ROCHESTER, N.Y., April 8 /PRNewswire-FirstCall/ -- Home Properties, Inc. (NYSE: HME) today announced that, on April 1, 2010, it purchased Middlebrooke Apartments and Westminster Apartments from the same seller, who was the original developer and owner. Both apartment communities are located in Westminster, Maryland, less than a mile apart. Westminster is now called Westbrooke Apartments. Both Middlebrooke and Westbrooke are within walking distance of Downtown Westminster, one mile from TownMall of Westminster and convenient to area employers. They are within commuting distance of Owings Mills, MD (15 miles), Baltimore (35 miles) and Columbia (40 miles). They will be operated with Ridgeview at Wakefield Valley, another apartment community in Westminster, which Home Properties has owned since 2005.
"There finally are more acquisition opportunities in our key markets," said Edward J. Pettinella, President and CEO of Home Properties. "We see great potential in these two properties, which we project will have a low double-digit internal rate of return. We hope to accelerate the pace of property purchases during the balance of the year."
Middlebrooke Apartments
Middlebrooke (208 units) was purchased for $17.5 million in cash, including closing costs, which equates to approximately $84,300 per apartment unit. The property is currently 88.8% occupied at monthly rents averaging $872.
Middlebrooke was built between 1974 and 1977. It consists of 168 garden units in nine three-story buildings and 40 townhomes. The buildings are of wood frame and brick construction on concrete block with spread concrete footers. Exteriors are brick with pitched asphalt-shingled roofs, which have all been replaced since 2004. There are 48 one-bedroom garden units. The balance of the garden units and all of the townhomes have two bedrooms. The average unit size is 877 square feet. Of the garden units, 120 units have individual gas furnaces with through-the-wall condensers and 48 units have individual electric heat pumps with pad-mounted condensers. All units have individual gas or electric water heaters. Amenities include a central laundry facility for every twelve garden units, poured concrete patios for ground level units and precast concrete balconies for upper floors.
During the first three years of ownership, the Company expects to spend a total of approximately $1.8 million, in addition to normal capital expenditures, to correct deferred maintenance; upgrade kitchens and baths; replace siding, window and entry doors and some HVAC; and improve signage and landscaping to upgrade the property's curb appeal. Management anticipates a 6.3% first year capitalization rate on this acquisition, increasing to 7.1% in the third year upon stabilization and after significant initial improvements and upgrades have occurred. (The return is calculated after allocating 3.0% of rental revenues for management and overhead expenses and before normalized capital expenditures of approximately $800 per unit annually.)
Westbrooke Apartments
Westbrooke (110 units) was purchased for $6.4 million in cash, including closing costs, or approximately $58,200 per unit. The property is 86.5% occupied at monthly rents averaging $791.
Westbrooke was built between 1961 and 1970. It contains five buildings, each with 22 units. Buildings are of wood frame and brick construction on concrete block with spread concrete footers and with brick and vinyl siding. The roofs of three buildings are pitched with asphalt shingles and were replaced in 2002. The other two roofs are flat with stone and tar, which were replaced in 1998. There are 60 one-bedroom units, 49 two-bedroom units and one studio. The average unit size is 817 square feet. Amenities include tiled floors in the hallways, poured concrete patios for ground level units and wood balconies for upper floors. Each building has a central laundry facility with two washers and dryers in each.
During the first three years of ownership, the Company plans to spend approximately $1.2 million, in addition to normal capital expenditures, to correct deferred maintenance; upgrade kitchens and baths; replace siding, window and entry doors and some HVAC; and improve signage and landscaping to upgrade the property's curb appeal.
Management anticipates a 6.3% first year capitalization rate, increasing to 7.4% in the third year upon stabilization and after completion of initial improvements and unit upgrades. (The return is calculated after allocating 3.0% of rental revenues for management and overhead expenses and before normalized capital expenditures of approximately $800 per unit annually).
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, Mid-Atlantic and Southeast Florida markets. Currently, Home Properties operates 110 communities containing 37,399 apartment units. Of these, 36,249 units in 108 communities are owned directly by the Company; 868 units are partially owned and managed by the Company as general partner, and 282 units are managed for other owners. For more information, visit Home Properties' Web site at homeproperties.com.
SOURCE Home Properties, Inc.
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