Debt (UNITED DOMINION REALTY, L.P.)

9 Months Ended

Sep. 30, 2014

SECURED AND UNSECURED DEBT

The following is a summary of our secured and unsecured debt at September 30, 2014 and December 31, 2013 (dollars in thousands):



	Principal Outstanding				For the Nine Months Ended September 30, 2014
					Weighted Average Interest Rate		Weighted Average Years to Maturity	Number of Communities Encumbered
	September 30, 2014		December 31, 2013
	September 30, 2014		December 31, 2013
Secured Debt:
Fixed Rate Debt
Mortgage notes payable (a)	$	438,172	$	445,706	5.47	%	1.8	8
Fannie Mae credit facilities (b)	623,754		626,667		4.99	%	4.3	22
Total fixed rate secured debt	1,061,926		1,072,373		5.19	%	3.2	30
Variable Rate Debt
Mortgage notes payable	31,337		63,595		1.94	%	2.3	1
Tax-exempt secured notes payable (c)	94,700		94,700		0.77	%	8.4	2
Fannie Mae credit facilities (b)	211,409		211,409		1.58	%	5.8	7
Total variable rate secured debt	337,446		369,704		1.39	%	6.2	10
Total Secured Debt	1,399,372		1,442,077		4.27	%	4.0	40

Unsecured Debt:
Commercial Banks
Borrowings outstanding under an unsecured credit facility due December 2017 (d) (f)	160,000		—		1.10	%	3.2
Senior Unsecured Notes
3.70% Medium-Term Notes due October 2020 (net of discounts of $48 and $54, respectively) (f)	299,952		299,946		3.70	%	6.0
4.63% Medium-Term Notes due January 2022 (net of discounts of $2,613 and $2,882, respectively) (f)	397,387		397,118		4.63	%	7.3
3.75% Medium-Term Notes due July 2024 (net of discount of $1,017) (e) (f)	298,983		—		3.75	%	9.8
1.30% Term Notes due June 2018 (f)	35,000		35,000		1.30	%	3.7
1.53% Term Notes due June 2018 (f)	100,000		65,000		1.53	%	3.7
5.13% Medium-Term Notes due January 2014	—		184,000		—	%	—
5.50% Medium-Term Notes due April 2014 (net of discount of $20)	—		128,480		—	%	—
5.25% Medium-Term Notes due January 2015 (net of discounts of $37 and $134, respectively)	325,138		325,041		5.25	%	0.3
5.25% Medium-Term Notes due January 2016	83,260		83,260		5.25	%	1.3
2.17% Term Notes due June 2018 (f)	215,000		250,000		2.17	%	3.7
8.50% Debentures due September 2024	15,644		15,644		8.50	%	10.0
4.25% Medium-Term Notes due June 2018 (net of discounts of $1,572 and $1,893, respectively) (f)	298,428		298,107		4.25	%	3.7
Other	28		30		N/A		N/A
Total Unsecured Debt	2,228,820		2,081,626		3.80	%	4.9
Total Debt	$	3,628,192	$	3,523,703	3.98	%	4.5

Our secured debt instruments generally feature either monthly interest and principal or monthly interest-only payments with balloon payments due at maturity. For purposes of classification of the above table, variable rate debt with a derivative financial instrument designated as a cash flow hedge is deemed as fixed rate debt due to the Company having effectively established a fixed interest rate for the underlying debt instrument. Secured debt encumbers $2.3 billion or 26.9% of UDR’s total real estate owned based upon gross book value ($6.1 billion or 73.1% of UDR’s real estate owned based on gross book value is unencumbered) as of September 30, 2014.

(a) At September 30, 2014, fixed rate mortgage notes payable are generally due in monthly installments of principal and interest and mature at various dates from December 2014 through May 2019 and carry interest rates ranging from 3.43% to 5.94%.

The Company will from time to time acquire properties subject to fixed rate debt instruments. In those situations, the Company records the secured debt at its estimated fair value and amortizes any difference between the fair value and par to interest expense over the life of the underlying debt instrument. The Company had a reduction to interest expense based on the amortization of the fair market adjustment of debt assumed in the acquisition of properties of $1.3 million and $3.8 million during the three and nine months ended September 30, 2014, respectively, and $1.3 million and $3.8 million during the three and nine months ended September 30, 2013, respectively. The unamortized fair market adjustment was a net premium of $8.0 million and $11.8 million at September 30, 2014 and December 31, 2013, respectively.

(b) UDR has three secured credit facilities with Fannie Mae with an aggregate commitment of $835.2 million at September 30, 2014. The Fannie Mae credit facilities are for terms of seven to ten years (maturing at various dates from May 2017 through July 2023) and bear interest at floating and fixed rates. At September 30, 2014, $623.8 million of the outstanding balance was fixed and had a weighted average interest rate of 4.99% and the remaining balance of $211.4 million had a weighted average variable interest rate of 1.58%.

Further information related to these credit facilities is as follows (dollars in thousands):



	September 30, 2014			December 31, 2013
Borrowings outstanding	$	835,163		$	838,076
Weighted average borrowings during the period ended	836,305			839,597
Maximum daily borrowings during the period ended	837,564			841,494
Weighted average interest rate during the period ended	4.1		%	4.2		%
Weighted average interest rate at the end of the period	4.1		%	4.1		%

(c) The variable rate mortgage notes payable that secure tax-exempt housing bond issues mature in August 2019 and March 2032. Interest on these notes is payable in monthly installments. The variable rate mortgage notes have interest rates of 0.74% and 0.79% as of September 30, 2014.

(d) As of September 30, 2014, the Company has a $900 million unsecured revolving credit facility that matures in December 2017. The credit facility has a six month extension option and contains an accordion feature that allows us to increase the facility to $1.45 billion. Based on the Company’s current credit rating, the credit facility carries an interest rate equal to LIBOR plus a spread of 100 basis points and a facility fee of 15 basis points.

The following is a summary of short-term bank borrowings under UDR’s bank credit facility at September 30, 2014 and December 31, 2013 (dollars in thousands):



	September 30, 2014			December 31, 2013
Total revolving credit facility	$	900,000		$	900,000
Borrowings outstanding at end of period (1)	160,000			—
Weighted average daily borrowings during the period ended	321,821			169,844
Maximum daily borrowings during the period ended	625,000			372,000
Weighted average interest rate during the period ended	1.2		%	1.2		%
Interest rate at end of the period	1.1		%	1.3		%

(1) Excludes $2.2 million of letters of credit at September 30, 2014 and December 31, 2013.

(e) On June 26, 2014, the Company issued $300 million of 3.750% senior unsecured medium-term notes due July 1, 2024. Interest is payable semi-annually beginning on January 1, 2015. The notes were priced at 99.652% of the principal amount at issuance and had a discount of $1.0 million at September 30, 2014. The Company used the net proceeds to pay down borrowings outstanding on our $900 million unsecured credit facility and for general corporate purposes. The notes are fully and unconditionally guaranteed by the Operating Partnership.

(f) The Operating Partnership is a guarantor at September 30, 2014 and December 31, 2013.

The aggregate maturities, including amortizing principal payments of unsecured and secured debt, of total debt for the next five calendar years subsequent to September 30, 2014 are as follows (dollars in thousands):



Year	Total Fixed Secured Debt		Total Variable Secured Debt		Total Secured Debt		Total Unsecured Debt (a)		Total Debt
2014	$	37,835	$	—	$	37,835	$	—	$	37,835
2015	197,359		—		197,359		323,874		521,233
2016	136,434		31,337		167,771		82,417		250,188
2017	177,955		65,000		242,955		160,000		402,955
2018	176,472		50,000		226,472		648,510		874,982
Thereafter	335,871		191,109		526,980		1,014,019		1,540,999
Total	$	1,061,926	$	337,446	$	1,399,372	$	2,228,820	$	3,628,192

(a) With the exception of the 1.30% Term Notes due June 2018 and the revolving credit facility which carry a variable interest rate, all unsecured debt carries fixed interest rates.

We were in compliance with the covenants of our debt instruments at September 30, 2014.

United Dominion Reality L.P. [Member]

Entity Information [Line Items]

DEBT

Our secured debt instruments generally feature either monthly interest and principal or monthly interest-only payments with balloon payments due at maturity. For purposes of classification in the following table, variable rate debt with a derivative financial instrument designated as a cash flow hedge is deemed as fixed rate debt due to the Operating Partnership having effectively established the fixed interest rate for the underlying debt instrument. Secured debt consists of the following as of September 30, 2014 and December 31, 2013 (dollars in thousands):



	Principal Outstanding				For the Nine Months Ended September 30, 2014
	September 30, 2014		December 31, 2013		Weighted Average Interest Rate		Weighted Average Years to Maturity	Number of Communities Encumbered
Fixed Rate Debt
Mortgage notes payable	$	380,506	$	386,803	5.46	%	1.8	5
Fannie Mae credit facilities	378,709		379,003		4.71	%	4.7	10
Total fixed rate secured debt	759,215		765,806		5.09	%	3.3	15
Variable Rate Debt
Tax-exempt secured note payable	27,000		27,000		0.74	%	17.5	1
Fannie Mae credit facilities	142,058		142,059		1.88	%	7.0	5
Total variable rate secured debt	169,058		169,059		1.70	%	8.7	6
Total Secured Debt	$	928,273	$	934,865	4.47	%	4.3	21

As of September 30, 2014, the General Partner had secured credit facilities with Fannie Mae with an aggregate commitment of $835.2 million with $835.2 million outstanding. The Fannie Mae credit facilities are for an initial term of seven to 10 years (maturing at various dates from May 2017 through July 2023) and bear interest at floating and fixed rates. At September 30, 2014, $623.8 million of the outstanding balance was fixed and had a weighted average interest rate of 4.99% and the remaining balance of $211.4 million on these facilities had a weighted average variable interest rate of 1.58%.

The following information relates to the credit facilities allocated to the Operating Partnership (dollars in thousands):



	September 30, 2014			December 31, 2013
Borrowings outstanding	$	520,768		$	521,062
Weighted average borrowings during the period ended	521,480			522,007
Maximum daily borrowings during the period	522,265			523,187
Weighted average interest rate during the period ended	3.9		%	4.2		%
Interest rate at the end of the period	3.9		%	4.1		%

The Operating Partnership may from time to time acquire properties subject to fixed rate debt instruments. In those situations, management will record the secured debt at its estimated fair value and amortize any difference between the fair value and par to interest expense over the life of the underlying debt instrument. The unamortized fair value adjustment of the fixed rate debt instruments on the Operating Partnership’s properties was a net premium of $7.1 million and $10.0 million at September 30, 2014 and December 31, 2013, respectively.

Fixed Rate Debt

Mortgage notes payable. Fixed rate mortgage notes payable are generally due in monthly installments of principal and interest and mature at various dates from December 2015 through May 2019 and carry interest rates ranging from 3.43% to 5.94%.

Secured credit facilities. At September 30, 2014, the General Partner had borrowings against its fixed rate facilities of $623.8 million, of which $378.7 million was allocated to the Operating Partnership based on the ownership of the assets securing the debt. As of September 30, 2014, the fixed rate Fannie Mae credit facilities allocated to the Operating Partnership had a weighted average fixed interest rate of 4.71%.

Variable Rate Debt

Tax-exempt secured note payable. The variable rate mortgage note payable that secures tax-exempt housing bond issues matures March 2032. Interest on this note is payable in monthly installments. The mortgage note payable has an interest rate of 0.74% as of September 30, 2014.

Secured credit facilities. At September 30, 2014, the General Partner had borrowings against its variable rate facilities of $211.4 million, of which $142.1 million was allocated to the Operating Partnership based on the ownership of the assets securing the debt. As of September 30, 2014, the variable rate borrowings under the Fannie Mae credit facilities allocated to the Operating Partnership had a weighted average floating interest rate of 1.88%.

The aggregate maturities of the Operating Partnership’s secured debt due during each of the next five calendar years subsequent to September 30, 2014 are as follows (dollars in thousands):



	Fixed				Variable
Year	Mortgage Notes		Credit Facilities		Tax Exempt Notes Payable		Credit Facilities		Total
2014	$	2,134	$	89	$	—	$	—	$	2,223
2015	193,075		366		—		—		193,441
2016	131,946		385		—		—		132,331
2017	1,630		15,640		—		6,566		23,836
2018	1,685		161,754		—		46,272		209,711
Thereafter	50,036		200,475		27,000		89,220		366,731
Total	$	380,506	$	378,709	$	27,000	$	142,058	$	928,273

Guarantor on Unsecured Debt

The Operating Partnership is a guarantor on the General Partner’s unsecured revolving credit facility with an aggregate borrowing capacity of $900 million, $250 million of term notes due June 2018, $100 million of term notes due June 2018, $300 million of medium-term notes due June 2018, $300 million of medium-term notes due October 2020, $400 million of medium-term notes due January 2022, and $300 million of medium-term notes due July 2024. As of September 30, 2014, the outstanding balance under the unsecured revolving credit facility was $160.0 million. As of December 31, 2013, there were no outstanding borrowings under the unsecured revolving credit facility.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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