-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TQzjm+50w00DeZzR79MW28Px4DWn5Jch5w49Xtmmt/iokuRhOFyPt360BkFNRxWF en/vm8G2tHqSn5k2JFs+ZA== /in/edgar/work/0000923118-00-000032/0000923118-00-000032.txt : 20001027 0000923118-00-000032.hdr.sgml : 20001027 ACCESSION NUMBER: 0000923118-00-000032 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20001026 ITEM INFORMATION: FILED AS OF DATE: 20001026 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HOME PROPERTIES OF NEW YORK INC CENTRAL INDEX KEY: 0000923118 STANDARD INDUSTRIAL CLASSIFICATION: [6798 ] IRS NUMBER: 161455126 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-13136 FILM NUMBER: 746698 BUSINESS ADDRESS: STREET 1: 850 CLINTON SQ CITY: ROCHESTER STATE: NY ZIP: 14604 BUSINESS PHONE: 7165464900 MAIL ADDRESS: STREET 1: 850 CLINTON SQUARE CITY: ROCHESTER STATE: NY ZIP: 14604 8-K 1 0001.txt SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K Current Report Pursuant to Section 13 or 15(d) of The Securities Act of 1934 Date of Report (Date of earliest event reported): October 26, 2000 HOME PROPERTIES OF NEW YORK, INC. ------------------------------------------------------- (Exact name of registrant as specified in its charter) Maryland 1-13136 16-1455126 ---------------- ------------ ------------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File No.) Identification No.) 850 Clinton Square, Rochester, New York 14604 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: (716)546-4900 Not Applicable ------------------------------------------------------------------ (Former name or former address, if changed since last report.) Item 7. FINANCIAL STATEMENTS AND EXHIBITS c. Exhibits Exhibit 99.1 Press Release Exhibit 99.2 Supplemental Information Item 9. Regulation FD On October 26, 2000, the Registrant issued a press release announcing its results for the third quarter of 2000. The related press release is attached hereto as Exhibit 99.1. Attached as Exhibit 99.2 is information supplemental to the financial information contained in the October 26, 2000 press release. On October 26, 2000, the Registrant held its third quarter 2000 investor conference call. The following is the script from that conference call: THIRD QUARTER, 2000 EARNINGS RELEASE CONFERENCE CALL TRANSCRIPT OCTOBER 26, 2000, 11:00 AM ET (DAVID) Good morning. Thank you for participating in our Third Quarter earnings release conference call. Here with me are Norman Leenhouts, Chairman and Co-Chief Executive Officer, and Amy Tait, Executive Vice President. Before we begin, I would like to remind you that some of our discussions this morning will involve forward-looking statements. Please refer to the safe-harbor language included in our press release, which describes certain risk factors that may impact our future results. Also, please be aware that this call is being recorded and members of the press may be participating. I will assume that all of you have already seen our earnings press release, which was issued early this morning. We also have made available several pages of supplemental schedules. If you didn't receive this information and would like to get on our fax list, give us a call. The press release and supplemental schedules are also available today on our web site at www.homeproperties.com. Well, we had another great quarter. Our total FFO increased 31%, while per-share results were up 5.5%, at 77 CENTS on a diluted basis. These results slightly exceeded analysts' consensus estimates for the quarter by one penny. During the quarter, we achieved 6.0% growth in core property rental revenues, consisting of a combination of rental rate increases, which averaged a record-tying 5.6%, plus occupancy gains of .3%. Other property income at our core communities increased by a record- breaking 30% this quarter, reflecting our ongoing successful efforts to increase ancillary income. Most of these additional revenues have come from a broad mix of fees and charges, including laundry, cable, and net furniture rentals from corporate apartments. Expenses at our core properties increased by 3.8% this quarter. A breakdown of these expenses is included in our supplemental schedules. The major areas of increase occurred in personnel expense, advertising, real estate taxes, utilities, and office & telephone. These expense increases were offset in part by savings in repairs and maintenance. The increased personnel costs reflect a higher percentage of property-level compensation tied to growth in rental revenue and NOI. With our continued exceptional results for core properties, site personnel have enjoyed a well-deserved increase in payouts under the incentive bonus component of their compensation package. The increase in the gas utility line item is not a significant dollar amount, but the percentage increase of 23% is an early indicator of things to come. I will discuss our exposure to rising heating costs later in this call. Some of the recent technological initiatives we have rolled out at our sites have required increased expenditures affecting the office & telephone line item. A part of this negative variance is merely a timing difference. The true increase has resulted from things like additional phone lines, as well as rolling out Safe Rent, an Internet-based applicant screening service. As discussed during this conference call last quarter, Safe Rent has made the screening process much more efficient but does carry a higher direct fee, which offsets the indirect costs we used to incur under the more labor intensive manual process we used previously. The savings from repairs and maintenance expenses represent a timing difference as to when planned maintenance projects will be made this year versus any indication of a trend. This positive variance, for the most part, offsets a negative variance experienced during the first six months of the year. The year-to-date negative variance of 1.9% is more reflective of an expected run rate for this line item. Our net operating income growth is running at 8.8% for the quarter and 8.2% year-to-date, well ahead of our expectations of 6% at the beginning of the year. As we have explained before, some of this growth reflects a return on incremental investments in our communities above and beyond normal capital replacements. After charging ourselves a 10% cost of capital on these additional expenditures, the ADJUSTED NOI growth that has fallen to the bottom line so far is a little north of 4%. All of the property results discussed so far have pertained to the 23,530 apartment units owned since the beginning of 1999. We continue to have exciting news concerning the over 13,000 units in communities recently acquired. These acquisitions continue to surpass our expectations, generating average returns of 10.5% for the first nine months of 2000. Occupancy levels throughout our portfolio remain quite healthy, averaging 96.0% as a result of a strong summer leasing season. On a same-property comparison, I am happy to say that we currently are 0.7% ahead on occupancies and have about 0.8% fewer apartments available to rent today than we did a year ago. This is true even though we are aggressively pushing rents as we implement our repositioning strategies - - - evidenced by the record tying rental-rate growth of 5.6% that we have now achieved two quarters in a row. "Other corporate income" of $305,000 during the third quarter reflects the net results from our management and development activities. Detailed information on the breakdown of this income is included in your supplemental packets. This is a somewhat lumpy line item that continues to fluctuate from quarter to quarter. However, for the quarter, development fee revenues were down 6%; and management fee revenues were up 5% compared to last year. Year-to-date, the net contribution from this line item is a negative variance compared to last year of over $1.8 million. We have explained previously our more conservative approach this year concerning development fee revenue recognition, in addition to higher carrying costs for recently-acquired land and increased G & A costs. With a stock price of $29.88 per share at the end of the quarter, leverage was 37% on our total capitalization of $2.1 billion. Ninety- nine percent of our debt was at fixed interest rates, with weighted average maturities of about eleven years and average interest rates of 7.4%. Our $100 million unsecured revolving credit facility was all available, in addition to having $47 million of cash on hand. Our interest coverage ratio was 3.4 times for the quarter; and our fixed charge ratio, which includes preferred dividends, averaged 2.6 times. I have just seen a posting on an Internet message board which indicated a much lower fixed charge coverage ratio, which, I believe, has been calculated in error. I think our ratios are at very comfortable levels. As anticipated, our leverage, which remained pretty constant at 37% during the quarter, was below our target of 40%. In addition, we started AND ended the quarter with over $40 million of cash on hand. Both of these factors contributed to expected short-term dilution to FFO for the quarter of $.01 per share. We expect activity from acquisitions in the fourth quarter will utilize our cash on hand and bring leverage back towards 40% by year-end. With Regulation FD now in place, our press release was expanded to include a discussion on earnings guidance. As mentioned in our press release, two factors are contributing to our expectation that we will fall slightly short of First Call consensus estimates for the fourth quarter and 2001. They are rising utility costs and the sale of our affordable housing development activity. The rising cost of natural gas has been highly publicized. Market traditions in the Northeast have led to Home Properties including heat in the monthly rent at approximately 70% of our units. This makes sense, since we are able to purchase gas in bulk at a much lower cost than individual consumers. This leaves us open, however, to temporary short- term exposure during periods of rising natural gas rates. Our natural gas exposure is not completely subject to the volatility seen in the natural gas commodity markets. During the 1999 winter heating season, approximately 50% of our heating expense represented delivery and overhead charges. This component of the pricing has been very stable the last couple of years. The remaining half of our gas expenditure is the actual cost of the commodity itself. Based on current NYMEX future prices, the commodity cost has increased about 80%. With no other protections in place, it would appear that our expense would be up 40% when you work through the math. We have reduced this exposure by establishing contracts through new providers, rather than just using the local utilities. Many properties are master metered, or are being converted to master meters, which reduces costs versus using individual meters for each unit. In the process of upgrading our apartment communities, we have also implemented many energy-saving improvements. Based on an analysis using a grid spreadsheet, taking into account each individual utility provider, contracts in place, renewal dates, and NYMEX future prices predicted for the heating season, we feel it would be prudent to increase our budgets for utility costs, which will reduce FFO estimates by 2 cents for the fourth quarter of 2000, and 6 cents for 2001, which will show up largely in the first quarter of next year. Our expectation is that full year 2001 natural gas expense will exceed 2000 by 23%. We do believe that if higher utility costs persist, we will be able to pass this cost on to residents in the form of further rent increases as leases are renewed. We have an educated customer, who is aware of the publicity surrounding this issue, making it easier to support a larger than normal rent increase. As most of our residents have a one-year lease term, there is a lag effect before we can pass on these higher increases. This will not help us much in the short-term - thus the suggested dilution. Finally, we are pleased with the plan of action we now have for our affordable housing operations. We have an agreement in principle to sell our affordable housing development operation, 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. Existing general partnership interests and management contracts on 8,225 apartment units in 161 existing or soon-to-be completed affordable communities will be retained by Home Properties. As we have just reached this agreement within the last couple days, with the need to document with a contract, we are not in a position to discuss details of the arrangement. We will issue a separate press release later this quarter. We do anticipate a smaller yield on reinvesting proceeds than originally contemplated, as well as some timing delays. While there are many benefits, as previously discussed, to exiting this business, there will be some short-term dilution estimated to be an additional 2 cents per share in 2001. Also in response to Reg FD, we thought it would be appropriate to begin publishing our internal model estimating the net asset value of the Company. This calculation is included as one of the supplemental schedules which accompany our press release, and will be updated on a quarterly basis. As this is the first time we have published this calculation, I wanted to take a few moments to walk through our assumptions and methodology. We first look at our current quarterly property net operating income and make adjustments for any acquisitions or dispositions during the quarter to arrive at a "run-rate." With our Northeast locations and the impact of winter on our operating results, a seasonality factor must be taken into account when annualizing NOI. Two additional adjustments are made before "capitalizing" the results. A growth factor of 4% is applied, as we have used a cap rate that reflects a "look forward" over the next twelve months. Even though we have been achieving growth well in excess of 4% - this level seems appropriate in estimating our ADJUSTED net operating income growth, as well as being what we feel is a conservative estimate. In addition, we deduct a management fee equal to 3% of gross revenues. The value of our real estate is determined by capitalizing this adjusted NOI at 9.5%. Finally, certain adjustments are made for other balance sheet items to arrive at our current Net Asset Value which we estimate to be above $31 per share. Now, I will turn the discussion over to Amy to discuss capital markets highlights. (AMY) Thank you, David. From a capital markets perspective, the month of October has been very frustrating for us. Our stock price is down over $4 (or nearly 15%) over the past four weeks. I will attempt to outline, first of all, what we believe contributed to this decline; how this decline has or has not affected us; and finally, what we are doing in response to this decline. The first trading day of the month opened with devastating news from Post Properties regarding the status of their development pipeline and future earnings outlook. Although Post operates in markets that are substantially different from ours and focuses on a product type which is also different, their announcement triggered a negative sentiment for the NAREIT conference that kicked off that same day in Washington, D.C. As we met with analysts during the conference, there were three issues that were raised repeatedly. The biggest concern seemed to be the impact of rising fuel prices on our future earnings outlook. Thanks to the new SEC regulations relating to fair disclosure, we did not feel that it was appropriate to give specific guidance to analysts until our energy consultants were able to complete their study and we were prepared to share the results of that study with the entire investment community as a part of this quarterly earnings release and conference call. I believe that we have now addressed that issue thoroughly. The uncertainty over the future of our affordable housing operations has also provided a distraction for both our employees and investors so far this year. As David outlined, we now have a plan of action, which we believe will be completed by the end of the year. The projected FFO impact is minimal, compared to the stability and focus that it will return to our organization. The third issue of succession planning has been raised as a result of my announced semi-retirement. I can assure you that a smooth transition of leadership over the coming years at Home Properties is of the utmost importance to our entire family and to the board of directors. Our Chairman will comment further on this in a few moments. Independent of these issues, one of our largest institutional shareholders was forced to liquidate some REIT holdings this month to meet fund redemptions. While we are not privy to exactly how many shares were sold or by whom, we have had approximately 1.3 million shares traded in large blocks this month, which is highly unusual for us. We recognize that this volume of selling just before earnings can spook prospective buyers. We both thank and congratulate those who were ready to jump in and benefit from this tremendous buying opportunity. Unfortunately, since this downward pricing pressure occurred after the end of our third quarter but before our earnings release, we were placed in an awkward position. We could not actively approach investors or give them assurances. Also, our policy regarding share repurchases prevents us from buying shares in the open market during this blackout period. The good news, is that we did not plan to raise any equity or price any OP units for UPREIT transactions during this period anyway. So, this did not adversely affect our cost of capital for any pending transactions. As David mentioned earlier, our balance sheet is strong, with ample capital resources to fund our anticipated acquisition pipeline, and then some. Therein lies the opportunity. This week, our board of directors unanimously voted to expand management's authorization to repurchase Home Properties common shares. Some of you may recall that we were among the first REITs to implement a share buyback program as early as May of 1997. Unfortunately, this was such a unique concept to our industry at that time, that upon the announcement, trading in our stock was halted on the New York Stock Exchange. Our share price then went up before we had a chance to actually repurchase many shares. Later, it seemed that every time we became anxious to repurchase shares, we were in the position of possessing material inside information or were in the process of valuing OP units for some acquisition. These situations resulted in legal constraints, which meant that we were unable to utilize the program to any great extent. Of the original one million shares authorized for repurchase, approximately 795,000 shares remain available. Once we are able to get back in the market buying, we may again encounter some of these same challenges in executing our repurchase program. However, if we do have the opportunity to repurchase a substantial number of our shares at a reasonable discount to our net asset value, our board did not want us to be constrained by the amount of remaining shares that they authorized back when we were a much smaller company. So, we now have the authorization and the financial capacity to buy back up to 1,795,000 shares, which represents approximately 8.5% of our common shares currently outstanding. This leaves us with mixed emotions as to whether we want our stock price to remain low or recover. Either way, we will look to add value for our long-term shareholders. NOW, I WILL TURN THE DISCUSSION OVER TO OUR CHAIRMAN. (NORMAN) THANK YOU, AMY. GOOD MORNING EVERYONE! This is our first conference call since Amy announced in late August her modified role at Home Properties. To recap, Amy will wrap up her day- to-day responsibilities as a full-time employee by the middle of February. Starting in February, she has been engaged as a consultant for one additional year and will remain as a non-employee Director. This was a very difficult personal decision for Amy, strongly influenced by her desire to spend more quality time with her husband and young children (my grandchildren!) The majority of her net worth continues to be invested in Home Properties. Amy's decision has led to numerous inquiries as to succession planning, as Amy had been seen as the logical choice for CEO after Nelson and I slow down. Amy had already started to spread her day-to-day duties to others - mainly David - in anticipation of taking on higher responsibilities. David, who has delegated many of his day-to-day activities to our treasurer and others, has well established relationships with sell-side and buy-side analysts, so they shouldn't miss a beat with Amy's departure. We will need to work hard, however, to maintain the longstanding relationships and credibility that Amy has cultivated with investors over these past six years. While Amy's importance in the management of this company had increased to the point that she had become like a partner to my brother and I, I want to stress that we will have a complete and strong team in place to execute our growth and business strategy when Amy leaves. We also want to assure you all that neither of us plans to hold out as long as Milton Cooper. Nelson and I are having the time of our lives, and plan to remain fully active for three more years. We are, however, already starting to groom candidates for the COO and CEO positions, and we plan to strengthen our management team and list of candidates with at least one new hire. We are now interviewing a number of strong outside candidates who have contacted us as a result of Amy's announcement. We take the issue of succession planning very seriously. Our board and management team will continue to focus on this important issue over the coming months. Earlier this week, we announced a dividend increase of 7.5%, effective with our dividend to be paid a few weeks from now. We plan to remain aggressive in implementing dividend increases, despite the limited access our industry has to raise equity. We are comfortable with our payout ratio in the low 70% range, which provides an ample cushion for replacement reserves, property upgrades and contingencies. We are particularly confident in the sustainability and growth of our dividends, since our leverage is low, our debt is almost entirely at fixed rates of interest (with very little maturing over the next few years), and our markets are not prone to over-building. Maintaining a healthy dividend yield also provides us with a competitive advantage when negotiating acquisitions which utilize operating partnership units as part of the consideration. It is not necessary for us to retain substantial levels of current cash flow to fund external growth, as we are willing to adhere to the discipline of the capital markets in order to justify new investments. We expect additional acquisitions of about $100 million before year-end using available resources, which will result in a total for the year of about $320 million. Next year's pace will be dependent upon our cost of capital, which, of course, will be heavily influenced by our stock price. While we are optimistic that our stock price will recover, if it stays low, we will consider selling assets with lower growth potential to help fund the repurchase of stock and the acquisition of properties. Today we announced that we have reached a preliminary agreement to sell our affordable development operations. We would have preferred to wait until a contract was final before announcing this transaction, however, we felt that it was important to begin communicating with our employees as soon as possible. David was also anxious to share our preliminary estimate regarding this transaction's impact on funds from operations, before analysts make their quarterly revisions to their earnings model. Since announcing last March that we would be pursuing strategic alternatives for our affordable housing operations, we and our investment bankers at Mercury Partners have met with many prospective investors and purchasers. In the end, we concluded that the group most capable of understanding and properly valuing our development pipeline, was the management team that has worked to create this portfolio of development opportunities. They also have the passion and the vision to see each project through to its completion. This solution offers our shareholders the best of both worlds. It will allow us to separate ourselves from the complex and volatile affordable housing development business, while allowing us to keep the stable income stream from managing 161 completed affordable housing communities which we control as the general partner. We are also pleased to have the prolonged process of selling the affordable housing development business behind us with an outcome that is beneficial to our employees and shareholders. When this transaction closes, our business will be easier to explain and manage, and we will be more focused. With that, I'd like to open up the phone lines for questions. (AFTER Q&A, NORMAN CONTINUES.) I will close by again reviewing a list of accomplishments during the quarter: * We achieved same-store NOI growth of 8.8%! * The $690 million of investments made in acquisitions since January, 1999 outperformed expectations, with unleveraged yields averaging 10.5% during the first nine months of 2000. * We are well positioned to fund our substantial pipeline of acquisitions as well as share repurchases. Leverage is only 37%, our $100 million line of credit is available with nothing outstanding at the end of the quarter, and we have cash reserves in excess of $45 million. * Altogether, our accomplishments resulted in per share FFO growth of 5.5%, after reflecting a reduced contribution from our affordable development activities and short-term dilution from deleveraging. (DAVID) We'd like to thank you all for your continued interest and investment in Home Properties. Have a great day! 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. Dated: October 26, 2000 HOME PROPERTIES OF NEW YORK, INC. (Registrant) By: -------------------------- David P. Gardner, Senior Vice President EX-99 2 0002.txt 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.
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 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
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 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
{(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.
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 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
(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. HOME PROPERTIES OF NEW YORK, INC. SUMMARY CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA - UNAUDITED)
SEPTEMBER 30, 2000 DECEMBER 31, 1999 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
# # # FOR FURTHER INFORMATION: David Gardner, Chief Financial Officer, (716) 246-4113 Amy L. Tait, Executive Vice President, (716) 246-4108 EX-99 3 0003.txt Exhibit 99.2
HOME PROPERTIES OWNED COMMUNITIES RESULTS THIRD QUARTER 2000 Q3 '00 VERSUS Q3 '99 % GROWTH # of Date Q3 '00 Q3 '00 Year Ago Rental Rental APTS. ACQU. RENT/MO. OCCUP. OCCUP. RATES REVS. NOI Rochester, New York Region: 1600 East Avenue 164 9/18/97 $ 1,329 78.5% 86.0% -0.4% -9.1% -0.4% 1600 Elmwood 210 Original $ 837 92.5% 93.6% 6.9% 5.6% 7.7% Brook Hill 192 IPO $ 839 95.8% 93.9% 2.7% 4.8% 5.0% Finger Lakes Manor 153 Original $ 752 94.1% 92.6% 4.9% 6.5% -0.9% Hamlet Court 98 1/1/96 $ 664 96.1% 95.1% 5.9% 7.0% 7.5% Hill Court South 95 10/31/97 $ 610 98.2% 94.1% 3.9% 8.3% 8.1% Ivy Ridge 135 10/31/97 $ 610 96.6% 95.3% 5.0% 6.5% 10.1% Newcastle Apartments 197 Original $ 727 93.9% 96.2% 4.3% 1.8% -0.1% Northgate Manor 224 11/3/94 $ 657 87.3% 91.3% 4.3% -0.5% -26.2% Perinton Manor 224 Original $ 764 97.5% 96.2% 2.7% 4.1% 3.1% Pines of Perinton 508 9/29/98 $ 522 97.3% 98.5% 0.0% -1.2% 17.9% Riverton Knolls 240 Original $ 824 85.4% 85.0% 4.4% 5.1% -5.4% Spanish Gardens 220 IPO $ 648 94.8% 96.0% 4.7% 3.4% 6.2% Springcreek 82 Original $ 574 98.6% 99.3% 2.9% 2.2% -3.5% The Meadows 113 Original $ 645 95.4% 93.9% 4.4% 6.0% 9.9% Woodgate 120 06/30/1997 $ 734 95.9% 96.8% 5.2% 4.0% 0.9% Total Rochester Region 2,975 $ 723 92.4% 93.4% 3.4% 2.3% 3.1% BUFFALO, NEW YORK REGION: Emerson Square 96 10/15/97 $ 571 98.1% 99.0% 3.6% 2.8% 5.5% Fairways 32 10/15/97 $ 685 97.0% 97.1% 4.3% 4.2% -7.6% Garden Village 315 IPO $ 642 95.3% 97.3% 3.0% 1.0% -11.7% Idylwood 720 1/1/95 $ 598 95.5% 95.7% 3.3% 2.9% 0.6% Paradise Lane 324 10/15/97 $ 603 97.3% 97.8% 2.7% 2.1% 1.6% Raintree Island 504 Original $ 629 95.5% 98.1% 3.5% 0.7% -7.1% Williamstowne Village 528 Original $ 631 94.8% 90.9% 1.4% 5.7% 13.5% Total Buffalo Region 2,519 $ 617 95.6% 95.8% 2.8% 2.6% -0.1% SYRACUSE, NEW YORK REGION: Candlewood Gardens 126 1/1/96 $ 521 97.4% 96.2% 4.0% 5.2% 2.6% Conifer Village 199 IPO $ 566 100.0% 100.0% 0.0% 0.0% -1.4% Fairview Heights 210 Original $ 770 89.8% 91.0% 6.9% 5.6% 19.0% Harborside Manor 281 9/30/94 $ 600 94.1% 95.7% 3.6% 2.0% 6.2% Pearl Street 60 5/17/95 $ 523 94.3% 95.1% 6.1% 5.1% -17.8% Village Green (inclu 448 12/19/94 $ 634 95.5% 95.6% 2.8% 2.5% 8.1% Fairways) Westminster Place 240 1/1/96 $ 581 94.6% 97.3% 4.9% 1.9% -3.2% Total Syracuse Region 1,564 $ 616 94.8% 95.7% 3.7% 2.8% 5.1% LONG ISLAND, NY REGION Coventry Village 94 7/31/98 $ 1,004 96.4% 96.1% 8.9% 9.3% 10.7% Lake Grove Apartments 368 2/3/97 $ 1,005 95.3% 95.6% 10.9% 10.5% -5.0% Mid- Island Estates 232 7/1/97 $ 893 97.1% 92.1% 6.8% 12.7% 20.4% South Bay Manor 61 09/11/2000 N/A N/A N/A N/A N/A N/A Total Long Island 755 $ 967 96.0% 94.5% 9.3% 11.0% 3.5% Region HUDSON VALLEY, NY REGION Carriage Hill 140 7/17/96 $ 836 98.1% 94.4% 3.5% 7.5% 8.2% Cornwall Park 75 7/17/96 $ 1,225 93.5% 92.8% 16.0% 16.8% 7.2% Lakeshore Villas 152 7/17/96 $ 720 92.8% 97.7% 11.3% 5.9% -5.6% Mountainside 227 7/7/98 $ 840 96.2% 97.3% 5.8% 4.5% 2.4% Patricia 100 7/7/98 $ 920 97.6% 96.2% 9.1% 10.7% 6.0% Sunset Gardens 217 7/17/96 $ 647 91.8% 92.5% 7.5% 6.5% 0.8% Total Hudson Valley 911 $ 814 95.0% 95.3% 8.1% 7.7% 3.1% Region NEW JERSEY REGION East Hill Gardens 33 7/7/98 $ 923 100.0% 95.7% 10.8% 15.8% 34.0% Lakeview 106 7/7/98 $ 857 98.0% 93.9% 8.5% 13.4% 21.2% Oak Manor 77 7/7/98 $ 1,199 98.6% 92.7% 9.1% 16.2% 35.3% Pleasantview 1,142 7/7/98 $ 806 94.3% 94.1% 8.0% 8.3% 14.2% Pleasure Bay 270 7/7/98 $ 676 97.4% 94.7% 5.8% 8.9% 15.9% The Towers 137 7/7/98 $ 997 98.7% 96.6% 5.2% 7.5% 8.3% Wayne Village 275 7/7/98 $ 873 96.2% 95.2% 7.1% 8.2% 8.7% Windsor Realty 67 7/7/98 $ 811 98.0% 95.4% 7.7% 10.7% 10.7% Royal Gardens Apartments 550 5/28/97 $ 855 96.3% 93.3% 6.3% 9.7% 9.7% Total New Jersey Region 2,657 $ 835 95.9% 94.3% 7.3% 9.3% 13.6% EASTERN PENNSYLVANIA REGION Arbor Crossing 134 07/28/1999 $ 666 95.4% n/a n/a n/a n/a Beechwood Gardens 160 07/07/1998 $ 624 98.5% 99.2% 4.2% 3.5% -11.0% Broadlawn 316 03/15/2000 $ 843 93.9% n/a n/a n/a n/a Castle Club 158 03/15/2000 $ 691 98.0% n/a n/a n/a n/a Cedar Glen 110 03/03/1998 $ 466 92.2% 93.6% 4.5% 2.9% -7.7% Chesterfield 247 9/23/97 $ 721 94.5% 93.2% 7.5% 9.0% 15.5% Curren Terrace 318 9/23/97 $ 762 95.3% 95.8% 6.9% 6.3% 8.0% Executive House 100 9/23/97 $ 799 98.5% 90.3% 8.1% 17.8% 38.5% Glen Brook 173 07/28/1999 $ 638 97.8% n/a n/a n/a n/a Glen Manor 174 9/23/97 $ 619 97.7% 97.0% 3.7% 4.3% 7.3% Golf Club 399 03/15/2000 $ 806 92.3% n/a n/a n/a n/a Hill Brook Place 274 07/28/1999 $ 655 97.5% n/a n/a n/a n/a Lansdowne Group 222 9/23/97 $ 657 95.5% 96.3% 4.3% 3.5% -5.2% New Orleans Park 308 9/23/97 $ 662 94.5% 92.3% 6.6% 9.2% 10.7% Racquet Club 467 7/7/98 $ 807 96.2% 94.5% 4.3% 6.0% 10.6% Ridgeway Court 66 2/26/99 $ 645 93.1% 92.2% 4.4% 5.6% 11.3% Ridley Brook 244 07/28/1999 $ 675 98.3% n/a n/a n/a n/a Sherry Lake 298 7/23/98 $ 895 97.2% 96.0% 6.7% 8.1% 15.9% Sherwood Gardens 103 05/27/1999 $ 671 94.8% 91.5% 8.4% 12.4% 6.2% Springwood Garden 77 9/23/97 $ 633 94.8% 86.5% 5.3% 15.4% 37.7% Sugartown Mews 628 03/15/2000 $ 894 93.8% n/a n/a n/a n/a Trexler Park 249 03/15/2000 $ 810 96.0% n/a n/a n/a n/a Valley Park South 384 11/25/96 $ 801 95.9% 94.4% 6.8% 8.6% 14.5% Valley View 176 9/23/97 $ 698 94.7% 88.5% 5.6% 13.0% 13.9% Village Square 128 9/23/97 $ 744 96.0% 95.7% 12.9% 13.2% 41.2% William Henry 363 03/15/2000 $ 835 95.6% N/A N/A N/A N/A Total Eastern Penn. 6,276 $ 756 95.5% 94.2% 6.3% 8.0% 11.4% Region WESTERN PENNSYLVANIA REGION Cloverleaf Village 148 11/4/97 $ 580 82.6% 90.4% 7.2% -2.0% 1.2% Total Western Penn. 148 $ 580 82.6% 90.4% 7.2% -2.0% 1.2% Region DETROIT, MICHIGAN REGION Bayberry Place 120 09/30/2000 n/a n/a n/a n/a n/a n/a Carriage Hill 168 09/29/1998 $ 726 98.6% 96.4% 3.6% 5.9% 14.2% Carriage Park 256 09/29/1998 $ 670 95.9% 91.5% 2.4% 7.3% 6.5% Cherry Hill Club 164 07/07/1998 $ 589 94.3% 87.0% 3.7% 12.1% 36.1% Cherry Hill Village 224 09/29/1998 $ 669 95.6% 95.8% 6.5% 6.1% 20.8% Deerfield Woods 144 03/22/2000 $ 701 97.1% n/a n/a n/a n/a Hampton Court 182 09/30/2000 n/a n/a n/a n/a n/a n/a The Lakes 434 11/05/1999 $ 873 96.4% n/a n/a n/a n/a Lewiston Portfolio 3,106 10/29/97 $ 669 96.1% 96.2% 5.5% 5.4% 3.2% Macomb Manor 216 03/22/2000 $ 622 97.4% n/a n/a n/a n/a Scotsdale 376 11/26/1997 $ 639 96.8% 95.2% 5.3% 7.1% 11.5% Springwells Park 303 04/08/1999 $ 919 96.9% 90.3% 2.8% 10.3% 11.9% Total Detroit Region 5,693 $ 696 96.3% 95.0% 4.9% 6.3% 6.6% INDIANA REGION Candlewood Apartments 310 02/10/1998 $ 666 90.8% 89.1% 3.7% 5.8% -4.2% Maple Lane 396 07/09/1999 $ 631 90.9% N/A N/A N/A N/A Total Indiana Region 706 $ 646 90.9% 89.1% 3.7% 5.8% -4.2% NORTHERN VIRGINIA REGION Braddock Lee 254 03/16/1998 $ 848 92.9% 96.7% 7.9% 3.6% 0.8% Carriage Hill - VA 664 07/01/1999 $ 766 94.4% 96.9% 5.5% 2.8% -1.6% East Meadow 150 08/01/2000 n/a n/a n/a n/a n/a n/a The Manor 198 02/19/1999 $ 762 93.6% 93.0% 10.1% 10.9% 52.3% Park Shirlington 294 03/16/1998 $ 880 95.1% 96.4% 8.2% 6.8% 7.1% Riverdale 580 07/01/1999 $ 595 92.0% 95.4% 7.4% 3.6% -11.3% Seminary Hill 296 07/01/1999 $ 899 95.2% 93.5% 10.3% 12.3% 9.7% Seminary Towers 548 07/01/1999 $ 903 95.3% 92.4% 6.2% 9.4% 4.0% Total No. Virginia 2,984 $ 790 94.2% 95.7% 8.5% 6.5% 13.5% Region CONNECTICUT REGION Apple Hill 498 03/27/1998 $ 809 94.9% 94.7% 6.9% 7.1% 13.3% Total Connecticut Region 498 $ 809 94.9% 94.7% 6.9% 7.1% 13.3% BALTIMORE REGION Bonnie Ridge 966 07/01/1999 $ 862 87.7% 92.6% 6.9% 1.3% -15.1% Canterbury Apartments 618 07/16/1999 $ 635 96.4% n/a n/a n/a n/a Carriage House 50 04/30/1998 $ 541 97.0% 99.4% 5.0% 2.3% 21.3% Country Club Apartments 150 07/16/1999 $ 630 95.0% n/a n/a n/a n/a Country Village 344 04/30/1998 $ 651 96.1% 96.1% 6.4% 6.3% 7.5% Doub Meadow 95 07/16/1999 $ 596 97.9% n/a n/a n/a n/a Elmwood Terrace 504 06/30/2000 n/a n/a n/a n/a n/a n/a Falcon Crest 396 07/16/1999 $ 688 91.0% n/a n/a n/a n/a Gateway Village 132 07/16/1999 $ 809 97.5% n/a n/a n/a n/a Laurel Pines 236 07/01/1999 $ 710 93.0% 91.2% 8.2% 10.2% -5.1% Morningside Heights 1,050 04/30/1998 $ 622 93.8% 94.4% 5.8% 5.0% 10.7% Old Friends 51 02/01/2000 $ 671 94.7% n/a n/a n/a n/a Owings Run 504 07/16/1999 $ 864 94.0% n/a n/a n/a n/a Pavilion Apartments 432 07/01/1999 $ 1,138 95.2% 97.1% 7.2% 4.9% 4.1% Rolling Park 144 09/15/1998 $ 660 93.7% 97.2% 7.8% 4.0% 6.8% Selford Townhomes 102 07/16/1999 $ 820 96.7% n/a n/a n/a n/a Shakespeare Park 82 07/16/1999 $ 609 98.2% n/a n/a n/a n/a Strawberry Hill 145 04/30/1998 $ 577 92.8% 96.6% 5.1% 0.8% -3.4% Tamarron Apartments 132 07/16/1999 $ 886 97.8% n/a n/a n/a n/a Timbercroft Townhomes 284 07/16/1999 $ 625 99.1% n/a n/a n/a n/a Village Square Townhomes 370 07/16/1999 $ 712 97.2% N/A N/A N/A N/A Total Baltimore Region 6,787 $ 686 93.7% 95.3% 6.1% 4.8% 9.2% CHICAGO REGION Colonies 672 06/23/1998 $ 606 93.8% 88.6% 7.6% 13.8% 36.0% Colony Apartments 783 09/01/1999 $ 790 97.2% N/A N/A N/A N/A Total Chicago Region 1,455 $ 705 95.9% 88.6% 7.6% 13.8% 36.0% PORTLAND, MAINE REGION Mill Co. Gardens 96 07/07/1998 $ 553 96.7% 98.9% 7.8% 5.3% 10.6% Redbank Village 500 07/07/1998 $ 615 95.4% 96.0% 8.7% 7.7% 8.8% Total Portland Region 596 $ 605 95.6% 96.4% 8.6% 7.4% 9.0% COLUMBUS, OHIO REGION Westin Gardens 242 07/07/1998 $ 518 83.7% 94.8% 10.4% -2.3% -5.5% Total Columbus Region 242 $ 518 83.7% 94.8% 10.4% -2.3% -5.5% DELAWARE REGION Chestnut Crossing 432 07/16/1999 $ 604 90.5% N/A N/A N/A N/A Total Delaware Region 432 $ 604 90.5% n/a n/a n/a n/a TOTAL OWNED PORTFOLIO 37,198 $ 730 94.7% n/a n/a n/a n/a TOTAL CORE PORTFOLIO 23,530 $ 707 94.9% 94.6% 5.7% 6.0% 8.5%
Home Properties of New York, Inc. September 30, 2000 and 1999 Supplemental Information SAME STORE OPERATING EXPENSE DETAILS 3RD QTR 3RD QTR NINE MOS NINE MOS 2000 1999 QUARTER % 2000 1999 NINE MOS % ACTUAL ACTUAL VARIANCE VARIANCE ACTUAL ACTUAL VARIANCE VARIANCE ELECTRICITY 1,081 1,113 32 2.9% 2,909 2,815 (94) -3.3% GAS 680 551 (129) -23.4% 5,844 5,680 (164) -2.9% WATER & SEWER 1,443 1,454 11 0.8% 4,050 3,967 (83) -2.1% REPAIRS & MAINTENANCE 3,530 3,948 418 10.6% 9,869 9,681 (188) -1.9% PERSONNEL EXPENSE 5,546 5,040 (506) -10.0% 16,102 15,185 (917) -6.0% ADVERTISING 925 786 (139) -17.7% 2,421 2,446 25 1.0% GROUND RENT 51 50 (1) -2.0% 152 146 (6) -4.1% LEGAL & PROFESSIONAL 118 118 - 0.0% 374 371 (3) -0.8% OFFICE & TELEPHONE 727 532 (195) -36.7% 1,849 1,683 (166) -9.9% % RENT 56 48 (8) -16.7% 190 155 (35) -22.6% PROPERTY INS. 179 183 4 2.2% 689 553 (136) -24.6% REAL ESTATE TAXES 5,234 5,024 (210) -4.2% 15,493 14,916 (577) -3.9% SNOW - 10 10 100.0% 462 618 156 25.2% TRASH 396 371 (25) -6.7% 1,158 1,078 (80) -7.4% TOTAL 19,966 19,228 (738) -3.8% 61,562 59,294 (2,268) -3.8%
HOME PROPERTIES OF NEW YORK, INC. September 30, 2000 and 1999 Supplemental Information BREAKDOWN OF "OTHER INCOME" Q3 '00 Q3 '99 YTD '00 YTD '99 RECOGNIZED DIRECTLY BY HOME PROPERTIES: Management fees 442 446 1,308 1,180 Development fees 258 210 498 601 Other 46 56 87 109 Sub-total 746 712 1,893 1,890 Management Companies (95% interest, see below) (441) (40) (1,512) 330 Total Other Income 305 672 381 2,220 MANAGEMENT COMPANIES DETAIL: Management fees 1,042 974 2,728 2,827 Development fees 1,054 1,184 3,163 3,829 Misc 23 40 66 78 General & Administrative (1,921) (1,787) (5,681) (5,259) Interest expense (509) (324) (1,425) (766) Depreciation (121) (92) (345) (259) Taxes (33) (37) (98) (103) (465) (42) (1,592) 347 95% to Home Properties (441) (40) (1,512) 330 COMBINED MANAGEMENT/DEVELOPMENT ACTIVITY: Management fees 1,484 1,420 4,036 4,007 Development fees 1,312 1,394 3,661 4,430 COMBINED EBITDA 944 1,123 2,169 3,365
HOME PROPERTIES OF NEW YORK, INC. September 30, 2000 and 1999 Supplemental Information SUMMARY OF ACQUISITIONS WGTD. AVG. PURCHASE # OF PURCHASE PRICE PER COMMUNITY MARKET STATE DATE UNITS PRICE (MM) UNIT 2000 ACQUISITIONS Southbay Manor Long Island NY 10/02/2000 61 $3.00 $49,180 Hampton Court Detroit MI 10/02/2000 182 $6.00 $32,967 Bayberry Detroit MI 10/02/2000 120 $5.70 $47,500 East Meadow NoVA/DC VA 08/01/2000 150 $13.00 $86,667 Elmwood Terrace Baltimore MD 06/30/2000 504 $20.60 $40,873 Shostack - 2 Detroit MI 03/22/2000 360 $14.40 $40,000 properties Gateside - 6 Philadelphia PA 03/15/2000 2,113 $135.90 $64,316 properties Old Friends Baltimore MD 06/30/2000 51 $2.00 $39,216 TOTAL YTD 3,541 $200.60 $56,651 1999 ACQUISITIONS Lakes, The Southfield MI 11/05/1999 434 $26.00 $59,908 Colony, The Mt. Prospect IL 09/01/1999 783 $41.80 $53,384 Ridley Philadelphia PA 07/28/1999 825 $32.30 $39,152 Mid-Atlantic MD & DE MD/DE 07/15/1999 3,297 $157.50 $47,771 Maple Lane South Bend IN 07/09/1999 396 $17.40 $43,939 CRC Baltimore MD 07/01/1999 3,722 $180.60 $48,522 Sherwood Gardens Levittown PA 05/27/1999 103 $4.10 $39,806 Springwell Park Dearborn MI 04/08/1999 303 $18.20 $60,066 Ridgeway Court Yeadon PA 02/26/1999 66 $2.15 $32,576 Manor, The Levittown PA 02/19/1999 198 $7.20 $36,364 TOTAL 10,127 $487.25 $48,114 TOTAL 1999 AND 2000 ACQUISITIONS 13,668 $688 $50,326
HOME PROPERTIES OF NEW YORK, INC. September 30, 2000 and 1999 Supplemental Information BREAKDOWN OF OWNED UNITS BY MARKET NET NET ACQUIRED AS OF 12/31/1999 ACQUIRED AS OF 09/30/2000 MARKET IN 1999 12/31/1999 % YTD 2000 09/30/2000 % CONNECTICUT CT 498 1.47% 498 1.34% DELAWARE DE 432 432 1.28% 432 1.16% CHICAGO IL 783 1,455 4.30% 1,455 3.91% SOUTH BEND IN 396 706 2.09% 706 1.90% BALTIMORE MD 3,831 6,232 18.43% 555 6,787 18.25% PORTLAND ME 596 1.76% 596 1.60% DETROIT MI 737 5,031 14.88% 662 5,693 15.30% NORTHERN NJ -256 2,657 7.86% 2,657 7.14% BUFFALO NY 2,519 7.45% 2,519 6.77% SYRACUSE NY 1,564 4.63% 1,564 4.20% ROCHESTER NY 2,975 8.80% 2,975 8.00% LONG ISLAND NY 694 2.05% 61 755 2.03% HUD VALLEY NY 911 2.69% 911 2.45% COLUMBUS OH 242 0.72% 242 0.65% PITTSBURGH PA 298 0.88% -150 148 0.40% EASTERN PA 1,192 4,163 12.31% 2,113 6,276 16.87% DC/No. VA DC 1,512 1,590 4.70% 150 1,740 4.68% CENTRAL VA 1,244 1,244 3.68% 1,244 3.34% TOTAL 9,871 33,807 100.0% 3,391 37,198 100.0% TOTAL NY STATE 8,663 25.6% 61 8,724 23.5% TOTAL UPSTATE, NY 7,058 20.9% 7,058 19.0% TOTAL MID-ATLANTIC 8,211 13,661 40.4% 2,818 16,479 44.3%
HOME PROPERTIES OF NEW YORK, INC. September 30, 2000 Supplemental Information DEBT SUMMARY SCHEDULE MATURITY YEARS TO FIXED RATE BALANCE DATE MATURITY SPRINGWOOD (IDS) 8.5000 1,414,628 11/01/01 1.09 VALLEY VIEW (IDS) 8.5000 3,207,075 11/01/01 1.09 ROYAL GARDENS (FIRST UNION) 7.6600 11,163,707 08/01/02 1.84 THE COLONY (JOHN HANCOCK) 7.6000 15,952,197 08/01/02 1.84 BAYBERRY PLACE (AE/IDS) 9.7500 2,526,001 10/01/02 2.00 1600 ELMWOOD (JOHN HANCOCK) 7.7500 5,170,255 11/01/02 2.09 BROOK HILL (JOHN HANCOCK) 7.7500 4,708,624 11/01/02 2.09 GARDEN VILLAGE (JOHN HANCOCK) 7.7500 4,431,647 11/01/02 2.09 VILLAGE GREEN (JOHN HANCOCK) 7.7500 4,616,298 11/01/02 2.09 BROADLAWN (CAPRI CAPITAL) 8.1700 11,853,420 08/01/03 2.84 CURREN TERRACE (GMAC) 8.3550 9,332,372 10/01/03 3.00 ELMWOOD TERRACE (JOHN HANCOCK) 8.2500 4,648,198 11/01/03 3.09 RACQUET CLUB (MELLON) 7.6250 11,830,164 11/01/03 3.09 ROLLING PARK (ALLFIRST MTG) 7.8750 2,754,366 11/01/03 3.09 SHERRY LAKE (GMAC) 7.8750 6,312,347 01/01/04 3.25 COLONIES (CAPRI CAPITAL) 8.8750 12,122,298 05/01/04 3.59 GLEN MANOR (IDS) 8.1250 3,601,494 05/01/04 3.59 CASTLE CLUB (LEGG MASON) 9.5500 3,718,977 03/01/05 4.42 WILLIAM HENRY (LEGG MASON) 7.6400 14,227,853 10/01/05 5.01 IDLYWOOD (MORGAN GTY) 8.6250 9,146,652 11/01/05 5.09 CARRIAGE HILL - MI (WMF WASH MTG) 7.3600 3,781,782 01/01/06 5.26 CARRIAGE PARK (WMF WASH MTG) 7.4800 5,449,488 01/01/06 5.26 CHERRY HILL (WMF WASH MTG) 7.9900 4,438,659 01/01/06 5.26 MID-ISLAND (JAMAICA SB) 7.5000 6,675,000 05/01/06 5.59 NEWCASTLE (PRESIDENTIAL) 7.9000 6,000,000 07/31/06 5.84 COUNTRY VILLAGE (PW FUNDING) 8.3850 6,554,543 08/01/06 5.84 HAMPTON COURT (ORIX RE CAP) 8.8750 3,601,453 09/01/06 5.92 RAINTREE (CAP LEASE) 8.5000 6,211,846 11/01/06 6.09 WOODGATE PLACE (ARCS) 7.8650 3,377,368 01/01/07 6.26 STRAWBERRY HILL (PW FUNDING) 8.2550 2,038,646 05/01/07 6.59 SEMINARY TOWERS - 1st (FIRST UNION) 8.2200 2,635,302 07/01/07 6.75 SEMINARY TOWERS - 2nd (FIRST UNION) 8.4000 2,321,271 07/01/07 6.75 MAPLE LANE APTS - II (AMI CAPITAL) 7.2050 5,911,716 01/01/08 7.26 PAVILION - 2nd (CAPRI CAPITAL) 7.4500 3,894,217 01/01/08 7.26 VALLEY PARK S (CAPRI CAP) 6.9300 9,878,719 01/01/08 7.26 CANDLEWOOD, IND (MORGAN GTY)) 7.0200 7,678,191 02/01/08 7.34 HAMLET COURT (HSBC) 7.1100 1,743,828 02/01/08 7.34 CANTERBURY IV (ALLFIRST BANK) 7.6700 2,166,620 06/01/08 7.67 DETROIT(COLLATERAL MORTGAGE) 7.5100 47,921,375 06/01/08 7.67 SHERWOOD GARDENS (LEGG MASON) 6.9800 3,036,934 07/01/08 7.76 GOLF CLUB (ARCS) 6.5850 16,958,601 12/01/08 8.18 MANSION HOUSE (1st NIAGARA BK) 7.5000 683,064 01/01/09 8.26 RIDLEY PORTFOLIO (KLORFINE et. al.) 8.0000 15,750,000 07/28/09 8.83 OLD FRIENDS (M & T BANK) 6.7300 2,387,909 08/01/09 8.84 MULTI-PROPERTY (M&T BANK/FREDDIE) 7.5750 45,400,000 05/01/10 9.59 CONIFER ( BALD. DEV CORP) 7.2000 2,445,000 06/01/10 9.67 SUGARTOWN MEWS (PRUDENTIAL) 7.5000 28,892,000 10/01/10 10.01 TREXLER PARK (PRUDENTIAL) 7.5000 10,140,000 10/01/10 10.01 RIDGEWAY(GMAC) 8.3750 1,121,401 11/01/10 10.09 MULTI-PROPERTY (WASHINGTON MTG) 7.2500 32,978,000 01/01/11 10.26 MULTI-PROPERTY (WASHINGTON MTG) 6.1600 58,881,000 01/01/11 10.26 TIMBERCROFT TH's 1 - 1st (GMAC) 8.5000 911,844 05/01/11 10.59 TIMBERCROFT TH's 3 - 1st (GMAC) 8.0000 1,225,663 02/01/12 11.35 VILLAGE SQUARE 3 (DP SERVICE) 7.0000 1,013,450 11/01/12 12.1 MORNINGSIDE/CARRIAGE HL (MORGAN) 6.9900 19,827,818 05/01/13 12.59 MULTI-PROPERTY (WASHINGTON MTG) 6.4750 100,000,000 08/31/13 12.93 DEERFIELD WOODS (GE FINANCIAL) 7.0000 3,428,070 01/01/14 13.26 SPRINGWELLS (AMER FIN CORP) 8.0000 11,404,360 07/01/15 14.76 PINES OF PERINTON (NYS URBAN DEV) 8.5000 8,517,159 05/01/18 17.59 CANTERBURY I - 1st (GMAC) 7.5000 3,684,048 06/01/18 17.68 CANTERBURY I - 2nd (ALLFIRST MTG) 8.5000 1,307,562 06/01/18 17.68 CANTERBURY I I- 2nd (ALLFIRST MTG) 8.5000 1,082,678 06/01/18 17.68 CANTERBURY I I I- 2nd (ALLFIRST MTG) 8.5000 618,302 06/01/18 17.68 PAVILION - 1st (CAPRI CAPITAL) 8.0000 8,768,942 11/01/18 18.10 BONNIE RIDGE (PRUDENTIAL) 6.6000 19,105,615 12/15/18 18.22 TIMBERCROFT TH's 1 - 2nd (ALLFIRST MTG) 8.3750 2,322,736 06/01/19 18.68 TIMBERCROFT TH's 3 - 2nd (ALLFIRST MTG) 8.3750 3,421,162 06/01/19 18.68 CANTERBURY I I - 1st (WMF HUNTOON) 7.5000 3,660,006 09/01/19 18.93 VILLAGE GREEN, FW (ARCS) 8.2300 4,284,498 10/01/19 19.01 RAINTREE (LEASEHOLD) 8.5000 1,144,877 04/30/20 19.59 CHESTNUT CROSSING (REILLY MTG) 9.3400 9,852,279 07/01/20 19.76 MACOMB MANOR (EF&A FUNDING) 8.6300 4,040,406 06/01/21 20.68 VILLAGE SQUARE 1&2 (CONT'L WINGATE) 8.1250 6,518,444 08/01/21 20.85 DOUB MEADOW (DOVENMUEHLE) 7.5000 2,876,823 10/01/21 21.02 CANTERBURY I I I - 1st (DOVENMUEHLE) 7.5000 2,551,527 11/01/21 21.10 SHAKESPEARE PARK (REILLY MTG) 7.5000 2,603,359 01/01/24 23.27 GATEWAY VILLAGE (CAPRI CAPITAL) 8.0000 6,369,803 05/01/30 29.60 OWINGS RUN 1 (REILLY MTG) 8.0000 17,602,823 10/01/35 35.02 OWINGS RUN 2 (WMF HUNTOON) 8.0000 14,671,241 06/01/36 35.69 WTD AVG - FIXED SECURED 7.43 756,507,997 10.89 % OF PORTFOLIO - FIXED 98.8% VARIABLE SECURED MAPLE LANE - I (CIVITAS) - Eqv. Bond 5.800 6,245,000 07/27/07 6.82 Yield Adjusts Monthly SPRINGCREEK (SILVER) P + 1/2 10.000 3,050,129 08/01/04 3.84 WTD AVG - VARIABLE SECURED 7.18 9,295,129 5.84 WTD AVG - TOTAL SECURED DEBT 7.43 765,803,126 10.82 VARIABLE UNSECURED - LINE OF CREDIT M & T LINE OF CREDIT - LIBOR+125 7.7800 0 09/01/02 1.92 Adjusts Daily WTD AVG - COMBINED DEBT 7.43 765,803,126 10.82 WTG AVG - TOTAL SECURED DEBT 7.43 10.82 WTD AVG - TOTAL PORTFOLIO 7.43 10.82
FREE & CLEAR PROPERTIES 1600 East Avenue 164 Ivy Ridge 135 Beechwood Gardens 160 Lake Grove Apartments 368 Candlewood Gardens 126 Lakeshore Villas 152 Carriage Hill - NY 140 Manor Apartments 198 Cedar Glen 110 Paradise Lane 324 Cloverleaf Village 148 Patricia Apts - NY 100 Cornwall Park 75 Pearl Street 60 Coventry Village Apartments 94 Selford Townhomes 102 East Hill Gardens 33 Seminary Hill 296 Emerson Square 96 Sunset Gardens 217 Fairway Apartments 32 The Lakes 434 Falcon Crest Townhouses 396 East Meadow 150 Hillcourt South 95 Southbay Manor 61 TOTAL FREE AND CLEAR PROPERTIES: 4,266
HOME PROPERTIES OF NEW YORK,INC. September 30, 2000 Supplemental Information NET ASSET VALUE CALCULATION Cap Rate (after 3% G&A, before capital expenditures) 9.25% 9.5% 9.75% 3RD QTR 2000 Rent 76,303 76,303 76,303 Property other income 2,999 2,999 2,999 Operating & maintenance expense (31,250) (31,250) (31,250) Property NOI 48,052 48,052 48,052 Adjustment for 3rd QTR acq/dispositions 338 338 338 Effective 3rd QTR "run rate" 48,390 48,390 48,390 Annualized (3rd qtr =25.5% due to 189,766 189,766 189,766 seasonality) NOI growth for next 12 months @ 4% 7,591 7,591 7,591 G & A @ 3% of gross revenues (9,516) (9,516) (9,516) Adjusted NOI 187,840 187,840 187,840 Real estate value using above cap rate 2,030,703 1,977,264 1,926,565 Management Co activities (1st nine months EBITDA / .15 X 2) 19,280 19,280 19,280 Cash 46,816 46,816 46,816 Other assets 130,160 130,160 130,160 Less: Investment in Mgt Co (incl above) [negative 1,237 1,237 1,237 balance] Deferred charges (3,631) (3,631) (3,631) Goodwill (8,628) (8,628) (8,628) Gross value 2,215,937 2,162,498 2,111,799 Less liabilities (811,520) (811,520) (811,520) Net Asset Value $ 1,404,417 $ 1,350,978 $1,300,279 PER SHARE/UNIT - FULLY DILUTED $ 32.34 $ 31.11 $ 29.94 43,428.9 shares Economic CAP rate (after cap ex reserve of $375 per unit) 8.56% 8.79% 9.03%
ADJUSTMENT FOR ACQUISITIONS/DISPOSITIONS: Initial # of days Unleveraged Quarterly Missing PROPERTY PRICE DATE RETURN NOI IN QUARTER ADJ Southbay Manor 3,000 09/11/2000 9.8% 74 72 58 Hampton Court 6,000 09/29/2000 9.5% 143 92 143 Bayberry 5,700 09/29/2000 9.7% 138 92 138 Misc from disposition N/A 338
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