Home Properties Inc.
), a multifamily real estate investment trust (REIT), has recently
acquired 'Howard Crossing' - a 1,350-unit garden-style apartment
community in Ellicott City, Maryland, for $186 million in cash. The
company expects to incur an additional acquisition cost of
approximately $2.2 million, which would be included as 'other
expenses' in the operating results of the second quarter of 2012.
The purchase price equates to approximately $138,000 per apartment
unit. The acquisition was partially funded by utilizing the
proceeds from the issuance of $50 million worth of unsecured Senior
Guaranteed Notes scheduled to mature on June 27, 2019. The
remainder of the purchase price was funded through a combination of
debt under the line of credit and a $100 million unsecured bank
The apartment community has 680 one-bedroom units and 670
two-bedroom units, with the average unit size being 854 square
feet. The property offers amenities such as two swimming pools, a
business center, a fitness center, basketball courts and tennis
The property is strategically located in close proximity to major
employment centers and corporate campuses in the region. At the
close of the transaction, the property was 92.6% occupied at
monthly rents averaging $1,111 per unit. Home Properties further
intends to spend approximately $12 million during the first three
years of its ownership, in addition to normal capital expenditures,
to upgrade the property.
Home Properties primarily operates along the East Coast of the U.S.
The key target markets of the company include New York-Long
Island/New Jersey, Boston, Washington D.C./Northern Virginia,
Baltimore, Philadelphia and Chicago. The company typically invests
$200 million - $300 million annually to acquire multifamily
communities to fuel its growth engine.
Home Properties largely focuses on the relatively stable markets in
the suburban region of major metropolitan areas that have
significant barriers to new construction, a favorable supply/demand
relationship, high single-family home prices, stable job growth,
and reduced vulnerability to economic downturns.
We presently have a Neutral recommendation on Home Properties,
which has a Zacks #3 Rank that translates into a short-term Hold
rating. We also have a Neutral recommendation and a Zacks #4 Rank
(short-term Sell rating) for
BRE Properties Inc.
), one of the peers of Home Properties.
BRE PROPERTIES (BRE): Free Stock Analysis
HOME PPTYS INC (HME): Free Stock Analysis
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