10-K 1 a12-27446_110k.htm 10-K

Table of Contents

 

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

 

x

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended December 31, 2012

 

o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

COMMISSION FILE NUMBER:  1-13136

 

HOME PROPERTIES, INC.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

 

MARYLAND

 

16-1455126

(State of incorporation)

 

(I.R.S. Employer Identification No.)

 

850 Clinton Square, Rochester, New York 14604

(Address of principal executive offices)(Zip Code)

 

Registrant’s telephone number, including area code:  (585) 546-4900

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Name of each exchange on which registered

Common Stock, $0.01 par value

 

New York Stock Exchange

 

Securities registered pursuant to section 12(g) of the Act: None

 

Indicate by checkmark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes x No o

 

Indicate by checkmark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.  Yes o No x

 

Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x No o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x No o

 

Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K ((§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨

 

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer x

 

Accelerated filer o

Non-accelerated filer o

 

Smaller reporting company o

 

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes o No x

 

The aggregate market value of the 48,992,495 shares of common stock held by non-affiliates was $3,006,179,493 based on the closing sale price of $61.36 per share on the New York Stock Exchange on June 30, 2012.

 

As of February 14, 2013, there were 51,535,219 shares of common stock, $0.01 par value, outstanding.

 

DOCUMENTS INCORPORATED BY REFERENCE

 

Document

 

Part Into Which Incorporated

Proxy Statement for the Annual Meeting of Stockholders to be held on April 30, 2013

 

Part III

 

 

 



Table of Contents

 

HOME PROPERTIES, INC.

 

TABLE OF CONTENTS

 

 

 

 

Page

PART I.

 

 

 

 

 

 

 

 

Item 1.

Business

3

 

Item 1A.

Risk Factors

13

 

Item 1B.

Unresolved Staff Comments

21

 

Item 2.

Properties

21

 

Item 3.

Legal Proceedings

27

 

Item 4.

Mine Safety Disclosures

27

 

 

 

 

PART II.

 

 

 

 

 

 

 

 

Item 5.

Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

28

 

Item 6.

Selected Financial Data

31

 

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

34

 

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

57

 

Item 8.

Financial Statements and Supplementary Data

58

 

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

58

 

Item 9A.

Controls and Procedures

58

 

Item 9B.

Other Information

58

 

 

 

 

PART III.

 

 

 

 

 

 

 

 

Item 10.

Directors, Executive Officers and Corporate Governance

59

 

Item 11.

Executive Compensation

59

 

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters

59

 

Item 13.

Certain Relationships and Related Transactions, and Director Independence

59

 

Item 14.

Principal Accounting Fees and Services

59

 

 

 

 

PART IV.

 

 

 

 

 

 

 

 

Item 15.

Exhibits, Financial Statement Schedules

60

 

Signatures

 

104

 

Exhibit Index

 

105

 

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Table of Contents

 

PART I

 

Forward-Looking Statements

 

This Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  Our actual results could differ materially from those set forth in each forward-looking statement.  Certain factors that might cause such a difference are discussed in this report, including in the section entitled “Forward-Looking Statements” on page 56 of this Form 10-K.

 

Item 1.         Business

 

The Company

 

Home Properties, Inc. (“Home Properties” or the “Company”) was formed in November 1993, as a Maryland corporation and is a self-administered and self-managed real estate investment trust (“REIT”) that owns, operates, acquires, develops and rehabilitates apartment communities.  The Company’s properties are regionally focused, primarily in selected Northeast and Mid-Atlantic regions of the United States.  The Company completed an initial public offering of 5,408,000 shares of common stock (the “IPO”) on August 4, 1994 and is traded on the New York Stock Exchange (“NYSE”) under the symbol “HME”.  The Company is included in Standard & Poor’s MidCap 400 Index.

 

The Company conducts its business through Home Properties, L.P. (the “Operating Partnership”), a New York limited partnership, and a management company, Home Properties Resident Services, Inc. (“HPRS”), which is a Maryland corporation.  At December 31, 2012, the Company held 83.2% (81.8% at December 31, 2011) of the limited partnership units in the Operating Partnership (“UPREIT Units”).

 

Home Properties, through its affiliates described above, as of December 31, 2012, owned and operated 121 communities with 42,635 apartment units (the “Communities” or the “Properties”).

 

The Properties are concentrated in the following market areas:

 

 

 

 

 

Apartment

 

Market Area

 

Communities

 

Units

 

Suburban Washington, D.C.

 

32

 

13,161

 

Baltimore, MD

 

23

 

10,477

 

Suburban New York City

 

28

 

7,225

 

Philadelphia, PA

 

17

 

5,067

 

Boston, MA

 

12

 

3,303

 

Chicago, IL

 

7

 

2,566

 

Southeast Florida

 

2

 

836

 

 

 

 

 

 

 

Totals

 

121

 

42,635

 

 

The Company’s mission is to maximize long-term shareholder value by acquiring, repositioning, developing and managing market-rate apartment communities while enhancing the quality of life for its residents and providing employees with opportunities for growth and accomplishment.  Our vision is to be a prominent owner and manager of market-rate apartment communities, located in selected high barrier, high growth, East Coast markets.  The areas we have targeted for growth are the suburbs of Baltimore, Boston, New York City, Philadelphia and Washington, D.C.  We expect to maintain or grow portfolios in markets that profitably support our mission as economic conditions permit.

 

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The Company (continued)

 

The Company’s long-term business strategies include:

 

·                  proactively managing and improving its communities to achieve increased net operating income;

 

·                  acquiring additional apartment communities with attractive returns at prices that provide a positive spread over the Company’s long-term cost of capital;

 

·                  limited development of new apartment communities on entitled land, on land adjacent to existing owned communities, and, where there are density opportunities, to replace existing garden apartments with mid-rise structures;

 

·                  disposing of properties that have reached their potential, are less efficient to operate, or are located in markets where growth has slowed to a pace below that of the markets targeted for acquisition; and

 

·                  maintaining a strong and flexible capital structure with cost-effective access to the capital markets.

 

Structure

 

The Company was formed in November 1993 as a Maryland corporation and is the general partner of the Operating Partnership.  On December 31, 2012, it held an 83.2% partnership interest in the Operating Partnership comprised of: a 1.0% interest as sole general partner; and an 82.2% limited partner interest through its wholly owned subsidiary, Home Properties I, LLC, which owns 100% of Home Properties Trust, which is the limited partner.  The holders of the remaining 16.8% of the UPREIT Units are certain individuals and entities who received UPREIT Units as consideration for their interests in entities owning apartment communities purchased by the Operating Partnership, including certain officers of the Company.

 

The Operating Partnership is a New York limited partnership formed in December 1993.  Holders of UPREIT Units in the Operating Partnership may redeem an UPREIT Unit for one share of the Company’s common stock or cash equal to the fair market value at the time of the redemption, at the option of the Company.  Management expects that it will continue to utilize UPREIT Units as a form of consideration for a portion of its acquisition properties when it is economical to do so.

 

HPRS is wholly owned by the Operating Partnership, and as a result, the accompanying consolidated financial statements include the accounts of both companies.  HPRS is a taxable REIT subsidiary under the Tax Relief Extension Act of 1999.

 

In September 1997, Home Properties Trust (“QRS”) was formed as a Maryland real estate trust and as a qualified REIT subsidiary.  The QRS is wholly owned by Home Properties I, LLC which is owned 100% by the Company.  The QRS is a limited partner of the Operating Partnership and holds all of the Company’s interest in the Operating Partnership, except for the 1% held directly by the Company as sole general partner.

 

The Company currently has approximately 1,200 employees and its executive offices are located at 850 Clinton Square, Rochester, New York 14604.  Its telephone number is (585) 546-4900.

 

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Operating Strategies

 

The Company will continue to focus on enhancing long-term investment returns by:

 

·                  acquiring apartment communities and repositioning them for long-term growth at prices that provide a positive spread over the Company’s long-term cost of capital;

 

·                  complementing its core acquisition and repositioning strategy by developing a limited number of new apartment units;

 

·                  recycling assets by disposing of properties in low growth markets and those that have reached their potential or are less efficient to operate due to size or remote location;

 

·                  balancing its decentralized property management philosophy with the efficiencies of centralized support functions and accountability including rent optimization and volume purchasing;

 

·                  enhancing the quality of living for the Company’s residents by improving annually the service and physical amenities available at each community in an environmentally responsible manner;

 

·                  adopting new technology so that the time and cost spent on administration can be minimized while the time spent attracting and serving residents can be maximized;

 

·                  continuing to utilize its written “Pledge” of customer satisfaction that is the foundation on which the Company has built its brand recognition; and

 

·                  focusing on reducing expenses while constantly improving the level of service to residents.

 

The Company has a strategy of acquiring and repositioning mature C to B- apartment properties.  Since its 1994 IPO, the Company has acquired and repositioned 219 communities, containing more than 61,000 units.  The rehabilitation and revitalization process targets a minimum 10% return on repositioning investments.  It is expected that capital expenditures in 2013 on repositioning investments will decrease slightly from 2012 levels, which were the highest in the Company’s history, as residents demonstrated a preference for an upgraded apartment at a higher monthly rent in a recovering economic environment.  Extensive experience and expertise in repositioning has helped the Company build significant internal design and construction management skills.  The complete repositioning of a community can take place over a five to seven year period.  The comprehensive process typically begins with improvements in landscaping, signage and common areas.  Exterior improvements increase curb appeal and marketability of the property.  Deferred maintenance is corrected, which can include new HVAC systems, roofs, balconies and windows.  At many properties, community centers and swimming pools are added or upgraded.  Apartment interiors are renovated when residents move out, with the most significant investments made in upgrading kitchens and baths.  Complete remodeling of dated kitchens and bathrooms typically includes new appliances, flooring, counters, cabinets, lighting, tile, fixtures, sinks, bathtubs and toilets.  It may include the removal of kitchen walls to open up the living area.  When feasible, in-unit washers and dryers are added. Repositioning efforts upgrade properties that were C to B- level when acquired to the B to B+ level, which, over time, significantly increases the property’s rental income, net operating income and market value.

 

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Acquisition, Development and Sale Strategies

 

The Company’s strategy is to grow primarily through acquisitions in the suburbs of major metropolitan markets that are near public transportation and major highways, have significant barriers to new construction, limited new apartment supply, easy access to the Company’s headquarters and enough apartments available for acquisition to achieve a critical mass.  Targeted markets also possess other characteristics, including acquisition opportunities below replacement costs, a mature housing stock, high average single-family home prices, a favorable supply/demand relationship, stable or moderate job growth, reduced vulnerability to economic downturns and large prime renter populations including immigrants and young adults in their twenties and early thirties.  The Company currently expects its growth will be focused primarily within suburban sub-markets of selected metropolitan areas within the Northeast and Mid-Atlantic regions of the United States where it has already established a presence.  The largest metropolitan areas the Company will focus on include Baltimore, Boston, New York City, Philadelphia and Washington, D.C.  The Company may expand into new markets that possess the characteristics described above although it has no current plans to do so.  Continued geographic specialization is expected to have a greater impact on operating efficiencies versus widespread accumulation of properties.  The Company will continue to pursue the acquisition of individual properties as well as multi-property portfolios.  It may also consider strategic investments in other apartment companies, as well as strategic alliances, such as joint ventures.

 

During 2012, the Company acquired three communities with a total of 2,018 units for an aggregate consideration of $298 million, or an average of approximately $148,000 per apartment unit.  The weighted average expected first year capitalization rate for the acquired communities was 5.9%.  Capitalization rate (“cap rate”) is defined as the rate of interest used to convert the first year expected net operating income (“NOI”) less a 2.7% management fee into a single present value.  NOI is defined by the Company as rental income and property other income less operating and maintenance expenses.  Two acquisitions were in suburban Washington, D.C.; and one was in the suburb of Baltimore.

 

The Company believes that it will have the opportunity to make acquisitions during 2013 and has projected $200 million to $300 million in purchases for the year.

 

The Company has the ability to develop new market-rate communities.  It plans to engage in development activity only in markets in which it is currently doing business in order to add net asset value and supplement future earnings and growth.  It expects to develop new apartment communities on entitled land and on land adjacent to existing Properties, as well as to increase the density of units at some communities currently owned.  The Company plans to continue construction of one project started in late 2011 and another started in the second quarter of 2012.  The Company plans to spend approximately $120 million on development in 2013.  There are no additional construction starts planned for 2013.

 

After not selling any communities in both 2010 and 2011, the Company closed on the sale of six communities in 2012 with a total of 1,596 units for approximately $160 million, resulting in a weighted average unlevered internal rate of return (“IRR”) of 14.1% over the ownership period of these six communities.  IRR is defined as the discount rate at which the present value of the future cash flows of the investment is equal to the cost of the investment.  The Company has specifically identified additional communities for sale in 2013 and will continue to evaluate the sale of its communities.  The Company expects to dispose of between $200 million and $300 million of properties for the year.  Typically, a property will be targeted for sale if management is of the opinion that it has reached its potential or if it is located in a slower growth market or is less efficient to operate.  After many years of being a net acquirer, for 2013 the Company is looking to create a better balance, with an equal range targeted of acquisitions and dispositions.  Property sale proceeds add another significant source of capital, reducing reliance on debt and equity sources.

 

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Table of Contents

 

Financing and Capital Strategies

 

The Company intends to continue to adhere to the following financing policies:

 

·                  maintaining a ratio of debt-to-total market capitalization (total debt of the Company as a percentage of the value (using the Company’s internally calculated Net Asset Value (“NAV” per share) of outstanding diluted common stock, the UPREIT Units, plus total debt)) of approximately 42% or less;

 

·                  utilizing primarily fixed rate debt;

 

·                  varying debt maturities to avoid significant exposure to interest rate changes upon refinancing; and

 

·                  maintaining a line of credit so that it can respond quickly to acquisition opportunities.

 

On December 31, 2012, the Company’s debt was approximately $2.8 billion and the debt-to-total market capitalization ratio was 42.2% based on the year-end closing price of the Company’s common stock of $61.31.  The weighted average interest rate on the Company’s mortgage debt as of December 31, 2012 was 5.06% and the weighted average maturity was approximately five years.  Debt maturities are staggered, with an average 10.9% of loans maturing each of the next nine years.  The range is from a high of 22.7% in 2016 (includes line facility bank term loan) to a low of 2.9% in 2014.  As of December 31, 2012, the Company had a $275 million unsecured line of credit facility with M&T Bank and U.S. Bank National Association (acting as joint lead banks) and nine other participating commercial banks with $162.5 million outstanding on the line of credit.

 

To further strengthen the Company’s balance sheet and increase its financial flexibility, during 2012 the Company pursued certain capital market initiatives as follows:

 

·                  The Company increased the level of the value of unencumbered properties in relationship to the total property portfolio from 33% to 39%.  This higher level adds flexibility, allowing the Company to place additional unsecured financing if desired, or increase secured borrowing on unencumbered assets.

 

·                  The Company benefits from its multifamily focus as the Government Sponsored Enterprises (“GSEs”) Fannie Mae and Freddie Mac are still very active lending to apartment owners.  However, no secured debt was added during 2011 or 2012, except for one small loan assumed in conjunction with a property acquisition.  The Company paid off approximately $42 million of mortgage debt in 2012 with a weighted average interest rate of 6.79%.

 

·                  The Company sold 2.4 million shares of common stock through its at-the-market (“ATM”) equity offering program, generating $145 million in net proceeds.

 

·                  In 2011, the Company entered into a five-year unsecured term loan for $250 million that bears monthly interest at 1.3% above the one-month LIBOR.  On July 19, 2012, the Company entered into interest rate swap agreements that effectively convert the variable LIBOR portion of this loan to a fixed rate, resulting in an effective rate of 1.99% as of December 31, 2012.

 

·                 With a focus of adding unsecured debt, in June 2012, the Company issued a private placement note in the amount of $50 million with a seven-year term at a fixed interest rate of 4.16%.

 

The capital market initiatives described above allowed the Company to achieve stronger key debt and credit metrics at December 31, 2012 versus December 31, 2011 as follows:

 

·                  total debt to value was reduced to 45.2% from 46.9%;(1)

 

·                  total secured debt to value was reduced to 35.0% from 39.7%;(1)

 

·                  interest coverage ratio was increased from 2.5 times to 3.0 times;

 

·                  fixed charge coverage ratio was increased from 2.4 times to 2.9 times; and

 

·                  value of unencumbered asset pool was increased from $1.9 billion to $2.7 billion; or from 33.3% to 39.0% of total value, respectively.

 


(1)         As calculated under the terms of the line of credit facility.

 

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Table of Contents

 

Financing and Capital Strategies (continued)

 

For 2013, the Company plans to continue to increase the level of the value of unencumbered properties to over 40% of the portfolio, maintaining the debt-to-total market capitalization ratio at a level equal to or slightly less than the level at December 31, 2012 and issuing shares under the current or future ATM programs.

 

Management expects to continue to fund a portion of its continued growth by taking advantage of its UPREIT structure and using UPREIT Units as currency in acquisition transactions.  During 2010, the Company issued $4.8 million worth of UPREIT Units as partial consideration for one acquired property.  During 2011 and 2012, no UPREIT Units were used as consideration for acquired properties.  It is difficult to predict the level of demand from sellers for this type of transaction.  In periods when the Company’s stock price is trading at a discount to estimated NAV, it is unlikely that management would engage in UPREIT transactions.

 

In 1997, the Company’s Board of Directors (the “Board”) approved a stock repurchase program under which the Company can repurchase shares of its outstanding common stock and UPREIT Units.  Shares or units may be repurchased through the open market or in privately-negotiated transactions.  The Company’s strategy is to opportunistically repurchase shares at a discount to its estimated NAV, thereby continuing to build value for long-term shareholders.  The last year where the Company repurchased any shares under this program was 2008.  At December 31, 2012, there was approval remaining to purchase 2.3 million shares.  Management does not anticipate making additional share repurchases in 2013.

 

Competition

 

The Company’s properties are primarily located in developed areas where there are other multifamily properties which directly compete for residents.  There is also limited competition from single family homes and condominiums for sale or rent.  The competitive environment may have a detrimental effect on the Company’s ability to lease apartments at existing and at newly developed properties, as well as on rental rates.

 

In addition, the Company competes with other real estate investors in seeking property for acquisition and development.  These competitors include pension and investment funds, insurance companies, private investors, local owners and developers, and other apartment REITs.  This competition could increase prices for properties that the Company would like to purchase and impact the Company’s ability to achieve its long-term growth targets.

 

The Company believes, however, that it is well-positioned to compete effectively for both residents and properties as a result of its:

 

·                  focus on service and resident satisfaction, as evidenced by both The Home Properties Pledge, which provides a money-back service guarantee and lease flexibility, and by its resident turnover ratio which is consistently below the industry average;

 

·                  ability to issue UPREIT Units in purchase transactions, which provides sellers with the opportunity to defer taxes; and

 

·                 unique repositioning strategy that differentiates the Company from its competitors.

 

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Table of Contents

 

Market Environment

 

The markets in which Home Properties operates could be characterized long term as stable, with moderate levels of job growth.  After a recessionary period, starting in 2010 and expected to continue through 2013, many regions of the United States have been experiencing varying degrees of economic recovery resulting in improving job growth for both the country as a whole and the Company’s markets.

 

In 2011, the Company’s markets job growth was slightly behind the U.S. average with 0.7% job growth versus 1.3%, respectively.  In 2012, the Company’s markets job growth continued to lag the U.S. average with a 1.1% growth rate versus 1.4%.  However, the unemployment rate for the Company’s markets of 6.9% continues to compare favorably to the country average of 7.6%.  The Company’s Northern VA/DC market continues to experience the lowest unemployment rate of 5.2% at December 31, 2012.  This market represents 30.9% of the Company’s total apartment unit count.  These favorable comparisons help explain why the Company’s markets helped the Company outperform many of its public company multifamily peers on a measurement of same store NOI growth in both 2011 and 2012, producing the fourth best same store NOI growth out of twelve peers each year.

 

New construction in the Company’s markets is low relative to the existing multifamily housing stock and compared to other regions of the country.  In 2012, Home Properties’ markets represented 27.8% of the total estimated existing U.S. multifamily housing stock, but only 18.0% of the country’s estimated new supply of multifamily housing units.

 

The information on the “Market Demographics and Multifamily Supply and Demand” tables on pages 10 and 11 were compiled by the Company from the sources indicated on the tables.  The methods used include estimates and, while the Company feels that the estimates are reasonable, there can be no assurance that the estimates are accurate.  There can also be no assurance that the historical information included on the tables will be consistent with future trends.

 

An analysis of multifamily supply compared to multifamily demand can indicate whether a particular market is tightening, softening or in equilibrium.  The fourth to last column in the “Multifamily Supply and Demand” table on page 11 reflects current estimated net new multifamily supply as a percentage of new multifamily demand for the Company’s markets and the United States.  For both the Company’s markets and the country as a whole, net new supply is low compared to expected new demand.  For the country, net new supply represents 66.5% of net new demand, creating an environment where both pricing and/or occupancy will remain stable with room for some improvement.  The relationship in the Company’s markets is much better, where net new supply after obsolescence is expected to meet only 27.0% of the expected increasing demand for rental housing.

 

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Table of Contents

 

Market Demographics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Multifamily

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2012

 

Units as a %

 

2012

 

 

 

% of

 

2012

 

2012

 

2012 vs. 2011

 

December 2012

 

Median

 

of Total

 

Multifamily

 

 

 

Company

 

Number of

 

Job

 

Job Growth

 

Unemployment

 

Home

 

Housing Units

 

Housing

 

CBSA Market Area

 

Units

 

Households

 

Growth

 

% Change

 

Rate

 

Value

 

Stock (5)

 

Stock (6)

 

Northern VA/DC

 

30.9

%

2,124,902

 

30,200

 

1.0

%

5.2

%

359,142

 

29.3

%

663,573

 

Baltimore, MD

 

24.6

%

1,045,893

 

11,700

 

0.9

%

7.0

%

262,126

 

19.6

%

223,481

 

Suburban New York City (1)

 

16.9

%

6,986,610

 

118,700

 

1.4

%

8.5

%

404,713

 

37.6

%

2,857,906

 

Eastern PA (2)

 

11.9

%

2,600,019

 

28,200

 

0.9

%

8.4

%

210,846

 

14.9

%

416,740

 

Boston, MA (3)

 

7.7

%

1,994,716

 

53,800

 

2.0

%

5.9

%

564,405

 

21.3

%

462,736

 

Chicago, IL

 

6.0

%

3,508,312

 

34,700

 

0.8

%

8.6

%

203,997

 

24.8

%

949,813

 

Southeast Florida (4)

 

2.0

%

2,115,417

 

1,200

 

0.1

%

8.1

%

171,076

 

39.0

%

969,904

 

Home Properties Markets

 

100.0

%

20,375,869

 

278,500

 

1.1

%

6.9

%

328,277

 

29.4

%

6,544,153

 

United States

 

 

 

118,582,568

 

1,857,000

 

1.4

%

7.6

%

168,275

 

17.6

%

23,573,720

 

 


(1)         Suburban New York City is defined for this report as New York-Northern New Jersey-Long Island, NY-NJ-PA Core Based Statistical Area (CBSA).

(2)         Eastern Pennsylvania is defined for this report as Philadelphia-Camden-Wilmington, PA-NJ-DE-MD CBSA & Allentown-Bethlehem-Easton PA-NJ CBSA.

(3)         Boston, MA is defined for this report as Boston-Cambridge-Quincy, MA CBSA & Portland-South Portland-Biddeford, ME CBSA.

(4)         Southeast Florida is defined for this report as Miami-Fort Lauderdale-Miami Beach, FL CBSA.

(5)         Based on The Nielsen Company 2012 estimates calculated from the 2000 U.S. Census figures.

(6)         2012 Multifamily Housing Stock is from The Nielsen Company estimates of five or more units based on the 2000 U.S. Census.

 

Sources:  Bureau of Labor Statistics (BLS); The Nielsen Company (formerly Claritas); US Census Bureau - Manufacturing & Construction Div.

Data collected is data available as of January 30, 2013 and in some cases may be preliminary.

BLS is the principal fact-finding agency for the Federal Government in the broad field of labor economics and statistics.

The Nielsen Company is a leading provider of precision marketing solutions and related products and services.

U.S. Census Bureau’s parent Federal agency is the U.S. Dept. of Commerce, which promotes American business and trade.

 

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Multifamily Supply and Demand

 

 

 

 

 

 

 

 

 

 

 

Estimated

 

Estimated

 

 

 

 

 

 

 

 

 

 

 

 

 

Estimated

 

Net New

 

Net New

 

 

 

 

 

 

 

Estimated

 

 

 

Estimated

 

2012

 

Multifamily

 

Multifamily

 

 

 

 

 

 

 

2012

 

Estimated

 

2012

 

New

 

Supply as a

 

Supply as a

 

 

 

Expected

 

 

 

New

 

2012

 

Net New

 

Multifamily

 

% of New

 

% of

 

Expected

 

Excess

 

 

 

Supply of

 

Multifamily

 

Multifamily

 

Household

 

Multifamily

 

Multifamily

 

Excess

 

Revenue

 

CBSA Market Area

 

Multifamily (7)

 

Obsolescence (8)

 

Supply (9)

 

Demand (10)

 

Demand

 

Stock

 

Demand (11)

 

Growth (12)

 

Northern VA/DC

 

10,450

 

3,318

 

7,132

 

5,902

 

120.8

%

1.1

%

(1,230

)

(0.2

)%

Baltimore, MD

 

1,945

 

1,117

 

828

 

1,530

 

54.1

%

0.4

%

702

 

0.3

%

Suburban New York City (1)

 

17,160

 

14,290

 

2,870

 

29,769

 

9.6

%

0.1

%

26,899

 

0.9

%

Eastern PA (2)

 

3,300

 

2,084

 

1,216

 

2,803

 

43.4

%

0.3

%

1,587

 

0.4

%

Boston, MA (3)

 

4,145

 

2,314

 

1,831

 

7,643

 

24.0

%

0.4

%

5,812

 

1.3

%

Chicago, IL

 

3,145

 

4,749

 

(1,604

)

5,740

 

(27.9

)%

(0.2

)%

7,344

 

0.8

%

Southeast Florida (4)

 

7,053

 

4,850

 

2,203

 

312

 

706.1

%

0.2

%

(1,891

)

(0.2

)%

Home Properties Markets

 

47,198

 

32,722

 

14,476

 

53,699

 

27.0

%

0.2

%

39,223

 

0.6

%

United States

 

262,762

 

117,869

 

144,893

 

217,997

 

66.5

%

0.6

%

73,104

 

0.3

%

 


(1)-(6) see footnotes prior page

 

(7)         Estimated 2012 New Supply of Multifamily =  Multifamily permits (2012 figures U.S. Census Bureau, Mfg. & Constr. Div., 5+ permits only) adjusted by the average % of permits resulting in a construction start (estimated at 95%).

(8)         Estimated 2012 Multifamily Obsolescence = Estimated 2012 Multifamily Housing Stock multiplied by the estimated % of obsolescence (0.5%).

(9)         Estimated 2012 Net New Multifamily Supply = Estimated 2012 New Supply of Multifamily - Estimated 2012 Multifamily Obsolescence.

(10)  Estimated 2012 New Multifamily Household Demand = 2012 job growth (Nonfarm, not seasonally adjusted payroll employment figures) (12/31/2011-12/31/2012) multiplied by the expected % of new household formations resulting from new jobs (66.7%) and the % of multifamily households in each market (based on Nielsen estimates).

(11)  Expected Excess Demand = Estimated 2012 New Multifamily Household Demand - Estimated 2012 Net New Multifamily Supply.

(12)  Expected Excess Revenue Growth = Expected Excess Demand divided by 2012 Multifamily Housing Stock.  This percentage is expected to reflect the relative impact that changes in the supply and demand for multifamily housing units will have on occupancy rates and/or rental rates in each market, beyond the impact caused by broader economic factors, such as inflation and interest rates.

 

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Table of Contents

 

Environmental Matters

 

As a current or prior owner, operator and developer of real estate, the Company is subject to various federal, state and local environmental laws, regulations and ordinances and also could be liable to third parties as a result of environmental contamination or noncompliance at its properties.  See the discussion under the caption, “We may incur costs due to environmental contamination or non-compliance that could adversely affect our financial results and reputation” in Item 1A, Risk Factors, for information concerning the potential effect of environmental regulations on the Company’s operations.

 

Available Information

 

The Company’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and other reports required by Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended (collectively, the “Reports”), are electronically filed with the Securities and Exchange Commission (“SEC”).  The public may read and copy any materials the Company files with the SEC at the SEC’s Public Reference Room at 100 F Street NE, Washington, DC 20549-2521.  Please call the SEC at 1-800-732-0330 for further information on the operation of the Public Reference Room.  The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, which are available without charge.  In addition, you can read similar information about the Company at the offices of the NYSE at 20 Broad Street, New York, NY 10005.

 

Company Website

 

The Company maintains an Internet website at www.homeproperties.com.  The Company provides free-of-charge access to its Reports filed with the SEC, and any amendments thereto, through this website.  These Reports are available as soon as reasonably practicable after the Reports are filed electronically with the SEC and are found under “Investors/SEC Filings.”  In addition, a paper copy of the Reports filed with the SEC may be obtained at no charge by contacting the Corporate Secretary, Home Properties, Inc., 850 Clinton Square, Rochester, New York 14604.

 

Current copies of the Company’s Code of Business Conduct and Ethics, Code of Ethics for Senior Financial Officers with Certification, Corporate Governance Guidelines and Charters for the Audit, Compensation, Corporate Governance/Nominating and Real Estate Investment Committees of the Board are also available on the Company’s website under the heading “Investors/Corporate Overview/Governance Documents Highlights.”  A copy of these documents is also available at no charge upon request addressed to the Corporate Secretary at Home Properties, Inc., 850 Clinton Square, Rochester, New York 14604.

 

The reference to our website does not incorporate by reference the information contained in the website and such information should not be considered a part of this report.

 

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Item 1A.  Risk Factors

 

As used in this section, references to “we” or “us” or “our” refer to the Company, the Operating Partnership, and HPRS, taken as a whole.

 

Our business is subject to uncertainties and risks.  Please carefully consider the risk factors described below, which apply to Home Properties, the Operating Partnership, and HPRS, in addition to other risks and factors set forth in this Form 10-K.  Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business or prospects.  The risk factors we describe contain or refer to certain forward-looking statements.  You should review the explanation of the limitations of forward-looking statements contained in the section entitled “Forward-Looking Statements” on page 56 of this Form 10-K.

 

Real Estate Investment Risks

 

We are subject to risks that are part of owning residential real estate.

 

Real property investments are subject to varying degrees of risk.  If our communities do not generate revenues sufficient to meet operating expenses, debt service and capital expenditures, our cash flow and ability to make distributions to our stockholders will be adversely affected.  A multifamily apartment community’s revenues and value may be adversely affected by general economic conditions (including unemployment); local and regional economic conditions (including population shifts); local and regional real estate considerations (such as oversupply of or reduced demand for apartments); changes in home ownership or condominium affordability; the perception by prospective residents of the convenience and attractiveness of the communities or neighborhoods in which they are located and the quality of local schools and other amenities; and increased operating costs (including real estate taxes and utilities). Certain significant fixed expenses are generally not reduced when circumstances cause a reduction in income from a community.

 

We depend on rental income for cash flow to pay expenses and make distributions.

 

We are dependent on rental income from our multifamily properties to pay operating expenses, debt service and capital expenditures, and in order to generate cash to enable us to make distributions to our stockholders.  If we are unable to attract and retain residents or if our residents are unable, due to an adverse change in the economic condition of the region or otherwise, to pay their rental obligations, our financial results and our ability to make expected distributions will be adversely affected.  In addition, the weather and other factors outside of our control can result in an increase in the operating expenses for which we are responsible.

 

Attractive acquisitions may not be available and acquisitions we may be able to make may fail to meet expectations.

 

We plan to continue to selectively acquire apartment communities that meet our investment criteria.  We expect that other real estate investors, including insurance companies, pension funds, other REITs and other well-capitalized investors will compete with us to acquire existing properties and to develop new properties.  This competition could increase prices for properties of the type we would likely pursue and adversely affect our growth and profitability.  If we are able to make acquisitions, there are risks that those acquisitions will perform less favorably than we expect.  Our estimates of future income, expenses and the costs of improvements or redevelopment that are necessary to allow us to operate an acquired property as originally intended may prove to be inaccurate.  Other acquisition risks include environmental issues, structural issues, competition, economic submarket changes and employment variables.

 

Real estate investments are relatively illiquid, and we may not be able to respond to changing conditions quickly.

 

Real estate investments are relatively illiquid and, therefore, we have limited ability to adjust our portfolio quickly in response to changes in economic or other conditions.  In addition, the prohibition in the Internal Revenue Code (the “Code”) on REITs holding property for sale and related regulations may affect our ability to sell properties without adversely affecting distributions to stockholders.  A number of our properties were acquired using UPREIT Units and twelve of those properties are subject to certain agreements which may restrict our ability to sell such properties in transactions that would create current taxable income to the former owners.

 

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Table of Contents

 

Real Estate Investment Risks (continued)

 

Competition could limit our ability to lease apartments or increase or maintain rents.

 

Our apartment communities compete with other housing alternatives to attract residents, including other rental apartments, condominiums and single-family homes that are available for rent, as well as new and existing condominiums and single-family homes for sale.  Competitive residential housing in a particular area could adversely affect our ability to lease apartment units and to increase or maintain rental rates.  The recent challenges in the credit and housing markets have increased single-family housing inventory that may compete with our properties.

 

Repositioning and development risks could affect our profitability.

 

A key component of our strategy is to acquire properties and to reposition them for long-term growth.  In addition, we have developed and are in the process of developing new apartment communities.  We plan to continue to selectively expand our development activities.  Development projects generally require various governmental and other approvals, which have no assurance of being received.  Our repositioning and development activities generally entail certain risks, including the following:

 

·                  funds may be expended and management’s time devoted to projects that may not be completed due to a variety of factors, including without limitation, the inability to obtain necessary zoning or other approvals;

 

·                  construction costs of a project may exceed original estimates, possibly making the project economically unfeasible or the economic return on a repositioned property less than anticipated;

 

·                  projects may be delayed due to delays in obtaining necessary zoning and other approvals, adverse weather conditions, labor shortages, or other unforeseen complications;

 

·                  occupancy rates and rents at a completed development project or at a repositioned property may be less than anticipated; and

 

·                  the operating expenses at a completed development may be higher than anticipated.

 

If any of these risks materialized, the effect may negatively impact our financial results and reduce the funds available for distribution to our stockholders.  Further, the repositioning and development of properties is also subject to the general risks associated with real estate investments.

 

Short-term leases expose us to the effects of declining market conditions.

 

Virtually all of the leases for our properties are short-term leases (generally, one year or less).  Typically, our residents can leave after the end of a one-year lease term.  As a result, our rental revenues are impacted by declines in market conditions more quickly than if our leases were for longer terms.

 

An increase in operating expenses, including real estate taxes, would negatively affect our financial results.

 

Unanticipated increases in real estate taxes and other unanticipated or increased operating expenses cannot always be passed through to residents in the form of higher rents and may adversely affect financial results and our ability to make expected distributions.

 

A significant uninsured property or liability loss could adversely affect us in a material way.

 

The Company carries comprehensive liability, fire, extended and rental loss insurance for each of our properties.  There are however certain types of extraordinary losses, such as losses for certain natural catastrophes and relating to environmental contamination, for which the Company may not have insurance coverage.  If an uninsured loss occurred, we could incur significant expense.  As a result of a catastrophic uninsured event impacting an entire

 

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Table of Contents

 

Real Estate Investment Risks (continued)

 

property, we could lose our investment in and cash flow from, the affected property, and could be required to repay any indebtedness secured by that property and related taxes and other charges.

 

The Company is subject to increased exposure to economic and other competitive factors due to concentration of its Properties in certain markets.

 

At December 31, 2012, approximately 30.9%, 24.6%, 16.9% and 11.9% (on an apartment unit basis) of the Company’s Properties are located in the Washington, D.C., Baltimore, Maryland, suburban New York City and Philadelphia geographic areas.  The Company’s current strategy is to reduce its concentration in the Washington, D.C. market to below 30%.  However, geographic concentration could present risks if local property market performance falls below expectations as a result of deteriorating economic conditions or other factors.  This could have a negative impact on the Company’s financial condition and results of operations, which could adversely affect our ability to make expected distributions.

 

Insurance costs and policy deductibles expose us to unpredictable expenses which may be material.

 

The Company’s general liability, property and workers’ compensation policies provide for deductibles and self-insured retention amounts.  These deductibles and self-insured retention amounts expose the Company to potential uninsured losses.  Management believes that this exposure is justified by savings in insurance premium amounts and, in some cases, was necessary in order for the Company to secure coverage.  Depending on the level of claims experienced, insurance coverage may become difficult to obtain at the current premium and expense levels.

 

Changes in applicable laws, or noncompliance with applicable laws, could adversely affect our operations or expose us to liability.

 

We must operate our properties in compliance with numerous federal, state and local laws and regulations, including landlord tenant laws and other laws generally applicable to business operations.  Noncompliance with laws could expose us to liability.

 

Compliance with changes in:  (i) laws increasing the potential liability for environmental conditions existing on properties or the restrictions on discharges or other conditions; (ii) rent control or rent stabilization laws; or (iii) other governmental rules and regulations or enforcement policies affecting the use and operation of our communities, including changes to building codes and fire and life-safety codes, may result in lower revenue growth or significant unanticipated expenditures.

 

We may incur costs and increased expenses to repair property damage resulting from inclement weather.

 

In every market except Florida, we are exposed to risks associated with inclement winter weather, including increased costs for the removal of snow and ice.  In addition, in all of our markets, we have exposure to severe storms which also could increase the need for maintenance and repair of our communities.

 

We may incur increased energy and other costs resulting from the climate change regulations.

 

The current concerns about climate change have resulted in various treaties, laws and regulations which are intended to limit carbon emissions.  The Company believes these laws being enacted or proposed may cause energy and waste removal costs at our properties to increase, but we do not expect the direct impact of these increases to be material to our results of operations.  Increased costs relating to energy either would be the responsibility of our residents directly or in large part may be passed through by us to our residents through the utility recovery programs.  We may be able to pass increased waste removal costs on to our residents in the form of increased rental rates.  If this is not possible, it is still not expected that these additional costs would affect the Company’s financial performance in any material way.

 

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Table of Contents

 

Real Estate Investment Risks (continued)

 

We may incur costs due to environmental contamination or non-compliance that could adversely affect our financial results and reputation.

 

Under various federal, state and local environmental laws, regulations and ordinances, we may be required, regardless of knowledge or responsibility, to investigate and remediate the effects of hazardous or toxic substances at our properties and may be held liable under these laws or common law to a governmental entity or to third parties for property, personal injury or natural resources damages and for investigation and remediation costs incurred as a result of the contamination.  These damages and costs may be substantial.  The presence of such substances, or the failure to properly remediate the contamination, may adversely affect our ability to borrow against, sell or rent the affected property.

 

The development, construction and operation of our communities are subject to regulations and permitting under various federal, state and local laws, regulations and ordinances, which regulate matters including wetlands protection, storm water runoff and wastewater discharge.  Noncompliance with such laws and regulations may subject us to fines and penalties.  We do not currently anticipate that we will incur any material liabilities as a result of noncompliance with these laws.

 

Certain federal, state and local laws, regulations and ordinances govern the removal, encapsulation or disturbance of asbestos containing materials (“ACMs”) when such materials are in poor condition or in the event of renovation or demolition of a building.  These laws and the common law may impose liability for release of ACMs and may allow third parties to seek recovery from owners or operators of real properties for personal injury associated with exposure to ACMs.  ACMs are present at some of our communities.  We implement an operations and maintenance program at each of the communities at which ACMs are detected.  We do not currently anticipate that we will incur any material liabilities as a result of the presence of ACMs at our communities.

 

We are aware that some of our communities have or may have lead paint and have implemented an operations and maintenance program at each of those communities to contain, remove or test for lead paint to limit the exposure of our residents.  At some of our properties, we are required by federal law to provide lead-based paint disclosures to our residents.  Failure to comply with the federal notification requirement can result in a penalty.  We do not currently anticipate that we will incur any material liabilities as a result of the presence of lead-based paint at our communities or the failure to provide disclosures.

 

Mold growth may occur when excessive moisture accumulates in buildings or on building materials, particularly if the moisture problem remains undiscovered or is not addressed over a period of time.  Although the occurrence of mold at multifamily and other structures, and the need to remediate such mold, is not a new phenomenon, there has been increased awareness in recent years that certain molds may in some instances lead to adverse health effects, including allergic or other reactions.  This has resulted in an increasing number of lawsuits against owners and managers of multifamily properties.  Insurance companies have reacted by excluding mold-related claims from existing policies and pricing mold endorsements at prohibitively high rates.  We have adopted programs designed to minimize any impact mold might have on our residents or the property.  However, if mold should become an issue in the future, our financial condition or results of operations may be adversely affected.

 

All of the Properties and all of the communities that we are currently developing have been subjected to at least a Phase I or similar environmental assessment, which generally does not involve invasive techniques such as soil or ground water sampling.  These assessments, together with subsurface assessments conducted on some of our properties, have not revealed, and we are not otherwise aware of, any environmental conditions that we believe would have a material adverse effect on our business, assets, financial condition or results of operation.  There is no assurance that Phase I assessments would reveal all environmental liabilities.  In addition, environmental conditions not known to the Company may exist now or in the future which could result in liability to the Company for remediation or fines or to third parties for property or personal injury damages, either under existing laws and regulations or future changes to such requirements.

 

We occasionally have been involved in managing, leasing and operating various properties for third parties.  Consequently, we may be considered to have been an operator of such properties and, therefore, potentially liable for removal or remediation costs or other potential costs which could relate to hazardous or toxic substances.  We are not aware of any material environmental liabilities with respect to properties managed by us for such third parties.

 

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Table of Contents

 

Real Estate Financing Risks

 

We are subject to general risks related to debt.

 

We are subject to the customary risks associated with debt financing.  For example, if a property is mortgaged to secure payment of indebtedness and we are unable to meet its debt service obligations, the property could be foreclosed upon.  This could adversely affect our cash flow and, consequently, the amount available for distributions to stockholders.

 

We may not be able to obtain refinancing at favorable rates.

 

Because a significant amount of our financing is not fully self-amortizing, we anticipate that only a portion of the principal of our indebtedness will be repaid prior to maturity.  So, we will need to refinance debt.  Accordingly, there is a risk that we will not be successful in refinancing existing indebtedness or that the terms of such refinancing will not be as favorable as the terms of the existing indebtedness.  We aim to stagger our debt maturities with the goal of minimizing the amount of debt which must be refinanced in any year.

 

As of December 31, 2012, we had approximately $2.2 billion of mortgage debt, a significant portion of which is subject to balloon payments.  We do not expect to have cash flows from operations to make all of these balloon payments.  The mortgage debt matures as follows:

 

2013

 

$

190 million

 

2014

 

75 million

 

2015

 

255 million

 

2016

 

344 million

 

2017

 

265 million

 

Thereafter

 

1,036 million

 

 

Financing may not be available and issuing equity could dilute our stockholders’ interests.

 

Our ability to execute our business strategy depends on our access to an appropriate blend of debt financing, including unsecured lines of credit and other forms of secured and unsecured debt, and equity financing, including common and preferred equity.  Debt or equity financing may not be available in sufficient amounts, or on favorable terms or at all.  If we issue additional equity securities to finance developments and acquisitions instead of incurring debt, the interests of our existing stockholders could be diluted.

 

Potential reduction or elimination of the role that Fannie Mae and Freddie Mac play in the multifamily financing sector may negatively impact the multifamily sector and our ability to obtain financing.

 

Fannie Mae and Freddie Mac (the “GSEs”) are a major source of financing for secured multifamily real estate.  We and other multifamily companies depend in part on the GSEs to finance growth by purchasing or guarantying apartment loans.  In 2011, the Obama administration released a report proposing that the GSEs be gradually eliminated.  The report proposed three possible courses for long-term reform of housing finance.  A final decision by the government to eliminate the GSEs or to change their mandate may adversely affect interest rates and capital availability.  In 2012, the Company added only $7 million of secured debt assumed in connection with an acquisition.  Instead we added $50 million of unsecured debt and increased outstandings on our unsecured line of credit by $160 million.  This demonstrates the Company’s declining reliance on the GSEs.  In addition, management believes, based on the positive performance of the multifamily sector and its low mortgage default rate, that other sources of financing would enter the market such as pension funds and insurance companies.

 

17



Table of Contents

 

Real Estate Financing Risks (continued)

 

The Company in part relies on its line of credit to meet its short-term liquidity requirements.

 

As of December 31, 2012, the Company had an unsecured line of credit agreement of $275 million with an initial maturity date of December 8, 2015, and a one-year extension, at the Company’s option.  The Company had $162.5 million outstanding under the credit facility on December 31, 2012.

 

The credit agreement relating to the line of credit requires the Company to maintain certain financial covenants, ratios and measurements.  Maintaining compliance with these covenants could limit our flexibility.  In addition, a default in these requirements, if uncured, could result in a termination of the line of credit and a requirement that we repay outstanding amounts, which could adversely affect our liquidity and increase our financing costs.

 

Failure to comply with the financial covenants relating to its unsecured debt, could result in a default and early repayment of the loans.

 

In addition to the line of credit, as of December 31, 2012, the Company had $450 million of unsecured debt outstanding.  These loans require the Company to maintain some of the same covenants, ratios and measurements as under the line of credit.  A default in any of these requirements could result in a default of these unsecured loans and a requirement that the loan be repaid early.  This could adversely affect our liquidity and result in increased borrowing costs.

 

Rising interest rates could adversely affect operations and cash flow.

 

As of December 31, 2012, approximately 87% of our debt was at fixed rates.  This limits our exposure to changes in interest rates.  Prolonged interest rate increases, however, could negatively affect our ability to make acquisitions, to dispose of properties at favorable prices, to develop properties and to refinance existing borrowings at acceptable rates.

 

Failure to hedge effectively against interest rates may adversely affect results of operations.

 

We may manage our exposure to interest rate volatility by using interest rate hedging arrangements, such as interest rate cap agreements and rate swap agreements.  These agreements involve risks, such as the risk that the counterparties may fail to honor their obligations under these arrangements and that these arrangements may reduce the benefits to us if interest rates decline.  Failure to hedge effectively against interest rate changes could have a negative impact on our financial performance and our ability to make distributions to our shareholders and pay amounts due on our debt.

 

There is no legal limit on the amount of debt we can incur.

 

The Board has adopted a policy of limiting our indebtedness to approximately 55% of our total market capitalization (with the equity component of total market capitalization based on the per share NAV presented to our Board at its most recent Board meeting), but our organizational documents do not contain any limitation on the amount or percentage of indebtedness we may incur.  Accordingly, the Board could alter or eliminate its current policy on borrowing. If this policy were changed, we could become more highly leveraged, resulting in an increase in debt service that could adversely affect our ability to make expected distributions to stockholders and increase the risk of default on our indebtedness.  Our NAV fluctuates based on a number of factors.  Our line of credit agreement limits the amount of indebtedness we may incur.

 

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Table of Contents

 

Federal Income Tax Risks

 

There is no assurance that we will continue to qualify as a REIT.

 

We believe that we have been organized and have operated in such manner so as to qualify as a REIT under the Internal Revenue Service Code, commencing with our taxable year ended December 31, 1994.  A REIT generally is not taxed at the corporate level on income it currently distributes to its shareholders as long as it distributes currently at least 90% of its taxable income (excluding net capital gains).  No assurance can be provided, however, that we have qualified or will continue to qualify as a REIT or that new legislation, Treasury Regulations, administrative interpretations or court decisions will not significantly change the tax laws with respect to our qualification as a REIT or the federal income tax consequences of such qualification.

 

We are required to make certain distributions to qualify as a REIT, and there is no assurance that we will have the funds necessary to make the distributions.

 

In order to continue to qualify as a REIT, we currently are required each year to distribute to our stockholders at least 90% of our taxable income (excluding net capital gains).  In addition, we will be subject to a 4% nondeductible excise tax on the amount, if any, by which certain distributions made by us with respect to the calendar year are less than the sum of 85% of our ordinary income, 95% of our capital gain net income for that year, and any undistributed taxable income from prior periods.  We intend to make distributions to our stockholders to comply with the 90% distribution requirement and to avoid the nondeductible excise tax and will rely for this purpose on distributions from the Operating Partnership.  However, differences in timing between taxable income and cash available for distribution could require us to borrow funds or to issue additional equity to enable us to meet the 90% distribution requirement (and, therefore, to maintain our REIT qualification) and to avoid the nondeductible excise tax.  The Operating Partnership is required to pay (or reimburse us, as its general partner, for) certain taxes and other liabilities and expenses that we incur, including any taxes that we must pay in the event we were to fail to qualify as a REIT.  In addition, because we are unable to retain earnings (resulting from REIT distribution requirements), we will generally be required to refinance debt that matures with additional debt or equity.  There can be no assurance that any of these sources of funds, if available at all, would be available to meet our distribution and tax obligations.

 

Our failure to qualify as a REIT would have adverse consequences.

 

If we fail to qualify as a REIT, we will be subject to federal and state income tax (including any applicable alternative minimum tax) on our taxable income at regular corporate rates.  In addition, unless entitled to relief under certain statutory provisions, we will be disqualified from treatment as a REIT for the four taxable years following the year during which REIT qualification is lost.  The additional tax burden on us would significantly reduce the cash available for distribution by us to our stockholders.  Our failure to qualify as a REIT could reduce materially the value of our common stock and would cause all our distributions to be taxable as ordinary income to the extent of our current and accumulated earnings and profits (although, subject to certain limitations under the Code, corporate distributees may be eligible for the dividends received deduction with respect to these distributions).

 

The Operating Partnership intends to qualify as a partnership but there is no guaranty that it will qualify.

 

We believe that the Operating Partnership qualifies as a partnership for federal income tax purposes.  No assurance can be provided, however, that the Internal Revenue Service (the “IRS”) will not challenge its status as a partnership for federal income tax purposes, or that a court would not sustain such a challenge.  If the IRS were to be successful in treating the Operating Partnership as an entity that is taxable as a corporation, we would cease to qualify as a REIT because the value of our ownership interest in the Operating Partnership would exceed 5% of our assets and because we would be considered to hold more than 10% of the voting securities of another corporation.  Also, the imposition of a corporate tax on the Operating Partnership would reduce significantly the amount of cash available for distribution to its limited partners.  Finally, the classification of the Operating Partnership as a corporation would cause its limited partners to recognize gain (upon the event that causes the Operating Partnership to be classified as a corporation) at least equal to their “negative capital accounts” (and possibly more, depending upon the circumstances).

 

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Table of Contents

 

Other Risks

 

The loss of members of key personnel could negatively affect the Company’s performance.

 

We depend on the efforts of our executive officers, particularly Edward J. Pettinella, the Company’s President and Chief Executive Officer.  If he resigned or otherwise ceased to be employed by the Company, operations could be adversely affected.  Mr. Pettinella has entered into an Employment Agreement with the Company.

 

The ability of our stockholders to effect a change of control is limited by certain provisions of our Articles of Incorporation as well as by Maryland law and our executive retention plan.

 

Our Articles Incorporation, as amended (the “Articles of Incorporation”), authorize the Board to issue up to a total of 80 million shares of common stock, 10 million shares of excess stock and 10 million shares of preferred stock and to establish the rights and preferences of any shares issued.  Further, under the Articles of Incorporation, the stockholders do not have cumulative voting rights.

 

In order for us to maintain our qualification as a REIT, not more than 50% in value of our outstanding stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the Code to include certain entities) at any time during the last half of its taxable year.  We have limited ownership of the issued and outstanding shares of common stock by any single stockholder to 8.0% of the aggregate value of our outstanding shares.

 

The percentage ownership limit described above, the issuance of preferred stock in the future and the absence of cumulative voting rights could have the effect of:  (i) delaying or preventing a change of control of us even if a change in control were in the stockholders’ interest; (ii) deterring tender offers for our common stock that may be beneficial to the stockholders; or (iii) limiting the opportunity for stockholders to receive a premium for their common stock that might otherwise exist if an investor attempted to assemble a block of our common stock in excess of the percentage ownership limit or otherwise to effect a change of control of us.

 

As a Maryland corporation, we are subject to the provisions of the Maryland General Corporation Law.  Maryland law imposes restrictions on some business combinations and requires compliance with statutory procedures before some mergers and acquisitions may occur, which may delay or prevent offers to acquire us or increase the difficulty of completing any offers, even if they are in our stockholders’ best interests.  In addition, other provisions of the Maryland General Corporation Law permit the Board of Directors to make elections and to take actions without stockholder approval (such as classifying our Board such that the entire Board is not up for re-election annually) that, if made or taken, could have the effect of discouraging or delaying a change in control.

 

Also, to assure that our management has appropriate incentives to focus on our business and properties in the face of a change of control situation, we have adopted an executive retention plan which provides some key employees with salary, bonus and some benefits continuation in the event of a change of control.

 

The future sale of shares under our At-The-Market offering may negatively impact our stock price.

 

Beginning in 2009, the Company made the necessary filings with the Securities and Exchange Commission to institute the sale of its common shares from time to time in “at the market offerings” or negotiated transactions (the “ATM”).  As of December 31, 2012, approximately 2.4 million shares remain available under the current filings relating to the ATM.  If authorized by its Board of Directors, the Company, in the future could affect additional filings to register additional common shares for sale under the ATM.  Sales of substantial amounts of shares of common stock in the public market or the perception that such sales might occur could adversely affect the market price of the common stock.

 

20



Table of Contents

 

Item 1B.  Unresolved Staff Comments

 

None.

 

Item 2.   Properties

 

As of December 31, 2012, the Properties consisted of 121 multifamily residential communities containing 42,635 apartment units.  In 2012, the Company acquired three communities with a total of 2,018 units in three transactions for total consideration of $298.2 million.  Also in 2012, the Company sold six communities in separate transactions with a total of 1,596 units for total consideration of $159.6 million.  In 2011, the Company acquired eight communities with a total of 2,817 units in eight transactions for total consideration of $500.7 million.

 

The Properties are generally located in established markets in suburban neighborhoods and are well maintained and well leased.  Average physical occupancy at the Properties was 94.9% for 2012.  “Physical occupancy” is defined as total possible rental income, net of vacancy, as a percentage of total possible rental income.  Total possible rental income is determined by valuing occupied units at contract rates and vacant units at market rents.  Average economic occupancy at the Properties was 94.0% for 2012.  “Economic occupancy” is defined as total possible rental income, net of vacancy and bad debt expense as a percentage of total possible rental income.  The Properties are typically two- and three-story garden style apartment buildings in landscaped settings and a majority are of brick or other masonry construction.  The Company believes that its strategic focus on appealing to middle income residents and the quality of the services it provides to such residents results in lower resident turnover.  Average turnover at the Properties was approximately 39% for 2012, which is significantly below the national average of approximately 52% for garden style apartments.

 

Resident leases are generally for a one year term.  Security deposits equal to one month’s rent or less are generally required.

 

Certain of the Properties collateralize mortgage loans.  See Schedule III contained herein (pages 100 to 102).

 

The table on the following pages illustrates certain of the important characteristics of the Properties as of December 31, 2012.

 

21



Table of Contents

 

Property Information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4)

 

(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2)

 

(3)

 

(3)

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2012

 

2012

 

2011

 

Avg Mo

 

Avg Mo

 

12/31/2012

 

 

 

 

 

#

 

Age

 

 

 

Average

 

Resident

 

Average

 

Average

 

Rent Rate

 

Rent Rate

 

Total Cost

 

 

 

 

 

Of

 

In

 

Year

 

Apt Size

 

Turnover

 

Occupancy

 

Occupancy

 

per Apt

 

per Apt

 

(000)

 

Region

 

 

 

Apts

 

Years

 

Acq/Dev

 

(Sq Ft)

 

%

 

%

 

%

 

$

 

$

 

$

 

 

 

Core Communities (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FL - Southeast

 

The Hamptons

 

668

 

23

 

2004

 

945

 

45

%

95

%

95

%

$

1,007

 

$

979

 

$

74,418

 

FL - Southeast

 

Vinings at Hampton Village

 

168

 

23

 

2004

 

1,171

 

44

%

96

%

96

%

1,124

 

1,104

 

19,195

 

IL - Chicago

 

Blackhawk

 

371

 

51

 

2000

 

804

 

54

%

96

%

95

%

896

 

871

 

26,885

 

IL - Chicago

 

Courtyards Village

 

224

 

41

 

2001

 

765

 

46

%

97

%

98

%

892

 

843

 

19,300

 

IL - Chicago

 

Cypress Place

 

192

 

42

 

2000

 

840

 

33

%

97

%

97

%

1,008

 

944

 

16,648

 

IL - Chicago

 

Lakeview Townhomes

 

120

 

16

 

2010

 

1,080

 

47

%

94

%

94

%

1,228

 

1,153

 

16,741

 

IL - Chicago

 

The Colony

 

783

 

39

 

1999

 

716

 

43

%

97

%

97

%

897

 

867

 

60,393

 

IL - Chicago

 

The New Colonies

 

672

 

38

 

1998

 

674

 

59

%

95

%

96

%

773

 

756

 

39,005

 

MA - Boston

 

Gardencrest

 

695

 

64

 

2002

 

907

 

35

%

97

%

96

%

1,637

 

1,548

 

119,414

 

MA - Boston

 

Highland House

 

172

 

43

 

2006

 

709

 

33

%

97

%

96

%

1,244

 

1,170

 

21,183

 

MA - Boston

 

Liberty Commons

 

120

 

6

 

2006

 

1,075

 

49

%

96

%

97

%

1,310

 

1,267

 

14,929

 

MA - Boston

 

Liberty Place

 

107

 

24

 

2006

 

924

 

36

%

96

%

96

%

1,508

 

1,447

 

18,152

 

MA - Boston

 

Redbank Village

 

500

 

68

 

1998

 

752

 

43

%

97

%

96

%

941

 

906

 

31,669

 

MA - Boston

 

Stone Ends

 

280

 

33

 

2003

 

813

 

43

%

96

%

95

%

1,310

 

1,250

 

42,411

 

MA - Boston

 

The Heights at Marlborough

 

348

 

39

 

2006

 

898

 

43

%

95

%

94

%

1,250

 

1,187

 

59,603

 

MA - Boston

 

The Meadows at Marlborough

 

264

 

40

 

2006

 

822

 

39

%

95

%

95

%

1,202

 

1,147

 

41,549

 

MA - Boston

 

The Townhomes of Beverly

 

204

 

42

 

2007

 

973

 

39

%

96

%

96

%

1,544

 

1,485

 

42,111

 

MA - Boston

 

The Village at Marshfield

 

276

 

40

 

2004

 

766

 

39

%

96

%

96

%

1,202

 

1,158

 

40,498

 

MA - Boston

 

Westwoods

 

35

 

22

 

2007

 

832

 

26

%

97

%

97

%

1,310

 

1,232

 

4,654

 

MD - Baltimore

 

Annapolis Roads

 

282

 

37

 

2010

 

977

 

38

%

92

%

90

%

1,280

 

1,258

 

38,626

 

MD - Baltimore

 

Bonnie Ridge

 

960

 

46

 

1999

 

998

 

40

%

96

%

95

%

1,142

 

1,105

 

88,880

 

MD - Baltimore

 

Canterbury

 

618

 

34

 

1999

 

858

 

42

%

95

%

95

%

1,007

 

974

 

44,386

 

MD - Baltimore

 

Charleston Place

 

858

 

41

 

2010

 

817

 

33

%

96

%

97

%

1,178

 

1,130

 

115,801

 

MD - Baltimore

 

Country Village

 

344

 

41

 

1998

 

773

 

48

%

95

%

97

%

1,049

 

993

 

26,411

 

MD - Baltimore

 

Dunfield

 

312

 

25

 

2007

 

916

 

46

%

95

%

96

%

1,200

 

1,153

 

39,353

 

MD - Baltimore

 

Fox Hall

 

720

 

36

 

2007

 

826

 

40

%

92

%

92

%

895

 

870

 

78,116

 

MD - Baltimore

 

Gateway Village

 

132

 

23

 

1999

 

932

 

34

%

96

%

96

%

1,368

 

1,336

 

12,446

 

MD - Baltimore

 

Heritage Woods

 

164

 

39

 

2006

 

925

 

43

%

96

%

97

%

1,194

 

1,136

 

18,146

 

MD - Baltimore

 

Middlebrooke

 

208

 

38

 

2010

 

834

 

50

%

95

%

95

%

989

 

942

 

20,432

 

MD - Baltimore

 

Mill Towne Village

 

384

 

39

 

2001

 

804

 

42

%

96

%

94

%

924

 

904

 

32,894

 

MD - Baltimore

 

Morningside Heights

 

1,050

 

47

 

1998

 

865

 

38

%

92

%

93

%

929

 

896

 

75,085

 

MD - Baltimore

 

Owings Run

 

504

 

17

 

1999

 

1,064

 

43

%

95

%

96

%

1,269

 

1,242

 

51,165

 

MD - Baltimore

 

Ridgeview at Wakefield Valley

 

204

 

24

 

2005

 

972

 

53

%

96

%

95

%

1,221

 

1,208

 

25,109

 

MD - Baltimore

 

Saddle Brooke

 

468

 

39

 

2008

 

889

 

43

%

94

%

93

%

1,099

 

1,036

 

60,541

 

MD - Baltimore

 

Selford

 

102

 

25

 

1999

 

946

 

42

%

97

%

94

%

1,409

 

1,364

 

9,508

 

MD - Baltimore

 

The Coves at Chesapeake

 

469

 

30

 

2006

 

986

 

43

%

94

%

92

%

1,286

 

1,234

 

77,682

 

MD - Baltimore

 

The Greens at Columbia

 

168

 

26

 

2010

 

969

 

39

%

94

%

96

%

1,427

 

1,362

 

28,183

 

 

22



Table of Contents

 

Property Information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4)

 

(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2)

 

(3)

 

(3)

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2012

 

2012

 

2011

 

Avg Mo

 

Avg Mo

 

12/31/2012

 

 

 

 

 

#

 

Age

 

 

 

Average

 

Resident

 

Average

 

Average

 

Rent Rate

 

Rent Rate

 

Total Cost

 

 

 

 

 

Of

 

In

 

Year

 

Apt Size

 

Turnover

 

Occupancy

 

Occupancy

 

per Apt

 

per Apt

 

(000)

 

Region

 

 

 

Apts

 

Years

 

Acq/Dev

 

(Sq Ft)

 

%

 

%

 

%

 

$

 

$

 

$

 

MD - Baltimore

 

Top Field

 

156

 

39

 

2006

 

1,132

 

37

%

95

%

97

%

1,315

 

1,270

 

23,056

 

MD - Baltimore

 

Village Square

 

370

 

44

 

1999

 

967

 

41

%

96

%

96

%

1,193

 

1,166

 

29,267

 

MD - Baltimore

 

Westbrooke

 

110

 

51

 

2010

 

651

 

42

%

95

%

95

%

862

 

823

 

7,967

 

NJ - Northern

 

Barrington Gardens

 

148

 

39

 

2005

 

837

 

45

%

97

%

97

%

1,286

 

1,198

 

14,219

 

NJ - Northern

 

Chatham Hill

 

308

 

45

 

2004

 

856

 

42

%

95

%

95

%

1,881

 

1,764

 

66,185

 

NJ - Northern

 

East Hill Gardens

 

33

 

54

 

1998

 

694

 

30

%

98

%

95

%

1,607

 

1,555

 

3,623

 

NJ - Northern

 

Hackensack Gardens

 

198

 

64

 

2005

 

552

 

35

%

98

%

98

%

1,176

 

1,119

 

20,611

 

NJ - Northern

 

Jacob Ford Village

 

270

 

64

 

2007

 

744

 

26

%

99

%

97

%

1,327

 

1,247

 

35,579

 

NJ - Northern

 

Lakeview

 

106

 

63

 

1998

 

575

 

36

%

97

%

96

%

1,431

 

1,380

 

10,458

 

NJ - Northern

 

Northwood

 

134

 

47

 

2004

 

850

 

28

%

97

%

97

%

1,387

 

1,339

 

20,480

 

NJ - Northern

 

Oak Manor

 

77

 

56

 

1998

 

1,006

 

26

%

98

%

95

%

1,890

 

1,797

 

9,321

 

NJ - Northern

 

Pleasant View

 

1,142

 

44

 

1998

 

738

 

37

%

96

%

96

%

1,190

 

1,151

 

92,459

 

NJ - Northern

 

Pleasure Bay

 

270

 

41

 

1998

 

803

 

43

%

97

%

95

%

1,081

 

1,041

 

20,653

 

NJ - Northern

 

Royal Gardens

 

550

 

44

 

1997

 

872

 

32

%

97

%

96

%

1,294

 

1,246

 

41,531

 

NJ - Northern

 

Wayne Village

 

275

 

47

 

1998

 

790

 

27

%

97

%

97

%

1,443

 

1,402

 

26,493

 

NJ - Northern

 

Windsor Realty

 

67

 

59

 

1998

 

622

 

51

%

95

%

97

%

1,324

 

1,287

 

6,712

 

NY - Long Island

 

Bayview/Colonial

 

160

 

45

 

2000

 

717

 

29

%

99

%

98

%

1,312

 

1,260

 

16,501

 

NY - Long Island

 

Cambridge Village

 

82

 

45

 

2002

 

725

 

33

%

98

%

98

%

1,873

 

1,789

 

8,846

 

NY - Long Island

 

Crescent Club

 

257

 

39

 

2010

 

876

 

28

%

96

%

97

%

1,345

 

1,275

 

36,096

 

NY - Long Island

 

Devonshire Hills

 

656

 

44

 

2001

 

767

 

39

%

97

%

97

%

1,641

 

1,584

 

126,360

 

NY - Long Island

 

Hawthorne Court

 

434

 

44

 

2002

 

759

 

34

%

97

%

97

%

1,478

 

1,439

 

57,497

 

NY - Long Island

 

Heritage Square

 

80

 

63

 

2002

 

696

 

40

%

98

%

98

%

1,837

 

1,744

 

10,486

 

NY - Long Island

 

Holiday Square

 

144

 

33

 

2002

 

575

 

21

%

99

%

96

%

1,269

 

1,223

 

13,322

 

NY - Long Island

 

Lake Grove

 

368

 

42

 

1997

 

775

 

38

%

96

%

96

%

1,503

 

1,442

 

41,339

 

NY - Long Island

 

Mid-Island Estates

 

232

 

47

 

1997

 

684

 

32

%

99

%

98

%

1,461

 

1,402

 

19,700

 

NY - Long Island

 

Sayville Commons

 

342

 

11

 

2005

 

1,012

 

19

%

97

%

97

%

1,629

 

1,590

 

67,838

 

NY - Long Island

 

South Bay Manor

 

61

 

52

 

2000

 

806

 

36

%

97

%

96

%

1,684

 

1,642

 

8,806

 

NY - Long Island

 

Southern Meadows

 

452

 

41

 

2001

 

813

 

33

%

96

%

96

%

1,464

 

1,411

 

56,289

 

NY - Long Island

 

Westwood Village

 

242

 

43

 

2002

 

917

 

34

%

97

%

96

%

2,484

 

2,384

 

45,861

 

NY - Long Island

 

Woodmont Village

 

97

 

44

 

2002

 

725

 

40

%

96

%

97

%

1,370

 

1,325

 

12,669

 

NY - Long Island

 

Yorkshire Village

 

40

 

43

 

2002

 

766

 

35

%

98

%

98

%

1,905

 

1,839

 

5,054

 

PA - Philadelphia

 

Castle Club

 

158

 

45

 

2000

 

814

 

41

%

94

%

94

%

1,013

 

978

 

17,360

 

PA - Philadelphia

 

Glen Manor

 

174

 

36

 

1997

 

642

 

38

%

95

%

96

%

821

 

813

 

10,334

 

PA - Philadelphia

 

Golf Club

 

399

 

43

 

2000

 

857

 

48

%

95

%

94

%

1,137

 

1,094

 

44,683

 

PA - Philadelphia

 

Hill Brook Place

 

274

 

44

 

1999

 

711

 

34

%

96

%

95

%

942

 

905

 

22,348

 

PA - Philadelphia

 

Home Properties of Bryn Mawr

 

316

 

61

 

2000

 

705

 

72

%

95

%

94

%

1,435

 

1,295

 

40,222

 

PA - Philadelphia

 

Home Properties of Devon

 

631

 

49

 

2000

 

913

 

40

%

94

%

94

%

1,233

 

1,148

 

81,516

 

PA - Philadelphia

 

New Orleans Park

 

442

 

41

 

1997

 

696

 

44

%

95

%

95

%

898

 

867

 

32,027

 

 

23



Table of Contents

 

 

Property Information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4)

 

(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2)

 

(3)

 

(3)

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2012

 

2012

 

2011

 

Avg Mo

 

Avg Mo

 

12/31/2012

 

 

 

 

 

#

 

Age

 

 

 

Average

 

Resident

 

Average

 

Average

 

Rent Rate

 

Rent Rate

 

Total Cost

 

 

 

 

 

Of

 

In

 

Year

 

Apt Size

 

Turnover

 

Occupancy

 

Occupancy

 

per Apt

 

per Apt

 

(000)

 

Region

 

 

 

Apts

 

Years

 

Acq/Dev

 

(Sq Ft)

 

%

 

%

 

%

 

$

 

$

 

$

 

PA - Philadelphia

 

Racquet Club East

 

466

 

41

 

1998

 

910

 

37

%

95

%

95

%

1,113

 

1,061

 

43,439

 

PA - Philadelphia

 

Racquet Club South

 

103

 

43

 

1999

 

860

 

41

%

95

%

95

%

945

 

909

 

7,811

 

PA - Philadelphia

 

Ridley Brook

 

244

 

50

 

1999

 

796

 

37

%

96

%

94

%

967

 

939

 

17,511

 

PA - Philadelphia

 

Sherry Lake

 

298

 

47

 

1998

 

813

 

38

%

96

%

96

%

1,271

 

1,205

 

32,421

 

PA - Philadelphia

 

The Brooke at Peachtree Village

 

146

 

26

 

2005

 

1,261

 

30

%

97

%

96

%

1,186

 

1,138

 

21,331

 

PA - Philadelphia

 

The Landings

 

384

 

39

 

1996

 

912

 

37

%

96

%

96

%

1,068

 

1,012

 

34,772

 

PA - Philadelphia

 

Trexler Park

 

250

 

38

 

2000

 

919

 

47

%

95

%

95

%

1,118

 

1,065

 

27,231

 

PA - Philadelphia

 

Trexler Park West

 

216

 

4

 

2008

 

1,032

 

55

%

96

%

96

%

1,372

 

1,299

 

26,144

 

PA - Philadelphia

 

William Henry

 

363

 

41

 

2000

 

939

 

46

%

95

%

94

%

1,194

 

1,131

 

46,508

 

VA - Suburban DC

 

1200 East West

 

247

 

2

 

2010

 

839

 

29

%

96

%

96

%

1,885

 

1,747

 

84,598

 

VA - Suburban DC

 

Braddock Lee

 

255

 

57

 

1998

 

749

 

25

%

98

%

98

%

1,396

 

1,334

 

23,025

 

VA - Suburban DC

 

Cider Mill

 

864

 

34

 

2002

 

840

 

33

%

96

%

95

%

1,192

 

1,151

 

103,648

 

VA - Suburban DC

 

Cinnamon Run

 

511

 

52

 

2005

 

966

 

32

%

94

%

95

%

1,276

 

1,243

 

78,441

 

VA - Suburban DC

 

East Meadow

 

150

 

41

 

2000

 

943

 

36

%

97

%

98

%

1,415

 

1,354

 

18,333

 

VA - Suburban DC

 

Elmwood Terrace

 

504

 

39

 

2000

 

910

 

45

%

95

%

95

%

969

 

926

 

35,605

 

VA - Suburban DC

 

Falkland Chase

 

450

 

75

 

2003

 

760

 

40

%

96

%

96

%

1,440

 

1,402

 

69,362

 

VA - Suburban DC

 

Mount Vernon Square

 

1,387

 

38

 

2006

 

847

 

39

%

95

%

94

%

1,289

 

1,245

 

163,727

 

VA - Suburban DC

 

Park Shirlington

 

294

 

57

 

1998

 

840

 

27

%

97

%

97

%

1,380

 

1,320

 

25,539

 

VA - Suburban DC

 

Peppertree Farm

 

879

 

58

 

2005

 

1,020

 

29

%

94

%

93

%

1,245

 

1,211

 

120,511

 

VA - Suburban DC

 

Seminary Hill

 

296

 

52

 

1999

 

901

 

31

%

97

%

98

%

1,367

 

1,299

 

25,168

 

VA - Suburban DC

 

Seminary Towers

 

544

 

48

 

1999

 

911

 

35

%

96

%

96

%

1,440

 

1,361

 

51,028

 

VA - Suburban DC

 

Tamarron

 

132

 

25

 

1999

 

955

 

30

%

96

%

95

%

1,588

 

1,537

 

15,113

 

VA - Suburban DC

 

The Apts at Wellington Trace

 

240

 

10

 

2004

 

1,085

 

52

%

97

%

98

%

1,394

 

1,323

 

32,225

 

VA - Suburban DC

 

The Courts at Fair Oaks

 

364

 

22

 

2010

 

798

 

43

%

96

%

96

%

1,500

 

1,439

 

76,047

 

VA - Suburban DC

 

The Manor - MD

 

435

 

43

 

2001

 

908

 

28

%

96

%

95