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UDR Announces Forward Sale of 7M Shares, To Raise $306M

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UDR, Inc. (UDR - Free Report) priced a public offering of 7 million shares of common stock for expected gross proceeds of $306 million.

For this offering, the residential real estate investment trust (REIT) has entered forward sale agreements with J.P. Morgan and Wells Fargo Securities or their affiliates, per which the forward purchasers are likely to borrow and sell the shares to the underwriters. Subject to its right to opt for cash or net share settlement, the company anticipates delivering the shares no later than Mar 29, 2022, in exchange for cash proceeds amounting to the applicable forward sale price.

Nonetheless, UDR will not receive any proceeds through forward sales in the initial phase. The offering is anticipated to close on Apr 5, conditional on customary closing norms.

Furthermore, a forward sale arrangement will enable the company to lock in the price of such shares at the time of offering pricing, while at the same time delaying share issuance and the receipt of net proceeds until a funding requirement has occurred.

UDR intends to use the net proceeds received upon the future settlement of the forward sale agreements for planned buyouts or other investments, existing development efforts, and investments in the Developer Capital Program pipeline. Moreover, it plans to use proceeds for working capital and general corporate needs, including the repayment of outstanding debt under its unsecured revolving credit facility, commercial paper program and working capital credit facility, if any.

The common stock offering will boost the company's financial flexibility and help meet its financial obligations. Moreover, it will open up ample scope for deploying capital for long-term growth opportunities and rewarding higher returns to stockholders at the same time.

The coronavirus pandemic has been wreaking havoc, and resulting in macroeconomic uncertainty and a choppy job-market environment, leading to household contraction and consolidation. In addition, low mortgage rates are driving the demand for existing and new-home purchases. Apart from these, a number of factors are affecting rental demand, including the pandemic and delayed returns to office that are disrupting market dynamics. This, in turn, is resulting in a shift of some renter demand away from high rent and urban markets.

Shares of this Zacks Rank #3 (Hold) company have rallied 26.2% over the past six months compared with the industry’s growth of 13.7%.

 


Stocks to Consider

Alpine Income Property Trust, Inc.’s (PINE - Free Report) funds from operations (“FFO”) per share estimates for the current year have moved up 3.8% to $1.61 in the past month. The company sports a Zacks Rank of 1 (Strong Buy), currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

BRT Apartments Corp.’s (BRT - Free Report) Zacks Consensus Estimate for 2021 FFO per share has moved up 8.6% to $1 in the past month. The company currently carries a Zacks Rank of 2 (Buy).

Spirit Realty Capital, Inc. (SRC - Free Report) has a Zacks Rank of 2 at present. The Zacks Consensus Estimate for 2021 FFO per share has been revised 1% upward to $3.02 in a month’s time.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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