Apollo, UDR Form $2B Multifamily Joint Venture
Apollo Global Management and real estate investment trust UDR are joining forces on a large multifamily joint venture.
The alternative asset manager and landlord formed a $2 billion joint venture in the sector, the Commercial Observer reported. Citigroup Global Markets and Wells Fargo Securities arranged the deal, which is expected to close next week.
Under the arrangement, UDR will manage the portfolio of 19 communities and more than 7,000 units, owning a one-third interest in the venture. Apollo, meanwhile, will invest $1.34 billion in equity capital and take a two-thirds interest in the venture.
Specifics of the portfolio were not disclosed and neither company responded to a request for comment from the publication. The portfolio is expected to return an average revenue of more than $2,000 per home.
In five years, UDR will have the option to repurchase Apollo’s interest in the venture.
Proceeds from the transaction would be deployed towards high-growth assets and other company needs, UDR’s chief financial officer 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,” UDR chief executive officer Tom Toomey added.
At the start of the year, Ron Zeff’s Carmel Partners was reported to be nearing a deal to buy MetLife’s minority stake in a five-building, 710-unit portfolio near Columbus Circle, a portfolio co-owned with the Colorado-based UDR. The REIT maintained its majority stake in the deal.
This summer, Apollo Global Management agreed to invest more than $1 billion in a joint venture with Starwood Real Estate Income Trust, acquiring a 41.5 percent stake in a portfolio of 120 affordable housing properties. The infusion of capital enabled SREIT to repay a portion of its credit facility, aiming to improve liquidity and shareholder returns following a recent suspension of redemptions.
Similar to the UDR deal, SREIT retained a call option to buy back Apollo’s interest at predetermined times and parameters, including a capped internal rate of return.
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