UDR, a publicly traded REIT, recently made a significant investment in Texas by acquiring five properties totaling 1,753 units in the Dallas and Austin metros for $401.9 million. These properties include The Flats at Palisades in Richardson, Central Square at Frisco in Frisco, Estancia Villas and Palo Verde in Austin,and Villaggioin Mansfield.
According to Multifamily Dive’s report on UDR’s second quarter earnings news release,the company funded the purchase with $172.5 million of its operating partnership units issued at $47.50 per unit (equivalent to REIT shares),$20 million cash,and assumption of below-market debt worth $209.4million with an average coupon rate of 3.8%and an average maturity period of6 years.
Joe Fisher from UDR stated that compared to today’s market rates which are around low 5%,the interest rate on this debt provides them with a significant advantage for over six years.He also mentioned that this translates into abouta25 basis point benefit when it comes to asset pricing.Ultimately,this move is expectedto have a positive impacton UDR’s overall financial performance as they continue their expansion effortsin Texas.
