This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Home Properties Acquires Apartment Community

Stocks in this article: HME





ROCHESTER, N.Y., July 2, 2012 /PRNewswire/ -- Home Properties, Inc. (NYSE: HME) today announced that, on June 28, 2012, it purchased Howard Crossing in Ellicott City, Maryland for $186 million.

(Logo: http://photos.prnewswire.com/prnh/20101026/NY89070LOGO)

"This newly acquired property is located less than one mile from Charleston Manor, an 858-unit property we acquired in September 2010 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."

Howard Crossing (1,350 units) was purchased for $186 million in cash, which equates to approximately $138,000 per apartment unit. A portion of the acquisition was funded using the proceeds from the issuance of $50 million 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 $100 million 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 $1,111. 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 Baltimore and eight miles from Columbia. Fort Meade 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 $150,000 in annual rental income.

During the first three years of ownership, the Company expects to spend a total of approximately $12 million, 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.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,672.60 -141.38 -0.79%
S&P 500 2,051.82 -11.33 -0.55%
NASDAQ 4,757.8790 +7.4820 0.16%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs