$16.34
$34.26
bear $16.34
base $22.58
bull $34.26
margin of safety $16.00
market price* $34.26
UDR owns and runs apartment communities in the United States. At the end of 2025 it had 165 consolidated communities with 55,240 homes in 12 states and the District of Columbia, plus ownership interests in 12,167 completed or to-be-completed homes through unconsolidated joint ventures and partnerships. About three-quarters (74.5%) of 2025 net operating income came from eight metro areas: Metropolitan Washington D.C. (15.7%), Boston (11.7%), Orange County (10.9%), the San Francisco Bay Area (8.9%), Dallas (8.0%), New York (7.1%), Seattle (6.5%) and Tampa (5.7%). Apartment leases are short, typically around a year, so income resets with local rents, occupancy, property taxes, insurance and the cost of keeping buildings competitive. How we measured earnings. We start from operating cash flow, take out short-term working-capital swings and stock-based pay, and deduct capital spending on the existing buildings. That includes the "NOI-enhancing" upgrades, major renovations and technology spending that management leaves out of its own "recurring" capital-spending figure. In 2025 that figure was about $114 million, while total property and corporate capital spending was $289 million. We count only a small slice (about $6 million in 2025) as growth spending, tied to revenue growth. Spending on new developments and acquisitions is treated as investment, not upkeep. On this basis, owner earnings per share (counting the operating-partnership units that share in the cash flow one-for-one) were $1.47 in 2020, $1.54 in 2021, $1.71 in 2022, $1.52 in 2023, $1.72 in 2024 and $1.73 in 2025. Depreciation is added back because the buildings are kept up by the capital spending we deduct. In 2025, dividends to shareholders and unitholders absorbed roughly all of these earnings, so growth beyond rent increases has had to be paid for with new shares, asset sales or debt. To value the business before its lenders, we add back interest paid. That gives cash flow per share of $1.97 (2020), $1.96 (2021), $2.15 (2022), $2.04 (2023), $2.26 (2024) and $2.26 (2025). We use $2.10, the median of 2020 to 2025, as the starting level. That window covers the pandemic trough, the 2022 rent surge and the 2023 to 2025 wave of new apartment supply. It sits below the last two years on purpose, because we do not set the level from the latest year. Cash flow per share did not grow in 2025 (essentially flat versus 2024), so the base case assumes no growth in year one. Over 2016 to 2025, per-share cash flow before interest grew only about 1% a year, and that is the most we credit as repeatable rent-driven growth. Base case (median): $2.10 per share in year one, then 1% a year through year ten, then held flat. Apartment buildings that are maintained, which our capital deduction pays for, keep earning rent indefinitely, but we credit no growth beyond the demonstrated record. The business is worth about $37.47 per share (about $13.4 billion). It owes about $14.89 per share, leaving about $22.58 per share. Bear case (10th percentile): cash flow restarts at the 2020 to 2021 trough level of $1.96 and declines 1% a year for five years, then stays flat. The named causes are already in the filings. Rent rules are spreading in UDR's markets: Montgomery County, Maryland enacted rent control in 2023, New York State passed its Good Cause Eviction law in 2024, Salinas, California passed rent stabilization in 2024, and Washington State enacted statewide rent control in 2025. The company itself says allowed rent increases may not cover rising expenses. Other drivers are continued supply pressure and capital spending on existing buildings and systems, which reached $312 million in 2023. The business is worth about $31.24 per share (about $11.1 billion), it owes about $14.89, leaving about $16.34. Even here, cash flow of about $665 million a year covers interest on the whole debt load at 6% (about $350 million) almost twice. Bull case (90th percentile): cash flow starts at the $2.26 already earned in 2024 and 2025, grows 2.5% a year for ten years, slower than the roughly 3% a year achieved from 2017 to 2025, then 1.5% a year for another ten years before flattening. The business is worth about $49.15 per share (about $17.5 billion), it owes about $14.89, leaving about $34.26. Debt. At December 31, 2025, UDR owed $5.84 billion of principal ($964 million secured, $4.87 billion unsecured) at a weighted average rate of about 3.4%. Much of it is fixed-rate notes, some at 1.9% to 2.1% maturing in 2032 and 2033. We also count the $43 million of Series E preferred stock and credit about $1 million of cash. Because this debt costs well under 6% until it matures, we reduce the debt figure by about $566 million, the present value of that saving to maturity. That leaves about $5.31 billion, or $14.89 per share. Maturities are spread out: about $802 million in 2026 (including commercial paper and the 2.95% notes due September 2026), $333 million in 2027, $467 million in 2028, $966 million in 2029, $831 million in 2030 and $761 million in 2031. These will be refinanced at today's higher rates. That is already reflected because we assume 6% after each maturity. In the first quarter of 2026 the company sold properties, cut debt by about $158 million and bought back 2.8 million shares for $100 million. We treat these moves as roughly value-neutral. What we checked and what could break the case. In 2024 the company recorded a $37.5 million credit-loss provision, nearly all of it a loan-loss provision. It is added back as non-cash, but it does not change the median starting level. Repeated losses on the company's lending and preferred-equity investments in developments would push results toward the bear case. In the first quarter of 2026, operating cash flow before working-capital changes rose about 2.6% from a year earlier on revenue up about 0.9%. That is consistent with a flat-to-slightly-rising path but is too short a period to move the starting level. One item could not be fully explained from the filings. Changes in operating assets and liabilities took $22 million to $36 million of cash a year in 2023 to 2025. We treat this as timing. If it is actually a permanent cost, it would lower each case by roughly $1.40 per share. Margin-of-safety price. The margin-of-safety price is $16.00. The bear case is worth about $16.34, so at that price even the 10th-percentile outcome implies roughly no loss. The dividend, $1.72 per share declared for 2025, would represent a yield of roughly 11% at that price. If the shares moved to the base value of about $22.60 within three years, the base case implies the price gain plus about $5 of dividends compounding at about 20% a year. The bull case adds upside but is not needed. Uncertainty is moderate: the base case is 38% above the bear case, so the price is set at the bear value rather than at a discount to the base case. Change from our previous estimate. We previously put the base case at about $35. That figure leaned on management's adjusted funds from operations, which deducts only "recurring" capital spending, and on growth of 3.5% a year. We now deduct all upkeep and upgrade spending on existing buildings, value the debt explicitly, and limit growth to the 1% a year the business has actually delivered per share. Together these lower the estimate, although the 6% discount rate we now use is lower than before. The shares appear to be worth roughly $16 to $34, with about $22.60 as the central estimate. That central estimate would prove too low if UDR's NOI-enhancing upgrades keep producing per-share growth near 3% a year. It would prove too high if rent regulation spreads further into its California, Washington, New York or Maryland markets.