Company Interview - UDR Inc.: David L. Messenger, Senior Vice President And CFO
February 10, 2010 - The Wall Street Transcript has just published REITs Report offering a timely review of the REIT sector. This Special Report contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. Please find an excerpt below.
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David L. Messenger is Senior Vice President and Chief Financial Officer of UDR, Inc., where he oversees the areas of accounting, risk management, financial planning and analysis, property tax administration and SEC reporting. He joined the company in August 2002 as Vice President and Controller. In that role, Mr. Messenger was responsible for SEC reporting, Sarbanes-Oxley compliance and supervision of all accounting functions. In March 2006, Mr. Messenger was appointed Vice President and Chief Accounting Officer of the company. And in January 2007, while retaining the Chief Accounting Officer title, he was promoted to Senior Vice President.
In June 2008, he was named Chief Financial Officer. Prior to joining the company, Mr. Messenger was owner and President of TRC Management Company, a restaurant management company in Chicago. He has worked as a Controller at HMS Resource, Inc. Mr. Messenger began his career with Ernst & Young LLP as a Manager in their Chicago real estate division. He holds a Bachelor of Science degree in accounting and an M.A. in accounting from the University of Iowa. He is a Certified Public Accountant.
TWST: For the benefit of readers who might not be familiar with the company, would you start with a brief history and overview of UDR?
Mr. Messenger: UDR (UDR) is an apartment REIT that owns and manages approximately 45,000 homes. We're in primarily 20 coastal markets with high barriers to entry, high propensity to rent and higher likelihood of job growth when it returns. We invest and own assets close to job centers and transportation. Generally people are making a lifestyle choice to live where we are located. For example, in Orange County the majority of our assets are located west of the 405 - it's a lifestyle choice as opposed to being east of the 405 and commuting a couple of hours into work. Our primary renter demographic is 25 to 35 years old. They are very fluent with handheld devices and the Internet, and we have adapted our operating model to cater to those residents.
TWST: You've given us a snapshot of your portfolio. Do you see that changing or expanding at all in terms of your target markets and neighborhoods?
Mr. Messenger: Over the last eight to nine years, since 2001, we've been in the process of turning the portfolio from 60-plus markets and about 80,000 apartment homes down to what it is today, in 20 markets and 45,000 apartment homes. I don't see us making any significant changes to those locations going forward. Two markets that we are currently not in would be Boston and New York, and we have said publicly that through our joint venture with Kuwait Finance House, we plan to try and enter those locations. But otherwise, UDR for its own book is very happy and very satisfied with its current market mix, and we plan to grow within those markets.
TWST: You mentioned the joint venture with Kuwait Finance House. Would you talk a bit more about what the status is for that investment program? More generally, is this joint venture a first for the REIT and/or will you pursue more of these in the future?
Mr. Messenger: The use of joint venture as a strategy for raising capital, and acquiring and developing assets is not new to UDR. Several years ago, we did a joint venture with AEGON; we developed and sold two assets, and both parties enjoyed a healthy return on those projects. We also have a joint venture with Fannie Mae, where they are the equity partner of 10 operating assets in Texas, and that's been going on since 2007. Both parties are very happy with that arrangement. And so UDR is not unfamiliar with joint venture arrangements, and the complications and intricacies that come along with the various documents and the reporting relationships.
We did announce this summer the Kuwait Finance House joint venture. That is a $450 million investment program, of which UDR's portion is 30% and after applicable levels of leverage will be a total commitment of about $54 million. And in terms of that arrangement, I can comment on through September 30. And through September 30 we have not bought anything into that arrangement. We are in the market daily looking for assets for that venture to purchase and are actively bidding in core markets for those assets, we just haven't won one yet.
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