Home Properties Inc. purchased Howard Crossing, a 1,350-unit apartment property in Ellicott City, Md., for $186 million in cash. The price equates to approximately $138,000 per unit.
At the time of the closing, Howard Crossing was 92.6 percent occupied, with rents averaging $1,111 a month. The property was completed in phases from 1968 through 1975 and includes 42 three-story brick garden-style apartment buildings, with the units averaging 854 sq. ft. Common area amenities at Howard Crossing include two pools, a business center, a fitness center, basketball and tennis courts, and two commercial buildings totaling 141,371 sq. ft. of space.
Howard Crossing is located approximately 12 miles away from downtown Baltimore and eight miles away from Columbia.
“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 Home Properties President and CEO Edward J. Pettinella in a statement. “Based on our familiarity with this submarket, we expect Howard Crossing will achieve similar success.”
Home Properties funded this acquisition partly with the proceeds of its $50 million unsecured senior guaranteed notes issuance. The balance of the purchase price was funded through the company’s line of credit and a $100 million unsecured bank loan.
During the first three years of ownership, Home Properties expects to spend approximately $12 million to upgrade individual units and exteriors at Howard Crossing, in addition to normal capital expenditures. The company plans to improve the landscaping, HVAC and electric service at the property; replace roofs, asphalt and concrete and upgrade kitchens.
Home Properties anticipates achieving a 5.9 percent capitalization rate in the first year, after allocating 2.7 percent of rental revenues for management and overhead expenses.