EX-99 2 0002.txt EXHIBIT 99.1 FOR IMMEDIATE RELEASE HOME PROPERTIES REPORTS FOURTH QUARTER AND YEAR END 2000 RESULTS ROCHESTER, NY, February 13, 2001 /PRNewswire / -- Home Properties (NYSE:HME) today released financial results for the fourth quarter and full year 2000. For the quarter ended December 31, 2000, Funds From Operations (FFO) was $32,553,000, or $.75 per share, compared with $27,403,000, or $.74 per share for the quarter ended December 31, 1999. These results were in line with lowered Company estimates for the quarter and equate to a 19% increase in total FFO over the comparable prior-year period, or a 0.5% increase on a per-share basis. FFO for the year ended December 31, 2000, was $120,854,000, or $2.94 per share, compared with $89,132,000 for 1999, or $2.78 per share. This resulted in a 36% increase in total FFO from the prior year, or a 5.6% 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.) FOURTH QUARTER OPERATING RESULTS For the fourth 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 6.2% and a net operating income increase of 5.8% over the fourth quarter of 1999. Other property income improved 44%, reflecting successful efforts to increase ancillary income, as well as a one-time increase to earnings from insurance proceeds. Property level operating expenses increased by 9.5%, primarily due to increases in gas utility expenses, personnel expense, property insurance, real estate taxes, and snow removal costs. Average economic occupancy for the Core properties was 94.9% during the fourth quarter of 2000, up from 94.6% during the fourth quarter of 1999, with average monthly rental rates increasing 5.8% to $717. Occupancies for the 15,511 apartment units acquired between January 1, 1999, and December 31, 2000 (the "Recently Acquired Communities") averaged 94.4% during the fourth quarter, at average monthly rents of $788. FULL YEAR OPERATING RESULTS For the year ended December 31, 2000, same property comparisons for the Core properties showed an increase in rental revenues of 5.8% and a net operating income increase of 7.6% over 1999. Property level operating expenses increased by 5.3%, primarily due to increases in gas utility expenses, personnel expense, property insurance, and real estate taxes. Average economic occupancy for the Core properties increased slightly from 94.6% to 94.7%, with average monthly rents rising 5.7%. The yield on the Recently Acquired Communities during 2000 averaged approximately 10% 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 was about flat during the fourth quarter of 2000, with interest income from increased levels of financing to affiliates accounting for the annual increase of $654,000. 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 fourth quarter of last year, gross development fee revenues decreased by 37% to $1,180,000, and management fee revenues increased 4% to $1,380,000 (including development and management revenues recognized in both the Company and its subsidiaries). The net contribution for the fourth quarter was flat, helped by income tax refunds and a reduction to the incentive compensation included in the general and administrative allocation. The net contribution for the year decreased $1,849,000, or 64%. The Company closed on the sale of the affordable housing development operations on the last day of the year for $6.7 million. A loss on sale of $924,000 was recorded during the fourth quarter for this sale, mainly attributable to transaction costs incurred. ACQUISITIONS AND DISPOSITIONS During the fourth quarter of 2000, the Company acquired eight communities with a total of 1,843 apartment units in Long Island, Chicago, and Virginia. Total consideration was $121.5 million, or an average of $66,000 per unit. For the full year, net acquisitions have resulted in a 15% increase in the number of apartment units owned outright by Home Properties. The Company is considering the sale of $100 million to $200 million of properties in its portfolio, although no sale agreements have been finalized at this time. If completed, sale proceeds would be opportunistically applied to acquisitions with higher growth prospects and/or share repurchases of Home Properties common stock under its share repurchase program. CAPITAL MARKETS ACTIVITIES During the fourth quarter of 2000, the Company issued operating partnership units valued at $2.3 million in connection with property acquisitions, raised $15.3 million by issuing additional shares under its Dividend Reinvestment and Direct Stock Purchase Plan ("DRIP"), and repurchased $12.7 million of common shares in the open market at an average price of $27.03 through its Stock Repurchase Program. The Company completed the sale of $30 million of Series E convertible preferred equity in a private transaction with Prudential and Teachers Insurance. For the entire year, the Company accessed $231 million in new equity capital including $115 million of convertible preferred stock, $59 million of operating partnership units (which are convertible into shares of common stock on a one-for-one basis), and $57 million through the DRIP. The Company is exploring alternatives to eliminate or reduce the discount currently provided to optional cash purchasers under the DRIP. If participation in the DRIP does not decline significantly in response to these changes, the Company will switch to satisfying demand for shares sold under the Program to open market purchases from the existing method of issuing new shares. These changes are being contemplated due to the fact that the stock has been trading consistently below the Company's estimate of net asset value. During the quarter, the Company closed on a $43.7 million, non-recourse mortgage financing provided by Fannie Mae with interest fixed at a rate of 6.815% for a term of ten years, secured by the recently acquired 851-unit Orleans Village Apartments located in Arlington, Virginia. Proceeds from this loan and the Series E transaction referred to above were used to fully repay borrowings under the Company's unsecured line of credit. As of December 31, 2000, the Company's ratio of debt-to-total-market capitalization was 40%, with nothing outstanding on its $100 million revolving credit facility and $10.4 million of unrestricted cash on hand. Mortgage debt of $833 million was outstanding, at fixed rates of interest averaging 7.4% and with staggered maturities averaging approximately 11 years. Interest coverage averaged 3.1 times during the quarter, and the fixed charge ratio, which includes preferred dividends, averaged 2.5 times. The Company estimates its net asset value at December 31, 2000 to range from $30.00 to $32.50 (based on capitalizing the annualized fourth quarter property net operating income between 9.0% and 9.5%, after a 4% growth factor, and deducting a management fee equal to 3% of gross revenues). REVIEW AND OUTLOOK The Company reconfirms its previous FFO guidance of $3.10 per share for 2001 ($.060, $0.78, $0.85, and $0.87 per quarter, respectively). This estimate includes a total of $0.12 dilution to earnings (as previously communicated), reflecting higher operating expenses for heating costs due to escalating natural gas prices. For 2001, same store revenue increases are projected to be 7.5%, operating expenses are estimated to increase approximately 7.0%, resulting in net operating income growth of between 7.5% and 8.0%. A portion of the revenue growth represents above average rent increases in order to pass through to our residents the increased heating costs. According to Norman Leenhouts, Chairman and Co-CEO, "2000 was one of the most challenging years we have faced since going public. We have made positive strides in the areas of succession planning and exiting the affordable housing development business. Also, unprecedented increases in natural gas prices combined with record cold weather contributed towards energy costs that were more than reasonably anticipated. Our Core properties produced record results for increases in both rental income and weighted average rents, while also providing net operating income growth of 7.6%, despite pressures on certain expense items. "We start 2001 with a strong balance sheet, healthy markets, and solid occupancy levels. We look forward to taking advantage of lower interest rates and recycling capital to build shareholder 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 and simultaneous webcast today at 11:00 AM Eastern Time to review the information reported in this release. To listen to the call, please dial 800-248-9412. A replay of the call will be available by dialing 800-633-8284 or 858-812-6440 and entering the reservation number 17420043. Call replay will become available beginning at approximately 1:00 PM Eastern Time and continue until approximately Midnight on Tuesday, February 20. The prepared portion of the conference call presentation will be filed with the SEC on a Form 8-K. The Company webcast will include the audio portion of our conference call. To view the live webcast, you will need to perform a five-minute Pre-event System Test through the "Investors" section of our web site, www.homeproperties.com under the heading, "Financial Information." This will install the necessary software plug-in program on your computer. If you are unavailable at the scheduled time, you may still view the archived webcast presentation at www.homeproperties.com, beginning at 2:30 PM that day. 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 activities within anticipated budgets, the actual pace of future acquisitions, 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 319 communities containing 50,912 apartment units. Of these, 39,041 units in 147 communities are owned directly by the Company; 8,325 units are partially owned and managed by the Company as general partner, and 3,546 units are managed for other owners. The Company also manages one 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.
FOURTH QUARTER RESULTS AVG. ECONOMIC OCCUPANCY Q4 '00 Q4 '00 vs. Q4 '99 --------------- -------- --------------------- ----------------------- Average Monthly % Rental % Rental Rent/ Rate Revenue % NOI Q4 '00 Q4 '99 Occ Unit Growth Growth Growth -------- -------- --------- -------- --------- ------- Core Properties(a) 94.9% 94.6% $717 5.8% 6.2% 5.8% Acquisition Properties(B) 94.4% NA $788 NA NA NA -------- ------- ------ ---- ---- ---- TOTAL PORTFOLIO 94.7% 94.4% $744 NA NA NA Core Properties(a) 94.7% 94.6% $701 5.7% 5.8% 7.6% Acquisition Properties(B) 94.2% NA $766 NA NA NA ----- ------ ----- ----- ----- ----- TOTAL PORTFOLIO 94.5% 94.6% $723 NA NA NA
Avg. Economic Full Year Results Occupancy 2000 2000 vs. 1999 ----------------- ------------ ----- ------------------------------------ Average Monthly % Rental %Rental Rent/ Rate Revenue % NOI 2000 1999 Occ Unit Growth Growth Growth ---- ---- -------- -------- ------- ------ Core Properties (a) 94.7% 94.6% $701 5.7% 5.8% 7.6% Acquisition Properties(b) 94.2% NA $766 NA NA NA ----- ----- ----- ----- ----- ----- TOTAL PORTFOLIO 94.5% 94.6% $723 NA NA NA
(a) Core Properties includes 95 properties with 23,530 apartment units owned throughout 1999 and 2000. (b) Reflects 52 properties with 15,511 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 Year Ended December 31 December 31 2000 1999 2000 1999 ------- ------- ------ ------ Rental income $80,821 $66,068 $298,860 $217,591 Other income - property related 3,309 2,371 11,389 6,878 Interest and dividend income 1,711 1,743 7,746 7,092 Other income 672 682 1,053 2,902 ---------- ---------- ---------- --------- Total revenues 86,513 70,864 319,048 234,463 Operating and maintenance 35,172 27,840 128,034 95,200 General and administrative 3,436 3,405 13,235 10,696 Interest 15,270 12,200 56,792 39,558 Depreciation and amortization 14,635 11,823 52,430 37,350 Loss on available-for-sale securities -- -- -- 2,123 Non-recurring acquisition expense -- -- -- 6,225 ----------- ---------- ---------- ---------- Total expenses 68,513 55,268 250,491 191,152 Income before gain (loss) on disposition of property, minority interest, and extraordinary item 18,000 15,596 68,557 43,311 Gain (loss) on disposition of property (969) -- ( 1,386) 457 ---------- --------- ---------- -------- Income before minority interest and extraordinary item 17,031 15,596 67,171 43,768 Minority interest 6,495 6,524 25,715 17,390 --------- -------- --------- --------- Income before extraordinary item 10,536 9,072 41,456 26,378 Extraordinary item, prepayment penalties, net of $78 allocated to minority interest -- -- -- (96) ----------- ---------- ----------- ---------- Net income 10,536 9,072 41,456 26,282 Preferred dividends ( 3,926) (1,141) ( 12,178) (1,153) ---------- --------- ---------- --------- Net income available to common shareholders 6,610 7,931 29,278 25,129 Extraordinary item -- -- -- 96 (Gain) loss on disposition of property 969 -- 1,386 ( 457) Preferred dividends 3,926 1,141 12,178 1,153 Depreciation - real property 14,509 11,717 51,914 37,015 Depreciation - real property, unconsolidated 43 90 383 458 Minority Interest 6,495 6,524 25,715 17,390 ---------- ---------- ---------- ---------- FFO as clarified{ (1) }$32,552 $27,403 $120,854 $80,784 ====== ======= Non-recurring items:{ Loss on available-for-sale securities NA -- NA 2,123 Non-recurring acquisition expense NA -- NA 6,225 ---------- ----------- FFO as previously reported (2) NA $27,403 NA $89,132 ====== ======= Weighted average shares/units outstanding: Shares - basic 21,314.8 19,406.7 20,639.2 18,697.7 Shares - diluted 21,412.4 19,515.2 20,755.7 18,800.9 Shares/units -- basic(2) 37,261.3 35,116.1 35,998.3 31,513.8 Shares/units -- diluted 43,625.1 36,904.1 41,128.4 32,044.9 Per share/unit: Net income - basic $.31 $.41 $1.42 $1.34 Net income - diluted $.31 $.41 $1.41 $1.34 FFO as clarified - basic $.77 $.75 $3.02 $2.53 FFO as clarified - diluted $.75 $.74 $2.94 $2.52 FFO as previously reported - basic (3) NA $.75 NA $2.79 FFO as previously reported - diluted (3) NA $.74 NA $2.78
(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 E 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)
December 31, 2000 December 31, 1999 Real estate $1,895,269 $1,480,753 Accumulated depreciation (153,324) (101,904) ------------ ------------ Real estate, net 1,741,945 1,378,849 Cash and cash equivalents 10,449 4,742 Cash in escrows 36,676 28,281 Accounts receivable 11,510 6,842 Prepaid expenses 13,505 9,423 Deposits 877 897 Investment in and advances to affiliates 45,048 63,450 Deferred charges 3,825 2,610 Other assets 8,053 8,523 ------------ ------------- Total Assets $1,871,888 $1,503,617 ========== ========= Mortgage notes payable $ 832,783 $ 618,901 Line of credit -- 50,800 Other liabilities 49,300 36,913 ----------- ----------- Total liabilities 882,083 706,614 Minority interest 371,544 299,880 Series B convertible preferred stock 48,733 48,733 Stockholders' equity 569,528 448,390 ------------- ------------- Total liabilities and stockholders' equity $1,871,888 $1,503,617 ======== ======== Total shares/units outstanding: Common stock 21,565.7 19,598.5 Operating partnership units 15,854.5 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 -- Series E convertible cumulative preferred stock* 949.4 -- ------------ ------------- 44,532.6 36,979.0
*Common stock equivalent For further information: David Gardner, Senior Vice President and Chief Financial Officer, (716) 246-4113 Norman Leenhouts, Chairman and Co-CEO, (716) 246-4109