July 2, 2012
Home Properties, Inc
. (NYSE: HME) today announced that, on
June 28, 2012
, it purchased Howard Crossing in
Ellicott City, Maryland
"This newly acquired property is located less than one mile from
, an 858-unit property we acquired in
that has exceeded our underwriting expectations," said
Edward J. Pettinella
, Home Properties President and CEO. Based on our familiarity with this submarket, we expect Howard Crossing will achieve similar success."
(1,350 units) was purchased for
in cash, which equates to approximately
per apartment unit. A portion of the acquisition was funded using the proceeds from the issuance of
of unsecured Senior Guaranteed Notes, which are due
June 27, 2019
and bear interest at 4.16%. The terms of the Notes mirror those contained in the outstanding Series A and B Notes. The balance of the purchase price was funded through the line of credit and a
unsecured bank demand loan, with the same terms and rate as the line of credit.
At closing, Howard Crossing was 92.6% occupied at monthly rents averaging
. The property is located off U.S. 40, with easy access to U.S. 29, I-95 and the Baltimore Beltway. It is near major employment centers, approximately 12 miles from downtown
and eight miles from
is 20 miles to the southeast and BWI is less than 20 minutes from the property. Constructed in phases from 1968 through 1975, Howard Crossing consists of 1,350 units in 42 three-story brick garden-style apartment buildings. There are 680 one-bedroom units and 670 two-bedroom units. The average unit size is 854 square feet. Buildings are of wood-frame construction with concrete and masonry foundation systems. The property has individual gas-fired HVAC and pad-mounted condensing units. Hot water is provided by gas-fired central boilers. Stacked washers and dryers are in 91% of the units. Common area amenities include two pools, a business center, fitness center, basketball courts and tennis courts. In addition, there are two commercial buildings with a total of 14,371 square feet, currently producing approximately
in annual rental income.
During the first three years of ownership, the Company expects to spend a total of approximately
, in addition to normal capital expenditures, to upgrade individual units and exteriors to improve marketing and retention while reducing future repair and operating costs. The Company plans to correct deferred maintenance; improve landscaping, HVAC and electric service; replace roofs, asphalt and concrete; and upgrade kitchens. The LRO revenue management system will be implemented immediately to improve occupancy and move inventory.
Management anticipates a 5.9% first year capitalization rate after allocating 2.7% of rental revenues for management and overhead expenses and before normalized capital expenditures.