"We were very focused on acquisitions and dispositions in 2014," said Edward J. Pettinella, President and Chief Executive Officer. "Over the course of the past three months, we completed $158 million in acquisitions and $157 million in dispositions. As a result of these transactions, we added communities meeting our stringent investment criteria in one of our smaller markets, reduced our D.C. footprint, and demonstrated the success of our investment and repositioning strategy by generating an 11.3% unlevered IRR on the three dispositions."
The Company added 1,138 units in its Chicago region at a cost of $158 million.
- On November 12, 2014, the Company acquired The Lakes of Schaumburg, a 428 unit apartment community in Schaumburg, Illinois, an affluent submarket of Chicago. The Lakes of Schaumburg benefits from excellent access to three major Chicago area expressways and is only nine miles from O'Hare International Airport.
Built in 1987, the property consists of 15 two-story and 12 three-story garden-style apartment buildings with brick exteriors. Each unit has a patio or balcony.
For the period from November 12 to December 31, 2014, The Lakes of Schaumburg was 95.7% occupied at monthly rents averaging $1,194 per unit. The Company expects a 6.0% first year capitalization rate on its investment after allocating 2.7% of rental revenues for management and overhead expenses and before normalized capital expenditures. During the first four years of ownership, the Company expects to invest $2.4 million in renovations and upgrades.
- On January 7, 2015, the Company acquired two adjacent apartment communities in the northwest suburbs of Chicago — The Mansions of Mountshire and The Mansions Apartments — and will operate them as one community that has been renamed Park Grove Apartments. The community is comprised of 710 units and is located in Mount Prospect, near three major Chicago area expressways and within 5 miles of O'Hare International Airport.
Built in phases from 1978 through 1984, the property consists of 16 three-story and 8 two-story garden-style buildings with brick exteriors. Most units have a patio or balcony.
At closing, Park Grove Apartments was 91.8% occupied at monthly rents averaging $1,103 per unit. The Company expects a 5.8% first year capitalization rate on its investment after allocating 2.7% of rental revenues for management and overhead expenses and before normalized capital expenditures. During the first four years of ownership, the Company expects to invest $14 million to correct deferred maintenance, improve curb appeal, and upgrade individual units.
The Company sold 663 units in its Washington, D.C. region and 672 units in its Chicago region for a total of $157 million. The weighted average unlevered IRR for the dispositions was 11.3%. A gain of $50.5 million will be recorded in the fourth quarter of 2014 and a gain of approximately $27 million will be recorded in the first quarter of 2015.
Apartment communities sold were:
- Woodleaf Apartments — 228 units in Silver Spring, Maryland (Washington, D.C. region) sold on December 19, 2014
- The Manor Apartments — 435 units in Silver Spring, Maryland (Washington, D.C. region) sold on December 29, 2014
- The New Colonies — 672 units in Steger, Illinois (Chicago region) sold on January 26, 2015
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 are described under the heading "Risk Factors" in the Company's Annual Report on Form 10-K and in other filings with the Securities and Exchange Commission and include general economic and local real estate conditions, weather and other conditions that might affect operating expenses, the timely completion of repositioning and new development activities within anticipated budgets, the actual pace of future acquisitions and dispositions, and continued access to capital to fund growth. The Company assumes no obligation to update or supplement forward-looking statements because of subsequent events.
About Home Properties
Home Properties is a publicly traded multifamily real estate investment trust that owns, operates, acquires and repositions apartment communities in suburbs of major metropolitan areas, primarily along the East Coast of the United States. An S&P 400 Company, Home Properties owns and operates 121 communities containing 42,145 apartment units. For more information, please visit the Company's website at www.homeproperties.com
SOURCE Home Properties, Inc.