UDR Closes $2.0 Billion Apollo Joint Venture on 19 Apartment Communities

UDR, Inc. (NYSE: UDR) has closed a $2.0 billion strategic partnership with Apollo, contributing 19 apartment communities totaling 7,059 apartment homes to a newly formed joint venture, the company announced Nov. 2 alongside its third-quarter 2026 results. The portfolio was valued at an approximate 6.0 percent capitalization rate.

Under the terms of the transaction, UDR received $1.34 billion of equity capital from Apollo and retained an approximate one-third interest in the venture. UDR will continue to operate and manage the portfolio and will earn an asset management fee.

UDR-Apollo Joint Venture Terms

The venture values the 19 communities at approximately $2.0 billion, or about $283,300 per apartment home based on the stated valuation and unit count. At a 6.0 percent capitalization rate, the valuation implies annualized net operating income of roughly $120 million. The portfolio is approximately 60 percent Sunbelt and 40 percent coastal.

UDR also retained an option to repurchase Apollo's interest in the joint venture at a 7.0 percent target internal rate of return for a finite period beginning on the fifth anniversary of closing. UDR continues to consolidate the venture.

"Additionally, we are excited to have closed our strategic partnership with Apollo, which expands our access to capital, strengthens our balance sheet by reducing leverage, improves the quality of our wholly-owned portfolio, and positions UDR to pursue compelling investment opportunities that drive value creation for our shareholders," said Tom Toomey, UDR's Chairman, President and CEO.

Third-Quarter Results and Raised Guidance

UDR reported third-quarter net income of $0.67 per diluted share, compared with $0.12 a year earlier. Funds from operations (FFO) per diluted share were $0.62, unchanged from the third quarter of 2025, and FFO as Adjusted (FFOA) per diluted share were $0.65, also unchanged. Year-to-date FFOA was $1.90 per share, matching the prior-year period. The company said net income, FFO and FFOA per share for all 2026 periods and guidance are unaffected by the Apollo transaction.

The company raised its full-year 2026 guidance ranges for net income, FFOA and same-store growth, and updated its FFO range. Updated full-year guidance is as follows:

• Net income: $1.58 to $1.60 per diluted share, with a $1.59 midpoint
• FFO: $2.48 to $2.50 per diluted share, with a $2.49 midpoint
• FFOA: $2.54 to $2.56 per diluted share, with a $2.55 midpoint
• Same-store revenue growth: 1.4% to 1.8%
• Same-store expense growth: 2.7% to 3.1%
• Same-store NOI growth: 0.8% to 1.2%

Third-quarter same-store revenue rose 1.8 percent year over year, expenses rose 2.2 percent and net operating income rose 1.6 percent. These metrics exclude the 19 Apollo joint venture communities. Including them, same-store revenue, expense and NOI growth would have been 1.5 percent, 2.7 percent and 1.0 percent, respectively. Same-store physical occupancy averaged 96.5 percent for the quarter, down 0.2 percent from a year earlier.

By region, the West posted the strongest year-over-year same-store NOI growth at 3.9 percent, followed by the Northeast at 3.0 percent. The Mid-Atlantic, Southwest and Southeast posted NOI declines of 1.0 percent, 0.5 percent and 2.2 percent, respectively.

"Third quarter Same-Store results were supported by strong occupancy in the mid-96 percent range, year-over-year improvement in bad debt, blended lease rate growth that fell within our expected range, and continued improvement in resident retention that led to strong expense control," said Mike Lacy, UDR's Chief Operating Officer.

Broader Capital Allocation Activity

The Apollo venture was one part of a wider set of capital moves during and after the quarter:

• Share repurchases: Through the end of October, UDR repurchased approximately 5.2 million shares at a weighted average price of $35.48, for about $185.1 million. Since resuming buybacks in September 2025, it has repurchased approximately 16.7 million shares at a weighted average of $36.06 for about $603.2 million, with roughly 20.3 million shares remaining under the program.
• Dispositions: UDR sold two communities, one each in Seattle and Nashville, with a combined 412 homes for gross proceeds of $183.0 million. It remains under contract to sell a 396-home community in the Metropolitan Washington, D.C., area for approximately $69.0 million.
• LaSalle joint venture: UDR expanded its venture with LaSalle Investment Management to approximately $958.3 million by contributing a 360-home Nashville community and placing debt on that property and an existing venture community, receiving approximately $103.2 million in cash proceeds.
• Debt and preferred equity runoff: UDR acquired a 286-home Portland, Ore., community for an incremental $74.7 million based on a $104.3 million valuation, and a 483-home Inland Empire community in California for an incremental $160.3 million based on a $250.1 million valuation. It also agreed to acquire a 237-home Inland Empire community in the first half of 2027. Excluding that transaction, the debt and preferred equity portfolio is expected to total about $250.0 million at year-end 2026. UDR also received a full repayment of about $29.5 million on a preferred equity investment in a stabilized Orlando, Fla., community.

Balance Sheet

As of Sept. 30, UDR's total indebtedness was $5.8 billion at a weighted average interest rate of 3.45 percent. Debt maturing through 2027 totaled $333.6 million, or 6.6 percent of consolidated debt, excluding amounts on its line of credit, commercial paper program and working capital credit facility. Liquidity stood at approximately $641.6 million through cash and undrawn credit capacity, before the $1.34 billion of Apollo equity proceeds received after closing. Consolidated debt represented 32.3 percent of total assets, and net debt-to-EBITDAre was 5.5 times, unchanged from a year earlier.

UDR's board declared monthly dividends of $0.145 per share for October, November and December 2026, totaling $0.435 per share for the period, a 1.2 percent increase over the comparable 2025 period, or an annualized $1.74 per share.

Market Context

The transaction comes as national apartment fundamentals have improved. National apartment vacancy fell 30 basis points quarter over quarter to 8.6 percent, the lowest level in three years. Year-to-date absorption reached nearly 350,000 units, up 14 percent year over year, while deliveries of just over 250,000 units were down 25 percent from the comparable period of 2025. Second-quarter 2026 multifamily absorption totaled 152,856 units, more than double the 67,268 units delivered in the quarter.

Even so, UDR's same-store revenue and NOI growth remained modest, indicating that stronger occupancy trends have not translated into outsized rent growth. The joint venture allows UDR to convert part of its portfolio value into capital at a 6.0 percent capitalization rate while keeping an ownership stake and management role. Together with the company's buybacks, dispositions and the LaSalle venture expansion, the Apollo deal points to a continued emphasis on asset-level partnerships and balance sheet management.

Sources

• UDR, Inc., Third Quarter 2026 Results press release: https://ir.udr.com/files/doc_earnings/2026/q3/earnings-result/3Q-2026-UDR-Earnings-Release.pdf