Home Properties Inc. (HME), a multifamily real estate investment trust (REIT), has recently acquired ‘The Apartments at Cambridge Court’ – a 544-unit apartment community in White Marsh, Maryland, for $90.4 million. The transaction, which equated to approximately $166,000 per apartment unit, was funded through available cash.
The acquired property consists of 18 three-story garden-style buildings (432 units) and 2 four-story mid-rise buildings (112 units). The apartment community has 218 one-bedroom units, 272 two-bedroom units and 54 three-bedroom units, with the average unit size being 962 square feet. The property offers luxury amenities such as a swimming pool, clubhouse, fitness center, community gardens, children's playground, dog park, carports, in-unit washers and dryers.
Besides its lucrative features, the property is strategically located in close proximity to major employment centers and corporate campuses in the Baltimore region. The apartment community is also adjacent to the retail complex White Marsh Town Center, which contains 5 anchor stores and 190 specialty shops, thereby offering the convenience of easy shopping at the outlets of leading retailers.
Furthermore, the region has witnessed a 21% population growth between the 2000 and 2010 census, and is poised to capitalize on the growth opportunity provided at the nearby Aberdeen Proving Ground (APG), where 8,500 high-paying jobs are slated for relocation as a result of Base Realignment and Closure (BRAC) required by September, 2011.
In addition, several defense contractors and supporting firms in related industries are also expanding in the area. This in turn could enable Home Properties to charge a premium rent for the apartment in future. At the close of the transaction, the property was 90.8% occupied at monthly rents averaging $1,314 per unit.
The acquisition is expected to be accretive to earnings with immediate effect. Home Properties further intends to spend approximately $2.6 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 and 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 currently has a Zacks #3 Rank that translates into a short-term Hold rating. We also have a Neutral recommendation and a Zacks #2 Rank (short-term Buy) for BRE Properties Inc. (BRE), one of the peers of Home Properties.
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HOME PPTYS INC (HME): Free Stock Analysis Report
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