EXHIBIT 99.1
THE ARBORS AT WINDSOR LAKE APARTMENTS
Columbia, South Carolina
On January 14, 1997, effective January 1, 1997, Cornerstone Realty Income
Trust, Inc. ("Company") purchased The Arbors at Windsor Lake Apartments, a
228-unit apartment complex having an address of 0000 Xxxxxxx Xxxx Xxxxxxxxx,
Xxxxxxxx, Xxxxx Xxxxxxxx ("Property").
The Seller was unaffiliated with the Company. The purchase price was
$10,875,000. At closing, the entire purchases price was borrowed under the
Company's unsecured line of credit. The Company expects to repay such borrowed
amount with the proceeds from the sale of additional Shares. Title to the
Property was conveyed to the Company by limited warranty deed.
Location. The following information is based in part upon information
provided by the Columbia Chamber of Commerce.
Columbia is the capital of South Carolina and the greater metropolitan area
has a population of approximately 500,000 people. The largest employers in the
area included federal, state and local governments, various financial services
firms and the Army's Fort Xxxxxxx.
Columbia is also the site of the University of South Carolina and various
other smaller colleges. As a result of the reputation of the engineering program
at the University of South Carolina, the city has recently become home to new
businesses in various technical areas. Also, the medical school and teaching
hospital at the University make Columbia the state's leader in the health care
industry.
The Property is in the northeast portion of the city and is located in an
established residential area. The neighborhood also includes other multi-family
developments and commercial and retail developments.
The Property is near Interstate 77 and Interstate 20, which provide
convenient access to all locations in the greater Columbia area. Downtown
Columbia is an approximately 15-minute drive from the Property. The Property is
approximately one mile from Fort Xxxxxxx.
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Description of the Property. The Property consists of 228 garden-style
apartments located in 11 buildings on approximately 14.5 acres of land. The
buildings are a combination of two and three stories, and the Property was
constructed in 1991.
The Company believes the Property has generally been well maintained and is
generally in good condition. However, the Company has budgeted approximately
$50,000 for repairs and improvements including landscaping, carpet replacement
and clubhouse renovations.
The Property offers six different unit types. The unit mix and rents being
charged new tenants as of January, 1997 are as follows:
Approximate
Interior
Quantity Type Square Footage Monthly Rental
-------- ---- -------------- --------------
12 1 bedroom/1 bath 750 $510
56 1 bedroom/1 bath 750 530
(front)
22 2 bedrooms/2 baths 964 615
88 2 bedrooms/2 baths 964 630
(front)
10 3 bedrooms/2 baths 1184 725
40 3 bedrooms/2 baths 1184 740
(front)
The apartments provide a combined total of approximately 216,000 square
feet of net rentable area.
Leases at the Property are for terms of one year or less. Average rental
rates for the past five years have generally increased gradually. As an example
a three bedroom, two bath apartment rented for $710 in 1992, $710 in 1993, $725
in 1994, $725 in 1995, and $735 in 1996. The average effective annual rental per
square foot at the Property for 1992, 1993, 1994, 1995 and 1996 was $7.55,
$7.55, $7.71, $7.71, and $7.81, respectively.
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The buildings are wood frame construction on concrete slabs with a
combination of brick veneer and vinyl siding. Roofs are sloped fiberglass
shingles on plywood.
The Property features an outdoor swimming pool and hot tub, two lighted
tennis courts, a fitness center, a car wash area and vacuum, a playground, 20
covered garages with electronic door openers, 40 extra storage units, a dry
cleaning service and a resident executive center. The Property also has a
clubhouse with a leasing office.
Apartment units have wall-to-wall carpeting in the living areas and vinyl
floors in the kitchen and bath. Each unit has a cable television hook-up and an
individually controlled heating and air conditioning unit. Each kitchen has a
refrigerator/freezer, electric range and oven, a dishwasher and a garbage
disposal. Each unit also has a full-sized washer/dryer and some units have
vaulted ceilings, lighted ceiling fans, mini blinds and large walk-in closets.
There are natural gas fire places in 187 apartments units. The owner of the
Property pays for cold water and sewer service. The tenants pay for their
electricity and gas service, which includes heating, air conditioning, cooking,
hot water and lights.
There are at least four apartment properties in the area which compete with
the Property. All offer similar amenities and generally have rents that are
comparable to those of the Property. Based on a recent telephone survey, the
Company estimates that occupancy in nearby competing projects now averages
approximately 92%.
According to information provided by the seller, physical occupancy at the
Property averaged approximately 85% in 1992, 88% in 1993, 90% in 1994, 94% in
1995 and 94% in 1996. On January 1, 1997, the Property was 78% occupied. The
tenants are a mix of white-collar workers, military personnel and students.
Approximately 30% of the current residents are employed at Fort Xxxxxxx.
The 1996 real estate taxes applicable to the Property were calculated as
assessed value times 6% times 0.3019, and the real estate taxes for 1996 were
calculated to be $120,083. The assessed value was $6,629,300. The basis of the
depreciable residential real property portion of the Property (currently
estimated at about $6,050,100) 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 improvements will be
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treated for tax purposes as permitted by the Code based on the nature of the
expenditures.
Before acquisition by the Company, the Property had been in bankruptcy for
over one year. During that period it had been managed by three separate
management companies. The Company believes that inefficient management resulted
in a downturn in occupancy and rental income at the Property during such period.
The Company does not believe that any factors which led to the Property being
placed into bankruptcy will apply to the Company's ownership and operation of
the Property.
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 Columbia, South Carolina area will
experience continued strong economic development and steady population increase,
owing in part to its status as the capital of the state and the presence of the
University of South Carolina, 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 good condition.
3. The Property is conveniently located and proximate to area 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 necessarily indicative of future operating
results.
WESTCHASE APARTMENTS
Charleston, South Carolina
On January 15, 1997, effective the same date, Cornerstone Realty Income
Trust, Inc. (the "Company") purchased the Westchase Apartments, a 352-unit
apartment complex having an address of Xxx Xxxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxx
Xxxxxxxx (the "Property").
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The Seller was unaffiliated with the Company. The purchase price was
$11,000,000. At closing, the entire purchase price was borrowed under the
Company's unsecured line of credit. The Company expects to repay such borrowed
amount with the proceeds from the sale of additional Shares. Title to the
Property was conveyed to the Company by limited warranty deed.
Location. The following information is based in part upon information
provided by the Charleston Chamber of Commerce.
The Charleston Metropolitan Statistical Area ("MSA") is comprised of
Charleston, Berkeley and Dorchester Counties. The approximate population of the
MSA is 570,000. Charleston County has approximately 330,000 residents,
approximately 85,000 of which are in the city limits.
The principal economic factors in the region are distribution and port
facilities, the tourist industry, the medical community and the military.
The Port of Charleston is the leading container cargo port in the southeast
and on the entire east coast ranks second only to the combined ports of New York
and New Jersey. BMW and NUCOR are two recent examples of companies that rely on
the Port of Charleston.
Tourism is a major factor in the area, with approximately five million
visitors annually. Tourist attractions include the historic district of
Charleston, beaches, golf courses, and restaurants. It is estimated that the
total economic impact of the tourist industry in the region is $1.5 billion
annually, accounting for approximately 34,000 jobs and approximately 14% of the
total work force.
Charleston is the home to the Medical University of South Carolina, which
accounts for approximately 7,500 jobs. A total of approximately 16,000 persons
are employed in the region's 10 hospitals.
The United States Navy employs approximately 7,800 people in the region in
installations such as Charleston Naval Weapons Station, Naval Hospital and Naval
Command, Control and Ocean Surveillance Center in Service Engineering, East
Coast Division. In addition, the Charleston Air Force Base employs over 5,400
people. From 1989 to 1996, Naval employment in the region dropped from 21% to 3%
of total jobs. However, the region experienced a concurrent increase in jobs in
other sectors.
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The overall unemployment rate in the region is currently approximately 5%.
The Property is located in the Xxxx Xxxxxx region of Charleston. The
immediate area consists of other multi-family housing, commercial and retail
development and single-family housing. The Property is located near major
shopping centers, schools and churches and is accessible from Interstate 26. The
Property is within a 10-minute drive of the airport and approximately a
15-minute from downtown Charleston. Charleston's largest mall, the Citadel Mall,
is located less than two miles from the Property and has four major anchor
stores and approximately one million square feet of space. The Xxxxx Hospital is
located within one-half mile of the Property and the St. Xxxxxxx Xxxxxx Hospital
is expected to relocate less than one-half mile from the Property.
Description of the Property. The Property consists of 352 garden-style
apartments located in 23 two-story buildings on approximately 30 acres of land.
The Property was constructed in 1985.
The Company believes that the Property has generally been well maintained
and is generally in good condition. However, the Company has budgeted
approximately $352,000 for repairs and improvements including siding replacement
and repair, painting, carpet replacement, roof replacement and clubhouse
renovations.
The Property offers many different unit types. The unit mix and rents being
charged new tenants as of January, 1997 are as follows:
Approximate
Interior
Quantity Type Square Footage Monthly Rental
-------- ---- -------------- --------------
11 Efficiency 407 $425
11 Efficiency LGLRUP 432 425
20 1/1 BWUP 505 445
2 1/1 BWUPSLOC 505 445
20 1/1 WS 505 440
2 1/1 WSSLOC 505 440
20 1/1 BWUP 617 460
2 1/1 BWUPSLOC 617 465
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Approximate
Interior
Quantity Type Square Footage Monthly Rental
-------- ---- -------------- --------------
25 1/1 BWFPUP 617 475
7 1/1 BWFPUP 617 480
1 1/1 BWFPSLOCUP 617 480
52 1/1 WS 617 455
3 1/1 WSSLOC 617 455
36 2/2 BWWDUP 847 580
8 2/2 BWWDUPSLOC 847 580
36 2/2 BWWDFPUP 847 585
8 2/2 BWWDFPUPSLOC 847 585
72 2/2 WS 847 565
16 2/2 WSSLOC 847 565
LGLR -- Large Living Room WS -- Window Seat
UP -- Upper Level FP -- Fireplace
BW -- Bay Window WD -- Washer/Dryer Connections
SLOC -- Special Location
The apartments provide a combined total of approximately 248,000 square
feet of net rental area.
Leases at the Property are for terms of one year or less. Average rental
rates for the past five years have both increased and decreased. As an example a
two bedroom, two bath apartment rented for $470 in 1992, $475 in 1993, $440 in
1994, $480 in 1995, and $495 in 1996. The average effective annual rental per
square foot at the Property for 1992, 1993, 1994, 1995 and 1996 was $7.28,
$7.36, $6.82, $7.44, and $7.67, respectively.
The buildings are wood frame construction on concrete slabs. The buildings
have pitched composition shingled roofs. Exteriors are a combination of brick
and horizontal wood siding.
The Property has an outdoor swimming pool with sun deck, whirlpool, lighted
tennis court, sand volleyball court, basketball court, car wash area with
vacuum, three laundry facilities and a scenic lake with fountains. The Property
also includes a clubhouse with a clubroom, entertainment bar,
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conversation area and leasing office. There is paved parking for approximately
616 vehicles.
Apartments units have wall-to-wall carpeting in the living areas and vinyl
floors in the kitchen and baths, as well as cable television hook-ups and
individually controlled heating and air conditioning units. Each unit has a
kitchen passthrough/breakfast bar, pantry, walk-in closets, a linen closet and
mini blinds. Some units also include a bay window with window seats, a wood
burning fire place and washer/dryer connections. Each kitchen is equipped with a
refrigerator/freezer, electric range and oven, dish washer 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 heat, air
conditioning, cooking, hot water and lights.
There are at least six apartment properties in the area which compete with
the Property. All offer similar amenities and generally have rents that are
higher when compared with those of the Property. Based on a recent telephone
survey, the Company estimates that occupancy in nearby competing projects now
averages approximately 94%.
According to information provided by the seller, physical occupancy at the
Property averaged approximately 97% in 1992, 93% in 1993, 95% in 1994, 95% in
1995 and 95% in 1996. On January 1, 1997, the Property was 97% occupied. The
tenants are a mix of white-collar and blue-collar workers, students and retired
persons. Most of the tenants are under the age of 35 and approximately half are
believed to be single.
The 1996 real estate taxes applicable to the Property were calculated as
assessed value times 6% times 0.3219, plus a solid waste tax of $56 per
apartment unit. The real estate taxes for 1996 were calculated to be $178,384.
The assessed value was $9,236,000. The basis of the depreciable residential real
property portion of the Property (currently estimated at about $7,581,000) 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.
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
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the Property for acquisition by the Company included the following:
1. The Company believes that the Charleston, South Carolina area will
experience continued strong economic development and steady population increase,
owing to a strong, diversified economy characterized by at least four major
employment factors (port facilities, tourism, medical facilities and the
military), 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 good condition.
3. The Property is conveniently located and proximate to area 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 necessarily indicative of future operating
results.
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