UDR, Inc. (UDR) is an apartment real estate investment trust (REIT) that owns, operates, acquires, develops, and renovates middle-market apartment communities. Although it has assets across the country, UDR's exposure is mostly in the Western and Mid-Atlantic US. As of June 30, 2008 the company had ownership interests in 43,045 apartment units, including 4,991 units under development and 1,133 units under contract for development. UDR is included in the S&P Mid-Cap 400 Index.

Shares of UDR have dropped 30% over the past week due to a general market selloff. We think UDR is attractively valued relative to underlying NAV (net asset valuation). The yield remains one of the most attractive payouts among national apartment REITs, and the company is covering the dividend with operating cash.

UDR reported strong 2Q08 results with year-over-year SS (same-store) revenue and NOI (net operating income) growth of 4.4% and 7.1% respectively. In very uncertain economic times, we think the apartment sector will outperform other forms of real estate, a byproduct of the free-falling housing market. While fundamentals will deteriorate in the apartment sector, we think well-capitalized multifamily REITs will be able to weather the storm.