UDR, Apollo Plan Residential Joint Venture With $2.0 Billion Portfolio
Key Facts
UDR and Apollo Global Management announced plans to form a joint venture comprising a residential portfolio valued at approximately $2.0 billion, according to a partnership statement filed with the U.S. Securities and Exchange Commission. The portfolio to be contributed to the venture consists of 19 residential communities with a total of 7,059 apartments. Apollo funds and affiliates will invest $1.34 billion in equity upon completion of the transaction. In return, Apollo will receive roughly two-thirds ownership of the planned joint venture. The partnership will provide UDR with proceeds it plans to direct toward investment and debt reduction while retaining a stake in the assets.
Under the announced structure, UDR will retain one-third ownership of the venture, according to the partnership statement. The company will consolidate the venture in its financial statements and continue operating and managing the residential portfolio in exchange for asset management fees. The transaction valuation represents an expected implied capitalization rate of approximately 6.0% at closing, under the terms announced by the company. UDR will also retain an option to repurchase Apollo's stake in the joint venture. That option is linked to an expected fixed return ranging from 7.00% to 7.50%, according to the SEC filing.
UDR plans to use part of the partnership proceeds to invest in assets with higher growth rates, according to its statement. The announced uses also include debt reduction and other corporate purposes under the company's plan for deploying the proceeds. Apollo described the proposed structure as providing a cost-effective capital solution tailored to UDR's needs. The debt reduction plans come after the company's total debt stood at approximately $5.8 billion at the end of June 2026, according to its second-quarter earnings statement. The weighted average interest rate on that debt was 3.4% at the end of the same period.
Alongside the partnership announcement, UDR raised its annual diluted earnings per share guidance range to between $1.58 and $1.60. The company had previously expected diluted earnings per share of between $1.03 and $1.11, according to an earnings and guidance update filed with the SEC. It also revised its annual guidance range for adjusted funds from operations per share to between $2.54 and $2.56. That compares with a previous range of between $2.49 and $2.57 per share for the measure, according to the same update. The company said its earnings, funds from operations and adjusted funds from operations per share measures, and the guidance included in the update, "are not affected by the Apollo transaction."
On the operating front, preliminary weighted average physical occupancy for same-store properties was 96.5% during the third quarter, according to UDR's update. Preliminary same-store blended effective rent rate growth was 2.0% over the same period. The company excluded the Apollo venture communities from the occupancy and rent growth metrics included in the update. UDR's consolidated residential portfolio comprised 162 communities at the end of June 2026, according to notes to its financial statements filed with the SEC. The consolidated portfolio contained a total of 54,173 apartments at the end of the same period.
The companies are targeting a closing date of October 29, 2026, according to the timetable announced in the partnership statement. Completion remains subject to finalization of the venture documentation, under the terms set out in the statement. Closing also requires satisfaction of customary closing conditions before the transaction is completed and the portfolio is contributed to the joint venture. On financial disclosures, the third-quarter operating metrics included in UDR's update remain preliminary. The company is scheduled to report its final earnings results on November 2, 2026.