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How UDR Plans to Increase Shareholder Returns


Dec. 4 2020, Updated 10:53 a.m. ET

Strategy of maximizing returns

UDR’s (UDR) principal business strategy is to maximize the economic returns of its apartment communities to provide higher shareholder returns and value. The company’s vision is to be the innovative multifamily public REIT of choice.

The company intends to pursue the following steps to achieve its vision:

  • own and operate apartments in high barrier-to-entry markets characterized by limited land for new construction, difficult and lengthy entitlement processes, low single-family home affordability, and strong employment growth potential in order to enhance the stability and predictability of returns to the stockholders
  • manage real estate cycles by taking an opportunistic approach to buying, selling, renovating, developing, and redeveloping apartment communities
  • continuously strengthen the portfolio’s quality
  • manage capital structure to enhance the predictability of earnings and dividends
  • drive organic growth and expand margins

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Redeploying capital

The company plans to continue the strategy of exiting markets where long-term growth prospects are limited, redeploying capital to primary locations in markets that are expected to provide the best investment returns.

Strategy enhances market position

UDR believes that its operating strategy has produced positive results in recent years. The company expects its strategy to help it increase profitability more while maintaining a strong balance sheet and liquidity position in the years to come. The strategy is also expected to help thwart competition from other major players like AvalonBay Communities (AVB), Equity Residential (EQR), and Essex Property Trust (ESS). The SPDR Dow Jones Wilshire Global Real Estate ETF (RWO) invests 1% of its portfolio in Essex Property Trust.

In the next article, we’ll analyze UDR’s revenue.


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