Highlands Ranch, Colo.-based UDR is offering 16 million shares of its common stock priced at $20.35 per share to generate proceeds of approximately $312.1 million (and possibly up to $359.0 million), the multifamily REIT announced today. Proceeds from the sale will be used to pay down debt as well as help fund current and future acquisitions, including the $455.1 million that UDR plopped down this week for five apartment properties in Southern California, Baltimore, and Boston.
“It is a great time to be invested in multifamily,” says UDR CEO Tom Toomey of the firm’s market moves this week, which also mark the firm’s first entry into the Boston market. “You look at the operating trends, and it is clear that we have turned the corner, and the question now is how high is the ceiling and how fast will we get there?”
UDR’s purchases this week include: the 265-unit 1818 Platinum Triangle in Anaheim, Calif.; the 583-unit Marina Point in Marina Del Rey, Calif.; the 180-unit Domain Brewers Hill in Baltimore, Md.; and three properties in Boston—the 160-unit Garrison Square; the 186-unit Ridge at Blue Hills; and the proposed 240-unit Lodge at Stoughton Hills in Stoughton, Mass., a pre-sale venture expected to be ready for lease-up by the fourth quarter of 2012.
Toomey says that, should certain legislative efforts succeed in November, Boston could see additional constraints to development, but Bean Town looks to have already weathered the worst of the recession and its related unemployment—market characteristics that the REIT will continue to underwrite on for both acquisition and development. “What I do know is that there is very limited supply coming at us, so it is a great time for supply-constrained markets to be putting shovels in the ground and building for the future and its also a good time to look at assets where you can add value either through operation or rehab and step up to the plate and buy them,” Toomey says.
With the exception of the move into Boston, UDR is largely considering both development and acquisition opportunities in its existing markets, Toomey says. “We’ll look at operating communities, communities in lease-up, and land. If you think you’ve got a world-class operating platform that can handle a number of opportunities, you should be out there looking for all of them, and we are looking at the full spectrum,” Toomey says. “The only deals that we do not see ourselves going into or even looking at with a great deal of interest would be half-converted condo deals, and you probably won’t see us going into acquisitions where rents are below $1,500 a month.”
Toomey says the REIT currently doesn't have a hard number on the size of its acquisition pipeline, which will evolve with market conditions. “We are in the marketplace every day looking at assets and making offers, and we’ll see what offers ultimately rise to a transaction,” Toomey says. “We continue to have an appetite to acquire.”