UDR and Apollo Form $2.0 Billion Multifamily Joint Venture Covering 19 Communities

UDR, Inc. (NYSE: UDR), a multifamily real estate investment trust, and Apollo (NYSE: APO) announced Oct. 21 their intention to form a long-term joint venture that will own a portfolio of 19 apartment communities totaling 7,059 homes and valued at approximately $2.0 billion. Apollo-managed funds and affiliates will invest $1.34 billion of equity capital for an approximate two-thirds interest, while UDR will retain a one-third interest and consolidate the venture.

The transaction is expected to close on Oct. 29, 2026, subject to execution of documentation and customary closing conditions, the companies said.

UDR and Apollo Joint Venture: Key Terms

Under the terms of the deal, UDR will continue to operate and manage the portfolio and will earn an asset management fee. The transaction is expected to imply a capitalization rate of approximately 6.0% for a portfolio with average revenue per home of $2,058 and an average age of 39 years. The $2.0 billion valuation across 7,059 homes implies approximately $283,000 per home.

UDR will also retain an option to repurchase Apollo's interest in the joint venture at an expected 7.00% to 7.50% fixed return for a finite period starting at the fifth anniversary of closing.

Citigroup Global Markets Inc. and Wells Fargo Securities, LLC acted as structuring agents and financial advisors to UDR. Scotiabank acted as financial advisor to Apollo.

Executive Commentary on the Partnership

"We are delighted for the opportunity to partner with Apollo, one of the world's leading financial institutions," said Tom Toomey, UDR's Chairman, President and CEO. "Access to equity capital is one of UDR's strategic priorities. With this transaction, we believe we will be positioned to take advantage of compelling opportunities in the marketplace, while improving the quality of our wholly-owned portfolio and strengthening our balance sheet, all in an accretive manner."

Toomey added that shareholders would benefit from "the flexibility to move assets in and out of our newly established joint venture" and from "the ability to realize outsized value creation over time."

Dave Bragg, UDR's Chief Financial Officer, said the partnership provides access to "a new, low-cost permanent source of equity capital." He said UDR expects the transaction to be accretive to earnings and intends to deploy proceeds into higher-growth assets and other general corporate purposes. Proceeds will also be used for debt reduction, he said.

Apollo Partner Jamshid Ehsani said, "This transaction provides a cost-efficient capital solution tailored to UDR's needs. Apollo's investment further demonstrates the ability of our High Grade Capital Solutions business to partner with and support leading companies around the world."

Portfolio Scale and UDR's Operating Position

As of Sept. 30, 2026, UDR owned or had an ownership position in 60,617 apartment homes, including 634 homes under development. The 7,059 homes in the Apollo venture represent approximately 11.6% of that total. The company has operated for more than 54 years and is a member of the S&P 500.

UDR reported second-quarter 2026 physical occupancy in the mid-96% range, with annualized resident retention reaching a seasonally adjusted record of 60%. Preliminary third-quarter reporting cited weighted-average physical occupancy of 96.5% and effective blended lease-rate growth of 2.0%.

At $2,058 in average monthly revenue per home, the venture portfolio implies annual revenue of roughly $174.4 million before concessions, bad debt and other adjustments. The 39-year average age points to an approximate 1987 average vintage, although individual communities could vary.

Apollo, a global alternative asset manager, had approximately $1.05 trillion of assets under management as of June 30, 2026.

Market Backdrop for the Multifamily Joint Venture

The transaction comes as the apartment sector shifts from a supply-heavy environment toward more balanced conditions. National multifamily vacancy fell to 5.7% in the first half of 2026, while rents rose 1.2% and net absorption approached 225,000 units, exceeding approximately 150,000 deliveries during the period. Full-year deliveries are expected to decline to roughly 300,000 units from approximately 430,000 in 2025.

Average multifamily cap rates were 5.75% in the first half of 2026, making the venture's approximately 6.0% implied cap rate broadly consistent with market pricing but slightly above the national average. Another market snapshot placed average apartment cap rates at 5.6% in the second quarter, with effective rents of $1,841 per unit and vacancy of 6.8%. These measures are not directly comparable to UDR's portfolio revenue per home, which may reflect geography and ancillary income.

The multifamily cap-rate spread over the 10-year Treasury was approximately 118 basis points in the second quarter, compared with a roughly 290-basis-point historical average, leaving less room for valuation gains unless long-term rates decline. CBRE expects operators to prioritize occupancy over aggressive rent increases in 2026, with remaining supply pressure concentrated in the Southeast, South Central and Mountain regions.

Implications for UDR's Capital Strategy

The structure is a capital-formation and portfolio-recycling transaction rather than a disposition of individual properties. UDR retains operating control, fee income and a one-third equity stake, while Apollo supplies the majority of the equity. The repurchase option gives UDR a potential path to regain Apollo's interest, though exercising it would create a future capital obligation.

The company said it intends to use proceeds to reduce debt and invest in higher-growth assets, a strategy that coincides with positive but restrained rent growth in several major markets.

Sources

UDR, Inc. press release, "UDR, Inc. and Apollo Form $2.0 Billion Strategic Partnership," Oct. 21, 2026: https://ir.udr.com/news/news-details/2026/UDR-Inc--and-Apollo-Form-2-0-Billion-Strategic-Partnership/default.aspx