TODAY’S DEALS: UDR Wraps Up Reinvestment of Funds from $1.7B 1031 Exchange, and Other Transactions
- Sep 09, 2008
By Anuradha Kher, Online News Editor, MHN and Barbra Murray, Contributing Editor, CPNDenver–Almost exactly six months after closing on the sale of 86 apartment properties to DRA Fund VI LLC and joint venture partner Steven D. Bell & Co., UDR Inc. has concluded the reinvestment of 1031 exchange funds from the from the $1.7 billion sale. The Denver-based Real Estate Investment Trust (REIT) used $951 million of the proceeds to purchase, in various transactions, 12 apartment communities encompassing nearly 4,100 residential units. The acquisitions allowed the company to reposition its portfolio with newer properties within close proximity to lifestyle centers and transportation hubs in its core markets, which are characterized by high rent-growth potential, expanding employment opportunities and limited availability of affordable single-family homes.UDR’s new purchases span six states; four are located in California. The 193-unit Edgewater and the 250-unit Almaden Lake Village are located in the San Francisco area; the 296-unit Pine Brook Village II is in Orange County; and Tierra Del Rey, offering 170 residences, is in Metropolitan Los Angeles. The other West Coast assets are the 235-unit Island Square and the 220-unit Hearthstone at Merrill Creek, both of which are in the Seattle area. The portfolio also enhances UDR’s Washington, D.C., presence with the 606-unit Circle Towers and the 241-unit Delancey at Shirlington. UDR also walked away with two Texas apartment complexes, the 1,043-unit Legacy Village compound in Plano and the 390-unit Residences at the Domain in Austin. The remaining two assets, Tampa, Fla.’s 249-unit Vintage Lofts and the 200-unit Waterford at Peoria in Phoenix, are presently under development.The acquisition of the rental complexes, which have an average age of 15 years, presented UDR with a bit of immediate gratification, as the average monthly income per home at the properties represents a 20 percent increase from the income level of UDR’s portfolio before the comprehensive transformation. Of course, UDR’s presence extends beyond the aforementioned markets, but not too far beyond. “The markets we’re in now are likely the ones we’ll continue to focus on,” a UDR spokesperson tells CPN. “When you’re already in a place like Seattle, for example, and add properties, it helps in terms of economies of scale. You can do labor sharing and you can offer tenants different locations. There’s an advantage to being big in a few markets, as opposed to being scattered around a lot of markets, and that’s what we accomplished–we’re more concentrated.”UDR, however, did more than just go on a shopping spree after pocketing nearly $2 billion from the 1031 exchange transaction. The company used $115.8 million of the proceeds to repurchase 4.9 million shares of its common stock to pay down debt totaling $387.4 million.Outside of the 1031 exchange activity, 2008 has brought two other multifamily purchases for UDR. The company shelled out $50.1 million for The Place at Millenia, an apartment community in Orlando featuring 371 residences, and paid $56.9 million for the 264-residence Dulaney Crescent in Suburban Baltimore. As for the remainder of the year, more buying binges are not really in the cards. “We feel we accomplished a lot with the sale In March and the conclusion of the acquisitions in August,” the spokesperson says. “Any acquisitions over the next three or four months will be in an opportunistic way.”CPC Makes Construction Loans in HarlemNew York–The Community Preservation Corporation’s (CPC) Bronx/Manhattan office, in partnership with the New York City Department of Housing Preservation (HPD) has closed on three construction loans in Harlem, New York totaling nearly $16 million.Financing of $9.2 million will provide the gut rehabilitation of two seven-story buildings in the Hamilton Heights section of Harlem. The properties, located at 3603-3605 Broadway, will be reconfigured into 37 units featuring 24 one-bedrooms and 13 two-bedrooms. The developer is a Housing Development Fund Corp. (HDFC), which is sponsored by the Urban Homesteading Assistance Board (UHAB), an organization formed in 1973 to create and facilitate innovative solution to New York City’s housing abandonment crisis.CPC and HPD will provide a $4.5 million construction loan to developer Malcolm Shabazz Development Corp. (MSDC), an outgrowth of the Masjid Malcolm Shabazz Mosque, which promotes housing and economic development activities in Harlem. Using HPD’s Third Party Transfer program, which forecloses on tax delinquent properties and conveys them to qualified third parties for rehabilitation, the developer will renovate the six-story building located at 2512 Adam Clayton Powell Blvd. to include 15 limited equity co-ops including two studios, six one-bedrooms, four two-bedrooms and three three-bedrooms units. A loan of $2.2 million will provide for the gut rehabilitation of a five-story Harlem building located at 131 East 101st St. As another UHAB-sponsored project, the building contains 10 rental units, which will be converted into HDFC co-ops upon completion.“Even during these tougher economic times, CPC, in partnership with HPD, has still been able to provide the necessary financing to build affordable housing options for local residents and families,” says Bruce Dale, senior vice president and regional director of CPC’s Bronx/Manhattan office.Alliant Closes $9.6M Refi Loan for 386-Unit Rental CommunityStamford, Conn.–Alliant Capital LLC closed a $9,600,000 loan for the refinancing of the Chatwell Club Apartments (pictured), located in Davison Township, Mich. The property is a 386-unit garden-style apartment community built in 1986 and 1998 and features 23, single-story buildings and 16, two-story buildings. Alliant’s loan has an 11-year term with one-year extension.