EXHIBIT 99.3
CHARLESTON PLACE APARTMENTS
Charlotte, North Carolina
On May 14, 1997, the Company purchased the Summit Charleston Apartments, a
214-unit apartment complex located at 0000 Xxxxxxxxxx Xxxxx Xxxx, Xxxxxxxxx,
Xxxxx Xxxxxxxx (the "Property"). The Company has renamed the Property the
"Charleston Place Apartments."
The Company purchased the Property from a seller unaffiliated with the
Company and its affiliates. The purchase price was $9,475,000, all of which was
borrowed by the Company under the Company's unsecured line of credit. Title to
the Property was conveyed to the Company by limited warranty deed.
Location. The Property is located in the southeastern part of Charlotte,
North Carolina, within Mecklenburg County. The following information is based in
part upon information provided by the greater Charlotte Chamber of Commerce.
Based in part upon its fast rate of growth and a diversified economy,
Charlotte has in recent years come to national attention as an attractive
location for business and residential growth. According to the August 1995, Site
Selection magazine, Charlotte's corporate popularity ranked second nationally
only to Dallas during the period between 1990 and 1994, being the site of 474
significant new and expanded facilities.
Charlotte has developed into a major financial, distribution and
transportation center, with a metropolitan population of approximately 1.3
million and a population of approximately 5.6 million within a 100-mile radius.
Charlotte's growth is also attributable to its favorable year-round climate, a
moderate cost of living, excellent quality of life, educated work force,
probusiness political climate, extensive transportation network, and strategic
geographic location.
According to the Charlotte Chamber of Commerce, during the first six months
of 1995, approximately 530 firms announced new or expanded businesses which will
provide approximately 6,200 new jobs in the area. Charlotte is home to major
offices of more than 225 of the Fortune 500 industrial firms and approximately
300 of the Fortune 500 service firms.
Charlotte is the leading financial center of the Southeast, serving as
corporate headquarters to NationsBank and First Union, with assets of
approximately $170 billion and $124 billion, respectively. The growth of
Charlotte's banking and financial communities has had a positive effect on the
growth of its
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supporting industries, such as insurance, accounting, legal services, and real
estate.
The city of Charlotte is located near the border of North Carolina and
South Carolina within Mecklenburg County. It is located at the intersection of
Interstates 77 and 85, the major north/south and each/west thoroughfares in the
region, which provide convenient access to all other regional areas.
The Property is located on Monroe Road adjacent to XxXxxxxx Xxxxxxxx Park.
The immediate area surrounding the Property consists of commercial and retail
development, other multi-family housing, and single family housing. The Property
is in close proximity to several major employment centers, including the
XxXxxxxx Business Center, Crownpoint Business Center, Xxxxxxxx Township and the
Charlotte central business district. The Property has ready access to shopping,
dining and entertainment and to the Charlotte/Xxxxxxxx International Airport.
Description of the Property. The Property consists of 214 garden style
apartment units in 11 two- and three-story buildings on approximately 15 acres
of land. The Property was built in 1986.
The Company believes that the Property is generally in very good condition
and has been well maintained. The Company has budgeted approximately $107,000
for certain improvements, including renovation of the clubhouse and painting.
The Property offers five unit types. The unit mix and rents currently being
charged new tenants are as follows:
Approximate
Interior Square Monthly
Quantity Type Footage Rental
-------- ---- ------- ------
31 One bedroom/one bath 550 $530-$560
31 One bedroom/one bath 650 550-580
31 One bedroom/one bath 710 600-635
31 One bedroom/one
bath/den 815 660-690
90 Two bedrooms/two 977 690-750
baths
The variation in monthly rental among units is based upon floor level and
amenities such as washer/dryer connections,
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fireplace, picture windows, vaulted ceilings and built-in shelving.
The apartments provide a combined total of approximately 172,000 square
feet of net rentable area.
Leases at the Property are generally for terms of one year or less. Average
rental rates for the past five years have generally increased. As an example, a
one-bedroom, one-bath apartment unit (710 square feet) rented for $385 in 1992,
$441 in 1993, $505 in 1994, $540 in 1995 and $550 in 1996. The average effective
annual rental per square foot at the Property for 1992, 1993, 1994, 1995 and
1996 was $6.04, $6.91, $7.92, $8.47 and $8.62, respectively.
The buildings are wood-frame construction on concrete slabs. Exteriors are
a combination of brick veneer and vinyl siding. The buildings have pitched roofs
covered with gabled fiberglass shingles over pre-engineered roof trusses.
Each apartment unit has wall-to-wall carpeting in the living areas and
vinyl floors in the kitchen and bath. Each apartment unit has a cable television
hook-up and an individually controlled heating and air conditioning unit. Each
apartment unit also includes miniblinds, vertical blinds, pantry and linen space
and outside storage. Each kitchen has a refrigerator/freezer with icemaker,
electric range and oven, microwave, dishwasher and garbage disposal. The owner
of the Property supplies cold water, sewer service and trash removal. The
tenants pay for their electricity, which includes air conditioning, heating,
cooking, hot water and lights.
The Property has an outdoor swimming pool, a lighted tennis court, an
exercise/fitness center overlooking the swimming pool, a sand volleyball court,
two gazebos with gas grills and picnic areas, a laundry room, and a car care
area. The Property also has winding walkways with access to XxXxxxxx Xxxxxxxx
Park. The Property has a large clubhouse/leasing office with an entertainment
area, fully-equipped kitchen, library and fireplace. There is ample paved
parking for tenants.
There are at least five apartment properties in the area that compete with
the Property. All offer similar amenities and have rents that generally are
comparable to those of the Property. Based on a recent telephone survey, the
Company estimates that occupancy in nearby competing properties now averages
approximately 92%.
According to information provided by the seller, physical occupancy at the
Property averaged approximately 92% in 1992, 94% in 1993, 94% in 1994, 95% in
1995 and 94% in 1996. On May 5, 1997, the Property was 93% occupied.
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Most of the tenants at the Property are white-collar workers.
The combined 1996 real estate tax rate imposed on the Property by the City
of Charlotte and Mecklenburg County was $1.2550. The assessed value was
$6,215,720. The taxes were calculated as $85,069 (including a solid waste tax of
$7,062).
The basis of the depreciable residential real property portion of the
Property (currently estimated at about $5,238,890) will be depreciated over 27.5
years on a straight-line basis. The basis of the personal property portion will
be depreciated in accordance with the modified accelerated cost recovery system
of the Code. Amounts to be spent by the Company on repairs and improvements will
be treated for tax purposes as permitted by the Code based on the nature of the
expenditures.
The Company believes that the Property is and will continue to be
adequately covered by property and liability insurance.
Material Factors Considered in Assessing the Property. The factors
considered by the Company to be relevant in evaluating the Property for
acquisition by the Company included the following:
1. The Company believes that the Charlotte, North Carolina area will
experience continued strong economic development and steady population increase,
and that such development and increase will support stable occupancy rates and
reasonable increases in rents at the Property.
2. Based upon an engineering report and its own inspections, the Company
believes that the Property is in very good condition.
3. The Property is conveniently located and proximate to major employers
and shopping.
4. The Company is very familiar with the Charlotte rental market. The
Company already owns several other apartment complexes in the Charlotte area,
which may provide certain economies and efficiency in operation.
The Company is not aware of any material adverse factors relating to the
Property not set forth in this report that would cause the financial information
contained in this report not to be indicative of future operating results.
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DUNWOODY SPRINGS APARTMENTS
Dunwoody, Georgia
On July 25, 1997, the Company purchased the Dunwoody Springs Apartments, a
350-unit apartment complex located at 0000 Xxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxx
(the "Property").
The Company purchased the Property from a seller unaffiliated with the
Company and its affiliates. The purchase price was $15,200,000, all of which was
borrowed by the Company under the Company's unsecured line of credit. Title to
the Property was conveyed to the Company by limited warranty deed.
Location. The Property is in Dunwoody, Xxxxxx County, just north of
Atlanta, Georgia. The following information is based in part upon information
provided by the greater Atlanta Chamber of Commerce.
The economy of the greater Atlanta area is diverse, and includes as
significant sectors manufacturing, transportation, distribution, retailing,
wholesaling, finance, government, research, education and medicine. More than
80% of the Fortune 500 industrial companies and over 1,800 local manufacturing
firms have operations in the area. Atlanta is the national headquarters of
Coca-Cola, Cable News Network, Delta Air Lines, United Parcel Service, Home
Depot and Holiday Inn Worldwide. The city is also headquarters for the Sixth
District Federal Reserve Bank.
The convention and visitor trade is also one of Atlanta's primary
industries and has an important impact on the overall economy of the city.
Atlanta's hosting of the 1996 Centennial Olympic Games furthered its visibility
as an important city internationally.
Atlanta sits at the junction of three major Interstate Highways (I-20, I-75
and I-85), and I-285 (Perimeter Highway) encircles the city. There are several
airports in the area, but the principal airport is Xxxxxxxxxx-Atlanta
International Airport, which had over 60,000 flights and over 4.5 million
passengers in 1994. Atlanta also has a rapid rail transit system (known as the
Metropolitan Atlanta Rapid Transit Authority, or "XXXXX").
Xxxxxx County is the most densely developed and populated county in the
metropolitan Atlanta area. With nearly 40% of the total number of jobs in the
greater metropolitan area, the county also has the largest employment base, with
downtown, midtown, Buckhead and Perimeter Center office districts all located in
Xxxxxx County.
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The 1996 population of Xxxxxx County was approximately 745,000. The Atlanta
Regional Commission projects that Xxxxxx County's population will reach
approximately 773,500 by 2005, and the County's current employment base of
approximately 616,000 is projected to increase by approximately 8,000 jobs
annually over the next ten years. Since 1980, county-wide employment has
increased by an average of approximately 11,000 jobs per year.
The Property is located on Dunwoody Place off of Northridge Road. The
immediate area surrounding the Property consists of other multi-family and
single-family housing, and commercial and retail development. The Property is
located at the apex of metropolitan Atlanta's largest and fastest growing
commercial area, the Perimeter Center/Georgia Highway 400 corridor. The Property
is near businesses, major shopping, entertainment, schools and churches.
The Property is located approximately 16 miles from the Atlanta central
business district, approximately five miles north of Interstate 285 and less
than one mile from both Georgia Highway 400 and Roswell Road.
Description of the Property. The Property consists of 350 garden and loft
style apartment units in 25 two- and three-story buildings on approximately 33
acres of land. The Property was built in 1981.
The Company believes that the Property is generally in very good condition
and has been well maintained. According to the seller, since October of 1993,
the seller has completed approximately $432,000 in capital improvements,
including installation of new appliances, roof repairs, paving, concrete
repairs, floor covering installation, window treatments and HVAC repair and
replacements. In addition, the exterior of the Property was painted in March
1997, which included exterior wood replacement where necessary. The Company has
budgeted $612,500 for additional renovations to the Property, including
construction of a clubhouse, re-siding of the entire Property and appliance
replacements.
The Property offers eight unit types. The unit mix and rents currently
being charged new tenants are as follows:
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Approximate
Interior Monthly
Quantity Type Square Footage Rental
-------- ---- -------------- ------
56 One bedroom/one bath 544 $545
(executive)
60 One bedroom/one bath 776 600
(screened porch)
68 One bedroom/one bath 972 645
(loft)
80 One bedroom/one bath 1,000 655
(sun room)
20 Two bedrooms/two 1,121 740
baths (roommate,
screened porch)
28 Two bedrooms/two 1,254 770
baths (screened
porch)
24 Two bedrooms/two 1,308 830
baths (den)
14 Two bedrooms/two 1,400 890
baths (sun room)
The apartments provide a combined total of approximately 331,600 square
feet of net rentable area.
Leases at the Property are generally for terms of one year or less. Average
rental rates for the past five years have both increased and decreased. As an
example, a one-bedroom, one-bath apartment unit (972 square feet) rented for
$519 in 1992, $573 in 1993, $584 in 1994, $540 in 1995 and $625 in 1996. The
average effective annual rental per square foot at the Property for 1992, 1993,
1994, 1995 and 1996 was $6.71, $7.40, $7.54, $6.97 and $8.07, respectively.
The buildings are wood-frame construction on concrete slabs, and the
exteriors are painted hardboard xxxxxx-style siding. Roofs are pitched and
covered with composition shingles and have metal gutters and downspouts.
Each apartment unit has wall-to-wall carpeting in the living areas and
vinyl floors in the kitchen and bath. Each apartment unit has a cable television
hook-up and individually controlled utilities. Each apartment unit, other than
the smallest one-bedroom unit, has individually metered utilities. The owner of
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the property supplies cold water, sewer service and trash removal. Each tenant
is responsible for his or her own electricity usage, which includes air
conditioning and lights, and each tenant also pays for gas usage that provides
heat and hot water, except that the owner of the Property is responsible for gas
usage in the smallest one-bedroom apartment units, which are in four buildings,
each of which is served by one central gas-fired boiler that provides hot water.
Each unit, except the smallest one-bedroom unit, includes washer/dryer
connections for full-sized appliances, mini and vertical blinds and a patio or
balcony. There is a wood-burning fireplace in 241 apartment units and certain
units include built-in bookshelves, a screened porch or sun room. Each kitchen
is equipped with a refrigerator/freezer with icemaker, gas range and oven,
dishwasher and garbage disposal.
The Property has two swimming pools, a sun-deck with dressing rooms and
showers, a pool-side cabana, two lighted tennis courts, a park area with gazebo,
picnic tables and gas grills, a fitness center, a laundry facility and a car
wash area. There is ample paved parking for tenants.
There are at least seven apartment properties in the area that compete with
the Property. All offer similar amenities and have rents that generally are
comparable when compared with those of the Property. Based on a recent telephone
survey, the Company estimates that occupancy in nearby competing properties now
averages approximately 90%.
According to information provided by the seller, physical occupancy at the
Property averaged approximately 93% in 1992, 94% in 1993, 95% in 1994, 94% in
1995, and 96% in 1996. On July 21, 1997, the Property was 95% occupied.
As of July 1997, approximately 80% of the Property's tenants were single,
with an average age of approximately 23. Tenants consist principally of
service-level and mid-management level employees of local businesses, including
MCI and Coca-Cola. The average household income is approximately $32,000.
For 1996, Xxxxxx County specified an assessed value for the Property equal
to $11,797,800. The taxable value is equal to 40% of the assessed value, or
$4,719,120. The tax rate was $0.04028, and the total real estate taxes were
calculated as $190,086.
The basis of the depreciable residential real property portion of the
Property (currently estimated at about $8,970,500) will be depreciated over 27.5
years on a straight-line basis. The basis of the personal property portion will
be depreciated in accordance with the modified accelerated cost recovery system
of the Code. Amounts to be spent by the Property on repairs and
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improvements will be treated for tax purposes as permitted by the Code based on
the nature of the expenditures.
The Company believes that the Property is and will continue to be
adequately covered by property and liability insurance.
Material Factors Considered in Assessing the Property. The factors
considered by the Company to be relevant in evaluating the Property for
acquisition by the Company included the following.
1. The Company believes that the greater Atlanta, Georgia metropolitan area
will continue to enjoy steady population increase and steady economic
development and that such increase and development will support stable occupancy
rates and reasonable increases in rents at the Property. In particular, the
Company believes that the Property is located in a particularly desirable part
of the Atlanta metropolitan area.
2. Based upon an engineering report and its own inspections, the Company
believes that the Property is in very good condition. The Company particularly
believes that the Property benefited from a significant renovation completed by
the former owner in 1993, and will similarly benefit from additional renovations
to be undertaken by the Company.
3. The Property has an advantageous location near the Perimeter
Center/Georgia Highway 400 corridor, Atlanta's largest and fastest growing
commercial area.
The Company is not aware of any material adverse factors relating to the
Property not set forth in this report that would cause the financial information
contained in this report not to be indicative of future operating results.
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