Welcome to UDR's fourth quarter conference call. (Operator Instructions) This conference is being recorded today, Monday, February 6, 2012. I would now like to turn the conference over to Chris Van Ens, Vice President of Investor Relations.

Thank you for joining us for UDR's fourth quarter financial results conference call. Our fourth quarter press release and supplemental disclosure package were distributed earlier today and posted to our website www.udr.com. In the supplement, we have reconciled all non-GAAP financial measures to the most directly comparable GAAP measures in accordance with Reg G requirements. I would like to note that statements made during this call, which are not historical, may constitute forward-looking statements. Although we believe the expectations reflected in the forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be met. The discussion of risks and risk factors are detailed in this morning's press release and included in our filings with the SEC. We do not undertake a duty to update any forward-looking statements. When we get to the question-and-answer portion, we ask that you to be respectful of everyone's time and limit your questions and follow-ups. Management will be available after the call for your questions that did not get answered on the call. I will now turn the call over to our President and CEO, Tom Toomey.

Thank you, Chris, and good morning everyone. Welcome to UDR's fourth quarter conference call. On the call with me today are David Messenger, Chief Financial Officer; and Jerry Davis, Senior Vice President of Operations, who will discuss our results; as well as senior officers, Warren Troupe and Harry Alcock who will be available to answer questions during the Q&A portion of the call. My comments today will focus on three topics: first, our fourth quarter and full year 2011 results; second, the summary of our 2011 accomplishments; and finally, our outlook for 2012. Following my comments, David will discuss our financial results and 2012 guidance, and Jerry will provide commentary on operational results and early 2012 trends. First, UDR's business continues to improve, as evidenced by the accelerating revenue growth we reported during 2011. In the fourth quarter, core FFO per share rose 21% year-over-year, driven by same-store revenue and net operating income growth of 5.3% and 7.7% respectively. For full year 2011, core FFO per share of $1.28 per share rose 13% year-over-year, driven by same-store revenue and net operating income of 4.1% and 5.6% respectively. We expect that 2012 will even be better than 2011. Second, we accomplished a great deal in 2011, expanding our enterprise by $1.8 billion in key urban markets and disposing of nearly $600 million of non-core communities. At yearend, our equity market capitalization stood at $6 billion and our total enterprise value is nearly $10 billion. Some additional highlights from the past year that demonstrate the progress we made in implementing our long-term strategic plan to improve our portfolio, strengthen our balance sheet and grow our cash flow include: we entered New York City market through four unique off-market transactions totaling $1.2 billion. These acquisitions offer meaningful operational upside as they continue to…

Thanks Tom. My comments this morning will focus on our fourth quarter results, of balance sheet update, 2012 guidance and our capital funds. Earlier this morning, we reported fourth quarter core FFO per diluted share of $0.34, a 21% year-over-year increase and consistent with our guidance in month of July. Reported FFO per diluted share of $0.35 during the quarter was positively affected by several non-recurring items which led into an additional $0.01. These items are disclosed in more detail on the first page of our fourth quarter press release. Turning to our balance sheet and capital market activities. As of December 31, we had $739 million of cash and credit capacity available to flaunt our business and external growth opportunities. In December and January, we sold 1.8 million shares under our At the Market equity program at a weighted average net price of $24.67. There are 7.4 million remaining shares available for sale under this program. At December 31, UDR had 233.1 million common share equivalents outstanding and pretty modeled is the assumed no further equity issuances for the remainder of the year to 2012 weighted average share count will be 234.3 million. This includes the shares sold under the ATM in January. In early January, we completed $400 million 4.625% on secured offerings, $100 million of which was used to repay higher cost unsecured debt. With the conclusion of 2011, it is important to look back at the improvements we have made in our balance sheet over the past two years. In addition to making substantial and sustainable progress with regard to our credit methods we also acquired and developed over $2 billion of wholly-owned high quality apartments in desirable location. The purchases were primarily funded with dispositions of non-core communities in access of $600 million and the…

Thanks, Dave. Good morning, everyone. We're pleased to announce another strong quarter and full year of operating results. In the fourth quarter same-store net operating income grew 7.7% year-over-year, driven by a 5.3% revenue increase and minimal expense growth of 0.5%. The fourth quarter progressed as we thought it would, effective rental rates on new leases filed during the quarter grew 1.1% in our same-store portfolio. San Francisco and Austin significantly outperformed the reminder of our portfolio and 14 of our 22 same-store market exhibited a positive new lease rate growth in the quarter. Our loss to lease at the end of January was 4%, inline with last year. Growth and renewals remain strong throughout the fourth quarter increasing 6.2% on an effective basis. We continue to go on a renewal rate increases at or slightly above what we originally spin out to residence. San Francisco, Phoenix and Seattle were our top performers. All of our same-store markets exhibited positive renewal rate growth in the fourth quarter. Fourth quarter occupancy declined by 40 basis points year-over-year to 95.1%, as we held the rates in the fourth quarter and we're willing to observe the small decline in our occupancy. However, we're announcing occupancy strengthen again. Resident turnover was up slightly in the fourth quarter to an annualized rate of 50%, compared to 47% in the fourth quarter of 2010. Move out for home purchase remained well below historical average of the 12%, move outs due to rent increases rose slightly, but still represent only 7% of total move outs. For full year 2011, our annualized turnover rate was flat at 53%. In addition, our eight communities continue to outperform our three communities this past quarter. On our third quarter call, I commented that the growth spread for new lease rate between…

Thank you, Jerry. And operator, we're now ready for the Q&A portion of the call.

(Operator Instructions) Our first question comes from the line of Dave Bragg with Zelman.

A few questions on disposition plans. Tom, what's the likelihood or your interest in pursuing large portfolio sale that not unlike that of January 2008, maybe not of the same magnitude, but that general strategy, given you disposition plans for the year? And along with that can you comment on whether or not you believe that there is a premium or discount inherent in a portfolio sale today?

I'll let Harry take that call.

We've got $400 million to $600 million in our guidance. And we're going to sort of pursue what we believe to be the appropriate disposition strategy, which may or may not include a portfolio sale. In terms of whether there is a premium, I think, my guess is portfolios would trade today at pricing that's roughly equivalent that the pricing we will get on a one-off basis.

I had to add that in a portfolio you could probably control the timing and minimize the risk a little bit, the portfolio transaction versus one-off market.

Could you remind us of your methodology to get to that 6% to 6.5% cap rate on these expected dispositions in terms of the NOI and the CapEx embedded?

Sure, that's going to be 2012 NOI. It's going to have a reasonable management fee and they are up about 3%, and 500 unit to 600 unit in CapEx.

And last question, can you talk about what you're doing on the G&A line to continue to drive that down?

A couple of items on the G&A front impacting the 2011 versus 2012. We made several restructuring changes over the past couple of years and you're starting to see the effects of. Our technology efforts have been solely focused on our operating platform and we made significant strides at the corporate level as well. Our portfolio composition is a positive for us. It's significantly easier or more efficient to manage $300 million assets in one location and 10 $30 million assets elsewhere. And additionally, we have increased our development and redevelopment pipelines, which have moved some of the people from our G&A forces into that segment of our business.

Our next question comes from the line of Karin Ford with KeyBanc.

Question just on your revenue growth guidance. I know that the midpoint is slightly higher than the revenue growth you achieved for 4Q '11. So could you just walk through what you expect to see the progression through 2012 quarterly of revenue growth for the first half and then the back half of the year?

I can tell you, you're right, our midpoint is 5.5%, 4Q it's 5.3% and for the year it was 4.1%. So we do expect 2012 to have better revenue growth than last year. Our expectation is somewhere in the middle of the year. It's probably going to be at its higher points and then it will tail off a little bit at the end of the year. When you look at the markets, I don't think it's going to be a surprise from what anybody else has been saying. But the strongest markets will be on the West Coast spearheaded by San Francisco. The Texas markets will also do well. We do expect Southern California to be an above average market for us this year. And if I had to differentiate between several markets down in Southern California, I would tell you, I think Orange County and LA will do better than San Diego and the Inland Empire. And then our weaker markets, we expect Florida to still be below average for us. And we think Washington D.C. will be a little bit below average for us this year.

My second question is related to Tom, a comment you made at the beginning of the call. I guess one of the items you mentioned is possible driver of your businesses here would be changes to GSEs or something on the regulatory front with respect to housing. Are you seeing anything on those two fronts or is that just a hypothetical case related to your guidance?

Karin, it's a good question. I don't think anybody really has clarity in an election year about where the GSEs are going to settle out. There's certainly a lot of noise surrounding it and a lot of people are going to say things to try to garner votes. So I'm not certain that it's going to settle itself out in '12, but it's certainly going to impact our business in '13 as a new congress is seated and undertakes what to do with the management of the GSEs, both from a rate standpoint as well as an asset standpoint. So it's just one of the things that on the horizon it's going to loom larger and larger in our calculus of risk as well as opportunities. Today, we're not seeing anything impacting our business. The GSEs are open. The rates are attractive, and we think we are going to take advantage of that window by moving a lot of our portfolio into the sales window, and take advantage of that interest rate environment on the sales front.

Our next question comes from the line of Jana Galan with Bank of America Merrill Lynch.

You mentioned deleveraging would be a priority. Can you talk about some goals or targets of where you'd like to get to on the different leverage metrics you laid out?

I think it's a long-term directional goal. And I'm not really set on a set of numbers or specific metrics. When I look at the balance sheet today, I look at a laddered maturity schedule that feels very good and overall cost of debt inside of 4.2%. And look at the financial flexibility of the enterprise, I think we're right about average on most metrics and above average on debt-to-EBITDA. But overtime, I think we'll just drive that down. David mentioned in his remarks about the progress we've made over the last couple of years. I don't think we'll try to do some big transaction, if you will, to fix it overnight. I think we'll going to continue to make slow steady progress on that front. And we think that's a prudent balance when managing a balance sheet.

And I apologies, if you said this, but I wanted to clarify, is there any new acquisition functions in your 2012 FFO number?

There is not.

Our next question comes from the line of Eric Wolfe with Citi.

I think you mentioned in your remarks that the acquisition equity guidance here can be market depending. Last year you gave us some specific numbers around that. Just curious, why you changed your approach this year? And secondly, how you think about 2012 might shape up from an acquisition perspective relative to 2011?

I think when we looked at the beginning of 2011 and we're formulating that game plan about what to do. We thought it was a great window of opportunity to buy that most people were not in the market, trying to buy the caliber of assets, and we think we've been rewarded by finding unique opportunities in that window. And Jerry and his team have delivered on those pro-forma, they've not exceeded them. And that's why we are aggressive in our guidance at the beginning of '11 related to acquisitions. As we start out in '12, our intentions turn more to what do we think the pricing of assets are for the sale side of the equations. And we're going to move more towards that initially at the year and I think we'll have success on the sales front. On the acquisition, we are continuing to look at the marketplace. It's hard for us to forecast and really see significant number of opportunities at this point, so we elected really to say, we'll look at it as they come up and weigh each of them individually. And again, look at them in light of what do we think we can do to improve the quality of the asset, garner better return out of it. And that's kind of our attitude right now about '12 acquisitions.

And so you wouldn't see it as being, I mean you had a pretty busy year in 2011, so 2012 is the continuation of that or is it just you're trying to pick off assets here and there, and you're sitting or bossing. Just trying to understand how busy I think this year could be relative to 2011?

A lot of the activity in '11 was big, because we had a couple of successful relationships and we were buying from a lot of private individuals. And those individuals are not forced to sale, so they kind of elect, both on a relationship and a trust basis to sale. And I think that's kind of the environment. Harry, anything you'd add?

We're in the market on a regular basis and as you know acquisitions are sort of opportunistic by nature. To the extent we find transactions that we feel good about, we certainly will be willing to pull the trigger as we did in '11. I mean, if you remember when we started '11, we didn't expect to complete the level of activity that we did, but again on an opportunistic basis we're in the market we find deals that we ended up closing.

Our next question comes from the line of Paula Poskon with Robert W. Baird.

I want to come back to the G&A question from earlier. Specifically what drove the much lower G&A in the fourth quarter relative to the other three quarters of 2011? And then looking ahead for 2012, how much of the drop in G&A that you're expecting is attributable to the reallocation of staff?

When looking at Q4 versus Q3, couple I know is going to jump out. First, we had an extremely busy year in the first nine months, first three quarters and a significant portion of our acquisition's debt, equity and sales marketing efforts were undertaken and completed. So accordingly the bulk of the incentive comp for the company was accrued during that timeframe, so there was really a little that had to be accrued in the fourth quarter. We had several severance contracts and consulting contracts went up in the third quarter that weren't present in the fourth quarter. And then getting to your second point, we also started capitalizing more of the costs in the fourth quarter to our development and redevelopment pipeline, as those have started to take shape and have nearly doubled over the course of the last year or so. I'll have to get back to you on an exact number for capitalizing costs, so we haven't previously disclosed that.

And then just one other question. Just broadly speaking, what are you seeing in terms of trends in hard construction costs? And also are you seeing any increased difficulty in getting plans approved or projects through the local municipalities just because they are getting overloaded relative to their staffing?

With respect to construction cost, I think construction activity just in general the levels remained weak by historical standards. There have been some upward pressure on commodity and material prices. In general, construction prices have increased moderately, perhaps 3% or so. So I think that answers part one. In terms of part two, the types of markets, there are a couple of different things. One, many of the projects that are in our guidance for 2012, we either have approvals or are near the point where we can put shovel in ground. And in terms of those where we are sort of starting from scratch and working through a new entitlement process, we haven't noticed any particular slowdown in terms of the processing time for these types of deals. A lot of the markets that we're building in, inevitably have longer approval or lead time process, just given the types of markets that they are in.

Michael Salinsky with RBC Capital Markets.

I just want to go back to the comments you put on the last conference call. I just want to see if it's still the case. You talked about last time funding development and redevelopment with proceeds from dispositions and funding acquisitions with new issuance. Is that still the plan as you're looking into 2012?

Yes, Mike, that's currently the plan. And you can see that pretty much they match up at this present time, and the walk-forward that David provided in his comments. We've got about $500 million in development and redevelopment spend plan for the year. And Harry is out marketing a number of communities and we gave guidance of $400 million to $600 million on the sales front.

So that doesn't include those acquisitions?

No.

I am sorry, joint venture acquisitions, so that wouldn't be defined as an acquisition?

It's very hard for us to forecast our joint venture partner's appetite or success rate on acquisitions. If they come to the market certainly we'll be telling you about them and fund them accordingly.

Second, can you give an update on the performance of the Hanover portfolio in the fourth quarter? And just curious what you define is below average for D.C. in 2012 as you can kind of walk us through what your expectations are for that market just given the supply pressure that we are seeing there?

The MetLife portfolio, I don't have the fourth quarter numbers with me. But I can tell you for the year, we exceeded our budget that we underwrote that deal at by 12% and it did pick up steam later in the year. We would expect in 2012 for those MetLife properties to do better than our same-store pool still because there continues to be more opportunities for revenue growth, whether it's continued concession burn off or just rent growth. And as far as D.C., I would tell you we're looking at D.C. probably in the 4.5% to 5% range for revenue growth this next year.

And then finally just can you give us an update as to what you're expecting on the real estate tax front built into the guidance?

Sure. A large portion of the portfolio in California were at the 2% for Prop 13, but when you look at it when did throughout the portfolio, it's up in the roughly 5% to 5.5% range. Most of the pressure is coming from Virginia as well as Florida.

And I'm assuming that's a same-store number that doesn't include the revaluations for acquisitions done last year at some of the markets like New York, Boston?

That's true. That is a same-store number.

Our next question comes from the line of Derek Bower with UBS.

Just on the performance of the A's versus B's of the 300 basis points. Can you talk about which markets maybe more pronounced and others not widening and what your sense maybe for how wide that break could get in 2012?

In the fourth quarter the spreads, like you said, was 300 basis points. And the markets where you really saw the larger spreads were predominantly San Francisco, Seattle. The markets where you didn't see as much of a spread tended to be more in the Washington D.C. area, because new supply has affected our downtown inside the Beltway markets and outside the Beltway did better and that's where our B product is located. So those would be the two outliers whether it's the best door or worse. And how large of a spread do I think that will get to be? It's hard to tell. I could see it getting a little bit more, but probably not markedly.

And, Tom, back to you remarks earlier on the call on rolling the enterprise. Can you give us a sense for how large and if there is any target size you have for your portfolio? And is there a number out there might be too big?

Derek, that's a very, very thoughtful question. And one that the management and the Board have undertaken as part of our strategic plan and review in 2012 is to revisit the size and shape of the enterprise. So we'll probably be able to give you more color later in the year on the subject. But it's certainly one that we feel good about getting into what turns out to be a $10 billion enterprise and managing $4 billion of JVs. So certainly, we have the management talent and scale to manage a larger enterprise. But how big and where is that right balance is something that we're just undertaking this year.

Our next question comes from the line of Alex Goldfarb with Sandler O'Neill.

Just going back to the dividend, you guys in the fourth quarter increased it 7.5%, so it sounds like you're increasing another just over 2%. As the Board thinks about the dividend, what changed from last time they met when they raised it to the subsequent quarter, they raised it just a little bit again? Was there something that changed or were you guys waiting to finalize like taxable income?

The increase in the dividend for 2012 compared to 2011, there is 10% from $0.80 to $0.88. The change we made really this time was to make sure we're paying it out quarterly versus the staggered payouts that we did during 2011 of the $0.185 and $0.20 and $0.215. But the Board looks at this, management looks at this dividend, and always considers taxable income and cash flow of the enterprise, and so the 10% increase on a year-over-year basis to $0.88 per share was appropriate.

But from the last time, I'm just curious, I mean you guys raised it 7.5%, which is meaningful. But the additional amount, I'm just trying to understand, if there was something new that the Board considered or if there was just as the books closed for yearend. Just trying to assess where the taxable income stands? And then also curious where the new dividend rate compares to taxable income.

Couple of parts in that Alex. First, management and the Board weighed what our growth prospects were going into '12 and beyond in setting the new dividend, and feel comfortable that the level we've set. There is no taxable event or structuring needed at the end of the year to increase the dividend to ensure that we met both, the taxable minimum or to not become a tax payer if you will? So that's aspect.

With regard to where we are with the dividend compared to taxable income, we have not disclosed what our taxable income per share amount is.

Then the second question is on the property tax. It's a two-parter. First of all, just as you've entered New York and you're now a 421a, if you can just remind us when the first year where you will experience the step-ups? And then the second was, your comments about Florida real estate taxes increasing and being a pressure point. I would've thought that, that would've been one of the parts to rebound, less, just given that rent growth in some of those northern markets has lagged some of the other parts of the country.

With respect to the New York City tax abatement. We have tax abatements that range from 10 years, to all the way up to 20 years. So, we will see that the abatement fades out over the course of the 20 years. So it's a long time. 2013 or 2014 is the first year where we'll get sort of the partial burn-off of any component of the abatement.

On the Florida, Alex, I can see your point. I would tell you that we will appeal anything we can, but right now what the consensus are showing is that heavy growth in Florida, as well as, again, the Virginian team. It's not surprising that D.C. and Baltimore pushed up ahead just like you said, because they were the first to rebound that didn't drop this far. Florida, over the past couple of years to municipalities have really have really come after us more on water rates than anything else, and it seems like their strategy this year is get more tax.

Harry, what is the step-up in '13, '14? What's the amount or impact?

I don't know what the exact amount impact is, but it's sort of the first 20% of one of the properties they've waived in first half. So, it's not going to be any ruling sort of for it.

Our next question comes from the line of Rob Stevenson with Macquarie.

Tom, what do you think today sitting here the percent of your portfolio that you would classify as non-core?

Rob, I don't have the door counts, but with respect to value, we look at it and say it's somewhere between $1.2 billion and $1.5 billion. And if you look at where I and we as the management team size it, that's equivalent to about where we are in the development pipeline. And so our strategy over time is to sell assets and redeployment the new development and the development pipeline of '12 is over the next three years, that's kind of our horizon to dispose of that. Now, there will be some dilution as it relates to, we'll probably sell before the asset come online and stabilize, but we think that' a good prudent way to fund the development activities.

Given the fact that a lot of these non-core assets are in core markets for you guys, I mean, do you have any desire to do sort of a disposition JV or are these likely to just be outright sales to maximize the value?

Rob, the vast majority are in tertiary markets that we'll probably exit, and I wouldn't see us joint venturing those. I would just see a whole effort to sell them. And we think the market is good for that today. I mean this capital environment as well as debt environment is very conducive to creating a wide range of auctions and a number of players to expose the assets to. So, I'm very comfortable with our ability to execute the sales at attractive prices.

Then one quick one for Dave. Thanks for the additional disclosure. One quick question on the same-store guidance for '12; looks like the unit count is the same for '12 as it was in the fourth quarter. Is that just because you're expecting for whatever is rolling in to sell an appropriate number of assets this year in terms of units, or is there something else going on there?

I guess, are you asking are we forecasting sales coming out of the same-store numbers?

No, no. For the '12 guidance, the same-store unit count is 38,680, which I believe is the same as the fourth quarter same-store number. Now, the reason why there is no additions to the same-store, no variance between that is because whatever you're rolling into the same-store bucket you're expecting the dispositions to be an equal number of units roughly, or is there something else going on there?

Everything that's in the same-store pool in the fourth quarter then goes into your 2012 year-to-date same-store pool. So, I don't think I'll a full year of comparison. And then we've got an additional attachment in the attachment seven that disclose each quarter as to when each asset will roll into the same-store bucket. So that way you can roll your quarter numbers. But I think where it was, we're getting hung up on this. And so we can take it offline is difference in the quarter pool and the year-to-date pool.

Well, the 2012 pool. That is offline.

That's fine.

Swaroop Yalla with Morgan Stanley.

Jerry, can you give us an idea of your exposure to financial services employment in your Manhattan portfolio?

Absolutely, it varies really by submarket within Manhattan. When you look at the two deals we have done with Financial District, roughly 50% of our residents are in the financial industry. As you go to Rivergate which is Murray Hill, Chelsea and then up to Columbus Square, it's more in the 15% to 25% range.

That's helpful. And then, in terms of the dispositions, did you guys talk about the markets that you're looking to make these dispositions and also you can give us some idea of the timing of these? I mean, should we be modeling sort of equally over the quarters, or is any timing we should be thinking about?

The markets are going to be our non-core tertiary markets, and by and large we didn't give any specific guidance, but that will give you sense as to what we're talking about. In terms of the timing, we've got a couple of deals tied up now that it could close in the first three or four months of the year. I think we expect most of the balance to close in the first half of the year. It could be some inevitably that they carry into the second half. But generally, the disposition should be relatively front-loaded.

Our next question comes from the line of Rich Anderson with BMO Capital Markets.

So, Tom, if you could get a hypothetical great transaction for your Southeastern region, your Southwestern region and sell all or most of that portfolio, would that be a good transaction for you? Or do you think still, because you guys seem to be leaning towards these higher barrier markets, Northern markets. I mean, is that something that you think still adds value to the story, those kind of low barrier regions?

There is couple of different questions inside of it, Rich. I mean, certainly for us, any offer that we receive for any asset is always considered. And if we were to receive an offer of substance and size for a particular portfolio or region, there's no question we would weigh it. If it's in our long-term plan to dispose of it. And so that's kind of part of what Harry and the entire acquisition and disposition team is doing, is exposing a lot to the market and see what we get. So, we are not afraid of selling assets. And as you recall in 2007 and 2008, we sold 25,000 apartment homes and about a third of the enterprise because we thought it was a great time to unload those assets and it turned out to be very fortuitous and in the sense that we headed just about the right window.

So if I were to guess though in that transaction, if there is one thing you would have like to done to that transaction is maybe had more of the Florida element involved in the fail, is that accurate? I'm not suggesting you ever told me that but I just feel like maybe that's your past year, is that about right?

Well, the first thing you're testing is my memory which over the year is saved but on the long-term aspect of looking at it, if we've asked ourselves several times and looking at that transaction that we would have sold more. And what we really thought about when we sized it and shaped it, was both the element of where we would go with the dividend and the coverage of the dividend as well as asset pricing. And it turns out we've got it about half right. We had the right asset pricing, right window to sell but the truth is we didn't forecast the economy dropping as perceived those we did. And ultimately a year later we had to cut the dividend. And I don't regret the decision. Florida at the time we thought would weather a better storm. We thought there was some more value to wrung out. And the truth is here we are five years later and Florida is still has not bounced back. And I think we'll probably see some of our asset dispositions in the Florida this cycle.

Just quickly a couple of question, this is on the joint venture. Did you say that you can't gauge the appetite of MetLife in future activity but you did say you expect to do more? So can you provide any color on how big the future business could be with MetLife?

Well, in the case of Met, I can't really speak on behalf of Met with respect to their goals and aspirations and pricing. What we have is a very good working relationship. And we talk about individual communities and portfolios that are in the market today as well as may come to the market. And I think they are very astute buyers of real estate. And they'll have their own sense of price, we'll have ours and we'll compare in those. But I would say that their overall tenure is towards growing their multi-family platform.

In Southeast?

That wouldn't be fair for me to speculate what market.

And then lastly on the Kuwait Finance House, I'm just curious, is there anything unique about having them as a partner, anything cultural? I mean, are they nice people?

Rich, I mean, anybody you pick as a partner is always nice people.

But I mean it's just your typical joint venture. It's not anything unique about because it is kind of unique type of partner I guess I would say?

Well, I think they are obviously, sure we are compliant, and they are very proud/compliant investor and prudent. They've been investing in United States for many, many years, and they have been successful at it. So, we find them very engaging, thoughtful, and a very strategic partner to have.

Our next question comes from the line of Tom Trujillo with Bank of America.

I appreciate your comments to Jana about your future de-leveraging being more kind of directional and opportunistic and goal-oriented, and I know that's hard to forecast acquisitions in 2012. But can you just provide some comments on potential sources of financing should your acquisitions exceed your divestitures? So, if you need additional capital, do you see using the equity market, preferred debt, either secured or unsecured and kind of what you're seeing out of pricing in each of those markets?

Hey Tom, this is Dave. I think that when we look at future acquisitions and whenever there is an additional need that arises, we look at all sources of capital, and determine at that time what is best for pricing, what is best for long-term growth of the enterprise, and so there may be points in time where unsecured offerings make more sense, while there will be other times where we're going to fund more with equity than we would with debt. From an unsecured standpoint, we're looking to continue to bring down our secured leverage and you've seen us access the unsecured markets more frequently than the secured. Unsecured basis we're probably around 4% type number on 10-year paper, and equity is what is trading at today. I think we've been pretty vocal in saying that we would fund more of the acquisitions with equity and debt and that we also always have the opportunity to look at the wide array of capital market, I guess products that are out there; being an investment-grade rated company.

Mark Fisher with Bloomberg.

This is question for Harry. I'm just wondering if you can talk about acquisition cap rates in 2012, and what you're seeing. Whether you think that cap rates will continue to compress at current levels or if you think they'll level off?

In terms of acquisition cap rates for the core products that we've been looking at, my general assumption is that the cap rates will be relatively stable throughout the year. These types of assets are influenced significantly by changes in interest rates if buyers tend not to capitalize purchase with nearly as much debt. In terms of the non-core product perhaps that we're selling, again, I think cap rates are probably going to move generally sideways and interest rates remain low. Buyers are still underwriting sort of properties with good fundamentals and expect cap rates to remain generally low.

And then you guys gave disposition cap rates of 6% to 6.5%; I'm just wondering, given that that's funding your development, what the dilution will be from development in terms of the timing when it bleeds into your portfolio in terms of sale. Are you going to sell these as you need the money for funding for redevelopment, or is there going to be a mismatch of funding there?

Mark, this is Toomey. There's probably a mismatch. I think the sales will probably be more frontloaded, the development dollars will be even throughout the year. And realize that the development dollars are going to assets under construction. So there inherently is no cash flow coming back from that constructing activity. So that's a big part of the dilution we are taking in the short run. But in the long-run, the caliber of assets, the growth rate of new asset and the market composition of them should far and exceed the assets that we are selling. So that's kind of our plan for '12.

And then lastly, on your CapEx spend. You guys have $1,150 a unit priced in and that's up from $1,081 last year. I'm just wondering, where that number goes and how of that is being impacted by the new non-same-store pool that's coming in, given the higher cost markets that they are in?

You hit it on the head. A lot of it is, it's a different portfolio than we've had for the last couple of years, and whether it's a high rise or a mid rise, you have a lot of systems that cost more than a basic garden community to take care of, as well as the common areas, the amenity base when people are paying rents that are in New York, up in the $3,000 to $4,500 range, the upkeep is more timely. So, most of it is due to the change in the portfolio.

Our next question comes from the line of Taylor Schimkat with KBW.

Just one question guys. Going back to dispositions, it looks like a chunk of the 2011 dispositions where newer properties developed through RE3. Looking forward at 2012, what does the mix look like between newer assets in secondary markets than older assets? And then secondly, could you comment on the expected cap rate spread between those newer and older assets if that's appropriate.

In terms of the characterization of the properties that we're selling in 2012, a majority of the properties will be our, call it, the non-core assets in these tertiary markets that the age will vary, but it will not be weighted in any particular way towards newer assets. So, inevitably there will be some in those sales. In terms of newer versus older, it depends on so many things, including whether there's a rehab component in terms of the quality of the sub market et cetera. I mean, in general, particularly new assets will trade at lower cap rates than older assets, but it gets a little hard to generalize because you have to look at sort of the really micro aspects of the deal on a property by property basis.

We have a follow-up question from the line of Eric Wolfe with Citi.

Just one quick clarification. I think you mentioned in your remarks that your anticipated de-leveraging was fully in guidance and does that mean do you have some equity issuance in guidance or is it just the dispositions that you're talking about there?

On the disposition guidance, we don't have any additional equity in our guidance numbers other than the shares issued to the ATM in January that were disclosed.

Okay thank you. And there are no further questions. Please proceed.

Well, I thank all of you for your time this morning. And as you can tell, 2011 was a very, very good year for UDR. And that we accomplished many of our strategic goals. And as we look at 2012, we feel very good about the business on the ground from an operating and from an opportunity standpoint. And I believe that we will advantage of those as they present themselves. We have a very good sound management group, execution team on the ground. And it's reflected both in our guidance as well as our increasing of our dividend. So, we think we're off to a great start in '12 and looking forward to it. With that, we'll close and thank you for your time again.

Ladies and gentlemen, this concludes UDRs fourth quarter conference call. If you would like to listen to a replay of today's conference, please dial 303-590-3030 or 1-800-406-7325 with the access code 4501829. ACT would like to thank you for your participation. You may now disconnect.