ACQUISITIONS AND DEVELOPMENT

12 Months Ended

Dec. 31, 2012

ACQUISITIONS AND DEVELOPMENT

ACQUISITIONS AND DEVELOPMENT

5              ACQUISITIONS AND DEVELOPMENT

Property Acquisitions

During the years ended December 31, 2012 and 2011, the Company acquired the communities listed below:

							Cost of
		Date	Year	Number	Cost of		Acquisition
Apartment Community	Region	Acquired	Constructed	of Units	Acquisition		Per Unit
Hunters Glen	Suburban D.C.	4/19/2011	1984	108	$	7,000	$	65
Waterview	Philadelphia	7/14/2011	1968	203	$	24,600	$	121
The Commons at Haynes Farm	Boston	7/15/2011	1991	302	$	40,500	$	134
The Apts at Cambridge Court	Baltimore	8/23/2011	1999-2002	544	$	90,400	$	166
Somerset Park	Suburban D.C.	10/11/2011	2006	108	$	20,250	$	188
Newport Village	Suburban D.C.	10/17/2011	1969	937	$	205,000	$	219
The Courts at Dulles	Suburban D.C.	11/30/2011	2000	411	$	92,750	$	226
The Gates of Deer Grove	Chicago	12/15/2011	1974	204	$	20,200	$	99
The Manor East	Suburban D.C.	5/11/2012	1964	164	$	16,200	$	99
Woodway at Trinity Centre	Suburban D.C.	5/17/2012	1997	504	$	96,000	$	190
Howard Crossing	Baltimore	6/28/2012	1968-1975	1,350	$	186,000	$	138

All of the 2012 and 2011 acquired apartment communities were recorded at fair value which approximated actual purchase price.  None of the acquisitions were subject to bargain purchase options or resulted in goodwill being recorded.  In connection with these acquisitions, closing costs of $2,741 and $3,225 were incurred and are included in other expenses for the years ended December 31, 2012 and 2011, respectively.

Included in the consolidated statements of income for the years ended December 31, 2012 and 2011, are total revenues of $63,873 and $12,386, respectively, and net income attributable to common shareholders of $19,094 and $3,054, respectively, since the respective date of acquisition through December 31, 2012 for the 2012 and 2011 acquired apartment communities.

Pro Forma Information

The following unaudited pro forma information was prepared as if the 2012 and 2011 transactions related to the acquisition of apartment communities occurred as of January 1 of the preceding year.  The pro forma financial information is based upon the historical consolidated financial statements of the Company and the acquired communities, and is not necessarily indicative of the consolidated results which actually would have occurred if the transactions had been consummated at January 1, 2011, nor does it purport to represent the results of operations for future periods.  Adjustments to the pro forma financial information for the years ended December 31, 2012 and 2011 consist principally of providing net operating activity and recording interest, depreciation and amortization from January 1, 2011 to the acquisition date as appropriate.  Acquisition related costs in the amount of $2,741 were excluded from the 2012 Pro forma net income attributable to common stockholders.  An adjustment was made to include these costs in the 2011 Pro forma net income attributable to common stockholders.

	2012 (Unaudited)		2011 (Unaudited)
Pro forma total revenues	$	656,624	$	621,755
Pro forma net income attributable to common stockholders	139,698		40,481
Pro forma earnings per common share:
Basic	$	2.81	$	0.97
Diluted	2.77		0.95

Development

During 2012, the Company completed construction at The Apartments at Cobblestone Square located in Fredericksburg, Virginia, consisting of eight, four-story buildings and a refurbished rail depot, for a total of 314 apartment units.  The total cost for this community was $48,609 for an average cost per apartment unit of $155.

During the fourth quarter of 2011, the Company started construction on Eleven55 Ripley, located in Silver Spring, Maryland, consisting of two buildings, a 21 story high-rise and a 5 story mid-rise, for a total of 379 apartment units.  Construction is expected to be completed in the first quarter of 2014 with initial occupancy in the third quarter of 2013.  The construction in progress for this development was $62,502 as of December 31, 2012.

During the second quarter of 2012, the Company started construction on The Courts at Spring Mill Station, located in Conshohocken, Pennsylvania, a suburb of Philadelphia. The mid-rise project, consisting of two buildings, will have a total of 385 apartment units.  Construction is expected to be completed in the second half of 2014 with initial occupancy in the first quarter of 2014.  The construction in progress for this development was $20,739 as of December 31, 2012.

Redevelopment

The Company has one project under redevelopment.  Arbor Park, located in Alexandria, Virginia, has 851 garden apartments in fifty-two buildings built in 1967.  The Company plans to extensively renovate all of the units over several years on a building by building basis.  As of December 31, 2012, there were five buildings with 90 units under renovation and twenty-six buildings with 391 units completed and 290 units occupied.  As of December 31, 2012, the Company has incurred costs of $14,006 for the renovation which is included in buildings, improvements and equipment.  The entire project is expected to be completed in 2014.

The Company has one project in the pre-redevelopment phase.  Falkland Chase, located in Silver Spring, Maryland, currently has 450 garden apartments constructed between 1936 and 1939.  The Company has obtained the necessary approvals to redevelop the North parcel which allows for an increase of units from 182 to approximately 1,185 units.  The cost associated with this project was $4,762 as of December 31, 2012 and is included in other assets.

Acquisition of Notes Receivable

On September 22, 2010, the Company purchased two non-performing mortgage notes from a community bank for $1,433 in an arm’s length transaction.  Both notes were in default.  They were purchased at face value plus accrued interest and late fees and were collateralized by real property.  One of the notes, originally purchased by the Company for $1,015, was repaid in its entirety on January 28, 2011.  The second note was purchased for $418 and was collateralized by vacant land.  On December 3, 2012, the Company completed foreclosure on the remaining note and took ownership of a parcel of vacant land located in Wall Township, NJ.  The total cost of the parcel, including legal fees, is $608 and is included in land as of December 31, 2012.