In early 2025, UDR prepared for the typical fourth-quarter slowdown well in advance by shifting approximately 25% of its Q4 lease expirations into higher-demand months in 2026, Chief Operating Officer Mike Lacy said on the REIT’s earnings call on Feb. 11. 

In late Q3, demand weakened beyond mere seasonality, which led UDR to build occupancy to nearly 97%. While new lease growth fell to negative 8%, with renewals at 2%, in October, UDR’s strategy set it up “to meaningfully accelerate lease rate growth over the last four months,” according to Lacy.

“Since the October lows, new lease rate growth has improved 550 basis points, renewals have increased 300 basis points and blended lease rate growth has improved by 400 basis points to positive 1%,” Lacy said.

That performance should set the REIT up for stronger performance this year, according to UDR president and CEO Tom Toomey.

“The positive operating momentum we achieved in the final months of 2025 has continued into 2026 with further acceleration in lease rate growth, coupled with high occupancy and outsized other income growth,” Toomey said on the Q4 call.

UDR, like its peers, sees a stronger 2026 ahead, despite more muted job growth. And, like other REITs, it also expects to be an active seller. 

Rent Outlook

UDR expects blended lease rate growth of 1.5% to 2% on average in 2026. “This is approximately 100 basis points higher than we achieved in 2025, which reflects a 35% year-over-year reduction in supply completions, coupled with a less certain employment outlook,” Lacy said.

Blended lease rate growth should contribute approximately 80 basis points to UDR’s full-year 2026 same-store revenue growth, which will fall between 0.25% to 2.25%.

“The 2.25% high end of the range is achievable through higher blended lease rate growth than our initial forecast, improved year-over-year occupancy and additional accretion from innovation,” Lacy said.

UDR’s management team sees several tailwinds for 2026. Apartment completions have fallen, which should lead to rent price acceleration in the Sun Belt. Its renters appear to be in good financial health with rent-to-income ratios below the long-term average, according to Chief Financial Officer Dave Bragg.

“This suggests that our residents can comfortably accept rent increases reflective of the value and exceptional living experience at a UDR apartment community,” Bragg said.

Elevated mortgage rates and home prices also make apartments an affordable option compared to home ownership, according to Bragg. But there are some reasons for caution in 2026. 

“We anticipate a more muted job growth environment relative to recent years, and we are mindful of regulatory risk, not just at the market level, but at the federal level, given continued uncertainty over tariffs, immigration and more,” Bragg said. “This has affected consumer confidence, which recently hit its lowest level in a decade.”

Net seller

In December, UDR announced it had closed a $230 million expansion of its joint venture with LaSalle. Under the terms of the transaction, the REIT agreed to contribute four additional properties totaling 974 units to the partnership.

UDR used the more than $200 million in proceeds from that joint venture expansion to repay $128 million of consolidated secured property debt at maturity and to repurchase approximately $93 million of common stock at a weighted-average share price of $35.56, according to Bragg.

In Q4, UDR purchased Enclave at Potomac Club, a 406-unit property in Northern Virginia for $147 million. Bragg said the REIT’s predictive analytics platform, its assessment of future capital expenditure needs and its operations team's on-the-ground perspective from owning the property directly across the street helped the firm identify the property. 

“Early operational results indicate outperformance relative to the market as we expected,” Bragg said.

Despite that purchase, UDR plans to be a net seller of apartments in 2026. “We are actively marketing for sale numerous apartment communities, and we're generally pleased with the market's reaction,” Bragg said.

UDR put roughly $700 million in assets on the block, with closings expected in the first and second quarters. As it decided what to sell, it evaluated predictive analytics on rent growth, the future expense burden and the operations team's perspective, according to Bragg. 

“That led us to a mix of assets to put on the market without a real specific concentration in market or age of asset,” Bragg said. “It's really an asset-level decision for us. 

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