Home Properties Buys Ellicott City Apartment Community
- Jul 06, 2012
Rochester, New York-based Home Properties recently announced it has acquired Howard Crossing, an Ellicott City apartment community, for $186 million or $138,000 per apartment unit. The cash deal was closed on June 28.
Howard Crossing was constructed in phases from 1968 through 1975. It consists of 1,350 units in 42 three-story brick garden-style apartment buildings located along Town and Country Boulevard off U.S. 40, with easy access to U.S. 29, I-95 and the Baltimore Beltway. Major employment centers are nearby with downtown Baltimore just 12 miles away, Columbia eight miles away, Fort Meade 20 miles to the southeast and BWI less than 20 minutes from the property. Charleston Manor, an 858-unit asset that Home Properties acquired in September 2010, is also less than a mile away.
The apartment community consists of 680 one-bedroom units and 670 two-bedroom units, with an average unit size of 854 square feet. The buildings are wood-frame construction with concrete and masonry foundation systems. Ninety-one percent of the units have washers and dryers with gas-fired central boilers providing hot water. The complex also features individual gas-fired HVAC and pad-mounted condensing units and includes two pools, a business center, fitness center, basketball courts and tennis courts for the use of its residents.
Two commercial buildings with a total of 14,371 square feet are also located on the property. Home Properties said they produce about $150,000 in annual rental income. At closing, Howard Crossing was 92.6 percent occupied. The average monthly rent was $1,111.
A part of the acquisition was funded using proceeds from the issuance of $50 million of unsecured Senior Guaranteed Notes. They are due June 27, 2019 and bear interest at 4.16 percent. Home Properties plans to invest approximately $12 million during the first three years of ownership to upgrade individual units and exteriors. They will implement the LRO revenue management system immediately to improve occupancy and move inventory.
Edward J. Pettinella, Home Properties President and CEO, said that Charleston Manor has exceeded their expectations and thinks Howard Crossing will do the same. Home Properties anticipates a 5.9 percent first year capitalization rate after 2.7 percent of rental revenues are allocated for management and overhead expenses and before normalized capital expenditures.
Image courtesy of www.facebook.com/HowardCrossingApartments.