Residential real estate investment trust UDR, together with alternative asset manager Apollo Global Management, has launched a 2 billion US dollar joint venture. At the core of the collaboration is a portfolio of 19 multi-family residential communities comprising a total of 7,059 units.
Capital structure and operational management
Under the transaction structure, Apollo is contributing 1.34 billion US dollars in equity, securing a two-thirds stake in the joint venture. UDR retains the remaining one-third interest and will continue to be responsible for ongoing day-to-day operations and property management.
- —Total volume of the joint venture: 2 billion US dollars
- —Portfolio: 19 residential communities with 7,059 units
- —Apollo equity contribution: 1.34 billion US dollars (two-thirds majority)
- —Buyback option for UDR after five years
According to company statements, the assets have an average building age of 39 years and generate an average monthly revenue of 2,058 US dollars per residential unit. The partners have not yet disclosed specific geographical locations for the individual residential communities. In addition to operational management, UDR retains a contractual option to reacquire the majority interest held by Apollo after five years.
Strategic direction and transaction execution
Dave Bragg, Chief Financial Officer of UDR, stated that the partnership with Apollo provides access to a cost-effective and enduring source of equity capital. Management expects the closing to have a positive impact on operating earnings. UDR intends to invest the capital released primarily into higher-growth assets as well as general corporate activities.
Tom Toomey, Chairman, President and CEO of UDR, emphasised the strategic significance of the move. He noted that the transaction strengthens the balance sheet, refines the portfolio profile, and positions UDR to capitalise flexibly on attractive market opportunities. In addition, shareholders benefit from the option to contribute or remove properties from the joint venture as needed, participating in substantial value creation over the long term.
The agreement was advised and structured by investment banks Citigroup Global Markets and Wells Fargo Securities. The closing of the transaction is expected on 29 October.
