Sule Aygoren Carranza is managing editor of Real Estate Forum.

DENVER-In a major restructuring of its portfolio, UDR Inc. has shed 86 communities for $1.7 billion. A joint venture of DRA Advisors LLC of New York City and Greensboro, NC-based Steven D. Bell & Co. bought the assets, which consist of 25,684 units in 10 states.

The transaction reduces UDR's holdings by nearly 40% to 40,183 units in 146 communities, and brings it from being the third-largest apartment REIT in the country to the fourth. The firm also announced it is moving its headquarters here.

In the REIT's fourth-quarter earnings call, UDR president and CEO Thomas W. Toomey said the decision to move forward with the transaction was driven by three key factors. For one, the firm wanted to take advantage of the valuation arbitrage that exists between the public and private markets. "We sold a hand-picked portfolio of assets that we would classify as below-average compared to the remaining portfolio at a 6.5% cap rate, when the stock was trading at a greater than 7% cap rate," he said.

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