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UDR Offers Notes to Relieve Debt

Zacks Equity Research

In order to reduce its debt level, UDR, Inc. (UDR) disclosed the pricing of 3.750% senior unsecured notes worth $300 million. In particular, the company has priced these notes at 99.652% of the principal amount plus accrued interest. The offering is anticipated to close on Jun 26, 2014.

The senior unsecured notes have a yield to maturity of 3.792% and will mature on Jul 1, 2024. The interest on senior unsecured notes is to be paid on Jan 1 and Jul 1, semi-annually. The first interest is payable on Jan 1, 2015. The notes are fully guaranteed by United Dominion Realty, L.P – a subsidiary of UDR.

This residential real estate investment trust (:REIT) intends to utilize the net proceeds from this offering to pay off its outstanding balance under the unsecured credit facility worth $900 million. The remaining amount will be used to meet other corporate needs.

Notably, a consortium of leading financial institutions assisted UDR in this offering. Of them, Wells Fargo Securities of Wells Fargo & Company (WFC), J.P. Morgan of JPMorgan Chase & Co. (JPM) and Citigroup Inc. (C) acted as joint book-running managers.

The aforementioned transaction is a strategic fit for UDR, as it will provide greater financial flexibility to the company. Moreover, this will enable it to pursue strong portfolio restructuring activity that will go a long way in enhancing top-line growth. As a matter of fact, as of Mar 31, 2014, UDR’s liquidity amounted to $628 million through a combination of cash and undrawn capacity on its credit facilities.

UDR currently carries a Zacks Rank #3 (Hold).

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