UDR Increases 2013 Guidance and Grows MetLife Relationship with New Vitruvian Park®Partnerships
~ Expands UDR/MetLife II Joint Venture via an Exchange of Ownership Interests in UDR/MetLife I Joint Venture Communities ~
an increase in its 2013 FFO per share and same-store guidance,
the formation of additional 50%/50% partnerships with MetLife, consisting of operating communities and developable land parcels at the Company's Vitruvian Park® master plan development located in Addison, TX (the "Partnerships"). In connection with the formation of the Partnerships the Company received net proceeds of $199.9 million, and
the expansion of its UDR/MetLife II Joint Venture via a swap of ownership interests in certain UDR/MetLife I Joint Venture communities, in addition to a net cash payment to MetLife of $15.6 million (the "Swap").
Revisions to Full-Year 2013 FFO and Same-Store Guidance
The Company has raised its 2013 FFO, FFO as Adjusted, AFFO per share and same-store guidance as follows:
Prior Guidance (As of 04.30.13)
$1.36 to $1.42
$1.39 to $1.43
FFO as Adjusted
$1.33 to $1.39
$1.36 to $1.40
$1.17 to $1.23
$1.20 to $1.24
4.00% to 5.00%
4.50% to 5.00%
2.75% to 3.25%
2.75% to 3.25%
4.25% to 6.00%
5.25% to 6.00%
The increase in earnings guidance was driven primarily from better-than-expected same-store and non same-store operating trends, which are attributable to strong fundamentals in a majority of the Company's markets. Additionally, the combined Partnerships and Swap transactions are expected to be slightly accretive to FFO, FFO as Adjusted and AFFO per share.
Formation of Vitruvian Park®Partnerships with MetLife
The Partnerships consist of the recently completed Savoye and Savoye2 operating communities, the under construction community, Fiori, and 28.4 acres of developable land parcels at Vitruvian Park®. These transactions,
expand the Company's relationship with MetLife, a stable, long-term, committed multifamily partner,
allow for the continued build-out of Vitruvian Park®, including the related development fees associated with the future developable land parcels, and
meaningfully reduce UDR's balance sheet and development funding risks associated with the continued build-out of Vitruvian Park®.
Combined, the Savoye and Savoye2 operating communities contain 739 homes with a cost basis of $136.4 million. Average revenue per occupied home and average occupancy as of June 25, 2013 for Savoye and Savoye2 were $1,417 and 94 percent, respectively. Fiori contains 391 homes under development at an estimated total cost of $98.4 million which was 93 percent funded at June 25, 2013 and subject to a GMAX agreement with the general contractor. Fiori is 19 percent leased at June 25, 2013 with rental rates in-line with original underwriting expectations. Cumulatively, the three communities were sold at a 5.0 percent weighted average NOI cap rate, inclusive of the Fiori development based on expected stabilized NOI. The newly formed land Partnership has the ability to construct approximately 2,000 to 2,500 homes and 45,000 to 50,000 square feet of retail space under current development plans.
Formerly unencumbered, $118.3 million of secured debt has been placed on the Savoye, Savoye2 and Fiori communities. The debt on Savoye and Savoye2 carries an interest rate of 4.0 percent with a term of ten years. The Partnership entered into a non-recourse construction loan on Fiori which carries an interest rate of LIBOR plus 175 basis points with a term of two years and two one-year extension options.
The Company is responsible for $7.4 million in costs to complete Fiori which will be funded through additional draws on the Partnership's construction loan described in the preceding paragraph. Upon completion, at its 50 percent ownership, the Company's pro-rata share of the undepreciated book value of the Vitruvian Park® Partnerships assets and outstanding debt will be $145 million and $62.8 million, respectively.
The remaining five legacy operating communities containing 997 homes at Vitruvian Park® remain wholly owned by the Company and are yielding 7.6 percent on their cost basis. The existing 154,000-square-foot grocery anchored retail center, 21,000-square-foot office building on the site and $13 million of developable land remain wholly owned by the Company and are currently being evaluated for redevelopment.
The Vitruvian Park® master plan development will continue to enjoy extensive support from the Town of Addison. To-date, Addison has invested $23.3 million of a $40 million commitment to enhance infrastructure at the project.
Revisions to Full-Year 2013 Capital Markets and Transactions Guidance
With the completion of the formations of the Partnerships, an update to the Company's expected capital markets and transaction activities in 2013 is provided below.
Capital Markets Guidance ($M):
$75 to $125
$300 to $375
$300 to $375
Transactional Guidance ($M):
$150 to $250
$225 to $275
Includes $145M from formation of
Other full-year 2013 capital markets and transactional guidance as presented in the Company's First Quarter 2013 Supplement, available at www.UDR.com, remains unchanged.
The Company exchanged its ownership interests in four operating communities in its UDR/MetLife I Joint Venture, in addition to a $15.6 million net cash payment to MetLife, for an increased ownership interest in two A-quality, high-rise UDR/MetLife I Joint Venture operating communities located in downtown Denver and San Diego. The Company now owns 50 percent of Acoma (Denver) and Current (San Diego). Both communities have been contributed to the UDR/MetLife II Joint Venture. In total, the estimated value of the swapped assets was $365 million based on a weighted average NOI cap rate of 4.7 percent.
Debt on the Acoma and Current communities totals $66.0 million, carries an average interest rate of 4.5 percent and an average term of 6.5 years. Debt on the four operating communities for which UDR transferred its ownership interest to MetLife totaled $89.5 million, carried a weighted average interest rate of 3.9 percent and an average term of 7.6 years. The Company will continue to fee manage the four operating communities that were transferred to MetLife. Additional transaction details are provided below.
Asset Swap Details
Acquired Ownership Interest
Exited Ownership Interest
Ashton Judiciary Square
Ashton San Francisco
Residence at South Park
1 May 2013 Average.
ML I represents the UDR/MetLife I Joint Venture. ML II represents the UDR/MetLife II Joint Venture.
With the completion of the swap of ownership interests, the UDR/MetLife II Joint Venture comprises 15 operating communities containing 3,119 apartment homes, has an undepreciated book value of $1.6 billion and outstanding debt of $889.3 million. At its 50 percent ownership, the Company's pro-rata share of the undepreciated book value of the UDR/MetLife II Joint Venture assets and outstanding debt is $796.3 million and $444.6 million, respectively. The UDR/MetLife I Joint Venture comprises 8 operating communities containing 1,641 apartment homes, 8 parcels of land for future development, has an undepreciated book value of $900.1 million and outstanding debt of $341.1 million. At its 9.8 percent ownership, the Company's pro-rata share of the undepreciated book value of the UDR MetLife I Joint Venture assets and outstanding debt is $88.1 million and $33.4 million, respectively.
Forward Looking Statements
Certain statements made in this press release may constitute "forward-looking statements." Words such as "expects," "intends," "believes," "anticipates," "plans," "likely," "will," "seeks," "estimates" and variations of such words and similar expressions are intended to identify such forward-looking statements. Forward-looking statements, by their nature, involve estimates, projections, goals, forecasts and assumptions and are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in a forward-looking statement, due to a number of factors, which include, but are not limited to, unfavorable changes in the apartment market, changing economic conditions, the impact of inflation/deflation on rental rates and property operating expenses, expectations concerning availability of capital and the stabilization of the capital markets, the impact of competition and competitive pricing, acquisitions, developments and redevelopments not achieving anticipated results, delays in completing developments, redevelopments and lease-ups on schedule, expectations on job growth, home affordability and demand/supply ratio for multifamily housing, expectations concerning development and redevelopment activities, expectations on occupancy levels, expectations concerning the Vitruvian Park® development, expectations concerning the joint ventures with third parties, expectations that automation will help grow net operating income, expectations on annualized net operating income and other risk factors discussed in documents filed by the Company with the Securities and Exchange Commission from time to time, including the Company's Annual Report on Form 10-K and the Company's Quarterly Reports on Form 10-Q. Actual results may differ materially from those described in the forward-looking statements. These forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this press release, and the Company expressly disclaims any obligation or undertaking to update or revise any forward-looking statement contained herein, to reflect any change in the Company's expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based, except to the extent otherwise required under the U.S. securities laws.
This press release and these forward-looking statements include UDR's analysis and conclusions and reflect UDR's judgment as of the date of these materials. UDR assumes no obligation to revise or update to reflect future events or circumstances.
About UDR, Inc.
UDR, Inc. (NYSE:UDR), an S&P 400 company, is a leading multifamily real estate investment trust with a demonstrated performance history of delivering superior and dependable returns by successfully managing, buying, selling, developing and redeveloping attractive real estate properties in targeted U.S. markets. As of March 31, 2013, UDR owned or had an ownership position in 54,195 apartment homes including 2,887 homes under development. For over 40 years, UDR has delivered long-term value to shareholders, the best standard of service to residents and the highest quality experience for associates. Additional information can be found on the Company's website at www.udr.com.
Thomas M. Herzog, 720-283-6139
KEYWORDS: United States North America Colorado
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