Exhibit 99.1
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United Dominion
R E A L T Y T R U S T NEWS RELEASE
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FOR IMMEDIATE RELEASE
RICHMOND, VIRGINIA
OCTOBER 1, 1996
UNITED DOMINION REALTY TRUST AND SOUTH WEST PROPERTY TRUST
ANNOUNCE MERGER AGREEMENT
United Dominion Realty Trust, Inc. (NYSE: UDR) and South West Property Trust
Inc. (NYSE: SWP) today announced the execution of a definitive Agreement
pursuant to which South West would be merged into United Dominion. The merger
which was approved unanimously by both Boards of Directors will combine South
West's 14,975 apartment homes (including its development portfolio), 80% of
which are in Texas, with United Dominion's 41,004 apartment homes in the
Southeast.
Following the merger, United Dominion, with 55,979 apartment homes in 210
communities, will be the largest REIT developer, owner and manager of apartments
in the southeastern and southwestern United States.
Based upon the closing stock price of United Dominion on September 30, 1996,
shareholders of South West would receive approximately $312 million of United
Dominion common stock.
Under the terms of the Agreement, each share of South West will be exchanged for
1.0833 shares of United Dominion provided that United Dominion's average closing
price during the pricing period is $13 7/8 or higher. If the average closing
price is less than $13 7/8, then the exchange ratio will be adjusted upwards to
provide a $15 value for each South West share. This exchange ratio assures South
West shareholders that their current dividend rate will not be reduced. United
Dominion is not required to offer more than 1.1215 shares, and South West is not
required to accept less than $15 per share in value. The Agreement is subject to
completion of due diligence by both parties, regulatory approval and approval by
both companies' shareholders.
The merger has been structured as a tax-free transaction and will be treated as
a purchase for accounting purposes. The merger is expected to be effective at
the close of business on December 31, 1996.
Three of South West's executive officers, John S. Schneider, Chairman and Chief
Executive Officer, Robert F. Sherman, President and Chief Operating Officer and
David L. Johnston, Executive Vice President and Chief Investment Officer will
join United Dominion as executive officers. Mr. Schneider, along with Mark J.
Sandler, Robert W. Scharar and Ira T. Wender, (currently Directors of South
West) will join United Dominion's Board of Directors.
John Schneider, South West's CEO, stated that the merged companies span the
southeastern and southwestern United States, two of the most vibrant growth
areas of the country. They bring together United Dominion's extensive
acquisition expertise and South West's proven development capabilities. The
combined Company, with over two billion dollars in assets, should also have
greater access to lower cost capital. Consequently, South West's management
believes that this merger creates a unique opportunity for its shareholders to
participate in the consolidation and growth of the REIT industry.
Mr. Schneider further stated that United Dominion and South West have each been
in the apartment business since 1973, and the combination will bring together
one of the strongest and most experienced management teams in the industry. In
addition, the merger should provide opportunities to realize significant
administrative cost savings which are expected to have a positive effect on
shareholder value.
John McCann, United Dominion's CEO, stated that the merger provides several
important strategic and operational benefits for United Dominion:
The apartment sector is rapidly consolidating, permitting dominant
companies to realize enhanced access to capital from a variety of
sources at lower cost. We have participated in this consolidation
in a substantial way in the private transaction sector since 1991.
This major transaction is our initial participation in the
consolidation of public companies. We are very excited about what
this merger does for the Company, its shareholders and our future.
The merger should be accretive immediately to funds from
operations per share.
More than $300 million will be added to our equity market
capitalization which should provide increased liquidity in our
common stock. The addition of South West's more than $500 million
of apartment homes should provide economies of scale in our
overall operations.
About 80% of South West's apartments are located in Texas. This
represents a logical expansion of our geography and gives us
instant critical size in Dallas, a long-term growth market.
South West has developed successfully in multiple markets in both
the southeast and southwest. They bring to us an enhanced
development capability, knowledge of the southwest markets and
management depth.
The expanded geography and greater development capabilities will
provide more investment opportunities for us to consider and
should result in increased returns on new investments.
For additional information, please contact:
John P. McCann
President and Chief Executive Officer
James Dolphin
Senior Vice President and Chief Financial Officer
Francine Farquhar
Investor Services Manager
Phone: (804) 780-2691
E-Mail: udrt@ix.netcom.com
10 SOUTH SIXTH STREET, SUITE 203, RICHMOND, VIRGINIA 23219-3802
804-780-2691 FAX: 804-343-1912