UDR, Inc.

and welcome to the UDR's first quarter 2020 earnings conference. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. You may press star 1 if you would like to register a question. If anyone requires operator assistance, please press star 0 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Director of Investor Relations, Trent Chuiho. Thank you, sir. You may now begin.

Welcome to UDR's quarterly financial results conference call. Our press release and supplemental disclosure package were distributed yesterday afternoon and posted to the investor relations section of our website, ir.udr.com. In the supplement, we have reconciled all non-GAAP financial measures to the most directly comparable GAAP measure in accordance with Reg G requirements. Statements made during this call which are not historical may constitute forward-looking statements. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be met. A discussion of risks and risk factors are detailed in our 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 be respectful of everyone's time and limit your questions to one plus a follow-up. Management will be available after the call for your questions that did not get answered during the Q&A session today. I will now turn the call over to UDR's Chairman and CEO, Tom Toomey.

Thank you, Trent, and welcome to UDR's first quarter 2020 conference call. On the call with me today are Jerry Davis, President and Chief Operating Officer, Mike Lacey, Senior Vice President of Operations, and Joe Fisher, Chief Financial Officer. who will discuss our results. Senior Executives Harry Alcock and Matt Cozette will also be available during the Q&A portion of the call. While we are pleased with the strong combined same-store NOI and FFOA per share growth we produced in the first quarter, the executive team and I are more gratified by how our business and dedicated team of associates have successfully adapted to the ongoing challenges that have come with the COVID-19 pandemic. We appreciate the position that many of our associates are in and thank them for continuing to show compassion to and accommodations extended to our residents that have been negatively impacted by the coronavirus. From a high level, our business continues to perform well. This is a testament to the outstanding work of our teams and culture The investments we have made in technology over the past decade, our diversified portfolio across geographies and price points, the strength of our balance sheet, and the defensive nature of apartments. I'm encouraged by the fact that traffic and leasing trends have steadily improved in the recent weeks, and our next generation operating platform has enabled us to continue to deliver a high level of service to our residents and prospects while providing the tools necessary for our associates to execute our business in the face of a fluid and the changing regulatory requirements. I am confident that our next generation operating platform is not only a foundation that enables our teams to meet today's demands, but it is also one that allows us to pivot when customers or the environment changes dramatically. and it will continue to be a differentiator for UDR as we make our way through the pandemic and adapt to the new ways we are all going to do business in the future. Moving on to a brief update of our business. April's cash collections were strong at 95.5%, with 98% of our residents paying all or part of their April rent. Resident retention has moved higher and turnover has declined throughout the portfolio. Traffic is lighter than we would typically see this time of year, but it has been trending up in recent weeks and we are encouraged by the prospects of a number of cities starting to open up again. And our dividend is secure and our balance sheet remains strong with substantial liquidity at our disposal. Jerry, Mike, and Joe will provide additional details on each of these areas later in the call. Last, a pandemic and an economic uncertainty it has created. We're not in our original plans. Therefore, we decided to withdraw our full year 2020 guidance outlook. COVID-19, like other disruptions we faced over the decades, will eventually pass. And I remain confident that we are on the right team, the right strategy, and the right portfolio in place to manage through this time of volatility like we are currently experiencing. Companies like UDR that remain focused on driving operations and innovation, ensuring positive outcomes for their residents and associates, maintaining a strong balance sheet, and deploying capital in a disciplined manner will come out of this much stronger. With that, I will turn the call over to Jerry.

Thanks, Tom. Good afternoon, everyone. With combined same-store revenue, expense, and NOI growth rates of 3%, 1.7%, and 3.5% respectively, we continue to produce solid operating results during the first quarter. Our controllable margin expanded by 60 basis points compared to the first quarter of 2019, and we reduced controllable expenses by 1.1%, versus a year ago. Over the past year, we have encouraged those listening to view personnel and R&M expense growth in tandem with one another as our next-generation operating platform initiatives push their respective growth rates in opposite directions, but also reduce their combined growth rate over time. This was again true in the first quarter with a combined growth rate of negative 2.3% year-over-year. But as Tom alluded to in his prepared remarks, First quarter results take a backseat to what has transpired over the past two months. We and the nation continue to face a challenging situation. COVID-19 has altered the way we live our lives, interact with people, and has changed the way UDR and the apartment industry approaches day-to-day operations. With all the negative headlines in the news, I am proud we collected April rents from 98% of our residents, with 95% of residents paying in full. And then and am inspired to hear the positive, uplifting actions our associates continue to take to provide quality service to and engagement with our residents. This would not be possible without our next-gen operating platform. When we originally laid out our vision for the platform three years ago, we understood that a majority of businesses were rapidly transitioning to an online self-service model and that we could capture first-mover advantages in the apartment industry by doing the same. Since early 2019, we have reported on a variety of stats that have highlighted how the next-gen operating platform is driving efficiency gains and contributing more dollars to our bottom line through controllable margin expansion and self-service. But we did not envision a pandemic when embarking on the transformation of our operating platform. We are thankful for the great people at UDR, as well as the investments we have made to help ensure the ongoing well-being of our workforce and the resident base in a world with mandated social distancing. Some of the traditional aspects of our business that have changed during the pandemic include, first, 100% of in-person property tours have ceased and have been replaced with virtual and self-guided tours. One of our original goals for 2020 was to roll out virtual and self-guided tours across all of our communities, and we were in a great position to accomplish this already, having implemented this initiative in over 100 of our communities pre-COVID. Leasing offices have largely gone virtual. 100% of resident documents are executed electronically. Our corporate inside sales and renewals teams have been working overtime to reverse notices to vacate We capitalize on the traffic we are receiving, and nearly all service requests are made online, by phone, through our app, or via other electronic means such as text. This is in comparison to approximately 80% of service requests being submitted electronically or by phone pre-COVID. To ensure the safety of associates and residents alike, and to comply with social distancing requirements, we continue to fulfill emergency requests only at this time. Our next-gen operating platform is clearly demonstrating its value by allowing us to quickly adapt to the current environment and fully run our business, which keeps us in a position of strength during this crisis. Tools such as Zoom-based leasing and real-time update fund collections are two such examples. In terms of operating details and relative market performance, Mike will provide more information later in his prepared remarks. But from a high level, I am pleased with how well we have adjusted to the situation and the steps we have and continue to take to drive solid operating results. In particular, the $1.9 billion of community acquisitions we have made since the start of 2019 continue to perform relatively well given the identified upside opportunities relative to private market opportunities. Last, I would like to express sincere gratitude to our associates in the field and at corporate for continuing to embrace the challenges brought on by the pandemic and for accelerating the adoption of the NextGen operating platform. I am proud to work alongside each of you as we create new and innovative strategies that will ensure continued high levels of service for our residents. With that, I'll turn it over to Mike.

Thanks, Jerry, and good afternoon. As everyone listening to this call is aware, the pandemic has led to unprecedented levels of unemployment claims over a short amount of time, which in turn has led to widespread concerns about residents' ability to be wrapped. As Jerry mentioned, through the dedicated efforts of our associates and the fiscal response by the federal government, April cash collections totaled 95.5% and 98% of our residents made some level of April rent payments, with 95% paying the full. For comparison purposes, April 2020 collections were just 4% below April 2019. What may not be as well known to those on this call is the web of regulations federal, state, county, and local governments have enacted or are likely to enact. These are wide ranging and include eviction moratoriums, stay-at-home orders, restrictions on fees that can be charged, freezes on rent increases, lease break legislation, and restrictions on debt collections to name a handful. While each of these has impacted our business in one way or another, our market and asset level operating strategies in response have remained surgical. as opposed to a one-size-fits-all approach. And by surgical, I mean that we are working with and accommodating any resident that has faced financial hardship due to COVID-19 on a case-by-case basis while ensuring our compliance with any regulatory actions. I want to thank all of our associates for staying on top of these constantly changing regulations and adapting our strategies as needed. On the operations front, Occupancy remained strong at 96.6% during April, which is approximately 20 basis points below the same period last year. One of the least rate growth for the month of April was 2%, driven by a solid renewal rate growth of approximately 5%. Retention was higher, as the annual ad turnover in April was 720 basis points lower than last year's comparable period. As reported in our release last night, we experienced a 19% decline in traffic and a 15% reduction in applications on a year-over-year basis in April due to stay-at-home orders. However, we also saw our lease closing ratio improve to 54% compared to 31% a year ago. I'm encouraged by the positive momentum in traffic, applications, and signed leases over the past two weeks. To build on this momentum, we have implemented partnership approaches tailored to each community, while our next-generation operating platform has allowed us to continue to drive traffic, execute leases virtually, and take a more surgical approach to maintaining rent and preserving our rent growth. While it is still too early to understand the long-term impact, if any, that regulatory actions may have on our business, some reset high-level operating trends we have identified over the past 45 days are as follows. Occupancy in our B-quality portfolio averaged 97% in April and hasn't declined much. Aid quality occupancy averaged 96% in April, but has and will likely continue to be pressured by corporate lease exposure and lower traffic due to shelter in place orders in key markets. Traffic and turnover have been slightly better at our B communities due to the more suburban nature of our B quality portfolio. Blended rental rate growth has been comparable between A's and B's, and we have seen slightly lower collections across our B quality communities. Highlighting some specific markets, Greater Seattle is one of the first markets afflicted by the coronavirus, yet our results through April were a pleasant surprise. However, due to recently enacted regulations in the state of Washington that mandate flat renewal growth for the foreseeable future, we are likely to see some forward rate growth headwinds. In certain urban and coastal markets, such as New York and San Francisco, we are experiencing a vacancy impact due to lower demand for short-term and corporate basis. Because of lower levels of traffic in these markets, we are facing reduced pricing power and are generally competitively priced on rents to increase leasing velocity. Orlando, Tampa, and Orange County are our largest markets with ties to hospitality and retail-oriented employment and collectively represent approximately 20% of NOI. These three markets have seen some softness in both length and occupancy. as a result of relatively high exposure to service sector employment combined with a large amount of our portfolio in these markets being suburban and deep quality. Finally, having previously worked in the field for a number of years, I understand how a period of extreme change can impact our regional and community leaders. Our associates have all worked well together to adapt to a new operating environment, develop targeted market approach, and engage with our current prospective residents. I'm proud of each and every one of you have continued to exemplify the UDR values during this health and economic crisis. Thank you for all that you do. And now, I'd like to turn the call to Joe.

Thank you, Mike. The topics I will cover today include our first quarter results and the withdrawal of our full year 2020 guidance and a balance sheet and liquidity update, inclusive of recent transactions and capital markets activity. Our first quarter earnings results came in at the midpoints of previously provided guidance ranges. FFO's adjusted per share was 54 cents, approximately 9% higher year-over-year, and driven by strong combined same-store and lease-up performance, accretive capital deployment, and lower interest rates. Regarding guidance, we have elected to withdraw our full-year 2020 guidance outlook given uncertainty around the impact the coronavirus pandemic will have on the economy and our business. As disclosed in our press release, and as Mike discussed, we have presented an operational update through April to provide stakeholders with additional insights into trends. Moving on, our balance sheet and next three year liquidity profile remain strong due to the efforts that we have taken over the last several years. As such, we are well positioned to weather the effects of COVID-19 and the downturn that has accompanied it. Some highlights include capital capacity and debt maturity profile put us in an advantageous three-year liquidity position. As of April 30th, our liquidity as measured by cash and credit facility capacity net of our commercial paper balance was $775 million. Through 2022, only $106 million or approximately 2% of our consolidated debt outstanding is scheduled to mature, excluding principal amortization and and amounts on our working capital credit facility. Please see attachment 4B of our supplement for further details on our debt maturity profile. Second, we entered into $105 million in Ford ATM contracts, sold one community in the greater Seattle area on May 1st for approximately $90 million, and are under contract with a non-refundable deposit to sell another community. Combined, these equate to approximately of capital sources. While the four ATM proceeds were originally raised in anticipation of a single-asset external growth opportunity, COVID-19 has changed these plans, and we have elected to focus on capital preservation in the near term. Third, to maintain flexibility on previously planned development starts and to preserve capital, we do not anticipate starting any new development projects until there is more clarity on the macroeconomic, regulatory, fundamental, and cost environments. Our current development and redevelopment pipeline totals only $304 million at cost, or less than 2% of enterprise value, and is nearly 40% funded with approximately $191 million of remaining capital to spend over the next two years. Fourth, our dividend remains secure and well covered by cash flow from operations. Based on first quarter 2020 AFFO per share of 51 cents, our dividend payout ratio was 71%. This implies that our earnings would need to decrease by approximately 30% before reaching cash flow parity, substantially higher than the losses we or the multifamily industry experienced during any of the past several recessions. Taken together, our liquidity position is strong and forward sources and uses are very manageable. Moving forward, we will be highly selective with where and how we choose to invest your capital as we believe it is prudent to preserve capital in the current environment while retaining value creation optionality for the future. In terms of credit metrics, as shown on attachment 4C of our supplement, we have substantial capacity before we have not been in compliance with any of our line of credit or unsecured bond covenants. As of quarter end, Our consolidated financial leverage was 35% on unappreciated book value and 31.5% on enterprise value, inclusive of joint ventures. Consolidated net debt to EBITDA RE was 6.0 times and inclusive of joint ventures was 6.1 times, which looks slightly elevated due to the timing of acquisitions completed during the quarter. versus the closing of announced dispositions and the pending settlement for ATM proceeds. Please see attachment 15 of our supplement for further details on sources and uses of capital. With that, I will open it up for Q&A. Operator?

Thank you. The floor is now open for questions. If you would like to ask a question, please press star 1 on your telephone keypad at this time. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, that's star one to register questions at this time. Our first question is coming from Nicholas Joseph of Citi. Please go ahead.

Thanks. I hope you guys are doing well. I appreciate the operating environment has obviously changed over the last two months. You have been continuously in the process of rolling out your next-generation operating platform. So I'm wondering if there's any lessons learned thus far in terms of either an acceleration or any delays or any changes to that next-generation operating platform as you see it over the next few years.

Hey, Nick. This is Jerry. Yeah, you know, we did start working on a next-gen operating platform, platform about three years ago started reporting the efficiencies and the contributions to our controllable margin last year. And I would tell you, I think we were well suited when the pandemic did hit to adapt quickly towards 100% virtual as well as self-guided tours. We were doing quite a bit of that before, but transitioning to 100% was fairly easy. We were also able to shut down our offices to physical traffic and accommodate our customers electronically or over the phone. That went extremely well. And, you know, I would say it probably accelerated us six to 12 months of where we would have expected to have been as far as customer self-service. In addition, you know, we've been working on the big data side of it, and we continue to learn new things every day, you know, Like I said, I've been working remotely for the last two months and have become proficient at Zoom, even though I never had really used Zoom before. And when you look at the adoption of the U.S. population to that way of doing virtual meetings, you know, we're starting to utilize that on virtual tours. So rather than just doing FaceTimes where you can just walk around, the ability to share a screen such as UDR.com and walk somebody through the entire A website, I think, is going to enhance our ability to sell virtually, especially as people continue to not want to travel as much, at least over the near term. In addition to that, Matt Kozad and our team have developed a mechanism to track collections really on a minute-by-minute, probably second-by-second basis. So you kind of see collections as they come through in real time. and it allows us to direct our resources to do a better job on managing these collections, though. I would say, in addition to everything we talked to you about previously, accelerating, we've also found new opportunities as our customers adopted technologies, and we're going to start using that in our business.

Thanks. I'm just maybe on a collection trend thus far, and I recognize it's very early in the month, but what have you seen relative to April in historical averages?

Yeah, this is still Jerry. I'm going to turn it over to Mike Lacey in a minute. A lot of you know Mike. He's been running ops really for us for a couple of years, and we thought since he's more into the details, especially as we work our way through this couple of months, it would be a good opportunity for him to give those updates. But I can tell you I'm pleased with the way our teams have reacted in both April as well as May. But, Mike, why don't you give them some stats on how we're doing?

Sure. Thanks, Jerry. Hey, Nick. Based on what we can see right now, our May collections are actually 87% of May billings, which is flat as our April collections at this point in the month. And we can see April today is 96% compared to the 95.5% we had in the press release. As Jerry said, we're able to see this real time, so I just pulled that number a minute ago. Currently today, 96% occupied. I expect we end up between 95.5% and 96% this month after we take back some more corporate units. Our May traffic today, trending about where it has been the last few weeks, which is around 10% to 15% down compared to last year, but significantly better than where we were in March this time last month, which was down about 35%. We expect our blended lease rate growth will remain positive in May. And we're keeping a close eye on regulatory changes. But just to remind everybody, our April numbers came in at plus 2% for our blend. And my turnovers expect to be flattened down for the month of May. And again, credit to our NextGen operating platform team. Having this visibility in real time to look at collections has been huge for us. We can focus our energy where we need to do it. And credit to our teams out in the field because they're able to take this and work with those that need it most.

Thank you.

Thank you. Our next question is coming from Austin Bershman of KeyBank. Please go ahead.

Hi, good afternoon, everyone. Just curious, you referenced some markets that are more exposed to hospitality, and I know it's still very early, but, you know, certainly the impact has been swift in some of these markets as far as layoffs. I'm just curious if you feel like you've seen sort of the worst of the impact play out in some of those markets, and you now have kind of a better sense of where some of the more challenged, you know, sub-markets are across the portfolio. Yeah, Austin, it's Jerry again. I'm going to throw it to Mike in a second. You know, it's hard to tell if we've seen the worst of it. You know, I think it's going to depend on, you know, when back to stay-at-home orders or mandates are released. You know, we see a lot of that starting to happen in Florida, so the Orlando market should pick up. It's going to be interesting to see how quickly the tourism base returns to, you know, want to enjoy their vacations there. You know, Orange County has started to stabilize a little bit. You know, traffic patterns there are probably pretty stable today. We did have some, again, some delinquency issues there during the month of April. But, Mike, anything you would add to, again, SoCal as well as South Florida?

Just in general, what we're seeing right now across the portfolio, New York, San Francisco, and Boston, definitely a little bit higher turnover there given corporate exposure and lower traffic due to stay-at-home orders. But on a positive note, we've seen Texas, Nashville, Seattle, L.A., and Salinas with stronger retention, traffic increasing, and a decent rent growth.

That's helpful. Appreciate the detail there. And then, you know, one other question that I've been putting out there, I'm just curious,

As you think about, you know, future development and how things have evolved, if you were negotiating contract today on a construction project, you know, where do you think hard costs would be versus pre-COVID-19? And then how does that sort of, you know, overlay with your strategy for, you know, restarting the development pipeline ultimately versus, you know, pursuing additional DCP type investments?

Awesome. This is Harry. We had two projects with planned starts during the second quarter. We hit pause on these two while we, as you mentioned, looked at pricing and overall economics. You know, we recognize that NOI is likely to decline in the near term, but we also know the multifamily fundamentals tend to be strong coming out of downturns, and we believe that we will be able to pull some costs out of the projects, which is a permanent benefit compared to NOI trends, which are inherently temporary or cyclical. I think there's a general view that it's somewhere in the neighborhood of 5% of hard costs is probably a safe number. There's some optimistic views that it could be a little bit greater than that, perhaps as high as 10%.

And then how do you get thinking about that versus kind of, you know, when you're looking at, you know, potential investment opportunities in a DCP-type deal or, you know, future development? Any additional thoughts there? And then that's all for me.

Hey Austin, it's Joe. Just in terms of how it relates to future investment opportunities as well as external growth, first off we start with the balance sheet in terms of where do we sit today. We spent some time in the prepared remarks and in the press release talking about all of what we've done in terms of building up capacity, pushing down maturities, and really doing a lot of work there in the last couple of years. When it gets to the external growth, it's going to be similar to what we've done over the last couple of years, which is pivot to where the returns take us. So we've reduced development significantly when we didn't see returns. We ramped up DCP. We really hit the go button on equity and external growth on acquisitions last year when we saw the opportunity there. So I think DCP developments, buybacks, acquisitions, et cetera, they're all going to end up competing with each other. But right now, we view capacity and liquidity as kind of at a premium and a desire to be patient in our approach. So We'll probably start to whittle away here at some point, but right now I'm just trying to be patient with the capital that we have. Understood.

Thank you.

Thank you. Excuse me. Our next question is coming from Mitch Hightower of Evercore. Please go ahead.

Sorry, hit the mute button. Good afternoon, guys. Thanks for taking the question, and I hope everybody's doing well. You know, Joe or anybody really, just to follow up on the external growth question, you know, talking to others, including your peers, it sounds like there's not yet a lot of distress out there, right? The Fed's cooperating and business is still holding up. But do you envision that scenario changing over the next few months as developer balance sheets or anybody else in the ecosystem that's as they get stretched, and do you think that's where the opportunity might come up a little more favorably for well-capitalized owners and investors like UDR?

Hey, Rich, it's Joe. I think for real estate broadly and then multifamily specifically, it's probably going to be tough to get into a fully distressed situation. If you go back to the last downturn, we had a fundamental downturn, a capital markets downturn, and real estate was at the epicenter of both of those. You look at where we're at today, I think the Fed, the Treasury, and the U.S. government have done an exceptional job in terms of trying to keep businesses in a good liquidity situation, making sure consumers survive, and making sure that credit markets continue to act pretty well when you look at unsecured and secured space. So I don't think we have anything ahead of us on the capital market side that would be concerning in terms of distress. So then it just comes down to how do you underwrite the near-term NOI growth profile And so I think we're all still waiting through that, trying to figure that out. But it's hard to see us going into a situation where we have a lot of distress out there in the transaction market.

Okay. Does it help? Oh, go ahead. Sorry. No, you're good, Rich. Okay, okay. Yeah, those are helpful comments. Yeah, and then just on the fundamental environment, you know, factoring in construction delays in different places versus other places, And as we think about the lease-up environment over the next few months, you know, where across your broad portfolio do you see supply, new supply having the greatest impact on market rents over this, you know, kind of peak leasing curve that we're into right now?

Hey, Rachel. I'll kind of kick it off, and some of the others may jump in here. But, you know, when we came into the year, we saw supply overall in 2020 was going to be in that flat, up 10% range. When you looked at individual markets, you know, Boston, L.A., San Francisco, those were some of the markets that we thought there would be a little bit more pressure on in terms of supply being up. When you look at the stay-at-home orders and some of the shutdowns in terms of construction activity, clearly it's been a little bit more impacted on the East Coast. So Boston specifically, where we thought there would be some more pressure, probably slows down a bit. New York definitely slows down. A little bit less of that taking place on the West Coast. But overall, you will see some degree of slippage throughout the country, a little bit more so in certain markets. So that flat to up 10% number probably looks more flat to down 10 and just drips into 21. And then if you look at a more forward picture, if you look at starts activity, clearly it's come off materially. We'll see where April is next week when we get the numbers again. But I'd expect starts permits activity to keep coming off. Both due to credit markets, which on the construction financing side, it's kind of one area of the credit markets that have really shut down a little bit in terms of cost and proceeds. And then governmental offices clearly have slowed their activity and or shut down. So probably a positive impact when you get out there later, 21 and into 22.

Yeah, I understand. You know, when you look at our portfolio where we've probably felt the most impact from new supply would be downtown San Diego. you know, some district in San Francisco and downtown L.A. Great. Thank you, guys.

Thanks, Rich.

Thank you. Our next question is coming from Jeff Spector of Bank of America. Go ahead.

Good afternoon. Hi, Jeff. It's just, you know, I know you guys have been through different cycles and the great geographic... you know, discuss or think about longer term, you know, some of the different regions and future trends you expect at this point?

Yeah. Jeff, this is to me. Let me take a shot at that. You know, with respect to we're right in the middle of, if you will, a crisis of this pandemic, and often I find it wise not to adjust our strategy in the middle of a storm. What you do adjust is your tactics. And you can see we like a good foundation with the operating platform to address those tactical opportunities. And Mike and the team are working very diligently at executing that. As we talk about what lies ahead on the back side of this, it's interesting when we start looking at the decision trees as well as the opportunity sets. And the first cube we come up with on a decision is, well, do we come up with a virus? Do we come up with adequate testing? And do we go back to, if we have those two things in hand in the next year, do we go back to February of 2020? Or is there something else that's going to evolve in that slow progression out of this? And so I think it's just early for us to adjust our strategy. We'll keep revisiting that question, looking at the opportunity sets that come up. And what we do have, and I believe, is a very strong foundation to build off of, whether that's the team, the platform, the capital availability. So no adjustment to strategy at this time. We'll plan it through. But I think we could be sitting here six months from now with a completely different landscape. And what we'll be proud of is the tactical execution that we've done and probably reach that decision when that time comes, best.

Thank you. Appreciate those comments. And does that also go for about the amenities or what you can offer, I guess?

Yeah, I think Jerry and Mike can handle what we're doing on the individual community levels about opening those up.

Yeah, you know, a lot of our amenities have closed. We will open them up as soon as The cities allow. There will be a lot of protocols put in place to comply with spatial distancing, cleaning standards, things like that. But I think when you look at amenities going forward, over the last two to three years, what we've seen in a lot of our revenue-enhancing spend has been placed in converting things like theater rooms and bathrooms spaces like that into smaller conference rooms and other types of work areas. So I think that's going to be continuing. I think, you know, when Harry is building product in the future, you know, we'll see how this plays out. If there's other things we'll look to do, I think having high-speed Wi-Fi in buildings is also going to become, you know, much more of a selling point as probably there will be more remote workers. But, Harry, anything you want to add to building plans that you think about in the future?

Well, I think, again, it's early, as Jerry mentioned. We look particularly to build new buildings. We'll definitely look at things such as the quality of airflow and filtration systems. We'll likely further expand package rooms to handle increased delivery volume. We'll ensure that we're using antimicrobial surfaces such as quartz or cedar stone, those types of things.

Thank you.

Our next question is coming from Nick . Please go ahead.

Hi, this is for Nick. Thank you for taking the call. The question, two broad questions, actually. One, I think you mentioned earlier on that collections were a little lighter on the Class B side of your portfolio. I just wanted to get a sense of renewal or, you know, blended lease pricing trends. as a differential between Class B and, let's say, the kind of properties. And then the second question is more around DCP. Are there any active projects in your pipeline that could potentially suffer yield loss because of delays? And how are you guys structured around controlling reimbursement or funding on those kind of situations?

You want to take DCP, Harris? Sure. Sure.

So with respect to DCP, we're open to some more DCP. We expect new development starts to swell in the near term, which likely impacts demand. But over time, we expect to be able to continue to deploy capital in DCP. It is an investment class that we like, and we continue to look to deploy capital in that area.

And then maybe just to add on to that in terms of the protection that we have in place for some of those transactions, as you think about the underlying collateral or real estate, we've underwritten the majority of those to about 5.5% to 6% type of yield on developers' numbers. So if we do see a drawdown in terms of NOI expectations, I think we have plenty of cushion to get down to our level of basis. where our capital sits, we're kind of in that 55% to 85% of the stack. And you had asked about our ability to sign off on draws. We do have that ability. But when you look at our remaining funding within the developer capital program, we've only got about $14 million left at this point in time, primarily related to the Thousand Oaks transaction, which we recently announced. So all of the equity hasn't been invested behind us. Most of our DCP capital now is on the deconstruction lender to finish out the funding.

This is Mike. Just to touch on the rents. Very comfortable between A's and B's, urban and suburban. And I believe you asked about the delinquency too. Again, we're averaging around 4% across our portfolio. New York and Boston are the highest due to corporate exposure. We're working with them right now on rent assistance. L.A., which makes up about 4% of our NOI, is the next highest given regulatory environment there. Then you have Seattle, Austin, and Nashville. They're all the lowest in between 1% and 2%.

And just to make an additional comment there on those delinquencies that Mike referenced, that 4%, we do have payment plans or financial arrangements in place with about 1.5% of that delinquency, which over time we think then reduces you to 97.5%. In addition to the fact that we continue to get payments coming in from individuals we do not have payment plans with, so we see those each and every day coming in. And so we think that number will continue to go up in terms of cash collected for April. Thank you.

Thank you. Our next question is coming from . Please go ahead.

Thank you. Mike or Jerry, as you guys ramped concessions in April, were there any markets that just did not respond to the increased concessions, whether it be six or eight weeks free?

Hey, John. It's Mike. New York City's been the one probably where it's a little bit more challenging right now because of the stay-at-home orders. So while we did increase concessions to try to increase demand there, we quickly pivoted, and we're finding that we're doing more of the virtual tours there, getting those Zoom tours that Jerry spoke to, and that's helping us out right now. And then as far as other markets, in some cases we did a few loss leaders where we were trying to drive demand, and you can see that in San Francisco. That can help us out to some degree, a little bit more than, say, New York City.

Okay. Sticking with San Francisco, revenue growth in the quarter, even pre-COVID-19, lagged pretty meaningfully. Could you share April occupancy and new lease growth for San Francisco portfolio?

Sure. So San Francisco today – It looks like we're around 94%. In April, we were 95.2%. And then our blended growth there today is right around 1% to 2%.

Thank you.

Thank you. Our next question is coming from Rich Hill of Morgan Stanley. Please go ahead.

Hey, good afternoon, guys. Two things I wanted to address. The 11 JV properties that you put into your combined pool, could you just maybe talk through the revenue benefits and the expense benefits? I noted on some of your disclosure that your controllable expenses turn negative. So I'd love to just understand a little bit more what the benefit of those new additions to the pool are.

Sure, Reg. This is Jerry. Okay. Just to get everybody up to speed, that's about 3,600 units, mostly deals we traded for in the MetLife transaction last year. Makes up about 8.6% of combined same-store NOI this year. So when you look at those assets, they have revenue growth of 3.9%. That compares to the 3% blended level. So it benefited total UDR revenue growth for same-stores by 10%. because the legacy assets would have come in at 2.9%. A lot of that was actually in fee and other income, which is really attributable to our platform. As you know, one thing we've told everybody in the past about why we don't combine the MetLife joint ventures is we don't have full control over those. We have to run those in conjunction with an asset management function that doesn't always adopt our entire platform. So We got those deals 100% back in the fourth quarter of last year, put the UDR platform on them, and like I said, you saw revenue growth come in at 3.9% for the first quarter. When you look at expense growth, expense growth in total was negative 6% almost at those net deals. That compares to 1.7% on a combined basis. So the legacy assets were at 2.7%. So we've got about 100 basis point benefit on the expense side. And when you look at the controllables, which is the question you asked, and that's where most of the benefit comes from the NextGen operating platform. We've been telling you about all of the benefits for the last year or two to UDR's same stores. And this was a good opportunity to see how quickly, as we get the efficiency from outsourcing, centralization, sharing staff between stores, multiple properties that are close by, how you could benefit. But the controllable expenses at those 3,600 homes was down 9.7%. That compares to our legacy assets being held at flat, which is still a very strong number. And the end result on a combined basis is they were down 110 basis points.

Hey, Rich, this is Joe. Just one thing for reference for everybody on the call. Within our supplemental on attachment five, we did provide a substantial amount of detail in terms of trying to make sure that we remain transparent. So you can see on attachment five, we do give detail on combined same store, that acquired JV same store portfolio, as well as what you could call the legacy UDR same store portfolio. So you can see rev expense on the line kind of back into some of the caps that Jerry's talking about on a rev expense and a line number. So you can work the numbers yourself on that end if you'd like.

Got it. And then I'm sorry if you've already asked this question or answered this question, but for April, do you have any updates on the actual leases signed in April and what the rents look like? What I'm getting at is some of the disclosure we've heard from some of your peers has been a little bit mixed. But if you had any updates on actual leases signed in April, that would be really helpful.

Eric, this is Mike. We signed between Glendon and you in the renewal. It was around 2% growth.

But then for leases that are going to affect in May, so leases that we may have signed in April, including news and renewals, while we're not ready to give detail on that at this time, we do think they'll remain positive when we get to May. So when we get out to June, May read, we'll provide an update within our disclosure at that point in time so you can kind of track these numbers forward in terms of collections, blends, traffic, et cetera.

Okay, sounds good, guys. Thanks very much for the disclosure.

Thank you. Our next question is coming from Chris Anderson of SMB.

Go ahead. I think I heard that. Good afternoon. So if I could maybe ask a little bit of a clinical question because, you know, it's more fun, I guess. So all of your peers are kind of, you know, in that 95%, 96%, 97% range of April collections, which is great and really, really awesome for all of you, you guys included. But I'm curious how the realities of those conversations went. Were people just, you know, willing to pay their rent, or were there like some negotiations that went on, you know, along the way in some ways? you know, of those conversations, assuming that you have several levers from which to pull, you know, to get people to pay their rent? Or was it just as simple as, yeah, here's my rent payment? I feel like that there might have been more realities to many of those conversations to get you to that 96% level.

Yeah, this is Mike. I'll tell you, it really goes down to the property level, and that's why we've taken that surgical approach from the beginning. And it's a case-by-case. So some markets we've seen a little bit more where there's people coming in and they're negotiating versus others where it's been more of a business as usual. But for the most part, we only have about 700 payment plans today. So I think there's a lot of pride out there and a lot of people that did come in and pay the rent.

You know, I think most people have their jobs, you know, have not been financially impacted too hard. in our portfolio. And, you know, Mike, what did you say main collections were today? 87%. 87%. So that's people that just are normally going to pay on time. So, you know, if you think that that was roughly the same as last month, we had to go work to really get the next 9%, I guess I would say. And, you know, a lot of those people were the ones that were under financial distress and we entered in these payment plans Mike's talking about. In some locations, you know, where late fees are not legal anymore. People didn't have the incentive to pay quickly, and some of those would lag. But I think by and large, our portfolio is of such a quality that the majority of people are going to pay on their own without a lot of negotiation or being forced to do it.

Rick? This is Jimmy. One, I didn't think that was overly cynical. But what I found is... I got a second question. There we go. Good. Seriously, on the collections and negotiation status, what's intriguing is the ops platform we've talked about a number of times. We've got history on every resident for their length of stay, their pattern of pay, their level of service, any issues they've had. And so Mike and his team are armed with, listen, you've been a great resident. You've been with us 27 months. We understand you have a challenge right now. We want to work with you. We offer them up a payment plan. A lot of them, surprisingly, they look at it and they just come back and say, well, I can pay this much and we'll put them on terms. Others, you know, I don't have it right now. What can I do? And so he's got a team that's armed. And while we say automation, it still does require people that have skills and data to sit down with people and try to work out a plan. And And I think that's what you're seeing with respect to the April. You're here on May 7th. We're still collecting money from those April rents, whether they're on employment checks, government aid checks, or they're out looking for work. But we want to be accommodating towards our residents to try to help them get through this and believe that on the backside of this, that goodwill, but also our brand and our image are maintained. It's just going to be an individual-by-individual situation. Hard to throw a blanket over it. We shouldn't throw a blanket over it. We should be compassionate and accommodating.

Okay. Second question, when you think about the type of unemployment that's happened, maybe it's, I don't know, 20% of the U.S. workforce or something. I don't know if I have that number exactly right. How much of that has hit you directly in terms of people who have lost their jobs within your portfolio? It's assuming a lot of this is service-oriented sector. I don't know how big that is in your portfolio, but I'm just curious about the direct hit for UDR.

Yeah, Rich. You know, it's hard to tell. If somebody got laid off and didn't come in and ask us for rental assistance, we're not aware of it. As Mike stated a little bit earlier, In April, we entered into 700 deferral plans with individual residents, which is a little bit under 2% of our portfolio. So I would tell you, as of April, it wasn't very high. We're offering the same type of deferral plans for people that are under distress in the month of May. We do ask them to provide some sort of proof of their being financially impacted by by the COVID virus, but, uh, right now it's not that much.

But you, you don't have a read about what their jobs are? Like, when they come in the door, you don't have a, an understanding of their... We do.

We just haven't gone back and looked at exactly where they work or if they got laid off. As we said, you know, some of the markets we've, uh, felt more of it is in the, um, in those hospitality markets in Orange County as well as Orlando. Um, but, uh, As far as I can tell today, they either still have their jobs or they're able to make their rent payments.

Risk for real life. In the application process, you do get a degree of comfort about what their position is. But our average resident staying with them is 28 months. And they've moved on to and promoted, changed jobs. We really do not have a mechanism to collect that. And it's often the deficiency of when people try to report income Well, how much of it's passive income, how much of it's W-2 or 1099, it's data, but it's not useful. Their actions is what's useful. Their interaction is what's useful.

Okay, fair enough. Thanks very much.

Thank you. Our next question is coming from Neil Malkin of Capital One.

Go ahead. Hey, guys. Thanks. First one on the operation side. Jerry or Mike, I'm wondering if the COVID pandemic has maybe shined a light or helped expedite a move to more technology or the next-gen platform or the capabilities in such a way that maybe that changes your operating cost model on a property level. In other words, you might not need as many people doing tours or you know, back office or maintenance, et cetera. Is that something that you're kind of seeing come through? Thanks.

Yeah, you know, I said a little earlier, we've been working on our new platform for about three years. A lot of it was really for that efficiency and to allow our residents to adopt self-service. I think what we've seen with the last two months is our customers were ready for it. They adopted it. and it's going to allow us to continue moving forward with this. And, you know, I also said that, you know, we're finding new things through technology to even enhance that self-service ability where they don't feel it as necessary to show up and tour at the site. So, yeah, I think you're going to see efficiency. I think, you know, we've been talking for the last year, year and a half about, contraction to our controllable margin. You know, this quarter, our controllable margin grew by 60 basis points as a result of, again, controllable expenses being down 1.1%, so that shows some of that efficiency you're talking about, and I would expect it to continue, but some of it has been accelerated.

Okay, thanks. Another one for me is, could you just maybe or juxtapose the coastal versus sunbelt markets, you know, the major things you're seeing in terms of, you know, payback periods, moratorium, you know, fees being suspended, you know, evictions, anything along those lines that, you know, would give some help to, you know, understanding really what the economic and political or legislative environment looks like between those two parts of the country.

Hey, Neil. It's Joe. You're right. There has been a little bit of a juxtaposition between different regions and states. And, you know, while at the federal level we've been very, very thankful for all the efforts, it's fair to say that, you know, some of the local and state regulations have made operations more difficult in nature. You know, you just start with the shelter-at-home orders. As you look at the sequencing of when those come off over time, About 10% of our markets are actually open at this point in time, those being here in Denver, Nashville, the Florida markets, Texas starting to open back up. So you are seeing more of a Sunbelt opening, and that's where we're really trying to figure out how to work through the operational reopening of the assets. When you get into some of these other restrictions, such as eviction moratoriums and other things, the eviction moratoriums generally are lasting longer. When you get into the coastal markets again, California, Seattle, Massachusetts, Oregon, all those are longer. New York just recently changed theirs, I think, last night or this morning to August 20th. So you do see longer eviction moratoriums on the coast. Similarly with the payback periods, we've seen most of the payback period restrictions taking place in California markets, San Fran, L.A., San Diego, Costa Mesa. And then out on the East Coast, D.C. proper has more restrictions on payback periods as well. So it is a little bit more coastal in nature at this point in time. I don't doubt that that's part of the reason when you hear a commentary from Mike and Jerry on delinquencies and what we're seeing there. There probably are a few bad actors that are taking advantage of those eviction moratoriums, but if and when they open up, we'll continue to work with them and try to get payments and be compassionate towards them, but also utilize the law on our side as well and try to get those collections that are contractually owed to us.

That's super helpful. Thanks. I guess on that question, are you willing to, if someone just says, I have to leave, kind of just letting them go, maybe taking a lot to get control of the unit back, how do you kind of weigh that decision?

A lot of it depends on how much demand we have at that particular property. there's significant demand, we would probably consider it. If there's limited traffic coming in and low demand and high exposure, we're probably going to hold them to the lease.

Okay. Thank you, guys.

Thank you. Our next question is coming from John Kim of Fierbo Capital Markets. Please go ahead.

Thanks. Good afternoon. I guess a similar question on geography differences on renewal rates. And are you just keeping them flat where it's mandated, like California and New York? And, you know, if so, what percentage of your markets are you at free market terms versus, you know, government-mandated renewals being flat?

Hey, John, it's Mike. So, you know, we are taking this, again, property by property, market by market, and pricing at market. So when we're looking at renewals today, we've already priced out through July, and we're anywhere from 4% to 4.5%. That being said, we are working with those that are facing a hardship, and we do have regulatory pressures in a few counties and states. So we'll see where they come in, but that's what we've been sending out as of now.

Hey, John, this is Joe. If you look at where we're at in terms of regulatory restrictions, I mentioned in terms of the rent stabilizer, assets are subject to cost of Hawkins in California. We do see that in L.A., San Fran, San Jose, where they've required 0% renewal increases for certain durations of time, depending on emergency periods or otherwise. D.C. proper is through the emergency period plus another 30 days after that. And then the state of Washington as well have renewals of 0% here for another month or so. Obviously, caveat that that could change at any point in time. So when you've got to look through the portfolio overall, We're probably just around 10% of our rents right now that are subject to flat renewal increases, with the rest being very market and asset-specific, as Mike talked about.

Okay. And then looking at your April updates, you know, it looks like you signed more new leases this April than last year, just looking at your application-multiplied by closing ratio. Okay. Is that just because your portfolio is bigger or incentives that are being offered?

Yeah, when you really look at our closing ratio, Mike, why don't you go through the math on a closing ratio because our supplement doesn't quite reconcile.

Sure. Yeah, so we look at qualified traffic as somebody who's either calling us or hitting our website, and then we really look at visits. and applications, and that's how we get to our closing ratio, based on visits. So what we've been seeing over the past few weeks is less people, obviously, coming to our properties where we have more of the stay-at-home orders in place, but those that are coming to our properties are more likely to rent. And so we've seen that go upwards of 50% to 60% as of late.

So that ratio is multiplied by visits, not applications or traffic? Right. Thank you very much. Thanks, John.

Thank you. Our next question is coming from Robert Stevenson of Janney. Please go ahead.

Good afternoon, guys. Joe, what are you going to be accruing for bad debt now in 2020, and what's been your bad debt cost running you in a typical year like 19th?

Hey, Rob. So I'll give you a historical first. Typically, when you exit a month, you've got about 1.5%, 2% of rent outstanding that you've built. And so over that subsequent period of time, leading all the way up until eviction process, you typically continue to collect. So that's why when you look in our press release, Q1 2020, we had 99.6% of rents collected. So you can see we had about 40% that were still outstanding waiting to be collected. As we go forward, we're going to be able to assess each individual tenant in each bucket and try to determine collectability at that time. So I can't speak to how we are going to recognize revenue and therefore what the collectability and bad debt is going to be as we move throughout the year, because it's really going to depend on each individual circumstance. So do they have a payment plan in place? Do they have a good payment history? Have they come to us and spoken about their ability to pay or that they're waiting for a governmental check that we will then receive? Or have they simply skipped and they're gone at this point in time and All of those have different collectible probabilities. So we're going to assess that as we move through 2Q and continue to get more information. So hopefully we'll have a better update in July when we get there for you.

Yeah, I would tell you, historically, when you look at our portfolio, you know, we look at net bad debt. So that's whatever you write off this month, I'll set by whatever you've collected from previous write-offs. So when Joe talks about that delinquency, sometimes it carries over. Sometimes people move out, but they come back to pay us. But When you really look at that net bad debt as a percentage of gross potential rents, it typically runs in the 0.1% to 0.3% range. So it's a fairly small number.

Okay. And then what are you guys thinking is going to wind up being the sort of lost revenue from, you know, the lack of renting the spaces, you know, for corporate events, for parking, all the other sort of, you know, fees, probably less application fees, et cetera. What does that sort of all sound up to when you guys think about that, you know, today as to what you've sort of lost thus far?

Sure, I can give you a little bit more color on what we saw for the month of April. And just to go to your first question on the common areas, that was an initiative that was starting to ramp up for us. It's about 1% potential of our total other income, or roughly $1 million over the course of a year. Right now, we have had to shut that down. But as amenity spaces start to open up, we expect that we can start to gain some momentum there again. But to late fees, admin fees, app fees, things like that, they were about 55% to 60% of our total miss in April. And I tell you, in total, fees were off by close to a million dollars.

Okay. And as we think about operating expenses, are there additional operating expenses that we need to be thinking about of any material nature to deal with? COVID and the challenges with the eviction bans and all this other sort of stuff that you're going to have to be dealing with throughout the remainder of 2020? Rob, this is Jerry.

There are some COVID expenses. We had to buy some PP&E, some cleaning materials. We actually are providing a bonus to our site associates for all of the policy changes they've had to endure over the last couple of months as well as the next few coming forward. You know, you're going to have utilities expense go up as more people are staying in their homes. You're going to possibly, hopefully not, have higher insurance clients as people stay in their homes more. You should have, you know, you're going to have a higher level of cleaning costs for common areas as time goes on. Ideally, a lot of those costs are going to be offset by lower turnover. So when we kind of bundle all of our expenses up together today, we don't think it's a material difference from what we originally had guided to. Okay. Thanks, guys. Stay safe. Thanks, Rob.

Thank you. Our next question is from Alexander Goldfarb of Piper Sandler. Please go ahead.

Hey. Good afternoon. I appreciate you guys staying after the close. Two questions really quick. First, up in Boston – What percent of your portfolio is traditionally occupied by overseas students?

I don't think it's very high. We've got some at our 345 Harrison deal. I don't have that number on top of me at my fingertips, but we can get that back to you after the call, Alex.

But basically, Jerry, if you don't know it offhand, it sounds like it's a pretty small number. It's not material. Okay, great. Second question is on New York. Have your property managers been getting a sense of what people's thoughts are for this summer, whether they're going to renew, you know, or move out? I mean, certainly we know what the rumbling is here, but obviously, you know, our sample set is going to be different than your resident sample set.

Hey, Mike. We're still seeing really low turnover in New York right now, and as we send out renewals, we haven't seen much of an increase in notices yet. We are seeing it a little bit more on the corporate side where we had some exposure there, but as far as our traditional residents, they're still sticking in place for the most part.

Okay.

Thanks, Mike. Thank you. Our next question is coming from Particle of Zellman & Associates. Please go ahead.

Hey, guys. Thanks for taking my question. I realize it's late, so I'll keep it quick. Joe, I know you talked about this a little bit on the call, but if you could just rank what you see or what you perceive are going to be the best uses of UDR's capital in the coming year. You mentioned developer capital programs still being very attractive. If you could highlight how you guys are thinking through that, that would be really helpful.

Yes, of course. So, I think at this point in time, you know, we talked about the impatient. We're still trying to look for opportunities because we do believe we have capacity given the strength of the balance sheet. But it's tough to really rank them given the dearth of opportunities that are out there. You've seen the transaction market really shut down at this point in time. Development, obviously, in terms of starts is coming off, which impacts land opportunities, impacts DCP opportunities. So the only opportunity we have to really look at day in and day out is our stock prices. And so trying to compare near-term returns, cash accretion, and long-term IRRs is pretty difficult in this environment. So it's tough to commit to any one class of assets other than to say that we'll continue to pivot where we can to get the best risk-adjusted return.

And just as a quick follow-up, any deals you did that, you know, don't look as good right now, I'm not saying that, you know, you're going to lose money on them, but the returns are lower than you would have thought.

I mean, obviously we were incredibly active on the acquisition front using equity last year. And while it's possible the near-term return might be lower, given the rental rate environment that we're in today, the reality is that we used a source of capital that was priced attractively. We locked in that cost of capital, put it to work, and did assets to add typically 5% to 10% upside due to the operational initiatives combined with the platform. So I think that opportunity still exists. The current environment does not take away from those opportunities that we saw to expand margin, to expand NOI yields by 5% to 10%. The near-term market run growth, yeah, that may have come off, but it came off for our entire portfolio. So the fact that we utilized cost capital, match-funded it, locked in the accretion, I don't think we have any sense of regret other than I wish we would have done a little bit more.

Thanks. That's great. Best of luck moving forward.

Thank you.

Hey, good afternoon out there.

So I guess my first question is a bit of a twist or follow-up to an earlier question. You guys are in a unique position relative to your peers that have reported thus far to give a broader perspective by market, price point, product type. So, you know, that gives you, I guess, a unique perspective to give color on the debate over higher-priced urban coastal apartments with greater COVID movement restrictions, but offset by a greater proportion of white-collar workers with greater work-from-home flexibility, versus the Sunbelt, which has less COVID cases, fewer restrictions, but lower incomes and less flexibility to work from home. So I guess I'm curious on what your early read is here, urban coastal high-rise versus – Sunbelt, Garden, lower price point. What have you seen recently that informs you? But more importantly, what are you thinking of over the next several quarters? Which of these two groups can potentially outperform and why?

Yeah, this is Jerry Gando. I'll probably throw it to Mike and potentially to me on more of a long term. I would say it's too early, as Tom said earlier, to make a real call on urban versus suburban. You know, I can tell you right now when we look at it, and you might refer to this earlier, as we look at the delta between A and B in pricing power in April, you know, whether it was on the renewal side or the new lease side, they're almost flat. Really not much of a differential. I think you pegged it right. Our Sunbelt and some of our B properties had residents that were probably a higher risk of being in the service sector and could have lost their jobs. I think those – and I would say this traffic is probably picking up in those locations more rapidly because the cities are opening up. The urban core markets, traffic is slower as stay-at-home is still widely in effect. I would tell you we also had some corporate exposure in a few of those markets that we felt some impact on. But, you know, it wasn't material, but that's where the impact was, was in those San Francisco, you know, Boston, New York City locations. But I would tell you right now, when I look at how it all works out, whether you're talking A, urban, B, suburban, they've all been impacted in some way, but it's in different ways. Traffic is perking up more rapidly in suburbia. But, you know, right now we're just playing them property by property. They all have a little bit of a different story. I think Mike and his team are dealing with it well. You know, Tom, I don't know if he would add anything to what he said earlier about the long-term aspects of these. And, again, like I said, it's just too early to tell what this means for future quarters. It depends on when do cities lift stay-at-home mandates. When do employers expect people both to come back to work, but also when do they start rehiring for some of those jobs that have been laid off? And then when do consumers want to get back out there and start buying things? So I think it's been on a lot. It's just too early to make the call. Anything you want to add, Tom?

No, I think you got it right. I mean, you're just right in the middle of this storm. And as the cities open up, people start getting out. their patterns are going to start gravitating back to where they were before with the constraints. The constraints can go away with immediacy testing, different transportation, a vaccine. If those are six months or a year off, are people going to make a decision and live with six months of discomfort until a long-term cure is on the horizon? Will they make a decision in that window of time that impacts them for years to come? Or will they hunker down and deal with the inconveniences and then, when they're listed, come back to normal? So it's just too early to overlay that rewinding of the economy onto a portfolio strategy and draw a conclusion.

Okay, fair enough, fair enough. Thank you for your comments, though. And maybe you guys should talk a little bit about the virtual tours. You mentioned earlier in the call being a handy tool here, obviously, in a post-COVID world for your leasing efforts. Can you share, perhaps, what percentage of your tours conducted maybe in the month of April or during some time frame have been conducted virtually versus conventional? And then maybe some comment on the differential in conversion rates between these virtual and the more traditional in-person leases. And on top of that, are you – finding that you need to offer any incremental incentives as part of these virtual leases as well.

Thanks. Sure. This is Mike. This goes back to the whole property market specific thing again, where we have places where we just can't give a guided tour, and in some cases can't even offer self-guided tours. Virtual tours are 100% of our traffic right now coming through the property, and in other cases where we are starting to open up more, We're still doing the self-guided tours, and we have guided tours where we can. But I would say over the last week or two, as we look at this technology and we're utilizing the Zoom tour, that's starting to pick up more, and we're utilizing that as a very good tool to help us close.

And I would add, I don't believe Mike can correct me that we've added, we've offered any additional incentive for virtual tours. No, that's correct.

Okay. That's all for me. Thank you, guys.

Thank you. If there are no further questions, I'd like to hand the call back over to Chairman and CEO, Mr. Toomey, for closing comments.

Thank you, Operator. And first, let me start with a thanks to all of you for your time and interest in UDR. And certainly, we here hope that you and your families are safe and healthy. Again, thanks to the team in the field, in Denver. Very proud of what you've accomplished so far, and congratulations. I can't say that enough. Very, very, very proud of you. On the business front, you know, I'm reminded that America is extremely resilient, that you see the power of solutions come through in a variety of different ways. Grateful for that, but I do believe America is an extremely resilient society, and we will get through this. You know, we have a business that is, frankly, a necessity. And we take that responsibility very seriously and at the same time recognize it is a core of our business and people will continue to read. And we're grateful for that. Also very grateful to our experienced leadership team. We've been through different crises, different challenges, and they've risen to the challenge. And our teams in the field, I know you're focused. You've got the tools, the resources. We've discussed already that we have an abbreviated leasing season, but I'm confident that they will perform well during this short leasing season that's going to be in front of us. Lastly, grateful that we have a diversified portfolio, a strategy that gives us optionality, and a platform to build on. And we look forward to showing you more of this in the future and demonstrating again the right strategic decisions we've made, and how they're going to build for our future. And with many of you, we'll see you at Mayree. Look forward to that. And certainly hope that you are safe and well in the interim. And please take care.