Apollo to invest $1.34 billion for two-thirds of $2 billion UDR multifamily venture

Apollo Global Management will invest $1.34 billion of equity for a two-thirds interest in a $2 billion multifamily joint venture with UDR, the firms announced Wednesday. The venture will own 19 apartment communities totaling 7,059 units; UDR keeps a one-third interest and operates and manages the properties. UDR also holds an option to repurchase Apollo's interest in five years.

The portfolio averages $2,058 in revenue per home and has an average age of 39 years, according to the announcement. Citigroup Global Markets and Wells Fargo Securities arranged the deal, which is expected to close Oct. 29.

UDR CFO Dave Bragg said the partnership "provides access to a new, low-cost permanent source of equity capital" and expects the transaction to be accretive to earnings. The company intends to use the proceeds for higher-growth assets and general corporate purposes. Chairman, president and CEO Tom Toomey said the deal should improve the quality of the wholly owned portfolio and strengthen the balance sheet.

Apollo's $1.34 billion for a two-thirds stake implies a total portfolio value of about $2.01 billion, or roughly $190,000 of Apollo equity per apartment.