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Exhibit 99.1
FOR IMMEDIATE RELEASE
HOME PROPERTIES REPORTS RECORD
THIRD QUARTER 2000 RESULTS
ROCHESTER, NY, OCTOBER 26, 2000 / PRNEWSWIRE / -- Home Properties (NYSE:HME)
today released financial results for the third quarter of 2000.
For the quarter ended September 30, 2000, Funds From Operations (FFO) was
$33,106,000, or $.77 per share, compared with $25,189,000, or $.73 per share
for the quarter ended September 30, 1999. These results slightly exceeded
analyst consensus estimates for the quarter and equate to a 31% increase in
total FFO over the comparable prior-year period, or a 5.5% increase on a per-
share basis. FFO for the nine months ended September 30, 2000, was
$88,302,000, or $2.19 per share, compared with $61,729,000 for 1999, or $2.03
per share, a 43% increase in total FFO from the prior year, or a 7.9% increase
on a per-share basis. FFO, a primary earnings measure for equity REITs, has
been calculated in conformance with NAREIT guidelines. (Note that reported
results reflect "diluted" FFO per share.)
THIRD QUARTER OPERATING RESULTS
For the third quarter of 2000, same-property comparisons (for 95 "Core"
properties containing 23,530 apartment units owned since the beginning of 1999)
reflected an increase in rental revenues of 6.0% and a net operating income
increase of 8.8% over the third quarter of 1999. Other property income improved
30%, reflecting successful efforts to increase ancillary income. Property level
operating expenses increased by 3.8%, primarily due to increases in personnel
expense, advertising, real estate taxes, utilities, and office and telephone.
These expense increases were offset in part by savings in repairs and
maintenance. Average economic occupancy for the Core properties was 94.9%
during the third quarter of 2000, up from 94.6% during the third quarter of
1999, with average monthly rental rates increasing 5.6% to $707.
Occupancies for the 13,668 apartment units acquired between January 1, 1999,
and September 30, 2000 (the "Recently Acquired Communities") averaged 94.4%
during the third quarter, at average monthly rents of $770.
YEAR-TO-DATE OPERATING RESULTS
For the nine months ended September 30, 2000, same property comparisons for the
Core properties showed an increase in rental revenues of 5.6% and a net
operating income increase of 8.2% over 1999. Property level operating expenses
increased by 3.8%, primarily due to increases in personnel expense and real
estate taxes. Average economic occupancy for the Core properties decreased
slightly from 94.7% to 94.6%, with average monthly rents rising 5.6%.
The yield on the Recently Acquired Communities during the first nine months of
2000 averaged 10.5% on an annualized basis (calculated as the net operating
income from the properties, less an allowance for general and administrative
expenses equal to 3% of revenues, all divided by the acquisition costs plus
capital improvement expenditures in excess of normalized levels).
INTEREST AND DIVIDEND INCOME
Interest and dividend income increased $863,000 during the third quarter of
2000, with interest income from increased levels of financing to affiliates of
$480,000 in addition to $383,000 increased earnings from invested cash
reserves.
DEVELOPMENT AND MANAGEMENT ACTIVITIES
"Other Income" reflects the net contribution from management and development
activities after allocating certain overhead and interest expenses. Compared
with the third quarter of last year, net development fee revenues decreased by
6% to $1,312,000, and management fee revenues increased 5% to $1,484,000
(including development and management revenues recognized in both the Company
and its subsidiaries). Development fee revenues were reported net of certain
loans and advances made (or anticipated being made in the future) to affiliated
affordable housing partnerships. The establishment of these reserves in 2000,
combined with the addition of carrying costs for recently acquired land held
for future development plus increased overhead costs, reduced the net
contribution from management and development activities. The net contribution
decreased $367,000, or 55%, for the third quarter and decreased $1,839,000, or
83%, for the first nine months. The Company previously announced that it is
considering strategic alternatives for the affordable housing component of
these activities.
ACQUISITIONS AND DISPOSITIONS
During the third quarter of 2000, the Company acquired four communities with a
total of 513 apartment units in Long Island, Michigan, and Virginia. Total
consideration was $27.7 million, or an average of $54,000 per unit. Year to
date, net acquisitions have resulted in a 10% increase in the number of
apartment units owned outright by Home Properties.
CAPITAL MARKETS ACTIVITIES
During the third quarter of 2000, the Company issued operating partnership
units valued at $5.8 million in connection with property acquisitions and
raised $15.0 million by issuing additional shares under its Dividend
Reinvestment and Direct Stock Purchase Plan. No shares were repurchased during
the quarter, although the Company continues to have Board authorization to buy
back up to 795,100 shares of common stock.
During the quarter, the Company closed on a $39 million, non-recourse mortgage
financing with interest fixed at a rate of 7.5% for a term of ten years. This
refinancing replaced an existing $25 million, 8% loan, which had a maturity
date of October 1, 2000. In addition, the Company extended its $100 million
revolving line of credit for two years with no material changes to the
financial terms. Based on the Company's current corporate credit rating of
'BBB' (Triple B), the interest rate continues at 125 basis points over the one-
month LIBOR rate. Manufacturers and Traders Trust Company will continue to act
as Administrative Agent with two other institutions participating - Citizens
Bank of Rhode Island and Chevy Chase Bank, FSB.
As of September 30, 2000, the Company's ratio of debt-to-total-market
capitalization was 37%, with nothing outstanding on its $100 million revolving
credit facility and $46.8 million of unrestricted cash on hand. Mortgage debt
of $766 million was outstanding, at fixed rates of interest averaging 7.4% and
with staggered maturities averaging approximately 11 years. Interest coverage
averaged 3.4 times during the quarter, and the fixed charge ratio, which
includes preferred dividends, averaged 2.6 times.
The Company estimates it's net asset value at September 30, 2000 to be $31.11
(based on capitalizing the annualized third quarter property net operating
income at 9.5%, after a 4% growth factor, and deducting a management fee equal
to 3% of gross revenues).
REVIEW AND OUTLOOK
The current average of publicly disclosed analysts' FFO estimates on First Call
for the Company for the fourth quarter of 2000 is $.79 per share with $3.24 per
share estimated for the year 2001. Looking ahead, there are two factors which
are contributing to management's expectation that the Company will fall
slightly short of these results -- rising utility costs and the sale of the
affordable housing development operations.
The Company includes heat in the monthly rent at approximately 70% of the
units. All of these properties use natural gas, except for two which use
heating oil. The Company has just completed an exhaustive study, with the
assistance of an outside consultant, concluding that increased natural gas
prices could reduce earnings by $.02 per share in the fourth quarter of 2000
and $.06 per share in 2001. If higher utility costs persist, the Company plans
to pass this cost on to residents in the form of further rent increases, as
leases (which typically have a one year term) are renewed. No benefit from
such further rent increases have been included in estimating the net effect per
share.
After six months of numerous meetings and discussions with various interested
parties, the Company has reached an agreement in principle to sell its
affordable housing development operations, including a development pipeline in
excess of 30 properties, to a management team led by employee-director Richard
Crossed at an amount which approximates book value. Mr. Crossed will resign as
an officer and director to devote his full time to the new company. The
financial impact of this sale to 2001 could be an additional $.02 per share
dilution. The Company will issue a separate press release on this transaction
after a contract is signed.
According to Norman Leenhouts, Chairman and Co-CEO, "We are proud of the strong
internal growth we have achieved at our Core communities, reflecting the
continued success of our repositioning activities. Total income from our Core
properties grew at a record-tying 6.7% over last year for the second
consecutive quarter. While we have significant capital resources available to
continue our growth through acquisitions, at recent trading levels, we cannot
imagine a better investment than repurchasing our own shares at a significant
discount to our net asset value."
CLARIFIED DEFINITION OF FFO
The Company's previously reported 1999 FFO excluded a non-recurring loss on
available-for-sale securities of $2,123,000 reported in the second quarter and
a non-recurring acquisition expense of $6,225,000 reported in the third quarter
in conformance with the NAREIT definition of FFO then in place ("FFO as
previously reported"). Effective January 1, 2000, the Company has adopted
NAREIT's clarified definition which modifies FFO to include certain non-
recurring charges ("FFO as clarified"). Although both FFO calculations are
presented in the financial statements, the Company believes using FFO as
previously reported for 1999 represents the best guide to investors of
comparable operations and growth between years.
The Company will conduct a conference call today at 11:00 AM Eastern Time to
review the information reported in this release. To listen to the call, please
dial 800-370-4506. A replay of the call will be available by dialing 800-633-
8284 or 858-812-6440 and entering the reservation number 13426666. Call replay
will become available beginning at approximately 1:00 PM Eastern Time and
continue until approximately Midnight on Friday, November 3. The conference
call script will be filed with the SEC on a Form 8-K.
The Company produces Supplemental Information that provides details regarding
property operations, other income, acquisitions, market geographic breakdown,
debt, and net asset value. The Supplemental Information is available via the
Company's web site or via facsimile upon request.
THIS PRESS RELEASE 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 WEATHER AND OTHER CONDITIONS
THAT MIGHT AFFECT OPERATING EXPENSES, THE TIMELY COMPLETION OF REPOSITIONING
AND CURRENT DEVELOPMENT ACTIVITIES WITHIN ANTICIPATED BUDGETS, THE ACTUAL PACE
OF FUTURE ACQUISITIONS AND DEVELOPMENTS, AND CONTINUED ACCESS TO CAPITAL TO
FUND GROWTH.
HOME PROPERTIES, THE 11TH LARGEST APARTMENT COMPANY IN THE UNITED STATES, IS A
FULLY INTEGRATED, SELF-ADMINISTERED, AND SELF-MANAGED REAL ESTATE INVESTMENT
TRUST ("REIT"). WITH OPERATIONS IN SELECT NORTHEAST, MIDWEST, AND MID-ATLANTIC
MARKETS, THE COMPANY OWNS, OPERATES, ACQUIRES, REHABILITATES, AND DEVELOPS
APARTMENT COMMUNITIES. CURRENTLY, HOME PROPERTIES OPERATES 315 COMMUNITIES
CONTAINING 49,395 APARTMENT UNITS. OF THESE, 37,569 UNITS IN 140 COMMUNITIES
ARE OWNED DIRECTLY BY THE COMPANY; 8,225 UNITS ARE PARTIALLY OWNED AND MANAGED
BY THE COMPANY AS GENERAL PARTNER, AND 3,601 UNITS ARE MANAGED FOR OTHER
OWNERS. THE COMPANY ALSO MANAGES 1.7 MILLION SQUARE FEET OF COMMERCIAL SPACE.
HOME PROPERTIES' COMMON STOCK IS TRADED ON THE NEW YORK STOCK EXCHANGE UNDER
THE SYMBOL "HME" AND ON THE BERLIN STOCK EXCHANGE UNDER THE SYMBOL "HMP GR".
FOR MORE INFORMATION, VIEW HOME PROPERTIES' WEB SITE AT WWW.HOMEPROPERTIES.COM.
Tables to follow.
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<TABLE>
<CAPTION>
THIRD QUARTER RESULTS Avg. Economic
OCCUPANCY Q3 '00 Q3 '00 VS. Q3 '99
Average
Monthly Rent/ % Rental % Rental
OCC UNIT Rate Revenue % NOI
Q3 '00 Q3 '99 GROWTH GROWTH GROWTH
<S> <C> <C> <C> <C> <C> <C>
Core Properties(a) 94.9% 94.6% $707 5.6% 6.0% 8.8%
Acquisition Properties(B) 94.4% NA $770 NA NA NA
TOTAL PORTFOLIO 94.7% 94.6% $730 NA NA NA
</TABLE>
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<TABLE>
<CAPTION>
YEAR-TO-DATE Avg. Economic
RESULTS OCCUPANCY YTD '00 YTD '00 VS. YTD '99
Average
Monthly Rent/ % Rental % Rental
OCC UNIT Rate Revenue % NOI
YTD '00 YTD '99 GROWTH GROWTH GROWTH
<S> <C> <C> <C> <C> <C> <C>
Core Properties(a) 94.6% 94.7% $696 5.6% 5.6% 8.2%
Acquisition Properties(B) 94.1% NA $757 NA NA NA
TOTAL PORTFOLIO 94.4% 94.6% $717 NA NA NA
</TABLE>
{(a) }Core Properties includes 95 properties with 23,530 apartment units owned
throughout 1999 and 2000.
{(B) }Reflects 44 properties with 13,668 apartment units acquired subsequent to
January 1, 1999.
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<TABLE>
<CAPTION>
HOME PROPERTIES OF NEW YORK, INC.
SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA - UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Rental income $76,303 $62,150 $218,039 $151,523
Other income - property related 2,999 1,819 8,080 4,507
Interest and dividend income 2,400 1,537 6,035 5,349
Other income 305 672 381 2,220
Total revenues 82,007 66,178 232,535 163,599
Operating and maintenance 31,250 26,398 92,862 67,360
General and administrative 3,479 2,964 9,799 7,291
Interest 14,132 11,681 41,522 27,358
Depreciation and amortization 13,188 9,667 37,795 25,527
Loss on available-for-sale securities -- -- -- 2,123
Non-recurring acquisition expense -- 6,225 -- 6,225
Total expenses 62,049 56,935 181,978 135,884
Income before gain (loss) on disposition of
property, minority interest, and
extraordinary item 19,958 9,243 50,557 27,715
Gain (loss) on disposition of property 45 -- ( 417) 457
Income before minority interest and
extraordinary item 20,003 9,243 50,140 28,172
Minority interest 7,658 4,137 19,219 10,866
Income before extraordinary item 12,345 5,106 30,921 17,306
Extraordinary item, prepayment penalties,
net -- (96) -- (96)
of $78 allocated to minority interest
Net income 12,345 5,010 30,921 17,210
Preferred dividends ( 3,790) -- ( 8,252) --
Net income available to common shareholders
8,555 5,010 22,669 17,210
Extraordinary item -- 96 -- 96
(Gain) loss on disposition of property ( 45) -- 417 ( 457)
Preferred dividends 3,790 -- 8,252 --
Depreciation - real property 13,049 9,574 37,405 25,298
Depreciation - real property, unconsolidated 99 147 340 368
Minority Interest 7,658 4,137 19,219 10,866
FFO as clarified{ (1) $33,106 $18,964 $88,302 $53,381
Non-recurring items:{
Loss on available-for-sale securities NA -- NA 2,123
Non-recurring acquisition expense NA 6,225 NA 6,225
FFO as previously reported (2) NA $25,189 NA $61,729
Weighted average shares/units outstanding:
Shares - basic 20,994.8 19,047.7 20,412.4 18,458.8
Shares - diluted 21,174.1 19,192.8 20,539.3 18,566.5
Shares/units -- basic(2) 36,820.1 34,485.9 35,601.0 30,299.9
Shares/units -- diluted 43,162.4 34,630.9 40,321.0 30,407.6
Per share/unit:
Net income - basic $.41 $.26 $1.11 $.93
Net income - diluted $.40 $.26 $1.10 $.93
FFO as clarified - basic $.80 $.55 $2.25 $1.76
FFO as clarified - diluted $.77 $.55 $2.19 $1.76
FFO as previously reported - basic (3) NA $.73 NA $2.04
FFO as previously reported - diluted (3) NA $.73 NA $2.03
</TABLE>
(1) FFO as clarified has been calculated in conformance with NAREIT
guidelines and is defined (as clarified effective January 1, 2000) as
net income (calculated in accordance with generally accepted accounting
principles) excluding gains or losses from sales of property, minority
interest and extraordinary items plus depreciation from real property.
(2) Basic includes common stock plus operating partnership units and Class
A limited partnership interests (in 1999) in Home Properties of New
York, L.P., which can be converted into shares of common stock. Diluted
includes additional common stock equivalents and Series A through D
convertible cumulative preferred stock (in 2000), which can be converted
into shares of common stock.
(3) FFO as previously reported is presented for comparative purposes.
Prior to 2000, NAREIT's definition of FFO excluded certain non-recurring
charges. The Company believes using FFO as previously reported for 1999
represents the best guide to investors of comparable operations and
growth between years.
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HOME PROPERTIES OF NEW YORK, INC.
SUMMARY CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA - UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, 2000 DECEMBER 31, 1999
<S> <C> <C>
Real estate
$1,737,780 $1,480,753
Accumulated depreciation (139,226) (101,904)
Real estate, net 1,598,554 1,378,849
Cash and cash equivalents 46,816 4,742
Cash in escrows 33,975 28,281
Accounts receivable 8,188 6,842
Prepaid expenses 13,892 9,423
Deposits 4,598 897
Investment in and advances to affiliates 55,905 63,450
Deferred charges 3,631 2,610
Other assets 9,971 8,523
Total Assets
$1,775,530 $1,503,617
Mortgage notes payable
$ 765,803 $ 618,901
Line of credit -- 50,800
Other liabilities 45,717 36,913
Total liabilities
811,520 706,614
Minority interest
369,105 299,880
Series B convertible preferred stock 48,733 48,733
Stockholders' equity 546,172 448,390
Total liabilities and stockholders' equity
$1,775,530 $1,503,617
Total shares/units outstanding:
Common stock
21,268.0 19,598.5
Operating partnership units 15,997.9 14,034.3
Series A convertible cumulative preferred stock* 1,666.7 1,666.7
Series B convertible cumulative preferred stock* 1,679.5 1,679.5
Series C convertible cumulative preferred stock* 1,983.5 --
Series D convertible cumulative preferred stock* 833.3 --
43,428.9 36,979.0
*Common stock equivalent
</TABLE>
# # #
FOR FURTHER INFORMATION:
David Gardner, Chief Financial Officer, (716) 246-4113
Amy L. Tait, Executive Vice President, (716) 246-4108
