<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 March 31, 1997
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 April 30, 1997
$.01 par value 6,936,557
Page 1 of 12
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
HOME PROPERTIES OF NEW YORK, INC.
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1997 AND DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
1997 1996
-------- --------
(Unaudited) (Note 1)
<S> <C> <C>
ASSETS
Real estate:
Land $ 22,500 $ 15,080
Buildings, improvements and 261,410 246,693
equipment
-------- --------
283,910 261,773
Less: accumulated depreciation ( 42,551) ( 40,237)
-------- --------
Real estate, net 241,359 221,536
Cash and cash equivalents 793 1,523
Cash in escrows 6,027 5,637
Accounts receivable 2,578 2,185
Prepaid expenses 4,322 2,496
Deposit - 1,900
Advances to affiliates 10,201 5,898
Deferred financing costs 1,381 1,616
Other assets 7,825 5,840
-------- --------
Total assets $274,486 $248,631
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgage notes payable $104,676 $104,915
Notes payable 206 261
Line of credit 8,700 -
Accounts payable 1,971 2,024
Accrued interest payable 614 601
Accrued expenses and other liabilities 1,826 2,525
Security deposits 3,178 2,545
-------- --------
Total liabilities 121,171 112,871
-------- --------
Minority interest 53,236 52,730
-------- --------
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;
6,936,557 and 6,144,498 shares issued and
outstanding at March 31, 1997 and
December 31, 1996, respectively 69 61
Excess stock, $.01 par value;
10,000,000 shares authorized; no
shares issued - -
Additional paid-in capital 116,616 98,092
Distributions in excess of ( 14,471) ( 13,062)
accumulated earnings
Officer and director notes for stock
purchases ( 2,135) ( 2,061)
-------- --------
Total stockholders' equity 100,079 83,030
-------- --------
Total liabilities and stockholders'
equity $274,486 $248,631
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
Page 2 of 12
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Revenues:
Rental income $12,579 $9,686
Property other income 436 253
Other income 827 601
--------- ---------
Total revenues 13,842 10,540
--------- ---------
Expenses:
Operating and maintenance 6,930 5,421
General and administrative 379 360
Interest 2,354 2,046
Depreciation and amortization 2,338 1,903
--------- ---------
Total expenses 12,001 9,730
--------- ---------
Income before minority interest 1,841 810
Minority interest 572 147
--------- ---------
Net income $ 1,269 $ 663
========= =========
Per share data:
Net income $.20 $.12
========= =========
Weighted average number of shares outstanding 6,378,441 5,409,824
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
Page 3 of 12
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 1,269 $ 663
------- -------
Adjustments to reconcile net income to net
cash provided by operating activities:
Equity in income of HP Management and Conifer ( 78) 152
Realty
Income allocated to minority interest 572 147
Depreciation and amortization 2,572 2,040
Changes in assets and liabilities:
Other assets ( 3,510) ( 2,666)
Accounts payable and accrued liabilities ( 106) 624
------- -------
Total adjustments ( 550) 297
------- -------
Net cash provided by operating activities 719 960
------- -------
Cash flows used in investing activities:
Purchase of properties, net of mortgage notes assumed (17,402) ( 2,076)
Additions to properties ( 2,835) ( 1,103)
Advances to affiliates ( 6,690) ( 3,744)
Payments on advances to affiliates 2,387 4,754
Other ( 169) -
------- -------
Net cash used in investing activities (24,709) ( 2,169)
------- -------
Cash flows from financing activities:
Proceeds from sale of common stock 18,458 54
Payments of mortgage and other notes payable ( 294) ( 260)
Proceeds from line of credit 24,700 8,030
Payments on line of credit (16,000) ( 4,200)
Additions to deferred loan costs - ( 82)
Additions to cash escrows ( 390) ( 148)
Dividends and distributions paid ( 3,214) ( 2,759)
Capital contribution to minority interest - 206
------- -------
Net cash provided by financing activities 23,260 841
------- -------
Net increase (decrease) in cash ( 730) ( 368)
Cash and cash equivalents:
Beginning of period 1,523 812
------- -------
End of period $ 793 $ 444
======= =======
Supplemental disclosure of cash flow information:
Cash paid for interest $ 2,190 $1,757
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
Page 4 of 12
<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 25,
1997.
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.
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 five year period starting January 1, 1996. In
March, 1997, the Company issued 19,153 UPREIT units valued
at $464 accounted for as additional goodwill. Conifer
was involved in the development and management of government-
assisted housing throughout New York State.
Page 5 of 12
<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)
The acquisition has been accounted for using the purchase
method of accounting and, accordingly, the results of
operations are included from the date of acquisition
forward. The purchase price was 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.
Basis of Presentation
The accompanying consolidated financial statements include
the accounts of the Company and its 70.6% (81.8% at March
31, 1996) general partnership interest in the Operating
Partnership.
All significant intercompany balances and transactions have
been eliminated in these consolidated financial statements.
3. 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.
In February, 1997, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards
No. 128 - Earnings per Share (SFAS No. 128), which will be
effective for the Company's fiscal year ended December 31,
1997. SFAS No. 128 is intended to simplify the earnings per
share computations and make them more comparable from company
to company. The adoption of SFAS No. 128 is not expected to
have a significant impact on the Company's earnings per share,
as currently determined.
4. Pro Forma Financial Information
The Company completed an acquisition of the Lake Grove
Apartments, a 368-unit apartment community in Long Island,
New York on February 3, 1997. The pro forma results for the
three months ended March 31, 1997 would not have been
materially different if the property had been acquired on
January 1, 1997. Therefore, no pro forma presentation has
been prepared reflecting this acquisition.
Page 6 of 12
<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
March 31, 1997 and 1996 and for the 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 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 issuance of UPREIT units,
proceeds from the Dividend Reinvestment Plan, property debt
financing, or issuing additional common shares or shares of the
Company's preferred stock. As of February 28, 1997, the
Company's Form S-3 Registration Statement has been declared
effective relating to the issuance of up to $100 million of
shares of common stock or other securities.
The Company has an unsecured line of credit of $35 million with
an available balance of $26.3 million at March 31, 1997.
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. The Company intends to either renew the line for another
year or establish a new line with a different institution.
As of March 31, 1997, the weighted average rate of interest on
mortgage debt is 7.7% and the weighted average maturity is 7.2
years. Most of the debt is fixed rate, with only 10% variable
rate debt. This limits the exposure to changes in interest
rates, minimizing the effect on results of operations and
financial condition.
Management believes that net cash flows provided by operating
activities and the line of credit will be sufficient to satisfy
the Company's cash requirements for the next one to two years.
Page 7 of 12
<PAGE>
The following table sets forth information regarding the mortgage
indebtedness at March 31, 1997.
<TABLE>
<CAPTION>
Principal
Interest Balance as of
Rate as of Maturity March 31, 1997
Communities Location March 31, 1997 Date (000's)
<S> <C> <C> <C> <C>
Fixed Rate
Conifer Court Syracuse, NY 10.53% 11/01/99 $ 410
Valley Park South Bethlehem, PA 8.50% 01/01/00 9,650
Perinton, Riverton and Rochester and
Waterfalls Buffalo, NY 6.75% (1) 08/01/00 12,062
Wedgewood Village Columbus, OH 6.00% (2) 07/31/01 6,250
Williamstowne Village Buffalo, NY 7.37% (3) 10/27/02 9,953
Brook Hill Rochester, NY 7.75% 11/01/02 5,000
Garden Village Buffalo, NY 7.75% 11/01/02 4,706
1600 Elmwood Rochester, NY 7.75% 11/01/02 5,490
Village Green Syracuse, NY 7.75% 11/01/02 4,902
Hamlet Court Rochester, NY 8.25% 05/01/03 1,827
Fairview Heights Ithaca, NY 7.71% (4) 11/30/03 4,035
Finger Lakes Manor Rochester, NY 7.71% (4) 11/30/03 4,035
Springcreek/Meadows Rochester, NY 6.75% (5) 08/01/04 3,238
Idylwood Buffalo, NY 8.625% 11/01/05 9,449
Raintree Island Buffalo, NY 8.50% 11/01/06 6,562
Conifer Village Syracuse, NY 7.20% 06/01/10 3,045
Village Green (Fairways) Syracuse, NY 8.23% 10/01/19 4,567
Raintree Island Buffalo, NY 8.50% 05/01/20 1,213
Harborside Manor Syracuse, NY 8.92% 07/01/27 5,052
--------
101,446
Floating Rate
Westminster Syracuse, NY 30 day LIBOR+1.75% 07/01/97 3,230
--------
Subtotal 104,676
Line of Credit
Unsecured N/A 30 day LIBOR+1.75% On Demand 8,700
--------
$113,376
========
</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 8 of 12
<PAGE>
Results of Operations
Comparison of three-months ended March 31, 1997 to the same
period in 1996
The Company had 23 apartment communities with 6,008 units, one
small ancillary convenience shopping area and a 202 site
manufactured home community which were owned during both the
three-month periods being presented (the "Core Properties"). The
Company has acquired seven apartment communities with 1,536 units
from March 6, 1996 through March 31, 1997 (the "Acquired
Communities"). The inclusion of these Acquired Communities
generally accounted for the significant changes in operating
results for the three months ended March 31, 1997.
Of the $2,893,000 increase in rental income, $2,507,000 is
attributable to the Acquired Communities. The balance of this
increase, which is from the Core Properties, was the result of an
increase of 3.7% in weighted average rental rates, plus an
increase in occupancy from 93.5% to 93.8%.
Of the $183,000 increase in property other income, $57,000 is
attributable to the Acquired Communities. The balance of this
increase is from the Company's share of income/loss from various
general partnership interests.
Other income increased by $226,000, the majority from increases
in the equity in the income from operations of HP Management and
Conifer Realty.
Of the $1,509,000 increase in operating and maintenance expenses,
$1,365,000 is attributable to the Acquired Communities. The
balance for the Core Properties represents a 2.7% increase over
1996. Increased utility costs, 11% higher than the previous
year, accounted for most of this increase. Natural gas
consumption was down 10%, but the cost/therm was up 21% from last
year. Areas where the Company experienced reduced costs included
advertising, insurance and snow removal costs.
Page 9 of 12
<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 five
quarters are presented below:
<TABLE>
<CAPTION>
March 31 Dec. 31 Sept. 30 June 30 March 31
1997 1996 1996 1996 1996
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net income $1,269 $1,215 $1,341 $ 928 $ 663
Minority interest 572 271 285 194 147
Extraordinary item - - - - -
Depreciation from real property 2,305 2,241 1,955 1,876 1,870
Depreciation from real property
from unconsolidated entities 4 183 69 69 69
(Gain) Loss from sale of property - - ( 3) 11 -
------- ------- ------- ------- -------
FFO $4,150 $3,910 $3,647 $3,078 $2,749
======= ======= ======= ======= =======
Weighted average common shares/
units outstanding 9,254.7 7,168.4 6,849.4 6,617.6 6,612.8
======= ======= ======= ======= =======
</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.
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 May 6, 1997, the Board of Directors approved a dividend of
$.43 per share for the period from January 1, 1997 to March 31,
1997. This is the equivalent of an annual distribution of $1.72
per share. The dividend is payable May 28, 1997 to shareholders
of record on May 16, 1997.
Stock Repurchase Program
On May 6, 1997, the Board of Directors approved a stock
repurchase program under which the Company may repurchase up to
1,000,000 shares of its currently outstanding common stock. The
shares may be repurchased through open market or privately
negotiated transactions at the discretion of Company management.
The Board's action does not establish a target stock price or a
specific timetable for repurchase.
Page 10 of 12
<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:
* Form 8-K was filed on January 6, 1997, date of report December 23,
1996, with respect to providing exhibit documents on the agreement
with the State Treasurer of the State of Michigan to sell a
$35 million Class A Limited Partnership Interest in the Operating
Partnership to the State of Michigan Retirement System.
Page 11 of 12
<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: May 14, 1997
----------------------------
By: /s/ David P. Gardner
----------------------------
David P. Gardner
Vice President
Chief Financial Officer and Treasurer
Date: May 14, 1997
------------------------------
By: /s/ Norman Leenhouts
------------------------------
Norman Leenhouts
Chairman and Co-Chief
Executive Officer
Page 12 of 12
<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
MARCH 31, 1997 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 793
<SECURITIES> 0
<RECEIVABLES> 2,578
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 283,910
<DEPRECIATION> 42,551
<TOTAL-ASSETS> 274,486
<CURRENT-LIABILITIES> 0
<BONDS> 104,676
0
0
<COMMON> 69
<OTHER-SE> 100,010
<TOTAL-LIABILITY-AND-EQUITY> 274,486
<SALES> 0
<TOTAL-REVENUES> 13,842
<CGS> 0
<TOTAL-COSTS> 9,647
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,354
<INCOME-PRETAX> 1,841
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,269
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,269
<EPS-PRIMARY> .20
<EPS-DILUTED> .20
</TABLE>
