UDR (UDR) 8-K United Dominion Realty Trust, Inc. Announces Second Quarter 2006 Results

For details contact:

Larry Thede

Phone (720)283-2450

E-mail:ir@udrt.com

www.udrt.com

     PRESS RELEASE

F o r  I m m e d i a t e  R e l e a s e

UNITED DOMINION REALTY TRUST, INC. ANNOUNCES
SECOND QUARTER 2006 RESULTS

RICHMOND, VA. (July 31, 2006) United Dominion Realty Trust, Inc. (NYSE: UDR) today reported Funds From Operations (“FFO”) of $63.1 million for the quarter ended June 30, 2006, compared to FFO of $59.4 million for the same period a year ago. The results produced FFO of $0.43 per share (diluted), a 7.5% increase from FFO of $0.40 per share (diluted), for the same period a year ago.

“We continued to see excellent apartment market fundamentals in the second quarter, producing higher rents and sustained high occupancy, demonstrating the pricing power we have across the vast majority of our markets,” stated Thomas W. Toomey, President and Chief Executive Officer. “Our same store revenue growth of 6.1% combined with expense growth of just 2.9% produced year over year same store net operating income growth of 8.0%, the highest level in over six years. In addition to outstanding same store performance, I am proud of the execution in all of our lines of business. Our active development and redevelopment projects total 5,727 homes with a planned investment of $536 million and our future development pipeline represents additional potential investment of $610 million in 3,339 homes. Our strategy is squarely focused on value creation and we are steadfast in our mission to maximize the value of our real estate.”

Second Quarter Highlights

• Recorded total income per occupied home of $878 per month, the highest level in the Company’s 35-year history.

• Achieved same store occupancy of 94.9%, up from 94.5% in the second quarter of 2005.

• Acquired four apartment communities with 1,286 homes for $219 million.

• Sold seven apartment communities with 1,903 homes for $89 million, realizing a gain of $26 million.

• Executed $160 million in sales contracts, representing 3,353 homes, expected to close in the third quarter.

• Sold 119 condominium homes for $21.5 million, realizing an after-tax gain of $6.5 million.

• Completed 1,872 kitchen and bath rehabs, representing an investment of $18.3 million.

• Issued $125 million of medium term notes due 2013 with a coupon of 6.05%.

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Portfolio Operating Performance and Same Community Results — Second Quarter 2006 vs. Second Quarter 2005

													Total Same
	Revenue			Expense						% of Total			Community
Region	Growth			Growth			NOI Growth			Portfolio(a)			Homes
Western		6.8	%		3.8	%		8.2	%		29	%		13,392
Mid-Atlantic		4.8	%		1.4	%		6.5	%		29	%		16,974
Southeastern		8.3	%		5.8	%		10.0	%		22	%		15,641
Southwestern		5.1	%		0.6	%		8.7	%		17	%		14,007
Midwestern		3.2	%		1.7	%		4.3	%		3	%		2,974
Total		6.1	%		2.9	%		8.0	%		100	%		62,988

(a) Based on YTD 2006 NOI

During the second quarter, 62,988 apartment homes, or 84% of total apartment homes, were classified as same community. The Company defines same community as all multifamily communities owned and stabilized for at least one year as of the beginning of the most recent quarter.

Same Community Results, Quarter/Quarter
($ in thousands, except rents & fees and total income per occupied home)

	2nd Qtr ’06			2nd Qtr ’05			% Change
Rent and other income	$	161,143		$	152,235			5.9	%
Concessions		2,804			3,155			-11.1
Bad debt		843			702			20.1
Total income		157,496			148,378			6.1
Expenses		56,417			54,822			2.9
Net operating income		101,079			93,556			8.0
Rents & fees per occupied home	$	841		$	799			5.3
Total income per occupied home	$	878		$	831			5.7
Avg. physical occupancy		94.9	%		94.5	%	40 b		ps
Operating margin		64.2	%		63.1	%	110 b		ps
Resident credit loss, % of effective rent		0.5	%		0.5	%	0 b		ps

Comparing second quarter 2006 to second quarter 2005 on a same community basis, 89% of the portfolio generated positive revenue growth and 80% of the portfolio generated positive NOI growth.

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Same Community Results, Quarter/Sequential Quarter
($ in thousands, except rents & fees and total income per occupied home)

	2nd Qtr ‘06			1st Qtr ’06			% Change
Rent and other income	$	161,143		$	158,572			1.6	%
Concessions		2,804			2,623			6.9
Bad debt		843			302			179.0
Total income		157,496			155,647			1.2
Expenses		56,417			58,432			-3.4
Net operating income		101,079			97,215			4.0
Rents & fees per occupied home	$	841		$	831			1.2
Total income per occupied home	$	878		$	868			1.2
Avg. physical occupancy		94.9	%		94.9	%	0 b		ps
Operating margin		64.2	%		62.5	%	170 b		ps
Resident credit loss, % of effective rent		0.5	%		0.2	%	30 b		ps

Comparing second quarter 2006 to first quarter 2006 on a same community basis, 71% of the portfolio generated positive revenue growth and 72% of the portfolio generated positive NOI growth.

Development Activity Expands

The Company continues to accelerate building its development and redevelopment pipeline. Since the end of the first quarter, the Company has added 879 homes and committed an additional $226 million to the pipeline.

In the second quarter, the Company closed a joint venture agreement for the development of 298 apartment homes in Marina del Rey, California with a budget of $134 million.

In July, the Company closed on a joint venture to develop a site in Bellevue, Washington. The Company owns 49% of the $135 million project which involves building a 400 home high rise apartment building with ground floor retail. Also this month, the Company closed on a 23 acre site in northwest Houston for the development of a 320 home community. In addition, the Company has a 250 home development site under contract in Glendale, California and another 22 acre site under contract in northwest Houston.

During the second quarter, the Company completed 100 homes in its redevelopment program and added 158 homes to the pipeline, bringing the total number of homes in the pipeline to 3,101. Additionally, the Company completed 1,872 kitchen and bath modernizations in the second quarter. Of these, 1,692 were in its same community pool.

The Company sold 119 condominiums in the second quarter for an after-tax gain of $6.5 million.

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Apartment Community Acquisitions Increase Presence in Growth Markets

During the second quarter, the Company acquired four apartment communities with 1,286 apartment homes for a total purchase price of $219 million, averaging $170,300 per home.

• The Company acquired two communities within close proximity in San Ramon, California. One was purchased for $56.3 million. The community includes 250 homes of 1, 2, and 3 bedroom floor plans, averaging 942 square feet, with average monthly collections of $1,516 per home. Construction was completed in late 2005 and is currently 94% leased. The Company will consider this property for future condominium conversion.

• The other San Ramon community was purchased for $90.0 million and includes 400 homes. The property includes a mixture of 1, 2, and 3 bedroom floor plans, averaging 953 square feet, with average monthly collections of $1,498. This property was completed in the second quarter of 2006 and is in lease-up, currently 74% leased. Stabilization is expected in first quarter, 2007.

• The Company acquired a 250 home community located in San Diego, California for $51.8 million. The community consists of 1 and 2 bedroom floor plans, averaging 765 square feet per home. The average monthly collections are $1,268 per home. It was completed in 1986 and has undergone modest interior renovations. The Company will continue to upgrade the property with additional improvements, including new kitchens and baths. The community has recently been approved for a tentative condominium map, making it a future condominium conversion candidate.

• The Company purchased an apartment community in Nashville, Tennessee, for $21.0 million. The community includes 386 homes averaging 704 square feet with average monthly collections of $624 per home. This property was completed in two phases in 1987 and 1990, with exterior renovations completed in 2005. The Company will consider upgrading the homes with new kitchens and baths.

Dispositions Accelerate

During the second quarter, the Company sold seven apartment communities with 1,903 homes for $89 million.

• The Company sold a portfolio of six properties consisting of 1,711 homes in submarkets of Dallas and Fort Worth, Texas for $74.5 million. The sale produced a gain of $17.9 million.

• The Company also sold a 192 home community in Mesa, Arizona for $14.6 million and a gain of $8.1 million.

In addition to sales that closed in the second quarter, 3,353 homes located in the Carolinas, Tennessee and Colorado are under contract for $160 million and are expected to close in the third quarter.

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“These sales are at outstanding prices and represent the Company’s ability to capture value created by the demand for institutional-quality apartments in job growth markets,” stated W. Mark Wallis, Senior Vice President. “We continually evaluate our portfolio and sell selected communities as we execute our strategy of value creation.”

Management Additions, Leadership Positions

The Company announced several significant additions to the management team in the second quarter. Mike Ernst was named Executive Vice President, Treasurer and Chief Financial Officer. He brings 20 years of experience in financial management and leadership in capital markets activity to the Company. Also, Mark Culwell and Doug Walker joined the Company as Senior Vice Presidents in the Development Group. They are both seasoned leaders with extensive knowledge and experience in real estate development and redevelopment. The Company has intensified its focus in these areas and these additions confirm the commitment to growing this important aspect of the business.

In May, Cheryl Pucci, Vice President, Operations, was installed as President of the Texas Apartment Association. She has been active in the Texas and National Apartment Associations for the past twelve years and currently serves as a Texas delegate to the National Apartment Association, representing the industry on legislative issues. Cheryl joins Kathy Ratchford, District Manager and Assistant Vice President, who also serves in an industry leadership position as President of the Florida Apartment Association.

Earnings Guidance

The Company believes that financial results for 2006 will be affected by international, national and regional economic trends and events, the acquisition and/or disposition of apartment communities, portfolio repositioning, financing activities, and other factors. The Company’s guidance for third quarter 2006 FFO is $0.40 to $0.42 per share (diluted) and $1.65 to $1.73 per share (diluted) for the full year 2006. All guidance is based on the current expectations and judgment of the Company’s management team.

A reconciliation of the range provided for projected 2006 FFO per share for the full year to Earnings Per Share (“EPS”) for the full year is as follows:

	2006
Funds From Operations (a)	$	1.73		$	1.65
Conversion to GAAP Share Count (b)		0.16			0.15
Minority Interest of OP Unit Holders (b)		(0.03	)		(0.05	)
Depreciation (c)		(1.70	)		(1.65	)
Gains (c)		0.50			0.70
Preferred Dividends		(0.09	)		(0.09	)
Expected Earnings Per Share	$	0.57		$	0.71

(a) The National Association of Real Estate Investment Trusts (“NAREIT”) defines funds from operations (“FFO”) (April 2002 White Paper) as net income (computed in accordance with accounting principles generally accepted in the United States (GAAP)), excluding gains (or losses) from sales of depreciable property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. The Company believes that FFO is helpful to investors as a supplemental measure of the operating performance of a real

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	estate company because it provides investors an understanding of the ability of the Company to incur and service debt and to make capital expenditures. FFO in and of itself does not represent net income or net cash flows from operating activities in accordance with GAAP. Therefore, FFO should not be exclusively considered as an alternative to net income or to net cash flows from operating activities as determined by GAAP or as a measure of liquidity.
(b)	Operating Partnership units are not considered to be common stock equivalents for GAAP purposes.
(c)	Due to the uncertain timing and extent of property dispositions and acquisitions, actual results could differ materially from expected EPS.

Supplemental Information

The Company offers Supplemental Information that provides information regarding the financial position and operating results of the Company. This Supplemental Information is available on the Company’s website at:
http://www.udrt.com/resources/files/Investor_Relations/2Q2006.pdf

Conference Call Information

Date:     August 1, 2006
Time:    1:00 p.m. Eastern Time

To Participate in the Telephone Conference Call:
Domestic: 800-218-0713
International: 303-262-2050
If you have any questions, please contact:
Gloria Price: 720-283-6132
E-mail: gprice@udrt.com

Conference Call Playback:
Domestic: 800-405-2236
International: 303-590-3000
Passcode: 11064137 and then press the pound sign
The playback can be accessed through August 8, 2006

Webcast:
The conference call will also be available on UDR’s website at http://www.udrt.com and at http://www.ccbn.com. To listen to a live broadcast, go to one of these sites at least 15 minutes prior to the scheduled start time in order to register, download and install any necessary audio software. A replay will also be available for 90 days on UDR’s website and also on CCBN’s website.

About United Dominion Realty Trust, Inc.

United Dominion is the fourth largest apartment REIT, owning and operating apartment communities nationwide. The Company has raised the dividend each of the last 30 years. United Dominion is included in the S&P MidCap 400 Index. At June 30, 2006, the Company owned 74,753 apartment homes and had 1,357 homes under development. Additional information about United Dominion may be found on its Web site at http://www.udrt.com.

Statements contained in this press release, which are not historical facts, are forward-looking statements, as the term is defined in the Private Securities Litigation Reform Act of 1995. You can

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identify these forward-looking statements by the Company’s use of words such as, “expects,” “plans,” “estimates,” “projects,” “intends,” “believes,” and similar expressions that do not relate to historical matters. Such forward-looking statements are subject to risks and uncertainties which can cause actual results to differ materially from those currently anticipated, due to a number of factors, which include, but are not limited to, unfavorable changes in the apartment market, changing economic conditions, the impact of competition and competitive pricing, acquisitions or new developments not achieving anticipated results, delays in completing developments and lease-ups on schedule, difficulties in selling existing apartment communities, and other risk factors discussed in documents filed by the Company with the Securities and Exchange Commission from time to time including the Company’s Annual Report on Form 10-K and the Company’s Quarterly Reports on Form 10-Q. All forward-looking statements in this press release are made as of today, based upon information known to management as of the date hereof. The Company assumes no obligation to update or revise any of its forward-looking statements even if experience or future changes show that indicated results or events will not be realized.

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Attachment 1

UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
In thousands, except per share amounts	2006			2005			2006			2005
Rental income	$	174,257		$	157,391		$	344,814		$	309,785
Rental expenses:
Real estate taxes and insurance		20,294			18,103			42,756			36,546
Personnel		17,477			15,867			33,994			31,073
Utilities		9,396			8,679			20,162			17,845
Repair and maintenance		9,707			9,719			19,542			19,152
Administrative and marketing		5,483			5,368			10,670			10,691
Property management		5,093			4,844			10,084			9,657
Other operating expenses		301			290			599			580
		67,751			62,870			137,807			125,544
Non-property income:
Sale of technology investment		—			—			—			12,306
Other income		724			39			1,902			657
		724			39			1,902			12,963
Other expenses:
Real estate depreciation and amortization		58,017			48,430			113,719			95,511
Interest		46,093			38,834			90,195			77,406
General and administrative		6,837			4,909			13,601			11,908
Loss on early debt retirement		—			18			—			6,662
Other depreciation and amortization		732			659			1,426			1,303
		111,679			92,850			218,941			192,790
(Loss)/income before minority interests and discontinued operations		(4,449	)		1,710			(10,032	)		4,414
Minority interests of outside partnerships		(38	)		(54	)		(54	)		(112	)
Minority interests of unitholders in operating partnerships		508			118			1,085			187
(Loss)/income before discontinued operations, net of minority interests		(3,979	)		1,774			(9,001	)		4,489
Income from discontinued operations, net of minority interests (A)		36,163			50,667			53,194			62,894
Net income		32,184			52,441			44,193			67,383
Distributions to preferred stockholders — Series B		(2,911	)		(2,911	)		(5,822	)		(5,822	)
Distributions to preferred stockholders — Series E (Convertible)		(931	)		(931	)		(1,863	)		(1,863	)
Net income available to common stockholders	$	28,342		$	48,599		$	36,508		$	59,698
Earnings per weighted average common share — basic and diluted:
Loss from continuing operations available to common stockholders, net of minority interests		($0.06	)		($0.01	)		($0.13	)		($0.02	)
Income from discontinued operations, net of minority interests	$	0.27		$	0.37		$	0.40		$	0.46
Net income available to common stockholders	$	0.21		$	0.36		$	0.27		$	0.44
Common distributions declared per share	$	0.3125		$	0.3000		$	0.6250		$	0.6000
Weighted average number of common shares outstanding — basic		133,676			136,150			133,634			136,108
Weighted average number of common shares outstanding — diluted		133,676			136,150			133,634			136,108

(A) Discontinued operations represents all properties sold since January 1, 2002 and properties that are currently classified as held for disposition at June 30, 2006. Gains on sales are included in discontinued operations.

Attachment 2

UNITED DOMINION REALTY TRUST, INC.
FUNDS FROM OPERATIONS
(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
In thousands, except per share amounts	2006			2005			2006			2005
Net income	$	32,184		$	52,441		$	44,193		$	67,383
Adjustments:
Distributions to preferred stockholders		(3,842	)		(3,842	)		(7,685	)		(7,685	)
Real estate depreciation and amortization		58,017			48,430			113,719			95,511
Minority interests of unitholders in operating partnerships		(508	)		(118	)		(1,085	)		(187	)
Real estate depreciation related to unconsolidated entities		—			74			—			136
Discontinued Operations:
Real estate depreciation		972			3,273			3,995			7,911
Minority interests		2,353			3,148			3,462			3,908
Net gains on the sale of depreciable property		(33,482	)		(46,781	)		(48,828	)		(53,804	)
Net incremental gains on the sale of condominium homes		6,478			1,865			14,995			2,324
Gains on the disposition of real estate developed for sale		—			—			9			—
Funds from operations (“FFO”) — basic	$	62,172		$	58,490		$	122,775		$	115,497
Distribution to preferred stockholders — Series E (Convertible)		931			931			1,863			1,863
Funds from operations — diluted	$	63,103		$	59,421		$	124,638		$	117,360
Weighted average number of common shares and OP Units outstanding — basic		142,418			144,657			142,382			144,621
Weighted average number of common shares, OP Units, and common stock equivalents outstanding — diluted		147,940			150,153			147,874			150,170
FFO per common share — basic	$	0.44		$	0.40		$	0.86		$	0.80
FFO per common share — diluted	$	0.43		$	0.40		$	0.84		$	0.78

FFO is defined as net income (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciable property, plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. This definition conforms with the National Association of Real Estate Investment Trust’s definition issued in April 2002. United Dominion considers FFO in evaluating property acquisitions and its operating performance and believes that FFO should be considered along with, but not as an alternative to, net income and cash flows as a measure of United Dominion’s activities in accordance with generally accepted accounting principles and is not necessarily indicative of cash available to fund cash needs.

Net incremental gains on the sale of condominium homes and the gains on the disposition of real estate developed for sale are defined as net sales proceeds less a tax provision (based on our annual estimated tax liability which could differ from amounts recorded per GAAP) and the gross investment basis of the asset before accumulated depreciation. We consider FFO with the net incremental gains on the sale of condominium homes to be a meaningful supplemental measure of performance because the short-term use of funds produce a profit which differs from the traditional long-term investment in real estate for REITs.

Attachment 3

UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)

	June 30,			December 31,
In thousands, except share and per share amounts	2006			2005
ASSETS
Real estate owned:
Real estate held for investment	$	5,372,252		$	5,047,128
Less: accumulated depreciation		(1,137,740	)		(1,031,586	)
		4,234,512			4,015,542
Real estate under development (net of accumulated depreciation of $1,329 and $140)		202,972			121,131
Real estate held for disposition (net of accumulated depreciation of $68,936 and $92,103)		170,452			251,922
Total real estate owned, net of accumulated depreciation		4,607,936			4,388,595
Cash and cash equivalents		6,290			15,543
Restricted cash		5,012			4,583
Deferred financing costs, net		30,721			31,036
Notes receivable		13,960			64,805
Other assets		48,420			33,764
Other assets — real estate held for disposition		6,493			3,267
Total assets	$	4,718,832		$	4,541,593
LIABILITIES AND STOCKHOLDERS’ EQUITY
Secured debt	$	1,167,748		$	1,116,259
Unsecured debt		2,234,118			2,043,518
Real estate taxes payable		25,023			22,670
Accrued interest payable		27,665			26,672
Security deposits and prepaid rent		25,502			24,668
Distributions payable		47,167			45,313
Accounts payable, accrued expenses, and other liabilities		44,268			53,470
Other liabilities — real estate held for disposition		2,205			17,480
Total liabilities		3,573,696			3,350,050
Minority interests		79,806			83,819
Stockholders’ equity
Preferred stock, no par value; 50,000,000 shares authorized
5,416,009 shares of 8.60% Series B Cumulative Redeemable issued and outstanding (5,416,009 shares in 2005)		135,400			135,400
2,803,812 shares of 8.00% Series E Cumulative Convertible issued and outstanding (2,803,812 shares in 2005)		46,571			46,571
Common stock, $0.01 par value; 250,000,000 shares authorized
134,569,843 shares issued and outstanding (134,012,053 shares in 2005)		1,346			1,340
Additional paid-in capital		1,685,367			1,680,115
Distributions in excess of net income		(803,354	)		(755,702	)
Total stockholders’ equity		1,065,330			1,107,724
Total liabilities and stockholders’ equity	$	4,718,832		$	4,541,593