Apollo, UDR Partner on $2B Multifamily Joint Venture

Multifamily real estate investment trust (REIT) UDR has partnered with alternative asset manager Apollo Global Management on a $2 billion multifamily joint venture, the firms announced Wednesday. 

Together, UDR and Apollo will own a portfolio of 19 multifamily communities spanning 7,059 units. UDR will operate and manage the portfolio, while Apollo will invest $1.34 billion of equity capital and acquire a two-thirds interest in the JV. 

The deal, which was arranged by Citigroup Global Markets and Wells Fargo Securities, is expected to close Oct. 29. 

“UDR’s partnership with Apollo provides access to a new, low-cost permanent source of equity capital,” Dave Bragg, UDR’s chief financial officer, said in a statement. “We expect the transaction to be accretive to earnings and intend to deploy the proceeds into higher-growth assets and other general corporate purposes.”

As part of the structure of the deal, UDR will retain a one-third interest in the JV but will have the option to repurchase Apollo’s interest in five years. The JV is expected to produce a portfolio with an average revenue of $2,058 per home and an age of 39 years. 

UDR and Apollo did not provide the locations for any of the multifamily communities that are part of the JV. The firms did not immediately respond to Commercial Observer’s requests for comment. 

“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,” Tom Toomey, chairman, president and CEO of UDR, said in a statement. “Our shareholders will benefit not only from the flexibility to move assets in and out of our newly established joint venture, but also from the ability to realize outsized value creation over time.”

Amanda Schiavo can be reached at aschiavo@commercialobserver.com.