ROCHESTER, NY - Home Properties, Inc. announced that, on September 30, 2010, it purchased apartment communities in Ellicott City, Maryland, Fairfax, Virginia and the Town of Brookhaven in Suffolk County, New York for a combined total purchase price of $204.4 million. Year-to-date the Company has purchased assets of approximately $325 million.
"These three acquisitions, in several of Home Properties' key geographic markets, will be immediately accretive to earnings," said Edward J. Pettinella, President and CEO of Home Properties. "Year-to-date we have purchased eight apartment communities with nearly 2,500 units, which have significant redevelopment potential that will contribute to future revenue growth, enhancing shareholder value."
Charleston Place (858 units), located in Ellicott City, Maryland, was purchased for $103 million (before mortgage assumption fair market value adjustment), which equates to approximately $120,000 per apartment unit. Consideration for the purchase included the assumption of three fixed-rate notes with an aggregate principal balance of $70.8 million at a weighted average rate of 5.31% maturing in September 2015, with the balance paid in cash. The property is currently 96.6% occupied at monthly rents averaging $1,073. It is within a ten-minute drive to Columbia, Maryland and 20 minutes from downtown Baltimore, with easy access to all major roads and highways in the area.
Charleston Place was built in three phases between 1971 and 1983. It consists of 858 units in 26 three-story, garden-style buildings. The buildings are of wood frame construction on concrete footings and block foundation walls with brick exteriors. Pitched roofs are asphalt shingled. There are 444 one-bedroom units and 414 two-bedroom units. The average unit size is 861 square feet. All units have individually metered gas and electric service. Most apartments have an individual washer and dryer. Amenities include a community center, resident lounge, fitness center, swimming pool, two playgrounds and a tennis court.
During the first three years of ownership, the Company expects to spend a total of approximately $6.8 million, in addition to normal capital expenditures, to correct deferred maintenance; improve landscaping and general curb appeal; upgrade kitchens and baths; replace roofs, windows and HVAC; and add controlled-access entryways. Management anticipates a 6.2% first year capitalization rate on this acquisition. (The return is calculated after allocating 3.0% of rental revenues for management and overhead expenses and before normalized capital expenditures.)
The Courts at Fair Oaks (364 units), formerly known as The Point at Fairfax, is located in Fairfax County, Virginia. It was purchased for $70.1 million (before mortgage assumption fair market value adjustment), or approximately $193,000 per unit. Consideration for the purchase included assumption of a $46 million fixed-rate mortgage at 5.66% maturing in August 2019, with the balance in cash. The property is 95.1% occupied at monthly rents averaging $1,395. It is located just west of the City of Fairfax, with immediate access to I-66, a direct route to Washington, D.C., and less than 15 minutes from Dulles International Airport. It is at the center of the major commercial and employment centers of Fairfax, Dulles and Tyson's Corner.
The Courts at Fair Oaks was built in 1990. A gated community, it contains fifteen three-story garden style buildings. Buildings are of wood frame construction with concrete slab on grade foundations and painted Masonite walls with painted wood trim. The roofs are pitched, gable-style, with asphalt shingles. There are 40 studio units; 144 one-bedroom units; and 180 two-bedroom units. The average unit size is 859 square feet. All units except studio apartments have an individual washer and dryer. Electric, gas and water/sewer are individually metered. Amenities include a community center, resident club room, fitness center, swimming pool, tennis courts, an exercise trail and picnic areas.
During the first three years of ownership, the Company plans to spend approximately $1.8 million, in addition to normal capital expenditures, to correct deferred maintenance, improve mature landscaping, reduce exterior painting costs and upgrade kitchens and baths.
Management anticipates a 5.9% first year capitalization rate on this acquisition. (The return is calculated after allocating 3.0% of rental revenues for management and overhead expenses and before normalized capital expenditures).
Crescent Club (257 units), located in the Town of Brookhaven in Suffolk County, Long Island, New York, was purchased for $31.3 million in cash, which equates to approximately $122,000 per unit. The property is currently 95.3% occupied at monthly rents averaging $1,241. The property has direct access to I-495, which is approximately three miles to the south.
A gated community, Crescent Club was built in 1973. It consists of 257 apartment units in 40 two-story, garden-style buildings. The buildings are of wood frame construction with concrete slab on grade foundations and a combination of vinyl siding and brick exteriors. Roofs are pitched with asphalt shingles. There are 110 one-bedroom units and 147 two-bedroom units, all with one bath. The average unit size is 872 square feet. All apartments have private entry doors as well as either a balcony or patio. Electricity is individually metered. Amenities include a community center, resident club room, fitness center, swimming pool and tennis courts.
During the first three years of ownership, the Company expects to spend a total of approximately $6.1 million in addition to normal capital expenditures to correct deferred maintenance, update the community's dated appearance and upgrade kitchens and baths. Management anticipates a 6.2% first year capitalization rate on this acquisition. (The return is calculated after allocating 3.0% of rental revenues for management and overhead expenses and before normalized capital expenditures.) Acquisition costs of approximately $1.7 million combined for the three properties will be included in other expenses in the 2010 third quarter.
Home Properties is a publicly traded apartment real estate investment trust that owns, operates, develops, acquires and rehabilitates apartment communities primarily in selected Northeast and Mid-Atlantic markets. Currently, Home Properties operates 116 communities containing 39,498 apartment units. Of these, 38,630 units in 115 communities are owned directly by the Company and 868 units are partially owned and managed by the Company as general partner.
Source: Home Properties