UDR Shifting Portfolio in REIT's 40th Year

The year 2012 has a special meaning for Denver-based apartment REIT UDR Inc. (NYSE: UDR). The company is celebrating its 40th anniversary as a REIT and positioning itself to take advantage of a strong operating environment in the multifamily sector.

"I've been in the apartment business for 20 years. We are probably hitting the very best time in that 20 years," said Tom Toomey, UDR CEO and president, in an interview with REIT.com.

The company plans to exit suburban markets and expand in core urban areas such as New York, Washington, California and Dallas.

"The strategy of the company has remained intact for many years. It's to always improve the quality of real estate holdings from time to time," Toomey said. "We will always be a buyer or seller and be able to develop and redevelop."

That focus has motivated UDR to make moves like the second real estate join venture it formed with MetLife in January. Each party owns 50 percent of a $1.3 billion portfolio consisting of 12 operating communities containing more than 2,500 apartment homes. Within this project, the UDR/MetLife joint venture acquired the Columbus Square community, recently developed, high-rise apartments on the Upper West Side of Manhattan.

Toomey said that the company is on average, buying and selling about $1.5 billion in real estate a year. In 2011, UDR bought and sold more than $2.5 billion. Although UDR has been busy expanding in the New York market and other core urban areas, Toomey said the apartment REIT is also looking to enter new markets, such as Miami.

"Miami has a lot of attractiveness, but we haven't been able to break into it yet," said Toomey, adding that the city fits many of the characteristics that UDR is looking for in terms of long-term growth.

Looking back on his 11-year tenure with the firm, Toomey said he has witnessed significant changes in UDR's portfolio. For instance, Texas was home to nearly 30 percent of UDR's properties when Toomey started. Now, the state of Texas makes up less than 10 percent of the portfolio. Likewise, UDR's holdings on the west coast have grown from 5 percent of the portfolio 11 years ago to nearly 40 percent.

Technology has also played a large role in the company's evolution, according to Toomey. Now, he said, technology provides solutions for UDR's residents so that they never even have to physically come into an office.

"They can search for us, pay rent, place work orders and renew their lease and all aspects of that online," he said.