ROCHESTER, NY - Home Properties, Inc. announced that, on July 14 and 15, 2011, it purchased an apartment community in West Chester, Pennsylvania and Shrewsbury, Massachusetts, respectively, for a combined total purchase price of $65.1 million. The purchases were funded by the Company's At-The-Market equity offering program during the second quarter of 2011, which generated $90.4 million in net proceeds. Year-to-date, the Company has purchased assets of approximately $72 million.
"These two acquisitions, in our suburban Philadelphia and Boston regions, will be immediately accretive to earnings," said Edward J. Pettinella, President and CEO of Home Properties. "Their significant redevelopment potential will contribute to future revenue growth, enhancing shareholder value."
Waterview Apartments
Waterview Apartments (203 units), located in West Chester, Pennsylvania, was purchased for $24.6 million in cash, which equates to approximately $121,000 per apartment unit. The property is currently 95.6% occupied at monthly rents averaging $1,000. It is well located at 2 Waterview Road and fronts on West Chester Pike (Route 3) approximately 1.5 miles from Route 202. It has excellent access to the highway system, shopping, employment centers and recreational opportunities. It is two miles from historic downtown West Chester.
Waterview Apartments was built in 1968. It consists of 203 units in 19 buildings, each containing three floors. The buildings have concrete plank floors with brick on block exteriors. Pitched roofs are asphalt shingled. There are 14 studio apartments, 67 one-bedroom units and 122 two-bedroom units. The average unit size is 825 square feet. All units have individually metered electric service. Heat is provided by a gas-fired boiler in each building with hot water baseboards, thermostats and zone valves in each unit. Each unit has two through-the-wall air conditioners. Amenities include patios or balconies for 181 units; a swim club with Olympic size pool, volleyball court and basketball court; a fitness center; a laundry room in every building; and a storage locker for each unit. The property contains 6,000 square feet of commercial space, which houses a restaurant and a pizza shop.
During the first three years of ownership, the Company expects to spend a total of approximately $2.3 million, in addition to normal capital expenditures, to correct deferred maintenance and upgrade kitchens and baths. Management anticipates a 5.7% first year capitalization rate on this acquisition. (The return is calculated after allocating 2.7% of rental revenues for management and overhead expenses and before normalized capital expenditures.)
The Commons at Haynes Farm
The Commons at Haynes Farm (302 units) is located in Shrewsbury, Massachusetts. It was purchased for $40.5 million in cash or approximately $134,000 per unit. The property is 97.0% occupied at monthly rents averaging $1,219. It is located approximately 30 miles west of Boston in the Worcester Metropolitan Statistical Area on the main east-west thoroughfare in Shrewsbury.
The Commons at Haynes Farm was built in 1991. The property contains 302 units in 10 three- and four-story frame buildings. Buildings are of wood frame construction with concrete slab and poured foundations. The roofs are pitched with asphalt shingles. There are 82 one-bedroom units, 167 two-bedroom units, 50 three-bedroom units and three four-bedroom units. The average unit size is 980 square feet. Units have individual gas-fired forced hot air heating units and pad-mounted condensing units. Amenities include 58 carports; a swimming pool; a community center, which includes an exercise room; fireplaces in 65 apartments; and laundry equipment or hook-ups in each unit.
During the first three years of ownership, the Company plans to spend approximately $2.5 million, in addition to normal capital expenditures, to reposition the community by correcting deferred maintenance, improving infrastructure and exteriors, renovating the community center, expanding the fitness center, and upgrading kitchens and baths.
Management anticipates a 5.9% first year capitalization rate on this acquisition. (The return is calculated after allocating 2.7% of rental revenues for management and overhead expenses and before normalized capital expenditures).
Combined acquisition costs of approximately $375,000 for the two properties will be included in other expense in the 2011 third quarter.
Capital Markets Activities
Both properties were purchased with cash from the At-The-Market equity offering program, which generated $90.4 million in net proceeds during the second quarter. In addition to funding the above two purchases and the ongoing property repositioning program, the Company used proceeds for development of Phase 2 of The Courts at Huntington Station in Alexandria, Virginia and The Apartments at Cobblestone Square in Fredericksburg, Virginia.
This release contains forward-looking statements. Although the Company believes expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be achieved. Factors that may cause actual results to differ include general economic and local real estate conditions, weather, other conditions that might affect operating expenses, the timely completion of repositioning activities within anticipated budgets, the actual pace of future acquisitions and sales, and continued access to capital to fund growth.
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 owns and operates 118 communities containing 39,696 apartment units.