In order to reduce its debt level, UDR, Inc. ( UDR ) recently priced 3.700% senior unsecured notes worth $300 million at 99.981% of the principal amount plus accrued interest. The settlement of the offering is anticipated to close on Sep 26, 2013.
The senior unsecured notes have a yield to maturity of 3.703% and will mature on Oct 1, 2020. The interest on senior unsecured notes is to be paid on Apr 1 and Oct 1, semi-annually. The first interest is payable on Apr 1, 2014. The notes are fully guaranteed by United Dominion Realty, L.P - a subsidiary of UDR.
In particular, this apartment real estate investment trust (REIT) intends to utilize the net proceeds to pay off its outstanding balance under the unsecured credit facility worth $900 million. The remaining amount will be used to meet other corporate needs.
Notably, a consortium of leading financial institutions assisted UDR in this offering. While, J.P. Morgan of JPMorgan Chase & Co. ( JPM ) and Morgan Stanley ( MS ) acted as joint book-running managers, U.S. Bancorp ( USB ), Mitsubishi UFJ Securities and Credit Suisse acted as co-managers for the offering.
For UDR, whose liquidity amounted to $769 million as of Jun 30, 2013, the aforementioned transaction is strategic fit, as we expect it to provide greater financial flexibility to the company. Moreover, this will also enable UDR to pursue strong portfolio restructuring activity that will go a long way in enhancing top-line growth.
UDR currently carries a Zacks Rank #3 (Hold).