The multifamily real estate investment trust (REIT),
) disclosed its transactional activities in fourth-quarter 2013.
Particularly, the company extended its alliance with MetLife,
planned its exit from California's Sacramento market and inked a
participating debt financing agreement for a Denver-based
Expanding Ties with MetLife
UDR has expanded its ties with
) through the sale of 49% stake in 399 Fremont land parcel and a
simultaneous 51%/49% joint venture (JV) agreement with the
latter. The JV plans to develop a luxury apartment residential
project on this land parcel for $317 million. Situated in San
Francisco's Rincon Hill neighborhood, this 42-story tower with
447 residential units enjoys proximity to entertainment spots,
the financial district and BART stations and upcoming Transbay
The project, which is likely to complete in 2016, will have a
Guaranteed Maximum contract (GMAX) to hedge construction cost
risk. Alongside, the JV entered into a term sheet for a
non-recourse construction loan worth $174 million, having a 48
months term along with one 12-month extension option.
Fourth-quarter 2013 Divestitures
During the fourth quarter, UDR plans to sell 3 properties.
Specifically, the company intends to exit the Sacramento market
of California with the disposition of 2 mortgage free communities
- Foothills Tennis Village (Roseville) and Woodlake Village
Apartments (Sacramento) - for $81.1 million.
UDR also disclosed the proposed divestiture of Greater
Boston-based community - Lodge at Stoughton - in the
fourth-quarter 2013 for $51.0 million. The sale of this recently
developed property in which the company has a 95% stake would
help it to reap $49 million in proceeds.
Participating Debt Financing Deal
Furthermore, in late Oct 2013, UDR engaged itself in a
participating debt financing deal with a third party that is
constructing a Denver-based mid-rise luxury community for $108
million. The project, which is located in the affluent Cherry
Creek neighborhood, is anticipated to be complete in late
As per the deal, UDR will fund up to 85% of the development
cost. In return, the company would receive an origination fee and
6.5% interest annually on any outstanding construction financing
as well as an option to buy the asset following its completion.
Further, UDR will enjoy a management fee during the lease-up and
subsequent property operation. Moreover, the company will have
50% participating interest in the upside at the time of the sale
or purchase of the community.
We believe that this extensive portfolio repositioning
activity of UDR will offer notable growth prospects. Furthermore,
the company's focus on allocating its capital efficiently and
improving cash flow is encouraging. Such efforts are expected to
fortify its balance sheet and enhance shareholder returns going
UDR currently carries a Zacks Rank #3 (Hold). Investors
interested in REIT- Equity Trust - Residential industry may
consider stocks like
Independence Realty Trust, Inc.
Spirit Realty Capital, Inc.
). Both stocks carry a Zacks Rank #2 (Buy).
INDEP REALTY TR (IRT): Free Stock Analysis
METLIFE INC (MET): Free Stock Analysis Report
SPIRIT REALTY (SRC): Free Stock Analysis
UDR INC (UDR): Free Stock Analysis Report
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