Weekly Real Estate News
UDR and Apollo announced plans Wednesday to form a roughly $2 billion joint venture encompassing 19 apartment communities with 7,059 homes, in a major institutional investment in U.S. multifamily real estate.
Under the proposed transaction, Apollo-managed funds and affiliates would invest $1.34 billion in equity for an approximate two-thirds ownership interest. UDR would retain about one-third of the venture, continue managing the properties and consolidate the venture in its financial statements.
The October 21 announcement values the portfolio at approximately $2 billion and implies a capitalization rate of roughly 6%, according to the companies. The properties have average revenue of $2,058 per home and an average age of 39 years.
UDR plans to redeploy capital
UDR Chief Financial Officer Dave Bragg said the partnership would provide a source of permanent equity capital. The company expects to use proceeds for higher-growth investments, general corporate purposes and debt reduction.
The agreement is not an outright sale of the entire portfolio: UDR would retain an economic interest and operational responsibilities. Nor has the transaction closed. The companies expect closing October 29, subject to final documentation and customary conditions.
Institutional investors have increasingly used joint ventures to gain exposure to rental housing while allowing public REITs to recycle capital and manage balance-sheet leverage.
Primary sources: UDR and Apollo joint announcement, October 21; UDR Form 8-K, accepted October 21 at 8:05 a.m. Eastern.
