<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
--------------------------------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR
15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-13136
------------------------------
HOME PROPERTIES OF NEW YORK, INC.
---------------------------------
(Exact name of registrant as specified in its charter)
MARYLAND 16-1455126
-------- ----------
(State or other jurisdiction of (IRS Employer Identification
incorporation or organization) Number)
850 Clinton Square, Rochester, New York 14604
---------------------------------------------
(Address of principal executive offices) (Zip Code)
(716) 546-4900
--------------
(Registrant's telephone number, including area code)
N/A
--------------
(Former name, former address and
former year, if changed since last report)
Indicate by check mark whether registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Class of Common Stock Outstanding at October 31, 1996
--------------------- ----------------------------
$.01 par value 5,850,365
Page 1 of 18
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
HOME PROPERTIES OF NEW YORK, INC.
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
1996 1995
---- ----
(Unaudited) (Note 1)
<S> <C> <C>
ASSETS
Real estate:
Land $ 8,484 $ 7,065
Buildings, improvements and equipment 230,394 191,138
-------- --------
238,878 198,203
Less: accumulated depreciation ( 37,987) ( 32,258)
-------- --------
Real estate, net 200,891 165,945
Cash and cash equivalents 1,260 812
Cash in escrows 4,349 3,754
Advances to affiliates 4,177 5,097
Deferred charges and other assets 15,889 5,854
-------- --------
Total assets $226,566 $181,462
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgage notes payable $110,527 $ 86,149
Notes payable 314 470
Line of credit 9,530 4,500
Accounts payable 2,803 1,657
Accrued interest payable 612 383
Accrued expenses and other liabilities 2,157 1,882
Security deposits 2,299 1,902
-------- --------
Total liabilities 128,242 96,943
-------- --------
Minority interest 18,037 8,739
-------- --------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value; 10,000,000
shares authorized; no shares issued - -
Common stock, $.01 par value; 30,000,000
shares authorized; 5,842,156 shares issued
and outstanding 58 54
Excess stock, $.01 par value; 10,000,000
shares authorized; no shares issued - -
Additional paid-in capital 91,979 83,413
Distributions in excess of
accumulated earnings ( 11,750) ( 7,687)
-------- --------
Total stockholders' equity 80,287 75,780
-------- --------
Total liabilities and
stockholders' equity $226,566 $181,462
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
Page 2 of 18
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
AND THE ORIGINAL PROPERTIES
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
1996 1995
---- ----
<S> <C> <C>
Revenues:
Rental income $ 30,665 $ 22,778
Property other income 799 827
Other income 1,492 887
Equity in income from operations of
HP Management and Conifer Realty 106 58
---------- ----------
Total revenues 33,062 24,550
---------- ----------
Expenses:
Operating and maintenance 15,992 11,447
General and administrative 1,077 874
Interest 6,440 4,328
Depreciation and amortization 5,995 4,775
---------- ----------
Total expenses 29,504 21,424
---------- ----------
Income before minority interest 3,558 3,126
Minority interest 626 315
---------- ----------
Net income $ 2,932 $ 2,811
========== ==========
Per share data:
Net income $.53 $.52
==== ====
Weighted average number of
shares outstanding 5,490,842 5,408,448
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
Page 3 of 18
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
AND THE ORIGINAL PROPERTIES
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
1996 1995
---- ----
<S> <C> <C>
Revenues:
Rental income $ 10,930 $ 8,123
Property other income 283 274
Other income 331 345
Equity in income from operations of
HP Management and Conifer Realty 272 67
---------- ----------
Total revenues 11,816 8,809
---------- ----------
Expenses:
Operating and maintenance 5,438 3,915
General and administrative 368 306
Interest 2,316 1,594
Depreciation and amortization 2,068 1,749
---------- ----------
Total expenses 10,190 7,564
---------- ----------
Income before minority interest 1,626 1,245
Minority interest 285 126
---------- ----------
Net income $ 1,341 $ 1,119
========== ==========
Per share data:
Net income $.24 $.21
==== ====
Weighted average number of
shares outstanding 5,646,418 5,408,466
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
Page 4 of 18
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
AND THE ORIGINAL PROPERTIES
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED, IN THOUSANDS)
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,932 $ 2,811
------- -------
Adjustments to reconcile net income to net
cash provided by operating activities:
Equity in income of
HP Management and Conifer Realty (106) (58)
Income allocated to minority interest 626 315
Depreciation and amortization 6,232 5,030
Changes in assets and liabilities:
Cash in escrows ( 595) 325
Deferred charges and
other assets ( 4,893) ( 2,633)
Accounts payable and
accrued liabilities 2,047 1,549
------- -------
Total adjustments 3,311 4,528
------- -------
Net cash provided by (used in)
operating activities 6,243 7,339
------- -------
Cash flows used in investing activities:
Purchase of properties, net
of mortgage notes assumed ( 4,868) ( 9,184)
Additions to properties ( 4,962) ( 6,592)
Advances to affiliates (11,686) ( 3,272)
Payments on advances to affiliates 12,606 922
------- -------
Net cash used in
investing activities ( 8,910) (18,126)
------- -------
Cash flows from financing activities:
Proceeds from sale of common stock 8,571 1
Proceeds from mortgage
and other notes payable 4,530 14,700
Payments of mortgage and
other notes payable ( 6,507) (11,887)
Proceeds from line of credit 20,930 14,727
Payments on line of credit (15,900) -
Dividends and distributions paid ( 8,493) ( 7,442)
Additions to deferred loan costs ( 222) ( 493)
Capital contribution to
minority interest 206 -
------- -------
Net cash provided by (used in)
financing activities 3,115 9,606
------- -------
Net increase (decrease) in cash 448 ( 1,181)
Cash and cash equivalents:
Beginning of period 812 1,635
------- -------
End of period $ 1,260 $ 454
======= =======
Supplemental disclosure of cash flow information:
Cash paid for interest $ 5,690 $ 3,868
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
Page 5 of 18
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
1. Unaudited Interim Financial Statements
The interim consolidated financial statements of Home Properties of New
York, Inc. (the "Company") are prepared pursuant to the requirements for
reporting on Form 10-Q. Accordingly, certain disclosures accompanying
annual financial statements prepared in accordance with generally
accepted accounting principles are omitted. The year-end balance sheet
data was derived from audited financial statements, but does not include
all disclosures required by generally accepted accounting principles. In
the opinion of management, all adjustments, consisting solely of normal
recurring adjustments, necessary for the fair presentation of
the consolidated financial statements for the interim periods have been
included. The current period's results of operations are not necessarily
indicative of results which ultimately may be achieved for the year.The
interim consolidated financial statements and notes thereto should be read
in conjunction with the financial statements and notes thereto included in
the Company's Form 10-K, as filed with the Securities and Exchange
Commission on March 15, 1996.
2. Organization and Basis of Presentation
Organization
Home Properties of New York, Inc. (the " Company ") was formed in
November 1993, as a Maryland corporation and is engaged primarily in the
ownership, management, acquisition and development of residential
apartment communities. On August 4, 1994, the Company completed an initial
public offering (" IPO ") of 5,408,000 shares of common stock. Net proceeds
from the IPO of approximately $94,000 were contributed to Home Properties
of New York, L.P. (the " Operating Partnership ") in exchange for units
representing a 90.4% general partnership interest in the Operating
Partnership. The Operating Partnership acquired all of the assets and
assumed all of the liabilities of the Original Properties (the
predecessor to the Company) and in connection therewith, (i) issued
575,375 units, representing a 9.6% minority interest in the Operating
Partnership, to insiders of Home Leasing Corporation (" HLC ");
(ii) paid $30,600 in cash to the partners of the Original Properties;
(iii) prepaid approximately $29,600 of the approximately $58,000 of
mortgage indebtedness on the Original Properties; and (iv) acquired four
residential properties from unaffiliated sellers for approximately
$32,400 in cash and the assumption of approximately $3,300 in existing
mortgage indebtedness.
The Original Properties is not a legal entity but rather a combination of
twelve entities which were wholly owned by HLC and its affiliates that
were reorganized to combine HLC's interest in certain investment
properties and property management operations. The entities owned 100%
of each property.
The property management, leasing and development activities for properties
affiliated with HLC, which were not combined with the Original
Properties, and certain other properties not affiliated with HLC, are
performed by Home Properties Management, Inc. (" HP Management "). HP
Management issued nonvoting common stock to the Operating Partnership
in exchange for management contracts for commercial and development
managed properties and certain other assets. This exchange entitles
the Operating Partnership to receive 99% of the economic interest of HP
Management. The remaining 1% economic interest and voting stock
were issued to the owners of HLC.
Page 6 of 18
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
2. Organization and Basis of Presentation (Continued)
On January 1, 1996, the Operating Partnership acquired the operations of
Conifer Realty, Inc. and Conifer Development, Inc. ("Conifer") and
purchased certain of Conifer's assets for a total acquisition price of
$15,434. The acquisition was funded by issuing 486,864 Operating
Partnership units (UPREIT units, valued at $17.25 per unit), the
assumption of $6,801 of existing mortgage debt and $235 in cash paid to
outside partners. Additional consideration will be paid in UPREIT
units if development fee income exceeds target levels over the next five
years.
The purchase price is allocated to three communities containing 358 units
valued at $10,173, general partnership interests in 2,804 apartment units
that Home Properties will manage valued at $1,757, goodwill valued at
$3,348 and other assets valued at $156.
The acquisition is accounted for using the purchase method of accounting
and, accordingly, the results of operations are included from the date of
acquisition forward.
The property management, leasing and development activities for properties
affiliated with the Conifer acquisition are performed by Conifer Realty
Corp. ("Conifer Realty"). Conifer Realty issued non-voting common stock
to the Operating Partnership in exchange for management contracts for
residential, commercial and development managed properties and certain
other assets. This exchange entitles the operating Partnership to
receive 99% of the economic interest of Conifer Realty. The remaining 1%
economic interest and voting stock were issued to the owners of HLC and
Conifer.
Basis of Presentation
The accompanying consolidated financial statements include the accounts
of the Company and its 82.9% general partnership interest in the
Operating Partnership.
All significant intercompany balances and transactions have been
eliminated in these consolidated financial statements.
Page 7 of 18
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
<TABLE>
<CAPTION>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
3. Deferred Charges and Other Assets
Deferred charges and other assets consist of the following:
September 30 December 31
1996 1995
------------ -----------
<S> <C> <C>
Deferred financing and interest rate
reduction agreements $ 2,927 $3,564
Goodwill 3,402 -
Less: Accumulated amortization (1,246) (1,588)
------- ------
Net intangible assets 5,083 1,976
Prepaid expenses 3,598 1,936
Accounts receivable 3,808 1,252
Investment in HP Management and
Conifer Realty 478 215
Investment in general partnerships 3,218 14
Land held for development 889 334
Other assets 142 127
------- ------
Total deferred charges and
other assets $17,216 $5,854
======= ======
</TABLE>
4. Earnings Per Common Share
Earnings per common share amounts are based on the weighted average number
of common shares and common equivalent shares (stock options) outstanding
during the quarter. The conversion of an Operating Partnership unit to
common stock will have no effect on earnings per common share as unit
holders and stockholders effectively share equally in the net income of
the Operating Partnership.
Page 8 of 18
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
5. Pro Forma Financial Information
<TABLE>
<CAPTION>
Pro Forma Combined Statement of Operations
For the Nine Months Ended September 30, 1996
--------------------------------------------
Home
Properties Pro Forma Company
Historical Adjustments Pro Forma
---------- ----------- ---------
<S> <C> <C> <C>
Revenue:
Rental Income $30,665 $2,084 $32,749
Property other income 799 46 845
Other income 1,492 -- 1,492
Equity in income from
operations of HP Management
and Conifer Realty 106 -- 106
------- ------ -------
Total revenues 33,062 2,130 35,192
------- ------ -------
Expenses:
Operating and maintenance 15,992 1,209 17,201
General and administrative 1,077 35 1,112
Interest 6,440 578 7,018
Depreciation and amortization 5,995 268 6,263
------- ------ -------
Total expenses 29,504 2,090 31,594
------- ------ -------
Income before minority interest
in Operating Partnership $ 3,558 $ 40 $ 3,598
======= ======
Minority interest in
Operating Partnership 634
-------
Net income $ 2,964
=======
Net income per common share $ .54
=======
Weighted average number of
shares outstanding 5,490,842
=========
</TABLE>
The pro forma information was prepared as if the transactions related
to the acquisition of Carriage Hill, Cornwall Park, Lakeshore Villa,
and Sunset Gardens on July 16, 1996 had occurred on January 1, 1996.
Adjustments to the pro forma combined statements of operations for the
nine months ended September 30, 1996, consist principally of providing
property net operating activity and recording interest, depreciation,
and amortization from January 1, 1996 to July 16, 1996.
The Company completed an acquisition of the Fairways, a 200-unit apartment
community in Syracuse, New York on March 5, 1996. The pro forma results
for the nine months and three months ended September 30, 1996 would not
have been materially different if the property had been acquired on
January 1, 1996. Therefore, no pro forma presentation has been prepared
reflecting this acquisition.
Page 9 of 18
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The following discussion is based primarily on the consolidated financial
statements of Home Properties of New York, Inc. as of September 30, 1996 and
1995 and for the nine-month and three-month periods then ended. This information
should be read in conjunction with the accompanying consolidated financial
statements and notes thereto.
Liquidity and Capital Resources
The Company's principal liquidity demands are expected to be distributions to
stockholders, capital improvements and repairs and maintenance for the
properties, acquisition of additional properties, property development and
debt repayment.
The Company has an unsecured line of credit of $25 million with an available
balance of $15.5 million at September 30, 1996. The Company will utilize the
available balance to finance property acquisitions, capital improvements,
property development and other corporate uses. Borrowings under the line of
credit bear interest at 1.75% over the one-month LIBOR rate. Accordingly,
increases in interest rates will increase the Company's interest expense and
as a result will effect the Company's results of operations and financial
condition. The line of credit expires on August 22, 1997.
At September 30, 1996, the weighted average rate of interest on mortgage debt
is 7.6% and the weighted average maturity is 7.1 years. Most of the debt is
fixed rate, with 23% variable rate debt. This limits the exposure to
changes in interest rates, minimizing the effect on results of operations and
financial condition.
The Company intends to meet its short-term liquidity requirements through net
cash flows provided by operating activities and the line of credit. The Company
considers its ability to generate cash to continue to be adequate to meet all
operating requirements and make distributions to its stockholders in accordance
with the provisions of the Internal Revenue Code, as amended, applicable to
REITs.
To the extent that the Company does not satisfy its long-term liquidity
requirements through net cash flows provided by operating activities and the
line of credit, it intends to satisfy such requirements through the use of
UPREIT units, proceeds from the Dividend Reinvestment and Stock Purchase Plan
("DRIP"), or issuing additional common shares or shares of the Company's
preferred stock. The Company has successfully completed acquisitions using
equity contributions in the form of partnership units totalling approximately
$11 million, and expects to continue to fund its growth through its UPREIT
structure.
Given the Company's long term growth objectives and favorable acquisition
opportunities, management continues to evaluate cost effective sources of
capital. Recently, the Company announced that all direct investments by
shareholders through the Company's DRIP will reflect a discount of 3% from the
market price. On August 13, 1996, $8.2 million of new equity capital was raised
under the DRIP, including $4.1 million from 24 officers and directors of the
Company. Proceeds were applied towards reduction of the
Company's outstandings under its line of credit.
Page 10 of 18
<PAGE>
Additionally, while there is no definitive agreement to announce at this time,
the Company is currently in preliminary negotiations with an institutional
investor for a private equity placement of $35 million. If consummated, the
proposed transaction would be announced upon closing, which is expected to
occur prior to the end of December. For this reason, the Company has not
pursued a secondary offering under its shelf registration to date. There can be
no assurance that the anticipated private equity placement will be completed as
planned.
This discussion contains forward-looking statements. Although the Company
believes expectations reflected in such forward-looking statements are based
on reasonable assumptions, it can give no assurance that its expectations
will be achieved. Factors that may cause actual results to differ include
general economic and local real estate conditions, the timely completion of
repositioning activities, and continued access to capital to fund growth.
Page 11 of 18
<PAGE>
The following table sets forth information regarding the mortgage indebtedness
at September 30, 1996.
<TABLE>
<CAPTION>
Principal
Interest Rate Balance as of
As Of Maturity September 30,
Communities Location September 30, 1996 Date 1996 (000's)
- ----------- -------- ------------------ -------- -------------
<S> <C> <C> <C> <C>
Fixed Rate
Hamlet Court Rochester, NY 8.25% 05/01/98 $ 1,837
Conifer Court Syracuse, NY 10.53% 11/01/99 414
Perinton, Riverton Rochester and
and Waterfalls Buffalo, NY 6.75%(1) 09/01/00 12,112
Wedgewood Village Columbus, OH 6.00%(2) 07/31/01 6,250
Williamstowne
Village Buffalo, NY 7.37%(3) 10/27/02 10,007
Brook Hill Rochester, NY 7.75% 11/01/02 5,037
Garden Village Buffalo, NY 7.75% 11/01/02 4,740
1600 Elmwood Rochester, NY 7.75% 11/01/02 5,530
Village Green Syracuse, NY 7.75% 11/01/02 4,938
Fairview Heights Ithaca, NY 7.71%(4) 11/30/03 4,054
Finger Lakes Manor Rochester, NY 7.71%(4) 11/30/03 4,054
Springcreek/Meadows Rochester, NY 6.75%(5) 08/01/04 3,269
Idylwood Buffalo, NY 8.625% 11/01/05 9,486
Raintree Island Buffalo, NY 8.50% 11/01/06 6,604
Conifer Village Syracuse, NY 7.20% 06/01/10 3,045
Village Green
(Fairways) Syracuse, NY 8.23% 10/01/19 4,601
Raintree Island Buffalo, NY 8.50% 05/01/20 1,222
Harborside Manor Syracuse, NY 8.92% 07/01/27 5,069
--------
92,269
Floating Rate
Westminster Syracuse, NY 30 day LIBOR +1.85% 07/01/97 4,530
Carriage Hill Goshen, NY 30 day LIBOR +1.9% 08/16/97 3,741
Cornwall Park Cornwall, NY 30 day LIBOR +1.9% 08/16/97 2,997
Lakeshore Villa Port Ewen, NY 30 day LIBOR +1.9% 08/16/97 2,610
Sunset Gardens Kingston, NY 30 day LIBOR +1.9% 08/16/97 4,380
--------
Subtotal 110,527
Line of Credit
Unsecured N/A 30 day LIBOR +1.75% On Demand 9,530
--------
$120,057
========
</TABLE>
(1) Fixed through August 4, 1999, then prime +.5% until maturity.
(2) Fixed through August 4, 1999, then 5-year T-bill +2% until maturity.
(3) Fixed through November 1, 2000, then prime +.5% until maturity.
(4) Fixed through April 30, 2000, then prime +.5% until maturity.
(5) Fixed through July 31, 1997, then 175 basis points above three year
treasuries.
Page 12 of 18
<PAGE>
Results of Operations
The Company has 17 apartment communities, one small ancillary convenience
shopping area and a 202 site manufactured home community which were owned
during both the nine and three month periods being presented (the "Core
Properties"). The Company has acquired twelve apartment communities from
April 1, 1995 through September 30, 1996 (The "Acquired Communities"). The
inclusion of these Acquired Communities generally accounted for the significant
changes in operating results for the nine and three months ended
September 30, 1996.
Comparison of nine-months ended September 30, 1996 to the same period in 1995
Of the $7,887,000 increase in rental income $6,893,000 is attributable to the
Acquired Communities. The balance of this increase, which is from the Core
Properties, was due primarily to an increase of 3.3% in weighted average
rental rates, plus an increase in occupancy from 93.0% to 94.2%.
The decrease in property other income is due to the net results for properties
accounted for on the equity method being included in 1995 on this line, where
by 1996, the same properties had been purchased and gross results are
included in the consolidated statement of operations in the appropriate line
categories.
Other income increased in the nine months ended September 30, 1996 by
$605,000. Of this increase, $299,000 is from development fee income from seven
low income housing tax credit properties, $153,000 is from increased interest
income, $32,000 is from increased management fees from residential properties
and $125,000 is from a non-recurring construction management fee.
The equity in the income from operations of HP Management and Conifer Realty
increased by $48,000. The management and development activities increased
greatly in 1996 with the addition of Conifer Realty. Much of the development
fee income from low income housing tax credit properties will be earned later
in the year by Conifer Realty. The results for both of the nine month periods
is not indicative of the full years' results because development and
construction fees tend to be earned later in the year, reflecting the
seasonal nature of development and construction.
Of the $4,545,000 increase in operating and maintenance expenses, $3,860,000
is attributable to the Acquired Communities. The balance for the Core
Properties represents a 6.4% increase over 1995. The main reasons for increases
at the Core Properties can be traced to the extraordinary severe winter and
spring weather in 1996 resulting in increased utilities and snow removal costs
of $373,000.
General and administrative expenses increased by $203,000, or 23% from
$874,000 in the nine months ended September 30, 1995 to $1,077,000 in the
nine months ended September 30, 1996 primarily as a result of costs associated
with new positions added and an increase in the bonus accrued during 1996 from
the incentive compensation plan.
Comparison of three-months ended September 30, 1996 to the same period in 1995
Of the $2,807,000 increase in rental income, $2,589,000 is attributable to the
Acquired Communities. The balance of this increase, which is from the Core
Properties, was due primarily to an increase of 3.1% in weighted average
rental rates, offset by a decrease in occupancy from 94.0% to 93.8%.
Page 13 of 18
<PAGE>
Of the $1,523,000 increase in operating and maintenance expenses, $1,332,000 is
attributable to the Acquired Communities. The balance for the Core Properties
represents a 5.5% increase over 1995, with an increase to repairs and
maintenance and personnel expenses. The increase to repairs and maintenance
reflects timing differences.
Recent Accounting Developments
Effective January 1, 1996, the Company adopted Statement of
Financial Accounting Standards No. 121 "Accounting for the Impairment of Long
Lived Assets" ("FAS 121"). FAS 121 established accounting standards for the
impairment of long lived assets and is effective for fiscal years beginning
after December 15, 1995. The impact of this new standard has not had a
material impact on the Company's financial condition or results of operations.
In October 1995, the Financial Accounting Standards Board issued the Statement
of Financial accounting Standard No. 123, "Accounting for Stock-Based
Compensation" ("FAS 123"). FAS 123 establishes market value accounting and
reporting standards for stock-based employee compensation plans. Companies
may elect to continue to account for stock-based compensation using the
"intrinsic value approach" under APB Opinion 25. Although the Company is
required to adopt the standard in fiscal 1997, it anticipates continuing to
follow APB 25, with pro forma disclosures required under FAS 123. Therefore,
adoption will have no impact on its financial position or results of
operations.
Page 14 of 18
<PAGE>
Funds From Operations
Management considers funds from operations to be an appropriate measure of
performance of an equity REIT. The National Association of Real Estate
Investment Trusts ("NAREIT") revised White Paper definition of funds from
operations is income (loss) before gains (losses) from the sale of property
and extraordinary items, before minority interest in the Operating Partnership,
plus real estate depreciation. Management believes that in order to facilitate
a clear understanding of the combined historical operating results of the
Company, funds from operations should be considered in conjunction with net
income as presented in the consolidated financial statements included
elsewhere herein. Funds from operations does not represent cash generated
from operating activities in accordance with generally accepted accounting
principles and is not necessarily indicative of cash available to fund cash
needs. Funds from operations should not be considered as an alternative to net
income as an indication of the Company's performance or to cash flow as a
measure of liquidity.
The calculation of funds from operations for the previous six quarters are
presented below. The sub-total labeled "New FFO" represents funds from
operations as calculated under NAREIT's revised White Paper definition, which
definition the Company has adopted effective January 1, 1996. For comparison
purposes, the presentation calculates funds from operations under NAREIT's
previous definition which included an add back for amortization and
depreciation from non-real property ("Old FFO").
<TABLE>
<CAPTION>
Sept 30 June 30 March 31 Dec. 31 Sept. 30 June 30
1996 1996 1996 1995 1995 1995
------- -------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net income (loss) $1,341 $ 928 $ 663 ($ 15) $1,119 $ 925
Minority interest 285 194 147 ( 1) 126 105
Extraordinary item - - - 1,390 - -
Depreciation from
real property 1,955 1,876 1,870 1,738 1,649 1,447
Depreciation from
real property from
unconsolidated
entities 69 69 69 41 97 78
(Gain) loss from sale
of property ( 3) 11 - - - -
------ ------ ------ ----- ----- -----
New FFO 3,647 3,078 2,749 3,153 2,991 2,555
Depreciation - other 10 9 9 8 8 7
Depreciation - other,
from unconsolidated
entities 29 26 18 12 12 12
Amortization:
Deferred financing 82 60 61 64 92 83
Included in interest 83 84 84 83 84 84
Goodwill 21 21 21 - - -
------ ------ ------ ------ ------ ------
Old FFO $3,872 $3,278 $2,942 $3,320 $3,187 $2,741
====== ====== ====== ====== ====== ======
Weighted average
common shares/units
outstanding 6,849.4 6,617.6 6,612.8 6,020.6 6,020.5 6,020.5
======= ======= ======= ======= ======= =======
</TABLE>
All REITs may not be using the strict White Paper definition for new FFO.
Accordingly, the above presentation may not be comparable to other similarly
titled measures of FFO of other REITs.
Page 15 of 18
<PAGE>
Inflation
Substantially all of the leases at the communities are for a term of one year
or less, which enables the Company to seek increased rents upon renewal of
existing leases or commencement of new leases. These short-term leases minimize
the potential adverse effect of inflation on rental income, although residents
may leave without penalty at the end of their lease terms and may do so if
rents are increased significantly.
Declaration of Dividend
On October 29, 1996, the Board of Directors approved a dividend of $.43 per
share for the period from July 1, 1996 to September 30, 1996. This is the
equivalent of an annual distribution of $1.72 per share. The dividend is
payable November 26, 1996 to shareholders of record on November 15, 1996.
Page 16 of 18
<PAGE>
PART II - OTHER INFORMATION
HOME PROPERTIES OF NEW YORK, INC.
Item 6. Exhibits and Reports or Form 8-K
(a) Exhibits: There are no exhibits which are filed with, or
incorporated by reference, to this report.
(b) Reports or Form 8-K: No reports or Form 8-K were filed during the
quarter for which this report is filed.
Page 17 of 18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HOME PROPERTIES OF NEW YORK, INC.
(Registrant)
Date: November 14, 1996
-------------------------------------
By: /s/ David P. Gardner
-------------------------------------
David P. Gardner
Vice President
Chief Financial Officer and Treasurer
Date: November 14, 1996
-------------------------------------
By: /s/ David P. Gardner
-------------------------------------
David P. Gardner
Vice President
Chief Financial Officer and Treasurer
Page 18 of 18
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
HOME PROPERTIES OF NEW YORK, INC.'S FINANCIAL STATEMENTS CONTAINED IN ITS
SEPTEMBER 30, 1996 FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 1,260
<SECURITIES> 0
<RECEIVABLES> 3,808
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 238,878
<DEPRECIATION> 37,987
<TOTAL-ASSETS> 226,566
<CURRENT-LIABILITIES> 0
<BONDS> 110,527
0
0
<COMMON> 58
<OTHER-SE> 80,229
<TOTAL-LIABILITY-AND-EQUITY> 226,566
<SALES> 0
<TOTAL-REVENUES> 33,062
<CGS> 0
<TOTAL-COSTS> 23,064
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,440
<INCOME-PRETAX> 3,558
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,932
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,932
<EPS-PRIMARY> 0.53
<EPS-DILUTED> 0.53
</TABLE>
