Demand Will Continue to Outpace Apartment Supply

Tom Toomey, president and CEO of UDR Inc., (NYSE: UDR) is confident about the short term and long term fundamentals in the apartment sector. In a video interview with REIT.com at REITWorld 2011: NAREIT’s Annual Convention for All Things REIT in Dallas at the Hilton Anatole hotel, Toomey said 2011 has been a great year.

So far UDR has done more than $4 billion in transactions, according to Toomey. The company has spent $1 billion in the New York market alone.

Toomey discussed the company's plan in the New York market and said that the recent transactions represent two different strategies. The first are undermanaged properties with a potential upside for redevelopment and he said the other is an investment in the financial district next to the rebuilt world trade center area.

"All of that office space that you find down there is being occupied and when you look a the submarket what you find is there's very little housing, so we decided to make a significant investment, a little over $600 million, in buying two buildings right down in the financial district," he said.

Concerns of overbuilding to meet the growing renter demand are not a concern of Toomey’s right now. He said while there's always a risk, it doesn't feel like one now.

"We are coming off a generational low, but even as the supply doubles it will not keep up with the demand side of that equation," said Toomey. "The demand between now and 2015 and 2016 looks like there are about 4 or 5 million renters on top of the 40 million. We can't meet that demand so I'm not worried about overbuilding at this point.”

Looking ahead to 2012 Toomey predicts that all of UDR's value creators, from operators to development to redevelopment, all have a great number of opportunities in front of them.

However, he is concerned about volatility in the REIT space but has plans to tackle that challenge.

"Volatility and the interconnectivity of the world and the news media cycles are creating very volatile periods," he said. "We as a management team have focused on volatility creating opportunity. You can either shy away from it or you can embrace it and say when the market overacts, if we are a long term investor and if we see value, we should jump on it."

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