WASHINGTON, DC—Lost, perhaps, in the hubbub of the announcement earlier this summer that private equity fund Lone Star planned to acquire the multifamily REIT Home Properties for $7.6 billion was a side deal by the Denver-based REIT UDR.
The proposal put to shareholders was that UDR would acquire six local communities valued at $908 million in exchange for a combination of common units of the newly formed operating partnership of the company, as well as cash and the assumption of debt.
The properties were Eleven55 Ripley and 1200 East West in Silver Spring, MD; Courts at Huntington Station, Arbor Park of Alexandria and Newport Village in Alexandria, VA; and The Courts at Dulles in Herndon, VA. The estimated year-one cap rate on that piece of the transaction was estimated at approximately 5.2%.
Recently, 75% of the outside limited partners of Home Properties approved the measure and this part of the transaction is moving forward.
The bottom line: UDR is moving forward to buy the six properties for $908 million through a combination of $565 million of UDR OP Units issued at $35 per unit, the assumption of $90 million of debt, $230 to $250 million of Section 1031 exchanges and the balance with cash of $10 to $30 million. It expects to close on the purchase in the fourth quarter of 2015.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
