UDR Finalizes $1.7B Portfolio
- Mar 04, 2008
UDR Inc. has completed its major portfolio sale of 86 apartment properties in 10 states totaling 25,684 units to a joint venture between DRA Fund VI L.L.C. and Steven D. Bell & Co., as previously reported by CPN. The portfolio traded for about $1.7 billion.For UDR, the portfolio disposition represents a strategy to tack against economic winds buffeting the REIT industry. According to NAREIT’s REIT Watch, apartment REITs saw an average decline of 25.43 percent in share prices during 2007. In early March 2007, UDR traded in the low $30s per share, dropping by January of this year to just below $20 per share. Since the announcement of the portfolio sale, UDR’s shareprice has nudged upward, trading at about $22.50 today.The portfolio sale was in part a move to take advantage of private equity buyers’ continued interest in U.S. real estate assets, including that of a number of overseas investors, who were among the bidders. A geographic rationalization for the company was also part of the motive to sell. Going forward, the REIT noted that its core markets will be on the West Coast, Florida, and in metro Washington, D.C. The bulk of the sale properties were in North Carolina, Texas and Ohio, plus a scattering in other states.According to UDR, some $500 to $800 million of the proceeds from the sale will go toward acquisitions on the West Coast and greater Washington, D.C., markets in which the company anticipates job growth. The balance of the proceeds will go to pay down debt and repurchase shares.After the sale, UDR’s total ownership includes 40,226 apartment units, with another 6,184 under development and another 738 under contract for development. Monthly rents in the remaining portfolio are about $1,200 per month, with an average property age of 15 years.