rehab about 400 of the units that the prior owner hadn't touched, cure a lot of exterior items, the full exterior of the building, all new windows, a brand new lobby which we finished, all new AC and heating systems, that type of thing.

We finished that and in the course of both rehabing the property and operating it for the past 1.5 years, we found a number of additional opportunities to generate additional revenue and enhance our return. So this really is a Phase II and, for example of those items are, create a second floor amenity area in space that was previously unused. We're going to split an entire stack of large one bedroom, 950 square foot one bedrooms, and split them into a combination of 450 square foot studio and a 500 square foot junior one bedroom, which gives us a new entry point in the building.

We have 11 homes with very large terraces, which is unique amenity in this market, that we're going to increase the rehab scope. We're going to add washers and dryers to 194 units. So the point is we think we're going to add for that $38 million get another $375 or so in additional rent and generate about an 8% return on that incremental $38 million in spend.

And I'll remind you that in the 2.5 years we've owned it, the average rents and acquisition were about $3250. We've increased rents nearly 30% at that building. The rehab units are generating rents in excess of $4,300 today and we've got another 375 to go as a result of the Phase II.

Okay thank you for that, Harry.

Thanks, Dave.

Thank you. Our next question comes from the line of Ryan Bennett with Zelman & Associates.

Good afternoon. I just want to go back to the shadow development pipeline for a second. I was wondering if you had any color regarding your land parcels in California and Seattle, in terms of the sub markets where those land parcels are located, versus the new supply that's coming online now and the markets, as well as what's planned over the next couple years and the level of competition you might be expecting within those sub markets?

Sure, this is Harry. I'll go ahead and walk through those in general and, I guess, there's a number of different answers. But we've got four properties, five properties actually, on Wellshire Boulevard in Los Angeles from Santa Monica to Koreatown, which represent a big chunk of it. Also a lot of new supply in the LA areas downtown, none of these are downtown so these happen to be in sub markets that are not experiencing the rate of supply you're seeing in Los Angeles on the whole.

We've got one of the land parcels in Bellevue, Washington, that is again -- Bellevue, I think there's two projects under construction now, there's a couple more on the drawing board, Bellevue, again, is not getting nearly the same level of new supply as downtown Seattle is. We do have one property in Irvine that we could start later this year. The City of Irvine does have a fair amount of new supply. We think we'll be right in the middle, perhaps slightly ahead of the overall supply in that marketplace. But that is going to be something that we will deal with when we're leasing those projects up.

We've got one property on El Camino in Mountain View. The City of Mountain View has just delivered two brand new projects. Those are the first new projects that have been delivered in that city in a long time.

There's a couple others that are coming online, but the point is this is not an area where we expect a tremendous amount of new supply. It's just very difficult to get these types of sites entitled that takes a long time and we feel very good about the types of assets that will be starting over the next two or three years.

Got it. That's helpful, thank you and just one more. Jerry, in terms of your expense growth guidance over the next few years ranging around about 3%. I'm just curious given the expense savings programs that you've put in place for the past few years if you quantified what sort of savings that you're generating in the next three years?

Well, we continue to find new opportunities to save money, especially on the repairs and maintenance side. As we make our service associates more efficient, it will enable us to continue to bring third party cost in house, as well as doing more preventive maintenance, doing a better job at move in and during the residents time period with us where we're hopeful. I can't back this up yet, that we'll be able to drive resident turnover down.

But as I look at 2014, like you stated, we have expense growth projected at 3%. And if I had to break that down, we're looking at about 6% for tax increases next year, while 35% of our Company is in California or Oregon where you have caps on valuation increases, those will come in somewhere in the 2% to 3% range.

We're going to feel some pressure again in Washington DC, where taxes are projected currently to be going up close to double digits. It's a high-single digits, and in DC, it's about 14% of my total same-store pool. And then when you look at the rest of the Company, which is about half of it, they kind of all blend into about a 6% growth. So we're seeing taxes going up based on valuations about 5% and then we did receive some refunds last year that translate to the total expense going up about 6%.

As you look into the other components, we think insurance is going to be roughly flat with last year. We're seeing utilities probably coming in at about 4%. We're keeping our eye on the State of California for future years with severe multi-year drought conditions that have been happening. That could in the future have an impact on water rates to date. We really haven't seen that in any of our Markets.

But 2014, our expectation is our repairs and maintenance expense will be negative growth, once again. This past year it was down about 4% as we were able to bring more work in house, we think it will be down 2% in 2014. We see personnel going up net 3%, 3.5% range, and we still think we can become a little more efficient in the office, as well as on marketing side and drive down our administrative and marketing costs about 2%. And I really don't see anything, as we go out further years, and I think our 2015, 2016 projection is to be in that 3% range.

I would say upside risk is probably more on the utility side. I think taxes will start to moderate as valuations are fully built in. We think some municipalities may start looking to raise levy rates in the future, if they can't get it on valuation. Nobody in 2014 that we're looking at do we see expectations that rates will go up. But I do think this efficiency in repairs and maintenance has another year or so.

Great, thank you.

Thank you. Our next question comes from the line of Haendel St. Juste with Morgan Stanley. Please go ahead.

Hi guys, thanks for taking my question.

So let's go back to Boston for a minute. We're seeing a meaningful amount of supply expected to come on line over the next year or two there, particularly in the city core, and given your more urban footprint in Boston, can you talk a bit more about your expectations for your Boston portfolio, specifically in 2014? And can you give us some broad color on, proportionately, what proportion of your portfolio there is urban versus suburban and then A versus B?

Sure, Haendel, this is Jerry.

We really don't have that much urban. We have one property several hundred units in the back bay, Garrison Square that we've owned for several years. We have two same-store properties up in the North Shore that are more B quality. And then as you go down to Brain Tree and the South Shore, we have one same-store property.

We have various properties that we own with MetLife that are scattered around the suburbs, but we really have only one that's an urban core. And it is interesting, for the first time since we've purchased that deal 3 years, 3.5 years ago, it's having a bit of a struggle right now. I think some of it is due to new supply. I think the other part of it that we've experienced over the last 45 to 60 days is pretty bad weather, in that New England area that's made it difficult for people to get out and shop for apartments.

But the new supply is coming in that downtown area, predominantly. We think our one core asset, which is more of a brownstone four-story property, will be fine. But its been hurt a little bit. And right now I would tell you the strongest sub market that we see in Boston, and has been this way for the last 6 to 9 months, is down in the South Shore.

Appreciate that. So looking at the Northeast forecast here, you have Boston and New York effectively similar forecasting. Can you perhaps give us, well scratch that.

I Want to go to DC for a second. Can you give me the same relative assessment of DC -- your portfolio you mentioned earlier about your DC portfolio benefiting? Can you talk a bit more about your relative urban/suburban A versus B? And any sense of delta in revenue growth expectations there that you are forecasting for this year?

Sure. Some of this will be kind of off the cuff, but the B portfolio is 60% or so of our total DC holdings, when you look at the metro DC area. If I was doing the math in my head I would say, probably 50%-60% is outside of the Belt way, in the suburban portions of DC.

We have a couple of deals that are wholly owned that are A product that are in the line of new supply, most of that is in the U-street corridor. The B' s projected will go up when that probably 3% revenue growth, and this is with the exception of Manassas. That's a B product but we are getting cleaned up pretty good from new supply out there. And I would say the A' s within the belt way are probably flat to negative 1, as far as revenue growth projections.

Great and just one last one if I may. Can you guys talk a bit about the near term opportunity for redevelopment within the portfolio? The numbers in the book are grouped with development. Can you pars out the redevelopment and your sort of opportunity in the portfolio today for redevelopment and any type of commentary on returns, et cetera?

Yes, again, what we do is look at redevelopments two different ways. We have the acquisition rehabs where we speak [yield], and then redevelopment of an asset that's on book that will seek 7% to 9%, we've probably got out of the call it $400 million to $600 million that we're doing per year, maybe 10% of that is redevelopment.

We've got on the books right now or in the pipeline right now, River Gate as the only one that has any substantial spend left and 2775 winding down. It's not going to be a big number to us and, as far as what's in our portfolio right now, we're looking at a couple of opportunities but it's not going to be a huge part of our pipeline.

Thank you.

Thank you. Our next question comes from the line of Paula Poskon with Robert W Baird. Please go ahead.

Thanks, good afternoon, everyone.

Hi, Paula.

Going back to the four tenants of the updated strategic plan, accretive capital allocation, operational excellence, cash flow growth and balance sheet health, I must confess it sounds more to me like a mission statement that really any REIT ought to be guided by as opposed to a strategic plan for a finite period of time. So I was wondering if you could provide more specificity on some of the execution elements of each of those tenants? For example, what might be an example of a continued enhancement to the best-in-class operating platform?

I'll take that.

Paula, I think it's a very fair question and I would agree with your initial assessment that they should be the four tenants of any strategic plan and direction and clearly, you can see we build our plan around supporting those, we measure them, we report to our Board and discuss them constantly. As I think about it, what doesn't get discussed when strategic plans are put forth is the prioritization and the tradeoff.

Hopefully from this three year strategic plan, you can see that the tradeoffs that we're making are portfolio improvement is important, but cash flow growth, NAV growth, is our paramount driver and focus of this three year plan. And I would tell you the last decade the strategic priorities probably started with really started with portfolio. I mean we just did not have the right assets and right Markets and we had to move all of that out in a way and that took a decade and I'll tell you it took a lot longer than I thought, but I'm glad where we're at, so I would agree that we've toggled between those two and now are focused really on the cash flow and dividend per share growth, as well as the NAV per share.

The other aspects, operational excellence, Jerry will give you more specifics, but it's always been a strong tenant of the Company. You look year in and year out, we're always in the top part of the pack, and we measure it by market and how we perform and that's how our site teams are compensated is how they perform head-to-head in markets. So I feel like there's a lot of still potential there, this industry continues to grow and do well, but there's more room in that area and Jerry will give you specifics.

On the balance sheet, it's hard to put the balance sheet in the last decade as the first priority when we had so much work to be done on the portfolio. And you can see the last couple of years its come into focus, we think we're on the right path, and it will be a derivative of growing the cash flow and the NAV, and the balance sheet will improve as time occurs. So that's the tradeoff of the four are always critical in what we discuss, about which lever to pull, over what period of time, and the constant measure and monitoring of it. So I hope that helps a little bit. Jerry?

Yes, there's been quite a few things over the last four or five years that we've done on operational excellence that we'll continue and I'll say we never stop looking at ways to grow our margin and to provide a better customer experience. And it goes back years ago when we first started doing electronic Marketing and then we moved to electronic payment.

We just made our office staff much more efficient, and then we looked more at the director resident of that online renewals, online leasing going, and then really about two years ago we started looking at our maintenance teams and determined we were still doing things old school the way we've done them since the 1980s. And, in addition to technology, we've put up performance standards for our teams and expectations. We've rolled out better ways to order parts to transport parts and have mobile shops that go with our guys so they can become more efficient, and it's allowed us really if you would assume that our NIM cost should be going up 3%, we were down 4% this past year, its enabled us to cut those costs by about 7%.

We expect this year to have comparable type results with a downward expectation of repairs and maintenance, and we think we can play this out for a few more years with probably the final piece of this coming a couple years down the road with electronic locks that we think will be an amenity to our residents, as well as make our people more efficient.

On the expense side over the last really last 1.5 years, we started looking at other opportunities to generate revenue out of our existing resident base, and some of that was on things we call rentable items and there's storage, parking, garages, things like that, look we only had occupancy in those types of places of 45% to 50%. We've driven that occupancy up to 70%.

We think we can continue to drive it over the next couple years. And lastly we're looking at other opportunities that will help our residents get by and some of that is flexible payment plans or bi-weekly payments. Tings like that we've realized that a portion of our residents struggle to budget their own income and they would just like a lot of people to pay their mortgages bi-weekly. People would like to be able to pay their rent bi-weekly, and we've rolled that out this year. And, so far, in the states where it's allowable we've seen pretty good acceptance of this and people do see it as a benefit that I think will help us not only stay in good graces with our residents, but I think it's also going to help them manage their money better, and we're hopeful that it will help drive down our bad debt.

But it's things like that we're keeping our eyes open, watching competitors, watching other industries, listening to our customers, and I think the next step that we're really going to look at is what do our customers -- how do they feel about us and ratings, and things like that, and be able to respond more quickly and provide better customer service.

That is very insightful, thank you.

I might add one thing, Paula. When we think about the other two pieces of this that haven't been spoken of, Harry cited the of the business where we're developing assets, providing accretive returns, driving additional CV&I and growth for our shareholders we think is important, very important and you're seeing results of that now as the deliveries are starting to occur. But if you play that through for the balance of the $1.2 billion pipeline, we had a couple questions earlier about equity issuance and what happens if we don't issue equity.

Well, you'll see on this balance sheet page that we have on Page 10, we speak to different metrics and if we issued no equity, all we did was stay -- or at least we just stayed at a leverage neutral basis, we would still drive our net debt to EBITDA down to a 6.2 times, just with the delivery of Harry's development project. Which, again, we've spoken to one and two delivered to triple B plus or operate to triple B plus, BAA1 metrics, and so that all ties into the plan mechanically as we speak to each of the four tenants that you alluded to.

Thanks very much. And my second question is just on the assets that are being marketed for sale in Tampa and Orlando. What was it about those specific assets versus the others you have in the market that keep those up for sale, and on a house-keeping perspective, have those already been classified as discontinued ops?

Paula, this is Harry. I'll answer the first part of the question.

Tampa and Orlando are both within our capital warehouse, universe will also sell a few non-core assets this year, for a number of reasons as we go through and rate the assets having to do with expected cash flow growth, having to do with future capital news, having to do with expected buyer response, having to do with a number of operational issues, those are the four assets that rose to the top of the heap and the assets are up a size that will satisfy our necessary sales volume for the year, combined with a few others that we'll put in the market later this year.

Thanks and are those in discontinued ops?

Yes, the second part of the question is, no, they have not been included in discontinued ops. Until we get hard dollars down, our policy has been not to do that, which I think is fairly consistent with a lot of other REITs handle that.

Thanks so much gentlemen. Much appreciated.

Thank you.

Thank you. Our next question comes from the line of Michael Salinsky with RBC Capital Markets. Please go ahead.

Good afternoon guys.

Hi, Mike.

I think you mentioned a couple development starts. Can you give the dollar volume that you're looking for in terms of starts so we can see that in the pipeline? And then a question as it relates to leverage. The leverage statistics you provide on 10 look like they don't include the JVs. If you look at the business plan for 2014 and then going forward to 2016, can you talk about leverage in the context of how you're looking at managing your wholly owned balance sheet versus JV, and whether you see leverage come down the same amount for the total entity on a proportionate basis?

Yes, Tom Herzog. I'll start with this and Harry will jump in on the developments. The development charts for 2013, $250 million ownership effective between Steel Creek and 399 Fremont, a couple more starts in the second half of 2014, because Harry's working on a variety of different entitlements and we're doing a lot of underwriting right now to make sure we meet the return hurdles we have in place, we have not yet set forth a number as to what that might look like for the balance of 2014. Anything you'd add to that Harry?

We do have three assets that depending on the timing of completion of the design in various pre construction activities that we think we could start this year. Those types of numbers could be another couple hundred million in UDR share of incremental development starts this year, and again, as you know, we just started 399 Fremont in San Francisco.

The one you bought in the first quarter, would that be a 2014 start and would that be a wholly owned just given the size?

It is wholly owned and I think it's unlikely that it's a 2014 start.

Okay.

This is Toomey. We won't start a deal until we have a GMAC in hand and 100% drawing, and that time frame on most deals, if you even have entitlement is still a year.

You'd mentioned--

If you don't have entitlements to string out for many so we're just trying to be thoughtful in making sure we can nail the returns and pricing against cost of capital with the right back pattern. So we're in no hurry to start putting things in the ground that we don't have all the facts in hand.

I appreciate that and then Tom, could you address the JV leverage versus on balance sheet?

Yes, I don't think the numbers, Mike, will be too different than what some of you guys have published. But looking forward, so if we were let's just say fixed charge were in the mid-3's in 2014, net debt to EBITDA in the mid-6's, asset costs of call it the high 38% to probably 39%. If we take the pro rata joint venture debt and assets, we're looking more like the very low 3's for fixed charge, net debt is about a 7, so still looks pretty good, inclusive of pro rata debt, and then the debt to asset costs, the leverage is probably about a 42 or something like that. Those are the rough numbers that we put together based on the joint venture activity.

Appreciate that. And then just a follow-up.

Could you just give us a sense in your guidance you've identified a decent amount of acquisition volume. Is any of that identified and, in the same sense, in terms of dispositions, should we think about that kind of going throughout the year match funding or would you expect that to be all lumpy at one point?

Well, I would say that we certainly internally have looked at a pool of assets that we would seek to liquidate. Harry is going through that now testing the market, so we wouldn't seek to individual assets at this point. But Harry maybe you can give more color on how you're looking at that.

On the acquisition side we did -- we acquired the land parcel and in Orange County in January, in terms of other acquisitions that fall within our guidance, as always we'll speak to those once we have something to talk about meaning it's the hard contract and a deal that's ready to close.

On the sale side we have the four in the market I talked about and others will come in the market throughout the year. This continues to be a very liquid disposition environment and transaction environment. This is a year where if you look at 2013, it was over $100 billion in trade, so the disposition environment continues to be very liquid.

Thank you much.

We have one more in the queue and we'll cut it off after that.

Thank you. Our next question comes from the line of Rich Anderson with BMO Capital Markets.

I knew it had to be me.

First Public Service announcement, CV& I is NAV plus dividend. I did not know that. Many thanks to Chris, I doubt many people on the call knew that. How do you get NAV equals CV& I, Tom? Or CV?

NAV equals CV& I? Is that what you said?

No. NAV plus dividend is CV&I?

Yes, it's NAV, it's actually not that. It's the change in NAV plus dividends reinvested at the then NAV create CV&I.

Okay got you.

It's the old Warren Buffett take change in NAV plus dividend and reinvest it back in at NAV.

Okay thanks for that. The mention of issuing stock once you get over NAV, why does that not put a ceiling on the stock if you're basically going to say you're going to raise equity since you're above NAV?

Well it doesn't necessarily mean we will raise equity above NAV, but we certainly might, so I wouldn't see that as putting a ceiling on the stock.

Okay, and then last question, big picture for Toomey. It was brought up awhile ago about M&A. What do you think about all this work you've done to put yourselves in high barrier market? You probably don't feel like you get properly valued for all of the work that you've done to put 80% of your portfolio in coastal high barrier markets. What about UDR as a seller if the right price came along? Is that in the mind set there?

Well, I think we can't control that, and the market will be what it's going to be and what we can do is grow our business, grow our cash flow, grow our NAV, and if the chips fall and there's an offer, that's what you have a Board of Directors for and a Management team that has alignment of interest with the shareholders and we'll conduct ourself accordingly.

So we don't seek it out. I think it's a consequence and for us we can only put forth our plan, execute on it. We think it's the right plan and are excited about the plan.

Okay that's all I have. I'll keep it short, thank you.

No, thank you.

I would like to turn it back over to Management for closing remarks. Please go ahead.

A brief closing. First thank you for your time today and certainly for the very good set of questions. Clearly, we've put forth an updated three year plan. We feel good about that plan.

You can see through the transparency of it what we expect to do. Like 2013, we feel good about that execution, have the right resources in the room, the right environment, and are excited about not just performing at it but exceeding it. And we will see many of you at investor conferences throughout the part of the season and look forward to seeing you and discussing it in more detail, and the rest of us will get to work and execute.

Ladies and Gentlemen this does conclude our conference for today. Thank you for your participation. You may now disconnect.