EXHIBIT 99.2
PACES ARBOR and PACES FOREST APARTMENTS
Raleigh, North Carolina
On March 27, 1997, Cornerstone Realty Income Trust, Inc. (the "Company")
purchased the Paces Arbor Apartments, a 101-unit apartment complex ("Paces
Arbor"), and the Paces Forest Apartments, a 117-unit apartment complex ("Paces
Forest"), both located in Wake County, near Raleigh, North Carolina. Paces Arbor
and Paces Forest are sometimes referred to collectively herein as the
"Property."
The Company purchased the Property from sellers unaffiliated with the
Company and its affiliates. The aggregate purchase price for the Property was
$12,061,700. The entire purchase price was borrowed on an interim basis under
the Company's unsecured line of credit and title to the Property was conveyed to
the Company by limited warranty deed.
Location. The following information is based in part on information
provided by the Raleigh Chamber of Commerce.
Paces Arbor and Paces Forest are located in Wake County, near Raleigh
within the Raleigh/Durham Metropolitan Statistical Area. The area is also know
as the Research Triangle, and contains the cities of Raleigh, Durham and Chapel
Hill. It is the second largest metropolitan area in North Carolina, after the
Charlotte area.
Raleigh is the capital of North Carolina and is the fastest growing major
city in North Carolina. The population of the city was approximately 150,000 in
1980 and estimated to be approximately 208,000 in 1993.
Research Triangle Park, which is located an approximately 20-minute drive
from the Property, is the largest planned research and development industrial
park in the United States. It was founded in 1958 as a cooperative effort among
Duke University, the University of North Carolina and North Carolina State
University. The Park comprises approximately 6,800 acres and contains over 14
million square feet of industrial space. Among the Park's approximately 60
research-oriented firms are IBM, Glaxo and Northern Telecom.
Raleigh's economy generally is a blend of industry, education and
government. The city's employment stability, strategic location, favorable labor
climate, pro-business
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attitude and pool of educated workers have helped the area attract many major
businesses and industries. Major industries in the area include electronics,
electrical equipment and machinery, metal working and food processing.
The Research Triangle is home to Duke University, the University of North
Carolina at Chapel Hill and North Carolina State University.
Paces Arbor is located on Xxxx Road off of Six Forks Road. Paces Forest is
located on Millbrook Road. The immediate area around each apartment community
consists of other multi-family housing, commercial and retail development and
single-family housing. Both apartment communities are conveniently located near
shopping, schools and churches. Each apartment community is an approximately
20-minute drive from Raleigh/Durham International Airport. Paces Arbor and Paces
Forest are within two miles of each other.
Description of the Property. The Property consists of two apartment
communities comprising 218 garden-style apartment units. Paces Arbor consists of
six two- and three-story buildings containing 101 units on approximately 10
acres. Paces Forest consists of six two- and three-story buildings containing
117 units on approximately 19.5 acres. Each apartment community was built in
1986.
The Company believes that Paces Arbor is generally in good condition.
However, the Company has budgeted approximately $89,417 for various repairs and
improvements to Paces Arbor, including painting, clubhouse renovations,
siding/wood repair, and addition of an exercise facility.
Paces Arbor offers four unit types. The unit mix and rents currently being
charged new tenants are as follows:
Approximate
Interior Square Monthly
Quantity Type Footage Rental
-------- ---- ------- ------
18 One bedroom, one 625 $560-$625
bathroom
35 One bedroom, one 788 580-645
bathroom
13 Two bedrooms, one 938 680-755
bathroom
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Approximate
Interior Square Monthly
Quantity Type Footage Rental
-------- ---- ------- ------
35 Two bedrooms, two 1,136 740-805
bathrooms
The apartments in Paces Arbor provide a combined total of approximately
91,000 square feet of net rentable area.
Leases at Paces Arbor 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 (788 square feet) rented for $455 in 1992,
$485 in 1993, $485 in 1994, $535 in 1995, and $535 in 1996. The average
effective annual rental per square foot at the Property for 1992, 1993, 1994,
1995 and 1996 was $6.72, $7.17, $7.17, $7.91 and $7.91, respectively.
The Company believes that Paces Forest is generally in good condition.
However, the Company has budgeted approximately $103,583 for various repairs and
improvements to Paces Forest, including painting, clubhouse renovation, wood
siding repairs and addition of an exercise facility.
Paces Forest also offers four unit types. The unit mix and rents currently
being charged new tenants at Paces Forest are as follows:
Approximate
Interior Square Monthly
Quantity Type Footage Rental
-------- ---- ------- ------
24 One bedroom, one 625 $580-$635
bathroom
38 One bedroom, one 788 620-675
bathroom
21 Two bedrooms, one 938 710-775
bathroom
34 Two bedrooms, two 1,136 790-835
bathrooms
The apartments in Paces Forest provide a combined total of approximately
103,000 square feet of net rentable area.
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Leases at Paces Forest 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 (788 square feet) rented for $525 in 1992,
$550 in 1993, $565 in 1994, $575 in 1995, and $575 in 1996. The average
effective annual rental per square foot at the Property for 1992, 1993, 1994,
1995 and 1996 was $7.80, $8.17, $8.39, $8.54 and $8.54, respectively.
The buildings at each apartment community are wood frame construction with
crawl spaces. Exteriors are wood cedar siding and brick veneer. The buildings
have pitched roofs covered with asphalt shingles.
Each apartment unit at the Property has wall-to-wall carpeting in the
living areas and vinyl floors in the kitchen and bath, as well as a cable
television hook-up and individually controlled heating and air conditioning
unit. Each apartment unit has washer/dryer connections, miniblinds, pantry and
outside storage, and some units include a wood-burning fireplace, stackable or
full-sized washer and dryer, vaulted ceilings and ceiling fans. Each kitchen is
equipped with a refrigerator/freezer, electric range and oven, dishwasher and
garbage disposal. The owner supplies cold water, sewer service and trash
removal. The tenants pay for their electricity, which includes heat, air
conditioning, cooking, hot water and lights.
Paces Arbor has an outdoor swimming pool and jacuzzi, an exercise/weights
room, a basketball court, gas grills and a gazebo. Paces Arbor has a clubhouse
with a rental office and lounge. There is ample paved parking for tenants.
Paces Forest has an outdoor swimming pool, a jacuzzi, tennis courts, an
exercise/weights room, a basketball court and a barbeque area. The apartment
community also has a clubhouse with a rental office and lounge. There is ample
paved parking for the tenants.
There are at least seven apartment properties in the area which 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 95%.
According to information provided by the seller, physical occupancy at
Paces Arbor averaged approximately 93% in 1992, 94% in 1993, 95% in 1994, 95% in
1995 and 96% in 1996. On March 25, 1997, Paces Arbor was 96% occupied.
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According to information provided by the seller, physical occupancy at
Paces Forest averaged approximately 92% in 1992, 94% in 1993, 95% in 1994, 95%
in 1995 and 97% in 1996. On March 25, 1997, Paces Forest was 94% occupied.
The residents at each apartment community are a mix of white-collar and
blue-collar workers, students and retired persons.
The following table sets forth the 1996 real estate tax information on the
Property:
Jurisdiction Assessed Value Rate Tax
------------ -------------- ---- ------------
Paces Arbor $3,430,017 $1.1675 $41,560.45*
Paces Forest 3,835,732 1.1675 46,537.17**
* Includes a residential waste reduction fee of $1,515.
** Includes a residential waste reduction fee of $1,755.
The basis of the depreciable residential real property portion of the
Property (currently estimated at about $2,723,473 for Paces Arbor and $3,016,732
for Paces Forest) 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 Internal Revenue Code
of 1986, as amended ("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 Raleigh, North Carolina area will enjoy
continued 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. In particular, the Company believes that the
presence of Research Triangle Park and three major universities in the area and
associated businesses and activities will have a positive impact on the area for
the indefinite future.
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2. Based upon an engineering report and its own inspections, the Company
believes that the Property is generally in sound condition.
3. The Property is conveniently proximate to major employers and shopping.
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.
CARLYLE CLUB APARTMENTS
Lawrenceville, Georgia
On April 30, 1997, the Company purchased the Carlyle Club Apartments, a
243-unit apartment complex located at 0000 Xxxxxxx Xxxx Xxxxx, Xxxxxxxxxxxxx,
Xxxxxxx (the "Property").
The Company purchased the Property from a seller unaffiliated with the
Company and its affiliates. The purchase price was $11,580,000, all of which was
borrowed by the Company on an interim basis 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 City of Lawrenceville, County of
Gwinnett, just outside 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
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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). 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").
The Property is located within Gwinnett County. It is located approximately
1.5 miles from Gwinnett Place, a 1.6 million square-foot regional mall anchored
by Sears, Macy's, Rich's, Mervyns and Parisians. The Property is also
approximately 1.5 miles from Interstate 85, which provides convenient access to
all portions of the metropolitan area as well as other cities in the region.
Gwinnett County had the highest population growth rate of any large county
in the United States during the 1980's. From 1980 to 1990, Gwinnett County added
almost 190,000 new residents, and the population growth for the County from 1990
to 2000 is projected to exceed 142,000, which would cause it to remain among the
fastest growing counties in the nation.
The immediate area surrounding the Property consists of other multi-family
housing, commercial and retail development and single-family housing. The
Property is adjacent to a golf course and is conveniently near major shopping,
schools and churches.
Description of the Property. The Property consists of 243 garden and
townhouse style apartment units in 27 two- and three- story buildings on
approximately 19.8 acres of land. The Property was built in 1974.
The Company believes that the Property is generally in very good condition.
In 1991, the Property was substantially renovated. The renovations at that time
included siding repair and replacement, new roofs and new appliances. The
Company has budgeted approximately $121,500 for additional repairs and
improvements, including renovation of the clubhouse and center hallways, parking
area resealing and restriping and power washing of all buildings.
The Property offers nine unit types. The unit mix and rents currently being
charged new tenants are as follows:
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Approximate
Interior Square Monthly
Quantity Type Footage Rental
-------- ---- ------- ------
50 One bedroom, one 800 $627
bathroom
30 One bedroom, one 936 670
bathroom, den
40 Two bedrooms, one 1,040 670
and one-half
bathrooms
38 Two bedrooms, one 1,140 725
full and two half
bathrooms, TH
17 Two bedrooms, one 1,140 760
and one-half
bathrooms, TH
24 Two bedrooms, two 1,184 780
bathrooms, den
9 Two bedrooms, one 1,290 865
and one-half
bathrooms, den, TH
18 Three bedrooms, two 1,395 935
and one-half
bathrooms, TH
17 Three bedrooms, two 1,600 950
and one-half
bathrooms, TH
The apartments provide a combined total of approximately 265,000 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
two-bedroom, 1.5-bath apartment unit (1,290 square feet) rented for $550 in
1992, $575 in 1993, $655 in 1994, $825 in 1995 and $840 in 1996. The average
effective annual rental per square foot at the Property for 1992, 1993, 1994,
1995 and 1996 was $5.14, $5.38, $6.13, $7.72 and $7.86, respectively.
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The buildings are wood-frame construction on concrete slabs with vinyl
siding exteriors. The buildings have pitched roofs covered with asphalt
shingles.
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 washer/dryer connections, miniblinds, a pantry and
a private balcony or patio. Each kitchen has a refrigerator/freezer with
icemaker, self-cleaning electric range and oven, 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,
cooking, hot water and lights. The tenants also pay for gas usage for heating.
The Property has two outdoor swimming pools, two small lakes, a tennis
court, a playground, two laundry rooms and a clubhouse. A portion of the
Property overlooks the adjacent golf course, which is known as Northwoods
Country Club. 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 to those of the Property. Based on a recent telephone survey, the
Company estimates that occupancy in nearby competing properties now averages
approximately 95%.
According to information provided by the seller, physical occupancy at the
Property averaged approximately 95% in 1992, 96% in 1993, 96% in 1994, 95% in
1995 and 95% in 1996. On April 21, 1997, the Property was 96% occupied.
The tenants at the Property are a mix of white-collar workers, students and
retired persons.
The 1996 real estate tax rate established by Gwinnett County for the
Property was $0.035950. The assessed value was $8,400,000 and the taxable value
(40% of assessed value) was $3,360,000. The taxes were calculated as $120,792.
The basis of the depreciable residential real property portion of the
Property (currently estimated at about $5,816,100) 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
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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 strong 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 in
1991.
3. The Property has a convenient location relative to shopping (including a
major regional mall). The Property also benefits from being adjacent to a golf
course.
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.
XXXXXX RUN APARTMENTS
Norcross, Georgia
On April 30, 1997, the Company purchased the Ashley Run Apartments, a
348-unit apartment complex located at 0000 Xxxxx Xxxx Xxxx, Xxxxxxxx, Xxxxxxx
(the "Property").
The Company purchased the Property from a seller unaffiliated with the
Company and its affiliates. The purchase price for the Property was $18,000,000,
which the Company borrowed on an interim basis under its unsecured line of
credit. Title to the Property was conveyed to the Company by limited warranty
deed.
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Location. The Property is located in the City of Norcross, which is within
Gwinnett County. Gwinnett County is part of the greater Atlanta, Georgia
metropolitan area. For information on the greater Atlanta metropolitan area, see
"Carlyle Club Apartments" above.
The immediate area surrounding the Property consists of other multi-family
housing, commercial and retail development and single-family housing. The
Property is located in the area known as "Peachtree Corners," and is near
businesses, major shopping, entertainment facilities, schools and churches. The
Property is readily accessible from Interstates 85 and 285.
Description of the Property. The Property consists of 348 garden and
townhouse style apartment units contained in 18 and two- and three-story
buildings on approximately 45 acres of land. The Property was built in 1987.
The Company believes that the Property has been well maintained and is
generally in good condition. Within the last two years, the owner of the
Property painted the building exteriors, replaced siding as necessary, installed
new roofs on four buildings and purchased new fitness equipment. The Company has
budgeted approximately $348,000 for certain renovations, including renovations
to the clubhouse, additional new roofs, painting (a new color) and siding
repairs and replacement.
The Property offers six unit types. The unit mix and rents currently being
charged new tenants are as follows:
Approximate
Interior Square Monthly
Quantity Type Footage Rental
-------- ---- ------- ------
36 One bedroom, one 835 $625
bathroom
60 Two bedrooms, one 1,089 650
bathroom
86 Two bedrooms, two 1,090 700
bathrooms
60 Two bedrooms, two 1,096 700
bathrooms
100 Three bedrooms, two 1,373 850
bathrooms
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Approximate
Interior Square Monthly
Quantity Type Footage Rental
-------- ---- ------- ------
6 Three bedrooms, two 1,328 900
bathrooms, TH
The apartments provide a combined total of approximately 400,000 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
two-bedroom, two-bath apartment unit (1,090 square feet) rented for $510 in
1992, $540 in 1993, $600 in 1994, $650 in 1995 and $660 in 1996. The average
effective annual rental per square foot at the Property for 1992, 1993, 1994,
1995 and 1996 was $5.54, $5.86, $6.51, $7.06 and $7.17, respectively.
The buildings are wood-frame construction on concrete slabs with a
combination of wood siding and brick veneer. The buildings have pitched roofs
covered with asphalt shingles.
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 washer/dryer connections, a security system, a
fireplace and a dining room ceiling fan. Each kitchen is equipped with a
refrigerator/freezer with icemaker, electric range and oven, dishwasher and
garbage disposal. The owner of the Property supplies cold water, sewer service
and trash removal. The tenants pay for their electricity usage, which includes
air conditioning, cooking and lights. The tenants also pay for gas which
provides their heat and hot water.
The Property has an outdoor swimming pool which is adjacent to a seven-acre
lake. The Property also has a lighted tennis court, a playground, two laundry
facilities, an exercise room and a clubhouse, which is also situated on the
lake. There is ample paved parking for tenants.
There are at least eight 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 95%.
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According to information provided by the seller, physical occupancy at the
Property averaged approximately 93% in 1992, 92% in 1993, 95% in 1994, 94% in
1995 and 96% in 1996. On April 22, 1997, the Property was 96% occupied.
The tenants at the Property are a mix of white-collar and blue-collar
workers, students and retired persons.
The 1996 real estate tax rate imposed by Gwinnett County on the Property
was $0.035950. The assessed value of the Property was $11,875,000 and the
taxable value (40% of assessed value) was $4,750,000. The real estate taxes were
calculated as $170,762.50.
The basis of the depreciable residential real property portion of the
Property (currently estimated at about $9,329,700) 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 greater Atlanta, Georgia metropolitan area
will continue to enjoy strong 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, known as Peachtree Corners.
2. The Property is has a convenient location relative to business and
shopping.
3. 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 significant renovations accomplished
during the past two years.
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4. The Company believes that the Property has a particularly spacious and
attractive site, which includes a seven-acre lake adjacent to the Property's
swimming pool and clubhouse.
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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