WASHINGTON, DC—Denver-based UDR has announced that, along with private equity fund's Lone Star closing of its acquisition of the multifamily REIT Home Properties, it too has closed on its portion of this deal.
It also expanded on a largely unnoticed detail in August when it reported that shareholders had agreed to the transaction. Namely that a 1031 exchange would be used to partly fund the acquisition that would be valued between $230 million to $250 million. On Wednesday it reported that it had six properties under contract six properties for $221 million, four of which are located in Norfolk, VA. Once these properties are sold the REIT will have exited the Norfolk market.
In addition, UDR has another two properties under contract, one of which is in Baltimore, for $66 million.
The original transaction that set these dominoes in motion was announced this past June when Lone Star revealed it was acquiring Home Properties for $7.6 billion, including its debt. It was, incidentally, one of the first signs that REITs' valuations had shifted to the extent that they had become attractive enough for private equity funds like Lone Star -- and later Blackstone -- to acquire them and take them private.
As part of that original transaction but structured separately, UDR agreed to acquire six local communities valued at $908 million, with an estimated year-one cap rate of 5.2%.
The properties were the 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.
On Wednesday late afternoon UDR reported that the six properties had closed for $565 million, via combination of shares issued at $35 per unit, the assumption of $89 million of debt, the $221 million via the 1031 exchange and $26 million in cash.
The properties under contract are: Dominion Waterside at Lynnhaven, Heather Lake, Eastwind Apartments and Dominion Yorkshire Down in Norfolk. In Huntington Beach, CA it is selling the Huntington Villas Apartment Homes and in Oxnard, CA, the Ocean Villas Apartment Homes.
The two other properties under contract are the Sugar Mill Creek Apartments in Tampa, FL and Tamar Meadows in Baltimore.
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