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REAL ESTATE OWNED (UNITED DOMINION REALTY, L.P.) | 12 Months Ended
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Dec. 31, 2019
Entity information |
REAL ESTATE OWNED | 3. REAL ESTATE OWNED Real estate assets owned by the Company consist of income producing operating properties, properties under development, land held for future development, and held for disposition properties. As of December 31, 2019, the Company owned and consolidated 148 communities in 13 states plus the District of Columbia totaling 47,010 apartment homes. The following table summarizes the carrying amounts for our real estate owned (at cost) as of December 31, 2019 and 2018 (dollars in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | December 31, |  | December 31,
​ | ​ | 2019 | ​ | 2018
Land | ​ | $ | 2,164,032 | ​ | $ | 1,849,799
Depreciable property — held and used: | ​ |  |  | ​ |  |
Land improvements | ​ |  | 224,964 | ​ |  | 213,224
Building, improvements, and furniture, fixtures and equipment | ​ |  | 10,102,758 | ​ |  | 8,133,136
Real estate intangible assets | ​ | ​ | 40,570 | ​ | ​ | —
Under development: | ​ |  |  | ​ |  |
Land and land improvements | ​ |  | 29,226 | ​ |  | —
Building, improvements, and furniture, fixtures and equipment | ​ |  | 40,551 | ​ |  | —
Real estate owned | ​ |  | 12,602,101 | ​ |  | 10,196,159
Accumulated depreciation | ​ |  | (4,131,353) | ​ |  | (3,654,160)
Real estate owned, net | ​ | $ | 8,470,748 | ​ | $ | 6,541,999
​ Acquisitions In January 2019, the Company increased its ownership interest from 49% to 100% in a 386 apartment home operating community located in Anaheim, California, for a cash purchase price of approximately $33.5 million. In connection with the acquisition, the Company repaid approximately $59.8 million of joint venture construction financing. As a result, the Company consolidated the operating community. The Company had previously accounted for its 49% ownership interest as an equity investment in an unconsolidated joint venture (see Note 5, Joint Ventures and Partnerships). The Company accounted for the consolidation as an asset acquisition resulting in no gain upon consolidation and increased its real estate assets owned by approximately $115.7 million and recorded approximately $2.4 million of in-place lease intangibles. In January 2019, the Company increased its ownership interest from 49% to 100% in a 155 apartment home operating community located in Seattle, Washington, for a cash purchase price of approximately $20.0 million. In connection with the acquisition, the Company repaid approximately $26.0 million of joint venture construction financing. As a result, the Company consolidated the operating community. The Company had previously accounted for its 49% ownership interest as a preferred equity investment in an unconsolidated joint venture (see Note 5, Joint Ventures and Partnerships). The Company accounted for the consolidation as an asset acquisition resulting in no gain upon consolidation and increased its real estate assets owned by approximately $58.1 million and recorded approximately $2.4 million of real estate intangibles and approximately $0.6 million of in-place lease intangibles. In January 2019, the Company acquired a to-be-developed parcel of land located in Washington D.C. for approximately $27.1 million. In February 2019, the Company acquired a to-be-developed parcel of land located in Denver, Colorado for approximately $13.7 million. In February 2019, the Company acquired a 188 apartment home operating community located in Brooklyn, New York for approximately $132.1 million. The Company increased its real estate assets owned by approximately $97.5 million and recorded approximately $33.6 million of real estate intangibles and approximately $1.0 million of in-place lease intangibles. In February 2019, the Company acquired a 381 apartment home operating community located in St. Petersburg, Florida for approximately $98.3 million. The Company increased its real estate assets owned by approximately $96.0 million and recorded approximately $2.3 million of in-place lease intangibles. ​ In April 2019, the Company acquired a 498 apartment home operating community located in Towson, Maryland for approximately $86.4 million. The Company increased its real estate assets owned by approximately $82.5 million and recorded approximately $3.9 million of in-place lease intangibles. ​ In May 2019, the Company acquired a 313 apartment home operating community located in King of Prussia, Pennsylvania for approximately $107.3 million. The Company increased its real estate assets owned by approximately $106.4 million and recorded approximately $0.9 million of in-place lease intangibles. ​ In May 2019, the Company acquired a 240 apartment home operating community located in St. Petersburg, Florida for approximately $49.4 million. The Company increased its real estate assets owned by approximately $48.2 million and recorded approximately $1.2 million of in-place lease intangibles. ​ In June 2019, the Company acquired a 200 apartment home operating community located in Waltham, Massachusetts for approximately $84.6 million. The Company increased its real estate assets owned by approximately $82.6 million and recorded approximately $2.0 million of in-place lease intangibles. ​ In August 2019, the Company acquired a 914 apartment home operating community located in Norwood, Massachusetts for approximately $270.2 million. The Company increased its real estate assets owned by approximately $260.1 million and recorded approximately $10.1 million of in-place lease intangibles. ​ In August 2019, the Company acquired a 185 apartment home operating community located in Englewood, New Jersey for approximately $83.6 million. The Company increased its real estate assets owned by approximately $77.5 million and recorded approximately $4.6 million of real estate intangibles and approximately $1.5 million of in-place lease intangibles. ​ In August 2019, the Company purchased a 292 apartment home operating community in Washington, D.C., directly from the UDR/KFH joint venture, thereby increasing its ownership interest from 30% to 100%, for a purchase price at 100% of approximately $184.0 million, before $2.8 million of closing costs incurred by UDR at acquisition (see Note 5, Joint Ventures and Partnerships). The Company accounted for the consolidation as an asset acquisition, resulting in no gain upon consolidation, and increased its real estate assets owned by approximately $156.0 million and recorded approximately $5.9 million of in-place lease intangibles. ​ In November 2019, the Company acquired the approximately 50% ownership interest not previously owned in 10 UDR/MetLife operating communities, one development community and four land parcels valued at $1.1 billion, or $564.2 million at UDR’s share, and sold its approximately 50% ownership interest in five UDR/MetLife operating communities valued at $645.8 million, or $322.9 million at UDR’s share, to MetLife, and recognized a net gain on sale of $114.9 million at our share. The Company paid $109.2 million directly to MetLife to complete the transaction. As a result, the Company consolidated the 10 operating communities, one development community and four land parcels, and they are no longer accounted for as equity method investments in an unconsolidated joint venture (see Note 5, Joint Ventures and Partnerships). The Company accounted for the consolidation as an asset acquisition resulting in no gain upon consolidation and increased its real estate assets owned by approximately $977.8 million and recorded approximately $30.0 million of in-place lease intangibles. In connection with the acquisition, the Company assumed six secured fixed rate mortgage notes payable and one credit facility secured by four communities with a combined outstanding balance of $518.4 million and estimated fair value of $551.8 million. The Company recorded the debt at its fair value in Secured debt, net on the Consolidated Balance Sheets. ​ The following table summarizes the 10 communities, one development community and four land parcels acquired from the UDR/MetLife II and the UDR/MetLife Vitruvian Park® joint ventures: ​
​ | ​ | ​ | ​
Property | Type | Number of Homes | Location
Strata | Operating Community | 163 | San Diego, CA
Crescent Falls Church | Operating Community | 214 | Washington, D.C.
Charles River Landing | Operating Community | 350 | Boston, MA
Lodge at Ames Pond | Operating Community | 364 | Boston, MA
Lenox Farms | Operating Community | 338 | Boston, MA
Towson Promenade | Operating Community | 379 | Baltimore, MD
Savoye | Operating Community | 394 | Addison, TX
Savoye2 | Operating Community | 351 | Addison, TX
Fiori on Vitruvian Park ® | Operating Community | 391 | Addison, TX
Vitruvian West | Operating Community | 383 | Addison, TX
Vitruvian West Phase 2 (a) | Development Community | 366 | Addison, TX
Vitruvian Park ® | 4 Land Parcels | N/A | Addison, TX
| (a) | The number of apartment homes for the community under development presented in the table above is based on the projected number of total homes upon completion of development. As of December 31, 2019, no apartment homes had been completed.
In January 2020, the Company acquired a 294 home operating community located in Tampa, Florida for approximately $85.2 million. ​ In January 2020, the Company increased its ownership interest from 49% to 100% in a 276 apartment home operating community located in Hillsboro, Oregon, for a cash purchase price of approximately $21.6 million. In connection with the acquisition, the Company repaid approximately $35.6 million of joint venture construction financing. As a result, in January 2020, the Company consolidated the operating community. The Company had previously accounted for its 49% ownership interest as a preferred equity investment in an unconsolidated joint venture (see Note 5, Joint Ventures and Partnerships). ​ During the year ended December 31, 2018, the Company did not have any acquisitions of real estate. Dispositions In June 2019, the Company sold a parcel of land located in Los Angeles, California for $38.0 million, resulting in a gain of approximately $5.3 million. Prior to the sale, the parcel of land was subject to a ground lease, under which UDR was the lessor, scheduled to expire in 2065. The ground lease included a purchase option for the lessee to acquire the land during specific periods of the ground lease term. During the second quarter, the lessee exercised the purchase option resulting in this sale by the Company and the ground lease being terminated. Prior to the sale, the purchase option was not deemed to be a bargain purchase option. This ground lease existed as of the adoption of the new lease accounting guidance on January 1, 2019 and we did not reassess lease classification per the practical expedient provided by the standard. As a result, this ground lease continued to be classified as an operating lease and the land parcel subject to the ground lease continued to be recognized in Real estate held for investment on our Consolidated Balance Sheets until the sale in June 2019. ​ In February 2018, the Company sold an operating community in Orange County, California with a total of 264 apartment homes for gross proceeds of $90.5 million, resulting in a gain of $70.3 million. The proceeds were designated for a tax-deferred Section 1031 exchange that were used to pay a portion of the purchase price for an acquisition in October 2017. In December 2018, the Company sold an operating community in Fairfax, Virginia with a total of 604 apartment homes for gross proceeds of $160.0 million, resulting in a gain of $65.9 million. In February 2017, the Company sold a parcel of land in Richmond, Virginia for gross proceeds of $3.5 million, resulting in a gain of $2.1 million. In December 2017, the Company sold two operating communities with a total of 218 apartment homes in Orange County, California and Carlsbad, California for gross proceeds of $69.0 million, resulting in a gain of $41.3 million. Developments At December 31, 2019, the Company was developing three wholly-owned communities totaling 878 homes, none of which have been completed, with a budget of $278.5 million, in which we have a carrying value of $69.8 million. The communities are estimated to be completed between the first quarter of 2021 and the second quarter of 2022. Other Activity In connection with the acquisition of certain properties, the Company agreed to pay certain of the tax liabilities of certain contributors if the Company sells one or more of the properties contributed in a taxable transaction prior to the expiration of specified periods of time following the acquisition. The Company may, however, sell, without being required to pay any tax liabilities, any of such properties in a non-taxable transaction, including, but not limited to, a tax deferred Section 1031 exchange. Further, the Company has agreed to maintain certain debt that may be guaranteed by certain contributors for specified periods of time following the acquisition. The Company, however, has the ability to refinance or repay guaranteed debt or to substitute new debt if the debt and the guaranty continue to satisfy certain conditions. Amortization of Intangible Assets The following table provides a summary of the aggregate amortization for the intangible assets acquired in the acquisition of real estate for each of the next five years and thereafter (in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Unamortized Balance as of December 31, 2019 | ​ | 2020 | ​ | 2021 | ​ | 2022 | ​ | 2023 | ​ | 2024 | ​ | Thereafter
Real estate intangible assets, net (a) | ​ | $ | 37,844 | ​ | $ | 3,062 | ​ | $ | 2,840 | ​ | $ | 2,740 | ​ | $ | 2,643 | ​ | $ | 2,525 | ​ | $ | 24,034
In-place lease intangible assets, net (b) | ​ | ​ | 43,614 | ​ | ​ | 41,179 | ​ | ​ | 501 | ​ | ​ | 470 | ​ | ​ | 386 | ​ | ​ | 358 | ​ | ​ | 720
Total | ​ | $ | 81,458 | ​ | $ | 44,241 | ​ | $ | 3,341 | ​ | $ | 3,210 | ​ | $ | 3,029 | ​ | $ | 2,883 | ​ | $ | 24,754
​ ​ ​
| (a) | Real estate intangible assets, net is recorded net of accumulated amortization of $2.7 million in Real estate held for investment, net on the Consolidated Balance Sheets. For the year ended December 31, 2019, $2.7 million of amortization expense was recorded in Depreciation and Amortization on the Consolidated Statement of Operations.
​
| (b) | In-place lease intangible assets, net is recorded net of accumulated amortization of $23.6 million in Other assets on the Consolidated Balance Sheets. For the year ended December 31, 2019, $20.8 million was recorded in Depreciation and Amortizatio n on the Consolidated Statement of Operations.
United Dominion Realty L.P. |
Entity information |
REAL ESTATE OWNED | 3. REAL ESTATE OWNED Real estate assets owned by the Operating Partnership consist of income producing operating properties, properties under development, land held for future development, and sold or held for disposition properties. At December 31, 2019, the Operating Partnership owned and consolidated 52 communities in nine states plus the District of Columbia totaling 16,434 apartment homes. The following table summarizes the carrying amounts for our real estate owned (at cost) as of December 31, 2019 and 2018 (dollars in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | December 31, |  | December 31,
​ | ​ | 2019 | ​ | 2018
Land | ​ | $ | 711,256 | ​ | $ | 711,256
Depreciable property — held and used: | ​ |  | ​ | ​ |  |
Land improvements | ​ | ​ | 96,864 | ​ | ​ | 92,000
Buildings, improvements, and furniture, fixtures and equipment | ​ |  | 3,067,040 | ​ |  | 3,008,729
Real estate owned | ​ |  | 3,875,160 | ​ |  | 3,811,985
Accumulated depreciation | ​ |  | (1,796,568) | ​ |  | (1,658,161)
Real estate owned, net | ​ | $ | 2,078,592 | ​ | $ | 2,153,824
​ Acquisitions The Operating Partnership did not have any acquisitions of real estate during the years ended December 31, 2019 and 2018. Dispositions The Operating Partnership did not have any dispositions of real estate during the year ended December 31, 2019. In February 2018, the Operating Partnership sold an operating community in Orange County, California with a total of 264 apartment homes for gross proceeds of $90.5 million, resulting in a gain of $70.3 million. The proceeds were designated for a tax-deferred Section 1031 exchange that were used to pay a portion of the purchase price for an acquisition in October 2017. In December 2018, the Operating Partnership sold a commercial office building in Fairfax, Virginia for gross proceeds of $9.3 million, resulting in a gain of $5.2 million. Other Activity In connection with the acquisition of certain properties, the Operating Partnership agreed to pay certain of the tax liabilities of certain contributors if the Operating Partnership sells one or more of the properties contributed in a taxable transaction prior to the expiration of specified periods of time following the acquisition. The Operating Partnership may, however, sell, without being required to pay any tax liabilities, any of such properties in a non-taxable transaction, including, but not limited to, a tax deferred Section 1031 exchange. Further, the Operating Partnership has agreed to maintain certain debt that may be guaranteed by certain contributors for specified periods of time following the acquisition. The Operating Partnership, however, has the ability to refinance or repay guaranteed debt or to substitute new debt if the debt and the guaranty continue to satisfy certain conditions.

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