NONCONTROLLING INTERESTS

UDR Lighthouse DownREIT L.P. Formation

In October 2015, in connection with the acquisition of the properties from Home OP, described in Note 4, Real Estate Owned, the Company, as the sole general partner and a limited partner, and the Operating Partnership, as a limited partner, entered into the Agreement of Limited Partnership (the “DownREIT Partnership Agreement”) of the DownREIT Partnership.

As the sole general partner of the DownREIT Partnership, the Company has full, complete and exclusive discretion to manage and control the business of the DownREIT Partnership and to make all decisions affecting the business and assets of the DownREIT Partnership, subject to certain limitations set forth in the DownREIT Partnership Agreement. As of the closing of the transactions, the Company and the Operating Partnership owned approximately 8.5% and 41.6%, respectively, of the DownREIT Units, which they received in exchange for their contribution of the following properties to the DownREIT Partnership:



Property		Location
Ridge at Blue Hills^(a)		Braintree, MA
Residences at the Domain^(a)		Austin, TX
Inwood West^(b)		Woburn, MA
Thirty377^(b)		Dallas, TX
Legacy Village^(b)		Plano, TX
Delancey at Shirlington^(b)		Arlington, VA
Circle Towers^(b)		Fairfax, VA
Barton Creek Landing^(b)		Austin, TX
The Whitmore^(b)		Arlington, VA

(a) Contributed by the Company.
(b) Contributed by the Operating Partnership.

The limited partners have no power to remove the Company as general partner of the DownREIT Partnership. The DownREIT Partnership is structured to make distributions in respect of DownREIT Units that will be equivalent to the distributions made to holders of the Company’s common stock. Subject to certain terms and conditions set forth in the DownREIT Partnership Agreement, limited partners in the DownREIT Partnership (other than the Company and its affiliates) have the right, commencing one year after the date of issuance, to tender their DownREIT Units for redemption for cash or, at the Company’s election, for shares of its common stock on a one-for-one basis (subject to the anti-dilution adjustments provided in the DownREIT Partnership Agreement).

Redeemable Noncontrolling Interests in the Operating Partnership and DownREIT Partnership

Interests in the Operating Partnership and the DownREIT Partnership held by limited partners are represented by OP Units and DownREIT Units, respectively. The income is allocated to holders of OP Units/DownREIT Units based upon net income attributable to common stockholders and the weighted average number of OP Units/DownREIT Units outstanding to total common shares plus OP Units/DownREIT Units outstanding during the period. Capital contributions, distributions, and profits and losses are allocated to noncontrolling interests in accordance with the terms of the partnership agreements of the Operating Partnership and the DownREIT Partnership.

Limited partners of the Operating Partnership and the DownREIT Partnership have the right to require such partnership to redeem all or a portion of the OP Units/DownREIT Units held by the limited partner at a redemption price equal to and in the form of the Cash Amount (as defined in the partnership agreement of the Operating Partnership or the DownREIT Partnership, as applicable), provided that such OP Units/DownREIT Units have been outstanding for at least one year. UDR, as the general partner of the Operating Partnership and the DownREIT Partnership may, in its sole discretion, purchase the OP Units/DownREIT Units by paying to the limited partner either the Cash Amount or the REIT Share Amount (generally one share of Common Stock of the Company for each OP Unit/DownREIT Unit), as defined in the partnership agreement of the Operating Partnership or the DownREIT Partnership, as applicable. Accordingly, the Company records the OP Units outside of permanent equity and reports the OP Units at their redemption value using the Company’s stock price at each balance sheet date.

The following table sets forth redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership for the years ended December 31, 2015 and 2014 (dollars in thousands):



	Year Ended December 31,
	2015			2014
Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership, beginning of year	$	282,480		$	217,597
Mark-to-market adjustment to redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership	102,703			73,954
DownREIT Units issued for real estate, net	563,836			—
Conversion of OP Units to Common Stock	(3,817		)	(4,372		)
Net income/(loss) attributable to redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership	16,773			5,511
Distributions to redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership	(15,231		)	(10,077		)
Allocation of other comprehensive income/(loss)	(308		)	(133		)
Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership, end of year	$	946,436		$	282,480

The following sets forth net income/(loss) attributable to common stockholders and transfers from redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership for the following periods (dollars in thousands):



	Year Ended December 31,
	2015		2014		2013
Net income/(loss) attributable to common stockholders	$	336,661	$	150,610	$	41,088
Conversion of OP units to UDR Common Stock	3,817		4,372		1,817
Change in equity from net income/(loss) attributable to common stockholders and conversion of OP units to UDR Common Stock	$	340,478	$	154,982	$	42,905

Noncontrolling Interests

Noncontrolling interests represent interests of unrelated partners in certain consolidated affiliates, and is presented as part of equity in the Consolidated Balance Sheets since these interests are not redeemable. During the years ended December 31, 2015, 2014, and 2013, Net (income)/loss attributable to noncontrolling interests was less than $0.1 million.