UDR Inc. (UDR) recently entered into an agreement to purchase a 507-home upscale apartment community, Dwell 95, in downtown Manhattan for $325 million. The acquisition is a part of the company’s strategy to expand its presence in the New York market.
The acquisition will be funded through the issuance of $50 million of operating partnership units (with a floor price of $25 per unit) and $275 million in cash, partially funded through the proceeds from the disposition of non-profitable communities. UDR expects to close the transaction by August 31, 2011.
The anticipated acquisition reflects UDR’s intention of owning and operating apartment homes in growth-oriented markets like Manhattan given the high rate of job formation coupled with low affordability of homes.
The community is currently 93% occupied and has an average income per occupied home of over $3,100 per month and continues to benefit from the redevelopment of World trade center and the surrounding areas. In addition to the one- to two-bedroom apartments, the complex also has a fitness center, roof top deck, retail stores and other 24 hour services, thus making it a valuable premium asset for UDR.
UDR Inc. is an apartment real estate investment trust (REIT) that owns, operates, acquires, develops and renovates middle-market apartment communities. UDR is committed to providing premium quality homes and excellent service and value for its residents.
UDR has continuously upgraded the overall quality of its portfolio by selling smaller market, older properties and replacing them with newer assets in better long-term markets. UDR currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock. One of its competitors, Apartment Investment & Management Co. (AIV) currently holds a Zacks #3 Rank.
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