In the most recent move in a string of real estate acquisitions, an investment trust known as Home Properties, Inc. has reportedly purchased a Maryland apartment complex for $186 million. The company previously purchased a different 858-unit rental property in Maryland in 2010, a move that a Home Properties executive said surpassed the company's "underwriting expectations."
The laws governing Commercial real estate in Maryland can be complex. A given transaction can include title transfers, lease negotiations, commercial loan workouts and other similar processes. In order to ensure their commercial real estate transactions proceed as smoothly as possible, parties on both sides of such deals generally employ attorneys to handle technical and legal issues such as the preparation of important documents, as well as represent them in the event of a dispute.
Because the two Maryland properties are within one mile of each other, it appears likely that the success of the first acquisition influenced the company's decision new purchase, which contains 1,350 units and may represent a larger possible return. An executive with Home Properties explained, "Based on our familiarity with this submarket, we expect Howard Crossing will achieve similar success."
Home Properties has had repeated success in acquisitions by improving occupancy rates in its rental properties and raising rents. The company invested over $500 million in 2011, resulting in profit growth of about 55 percent. Home Properties reported that its earnings have continued to rise, with its first quarter earnings rising by over 100 percent in 2012.
Home Properties' acquisition strategy illustrates how lucrative Commercial real estate purchases can be when properly executed. As a result of its aggressive investments, the company's stock has risen 7.7 percent since the beginning of 2012.
Source: Wall Street Journal, "Home Properties Buys 1,350-Unit Maryland Complex for $186M," Ben Fox Rubin, July 2, 2012