UDR's Still Tinkering With Mid-Atlantic Holdings

WASHINGTON, DC—Denver-based UDR is wrapping up its sale of eight properties in the DC area associated with its participation in Dallas-based Lone Star Funds' acquisition of Home Properties, a $7.6-billion deal announced earlier this year that closed in October.

As part of that transaction UDR acquired six DC apartments valued at $908 million in exchange for a stake in the combined company.

And to pay for that, UDR sold some of its properties in this area, it announced in October that it was selling via a 1031 exchange six properties for a total of between $230 million to $250 million, four of which are located in Norfolk, VA. All together it would sell eight properties it said, including some of Baltimore, MD, for a total of $284 million.

Which brings us to the most recent development: UDR has said it has completed the sale of the eight properties. It also has another under contract—the Greens at Schumaker Pond, located in Salisbury, MD, for $14.8 million.

It is unclear whether this sale is associated with the Home Properties deal.

What is clear, though, is that UDR is doubling down on its footprint in the District. During its recent earnings call SVP Harry Alcock said that UDR expects to start "another project in DC sometime in the relatively near future."

It's also clear that the sell off of the properties had an impact on UDR's local operations, which the REIT freely admitted during the earnings call. COO Jerry Davis said that "DC team was spending quite a bit of time over the summer preparing to ensure a smooth transition of the six Home properties" which had a modest effect on the local portfolio's deceleration of growth. It expects to post revenue growth for the DC portfolio at just under 2%, and "as we look further out to 2016, it's going to go up modestly, call it mid-2%s," Davis said.