Apollo, UDR Forming $2-Billion Multifamily Joint Venture

UDR, Inc. and Apollo said Wednesday they would form a new, long-term joint venture involving a diversified portfolio of apartment communities. Apollo will invest approximately $1.34 billion of equity capital for a two-thirds interest in the JV, which owns a 19-property portfolio totaling 7,059 units and valued at approximately $2.0 billion.

Under the terms of the transaction, UDR will continue to operate and manage the portfolio, earning an asset management fee. The apartment REIT will also retain an option to repurchase Apollo’s interest in the JV at an expected 7.00-7.50% fixed return for a finite period starting at the fifth anniversary of closing.

“Access to equity capital is one of UDR’s strategic priorities,” said Tom Toomey, UDR’s chairman, president and CEO. “With this transaction, we believe we will be positioned to take advantage of compelling opportunities in the marketplace, while improving the quality of our wholly owned portfolio and strengthening our balance sheet, all in an accretive manner.”

Apollo partner Jamshid Ehsani said, “We are proud to serve as a capital partner to UDR. UDR is a recognized leader in the real estate industry with a track record of operational excellence and disciplined capital allocation. This transaction provides a cost-efficient capital solution tailored to UDR’s needs. Apollo’s investment further demonstrates the ability of our High Grade Capital Solutions business to partner with and support leading companies around the world.”

The transaction is expected to close on Oct. 29. Citigroup Global Markets Inc. and Wells Fargo Securities, LLC acted as structuring agents and financial advisors to UDR. Scotiabank acted as financial advisor to Apollo.

Pictured: Tom Toomey.