UDR to Buy Two Manhattan Apartment Complexes for $581 Million

UDR Inc., the third-largest publicly traded U.S. apartment owner, agreed to pay about $581 million for two Manhattan rental communities as it seeks to expand its foothold in the New York market.

The company will purchase the 706-unit Rivergate complex in Murray Hill for $443 million, and a 210-unit community called 21 Chelsea for $138 million, the Highlands Ranch, Colorado-based real estate investment trust said today in a statement. UDR also said it bought a property in Washington, D.C., on June 28, paying $106 million for a 185-home community called View 14.

“The acquisition of these three communities continues our portfolio transformation and strategy of owning apartment homes in markets characterized by above-average job growth, low home affordability and limited new supply -- three of the key drivers to strong rental growth,” Tom Toomey, president and chief executive officer, said in the statement.

UDR is expanding in Manhattan after making its first purchase in the borough earlier this year, when it paid $260.8 million for 10 Hanover Square in the Financial District. Chief Financial Officer David Messenger said in March that the company was “walking up and down the streets” looking at New York properties as it sought more acquisitions in the city.

“One asset isn’t going to be enough for us,” he said in an interview at the time.

The acquisitions announced today will be financed with cash and UDR’s credit line, as well as the assumption of a $31 million first mortgage on 21 Chelsea, the company said. The mortgage has an interest rate of 6.76 percent and matures in June 2012. It can be pre-paid at par in December.

UDR also increased its forecast for funds from operations, a measure of cash flow used by REITs. The company expects full-year FFO of $1.25 to $1.30 a share, compared with a February forecast of $1.20 to $1.25.

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