-----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, OELiZqVGqxsqfEs52x1tfpvOkQD6sEYgNHim+Y2xJY/i0o0FjFTDBlslgsEkkki3 znWy91hbxq74Cf31lCX6yA== 0000923118-02-000080.txt : 20021114 0000923118-02-000080.hdr.sgml : 20021114 20021114165142 ACCESSION NUMBER: 0000923118-02-000080 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20020930 FILED AS OF DATE: 20021114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HOME PROPERTIES OF NEW YORK INC CENTRAL INDEX KEY: 0000923118 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 161455126 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-13136 FILM NUMBER: 02825787 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 10-Q 1 thirdquarter10q.txt QUARTERLY REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2002 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-13136 HOME PROPERTIES OF NEW YORK, INC. (Exact name of registrant as specified in its charter) MARYLAND 16-1455126 -------- ---------- (State or other jurisdiction of (IRS Employer Identification incorporation or organization) Number) 850 Clinton Square, Rochester, New York 14604 (Address of principal executive offices) (Zip Code) (585) 546-4900 (Registrant's telephone number, including area code) N/A (Former name, former address and former year, if changed since last report) Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO ____ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Class of Common Stock Outstanding at October 31, 2002 --------------------- ------------------------------- $.01 par value 26,778,912
HOME PROPERTIES OF NEW YORK, INC. TABLE OF CONTENTS PAGE PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets - September 30, 2002 (Unaudited) and December 31, 2001 3 Consolidated Statements of Operations (Unaudited) - Nine months ended September 30, 2002 and 2001 4 Consolidated Statements of Operations (Unaudited) - Three months ended September 30, 2002 and 2001 5 Consolidated Statements of Comprehensive Income (Unaudited) - Nine months ended September 30, 2002 and 2001 6 Consolidated Statements of Comprehensive Income (Unaudited) - Three months ended September 30, 2002 and 2001 7 Consolidated Statements of Cash Flows (Unaudited) - Nine months ended September 30, 2002 and 2001 8 Notes to Consolidated Financial Statements (Unaudited) 9-18 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 19-29 Item 3. Quantitative and Qualitative Disclosures About Market Risk 30 Item 4. Controls and Procedures 31 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 32 Signatures 33-36
PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS HOME PROPERTIES OF NEW YORK, INC. CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2002 AND DECEMBER 31, 2001 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) 2002 2001 ---- ---- (Unaudited) (Note 1) ASSETS Real estate: Land $ 367,140 $ 287,473 Buildings, improvements and equipment 2,130,644 1,847,605 --------- ----------- 2,497,784 2,135,078 Less: accumulated depreciation ( 239,538) ( 201,564) ------------ ------------ Real estate, net 2,258,246 1,933,514 Cash and cash equivalents 7,814 10,719 Cash in escrows 43,915 39,230 Accounts receivable 8,252 8,423 Prepaid expenses 18,057 17,640 Investment in and advances to affiliates 36,623 42,870 Deferred charges 7,517 5,279 Other assets 7,067 6,114 -------------- -------------- Total assets $2,387,491 $2,063,789 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Mortgage notes payable $1,161,281 $ 960,358 Line of credit 86,000 32,500 Accounts payable 17,405 21,838 Accrued interest payable 6,719 5,782 Accrued expenses and other liabilities 12,743 13,180 Security deposits 22,427 18,948 ------------ ------------ Total liabilities 1,306,575 1,052,606 ---------- ---------- Commitments and contingencies Minority interest 346,134 341,854 ----------- ------------ 8.36% Series B convertible cumulative preferred stock, liquidation preference of $25.00 per share; no shares and 2,000,000 shares issued and outstanding at September 30, 2002 and December 31, 2001, respectively, net of issuance costs - 48,733 ----------------- ------------- Stockholders' equity: Cumulative redeemable preferred stock, $.01 par value; 2,400,000 shares issued and outstanding at September 30, 2002. No shares issued or outstanding at December 31, 2001 60,000 - Convertible cumulative preferred stock, $.01 par value; 10,000,000 shares authorized; 1,086,800 and 1,150,000 shares issued and outstanding at September 30, 2002 and December 31, 2001, respectively 107,680 114,000 Common stock, $.01 par value; 80,000,000 shares authorized; 26,689,611 and 24,010,855 shares issued and outstanding at September 30, 2002 and December 31, 2001, respectively 267 240 Excess stock, $.01 par value; 10,000,000 shares authorized; no shares issued or outstanding - - Additional paid-in capital 639,291 572,273 Accumulated other comprehensive income (687) (532) Distributions in excess of accumulated earnings (68,943) (57,768) Officer and director notes for stock purchases (2,826) (7,617) --------------- --------------- Total stockholders' equity 734,782 620,596 ------------ ------------ Total liabilities and stockholders' equity $2,387,491 $2,063,789 ========== ========== The accompanying notes are an integral part of these consolidated financial statements.
HOME PROPERTIES OF NEW YORK, INC. CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001 (UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) 2002 2001 ---- ---- Revenues: Rental income $ 278,020 $ 249,146 Property other income 10,328 9,484 Interest and dividend income 1,079 2,548 Other income 451 1,610 -------------- ------------- Total revenues 289,878 262,788 ----------- ----------- Expenses: Operating and maintenance 121,789 112,570 General and administrative 8,758 7,292 Interest 56,964 48,591 Depreciation and amortization 48,529 45,505 Impairment of real property 1,565 - ------------- ------------- Total expenses and charges 237,605 213,958 ----------- ---------- Income before gain (loss) on disposition of property, minority interest and discontinued operations 52,273 48,830 Gain (loss) on disposition of property (402) 22,085 --------------- ------------ Income before minority interest and discontinued operations 51,871 70,915 Minority interest 13,655 24,134 ------------ ------------ Income from continuing operations 38,216 46,781 ------------ ------------ Discontinued operations: Income from operations, net of $1,021 in 2002 and $1,424 in 2001, allocated to minority interest 1,643 1,964 Gain on disposition of property, net of $3,402 allocated to minority interest 5,601 - ------------- ------------- Income from discontinued operations 7,244 1,964 ------------- ------------ Net income 45,460 48,745 Preferred dividends (11,027) (13,492) Premium on Series B preferred stock repurchase (5,025) - -------------- ------------- Net income available to common shareholders $ 29,408 $ 35,253 ============ ========== Per share data: Basic earnings per share data: Income from continuing operations $ .86 $1.52 Discontinued operations .28 .09 ------ ------- Net income available to common shareholders $1.14 $1.61 ===== ===== Diluted earnings per share data: Income from continuing operations $ .85 $1.52 Discontinued operations .28 .09 ------ ------- Net income available to common shareholders $1.13 $1.61 ===== ===== Weighted average number of shares outstanding - Basic 25,780,578 21,852,439 ========== ========== - Diluted 26,099,471 21,948,154 ========== ========== The accompanying notes are an integral part of these consolidated financial statements.
HOME PROPERTIES OF NEW YORK, INC. CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001 (UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) 2002 2001 ---- ---- Revenues: Rental income $ 97,990 $ 86,481 Property other income 4,210 3,353 Interest and dividend income 284 531 Other income (loss) (130) 684 ------------- ------------ Total revenues 102,354 91,049 --------- ---------- Expenses: Operating and maintenance 40,927 35,571 General and administrative 2,837 2,324 Interest 19,990 17,099 Depreciation and amortization 17,373 15,553 Impairment of real property 1,565 - ------------ ------------- Total expenses and charges 82,692 70,547 ----------- ---------- Income before gain on disposition of property, minority interest and discontinued operations 19,662 20,502 Gain on disposition of property - 8,437 ------------- ----------- Income before minority interest and discontinued operations 19,662 28,939 Minority interest 5,969 10,318 ------------ ---------- Income from continuing operations 13,693 18,621 ----------- ---------- Discontinued operations: Income from operations, net of $151 in 2002 and $493 in 2001, allocated to minority interest 251 674 Gain on disposition of property, net of $1,756 allocated to minority interest 2,912 - ------------ ------------- Income from discontinued operations 3,163 674 ------------ ------------ Net income 16,856 19,295 Preferred dividends (3,793) (4,498) ------------ ------------ Net income available to common shareholders $ 13,063 $ 14,797 ========== ========== Per share data: Basic earnings per share data: Income from continuing operations $ .37 $ .64 Discontinued operations .12 .03 ----- ----- Net income available to common shareholders $ .49 $ .67 ===== ===== Diluted earnings per share data: Income from continuing operations $ .37 $ .64 Discontinued operations .12 .02 ----- ----- Net income available to common shareholders $ .49 $ .66 ===== ===== Weighted average number of shares outstanding - Basic 26,428,655 21,963,017 ========== ========== - Diluted 26,755,132 29,233,625 ========== ========== The accompanying notes are an integral part of these consolidated financial statements.
HOME PROPERTIES OF NEW YORK, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001 (UNAUDITED, IN THOUSANDS) 2002 2001 ---- ---- Net income $ 45,460 $ 48,745 Other comprehensive income: Cumulative effect of accounting change - (339) Change in fair value of hedge instruments (67) (296) ------------ ------------ Other comprehensive loss, net of minority interest (67) (635) ------------ ----------- Comprehensive income $ 45,393 $ 48,110 ======== ======== The accompanying notes are an integral part of these consolidated financial statements.
HOME PROPERTIES OF NEW YORK, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001 (UNAUDITED, IN THOUSANDS) 2002 2001 ---- ---- Net income $ 16,856 $19,295 Other comprehensive income: Change in fair value of hedge instruments (348) (248) ----------- ----------- Other comprehensive loss, net of minority interest (348) (248) ----------- ----------- Comprehensive income $ 16,508 $19,047 ======== ======= The accompanying notes are an integral part of these consolidated financial statements.
HOME PROPERTIES OF NEW YORK, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001 (UNAUDITED, IN THOUSANDS) 2002 2001 ---- ---- Cash flows from operating activities: Net income $ 45,460 $ 48,745 --------- --------- Adjustments to reconcile net income to net cash provided by operating activities: Equity in income of affiliates 829 45 Income allocated to minority interest 18,078 25,558 Depreciation and amortization 50,181 47,859 Impairment of real property 1,565 - Gain on disposition of property (8,601) (22,085) Changes in assets and liabilities: Other assets (1,301) 1,907 Accounts payable and accrued liabilities (1,145) 4,107 ----------- ---------- Total adjustments 59,606 57,391 --------- --------- Net cash provided by operating activities 105,066 106,136 -------- -------- Cash flows from investing activities: Purchase of properties, net of mortgage notes assumed and UPREIT Units issued (222,345) (123,122) Additions to properties (83,838) (89,501) Proceeds from sale of properties 79,374 94,684 Advances to affiliates (8,244) (10,593) Payments on advances to affiliates 13,662 13,988 --------- ---------- Net cash used in investing activities (221,391) (114,544) --------- ---------- Cash flows from financing activities: Proceeds from sale of preferred stock, net of issuance costs of $1,902 58,098 - Proceeds from sale of common stock, net of issuance costs of $1,492 in 2002 and $91 in 2001 47,451 33,704 Repurchase of Series B Preferred Stock (29,392) - Purchase of treasury stock - (20,621) Purchase of UPREIT Units - (11,899) Proceeds from mortgage notes payable 118,472 65,640 Payments on mortgage notes payable (46,229) (53,946) Proceeds from line of credit 161,000 135,500 Payments on line of credit (107,500) (63,500) Payments of deferred loan costs (3,001) (513) Additions to cash escrows, net (4,685) (3,566) Repayment of officer loans 4,555 - Dividends and distributions paid (85,349) (77,643) ---------- ---------- Net cash provided by financing activities 113,420 3,156 -------- ---------- Net decrease in cash (2,905) (5,252) Cash and cash equivalents: Beginning of period 10,719 10,449 --------- --------- End of period $ 7,814 $ 5,197 ========= ========= Supplemental disclosure of non-cash investing and financing activities: Mortgage loans assumed associated with property acquisitions $128,678 $ 59,878 Conversion of preferred to common stock 6,320 - Exchange of UPREIT Units/partnership interest for common shares 1,929 1,202 Fair value of hedge instruments 1,611 1,095 Issuance of UPREIT Units associated with property and other acquisitions 11,526 19,133 Notes issued in exchange for officer and director stock purchases - 1,965 Increase in real estate associated with the purchase of minority interest UPREIT Units - 1,666 Transfer of notes receivable due from affiliates in exchange for additional equity in affiliates - 23,699 The accompanying notes are an integral part of these consolidated financial statements.
HOME PROPERTIES OF NEW YORK, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) 1. Unaudited Interim Financial Statements The interim consolidated financial statements of Home Properties of New York, Inc. (the "Company") have been prepared in accordance with generally accepted accounting principles for interim financial information and the applicable rules and regulations of the Securities and Exchange Commission. Accordingly, certain disclosures accompanying annual financial statements prepared in accordance with generally accepted accounting principles are omitted. The year-end balance sheet data was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles. In the opinion of management, all adjustments, consisting solely of normal recurring adjustments, necessary for the fair presentation of the consolidated financial statements for the interim periods have been included. The current period's results of operations are not necessarily indicative of results which ultimately may be achieved for the year. The interim consolidated financial statements and notes thereto should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Form 10-K for the year ended December 31, 2001 and Form 8-K dated January 23, 2002 (which financial statements reflect the impact of property sales as discontinued operations pursuant to the provisions of SFAS 144 - "Accounting for the Impairment of Disposal of Long-Lived Assets") for the year ended December 31, 2001. 2. Organization and Basis of Presentation Organization The Company is engaged primarily in the ownership, management, acquisition, rehabilitation and development of residential apartment communities in the Northeastern, Mid-Atlantic and Midwestern United States. As of September 30, 2002, the Company operated 292 apartment communities with 51,329 apartments. Of this total, the Company owned 146 communities consisting of 41,200 apartments, managed as general partner 8,061 apartments, and fee managed 2,068 apartments for affiliates and third parties. The Company also fee manages 2.2 million square feet of office and retail properties. Basis of Presentation The accompanying consolidated financial statements include the accounts of the Company and its 62.2% (58% at September 30, 2001) partnership interest in the Operating Partnership. Such interest has been calculated as the percentage of outstanding common shares divided by the total outstanding common shares and Operating Partnership Units outstanding. The remaining 37.8% (42% at September 30, 2001) is reflected as Minority Interest in these consolidated financial statements. For financing purposes, the Company has formed a limited liability company (the "LLC") and a partnership (the "Financing Partnership") which beneficially own certain apartment communities encumbered by mortgage indebtedness. The LLC is wholly owned by the Operating Partnership. The Financing Partnership is owned 99.9% by the Operating Partnership and .1% by Home Properties Trust, a wholly owned qualified REIT subsidiary ("QRS") of the Company. Investments in entities where the Company has the ability to exercise significant influence over but does not have financial and operating control are accounted for using the equity method. All significant inter-company balances and transactions have been eliminated in these consolidated financial statements. Reclassifications Certain reclassifications have been made to the 2001 consolidated financial statements to conform to the 2002 presentation. Change in Accounting Estimate During the first quarter of 2002, the Company completed a comprehensive review of its real estate related useful lives for certain of its asset classes. As a result of this review, the Company changed its estimate of the remaining useful lives for its buildings and apartment improvements. HOME PROPERTIES OF NEW YORK, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) 2. Organization and Basis of Presentation (continued) Effective January 1, 2002, the estimated useful life of all buildings has been extended to 40 years and the estimated useful life of apartment improvements has been changed from 10 years to 20 years. Certain buildings had previously been depreciated over useful lives ranging from 30 to 40 years. As a result of the change, income from continuing operations and net income for the three and nine-month periods ended September 30, 2002 increased approximately $2.6 and $7.8 million, respectively or $.10 and $.30 per diluted share, respectively. The Company believes the change reflects more appropriate remaining useful lives of the assets based upon the nature of the expenditures and is consistent with prevailing industry practice. New Accounting Standards In April 2002, the FASB issued Statement of Financial Accounting Standard ("SFAS") No. 145 -- "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections" which eliminates the requirement to report gains and losses from extinguishment of debt as extraordinary unless they meet the criteria of APB Opinion 30. This statement also amends other existing authoritative pronouncements to make various technical corrections, clarify meanings, or describe their applicability under changed conditions. The new standard becomes effective for the Company for the year ending December 31, 2003. The Company does not expect this pronouncement to have a material impact on the Company's financial position, results of operations, or cash flows. In June 2002, the FASB issued SFAS No. 146 - "Accounting for Costs Associated with Exit or Disposal Activities." This Statement requires the recognition of a liability for costs associated with an exit or disposal activity to be recorded at fair value when incurred. The company's commitment to a plan, by itself does not create a present obligation that meets the definition of a liability. The new standard becomes effective for exit and disposal activities initiated after December 31, 2002. The Company does not expect this pronouncement to have a material impact on the Company's financial position, results of operations, or cash flows. 3. Earnings Per Common Share Basic earnings per share ("EPS") is computed as net income available to common shareholders divided by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from common shares issuable through stock-based compensation including stock options, warrants and the conversion of any cumulative convertible preferred stock. The exchange of an Operating Partnership Unit for common stock will have no effect on diluted EPS as unitholders and stockholders effectively share equally in the net income of the Operating Partnership. Income from continuing operations applicable to common shareholders is the same for both the basic and diluted calculation for the nine and three-month periods ended September 30, 2002 and the nine-month period ended September 30, 2001. Income from continuing operations applicable to common shareholders has been adjusted by $4,498 to reflect the dividends related to the convertible preferred stock that is considered dilutive for the three-month period ended September 30, 2001. HOME PROPERTIES OF NEW YORK, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) 3. Earnings Per Common Share (continued) The reconciliation of the basic weighted average shares outstanding and diluted weighted average shares outstanding for the nine and three-months ended September 30, 2002 and 2001 is as follows:
Nine Months Three Months ----------- ------------ 2002 2001 2002 2001 ---- ---- ---- ---- Basic weighted average number of shares outstanding 25,780,578 21,852,439 26,428,655 21,963,017 Effect of dilutive stock options 95,715 158,227 and warrants 318,893 326,477 Effect of convertible cumulative preferred stock 7,112,381 ----------------- --------------------------------- ----------- - - - - - - - Diluted weighted average number of shares outstanding 26,099,471 21,948,154 26,755,132 29,233,625 ========== ========== ========== ========== Basic earnings per share $1.14 $1.61 $0.49 $0.67 ===== ===== ===== ===== Diluted earnings per share $1.13 $1.61 $0.49 $0.66 ===== ===== ===== =====
Unexercised stock options and warrants to purchase 678,490 and 1,772,562 shares of the Company's common stock were not included in the computations of diluted EPS because the options' exercise prices were greater than the average market price of the Company's stock during the nine and three-month periods ended September 30, 2002 and 2001, respectively. For the nine and three-months periods ended September 30, 2002 (as applicable and on a weighted average basis), the 1,788,629 and 1,121,148 shares, respectively, of the Series B, C, D and E Convertible Cumulative Preferred Stock (4,317,515 and 3,677,041 common stock equivalents, respectively) have an antidilutive effect and are not included in the computation of diluted EPS. In addition, for the nine month period ended September 30, 2001, the 4,816,667 shares of the Series A, B, C, D, and E Convertible Cumulative Preferred Stock (7,112,381 common stock equivalents) on an as-converted basis have an antidilutive effect and are not included in the computation of diluted EPS. 4. Preferred Stock and Stockholders' Equity On August 20, 2002, 63,200 of the Series E Convertible Preferred Shares were converted into 200,000 shares of common stock. The conversion had no effect on the reported results of operations. On May 24, 2002, the Company repurchased the 1.0 million shares outstanding of its Series B Convertible Cumulative Preferred Stock at an amount equivalent to 839,772 common shares (as if the preferred shares had been converted). The Company repurchased the shares for $29,392, equal to the $35.00 common stock trading price when the transaction was consummated. A premium of $5,025 was incurred on the repurchase and has been reflected as a charge to net income available to common shareholders in the consolidated statement of operations for the nine- month period ended September 30, 2002. HOME PROPERTIES OF NEW YORK, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) 4. Preferred Stock and Stockholders' Equity (continued) On March 18, 2002, the Company issued 2,400,000 shares of its 9.00% Series F Cumulative Redeemable Preferred Stock ("Series F Preferred Shares"), with a $25.00 liquidation preference per share. This offering generated net proceeds of approximately $58 million. The net proceeds were used to fund the Series B preferred stock repurchase, property acquisitions, and property upgrades. The Series F Preferred Shares are redeemable by the Company at anytime on or after March 25, 2007 at a redemption price of $25.00 per share, plus any accumulated, accrued and unpaid dividends. Each Series F Preferred share will receive an annual dividend equal to 9.00% of the liquidation preference per share (equivalent to a fixed annual amount of $2.25 per share). On February 28, 2002, the Company closed on two common equity offerings totaling 704,602 shares of the Company's common stock, at a weighted average price of $30.99 per share, resulting in net proceeds to the Company of approximately $21.8 million. On February 4, 2002, 1.0 million of the Series B Convertible Cumulative Preferred Shares were converted into 839,771 shares of common stock. The conversion had no effect on the reported results of operations. 5. Other Income Other income for the nine and three-months ended September 30, 2002 and 2001 is summarized as follows:
Nine Months Three Months ----------- ------------ 2002 2001 2002 2001 ---- ---- ---- ---- Management fees $1,506 $1,668 $537 $685 Other (226) (13) (341) (4) Management Companies (829) (45) (326) 3 -------- --------- ----- ------- $ 451 $1,610 ($130) $684 ======= ====== ====== ====
Certain property management, leasing and development activities are performed by Home Properties Management, Inc. and Home Properties Resident Services, Inc. (the "Management Companies"). Both are Maryland corporations and, effective January 1, 2001, have elected to convert to taxable REIT subsidiaries under the Tax Relief Extension Act of 1999. Effective March 1, 2001, the Company recapitalized Home Properties Resident Services, Inc. by contributing $23.7 million of loans due from affiliated partnerships to equity. Simultaneous with the recapitalization, the Company increased its effective economic interest from 95% to 99% diluting the economic interest held by certain of the Company's inside directors. The Operating Partnership owns non-voting common stock in the Management Companies which entitles the Operating Partnership to receive 95% and 99% of the economic interest in Home Properties Management, Inc. and Home Properties Resident Services, respectively. HOME PROPERTIES OF NEW YORK, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) 5. Other Income (continued) The Company's share of income from the Management Companies for the nine and three-months ended September 30, 2002 and 2001 is summarized as follows:
Nine Months Three Months ----------- ------------ 2002 2001 2002 2001 ---- ---- ---- ---- Management fees $2,134 $2,569 $717 $877 Interest income 637 1,195 260 437 Miscellaneous 31 32 (2) 19 General and administrative (2,720) (2,294) (978) (898) Interest expense (562) (1,128) (176) (289) Other expense (349) (423) (150) (139) --------- --------- ------ ------ Net income (loss) ($ 829) ($ 49) ($329) $ 7 -------- --------- ------ ------- Company's share ($ 829) ($ 45) ($326) $ 3 ======== ========= ====== =======
The general and administrative expenses reflected above represent an allocation of direct and indirect costs incurred by the Company estimated by management to be associated with the operations of the Management Companies. 6. Segment Reporting The Company is engaged in the ownership and management of market rate apartment communities. Each apartment community is considered a separate operating segment. Each segment on a stand-alone basis is less than 10% of the revenues, profit or loss, and assets of the combined reported operating segments. The operating segments are aggregated and segregated as Core and Non-core properties. Non-segment revenue to reconcile total revenue consists of unconsolidated management and interest income. Non-segment assets to reconcile to total assets include cash and cash equivalents, cash in escrows, accounts receivable, prepaid expenses, investments in and advances to affiliates, deferred charges and other assets. Core properties consist of all apartment communities owned as of January 1, 2001, where comparable operating results are available for the periods presented. Non-core properties consist of apartment communities acquired during 2001 and 2002, such that full year comparable operating results are not available. The accounting policies of the segments are the same as those described in Notes 1 and 2 of the Company's Form 10-K for the year ended December 31, 2001. The Company assesses and measures segment operating results based on a performance measure referred to as Funds from Operations ("FFO"). FFO is generally defined as net income (loss), before gains (losses) from the sale of property, non-cash impairment charges, extraordinary items, plus real estate depreciation including adjustments for unconsolidated partnerships and joint ventures. This presentation excludes the dividends on the Series F Preferred Stock and assumes the conversion of convertible preferred stock. FFO for the nine-month period ended September 30, 2002 adjusts for the add back of the premium on the Series B preferred stock repurchase. FFO is not a measure of operating results or cash flows from operating activities as measured by generally accepted accounting principles and it is not HOME PROPERTIES OF NEW YORK, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) 6. Segment Reporting (continued) indicative of cash available to fund cash needs and should not be considered an alternative to cash flows as a measure of liquidity. All REITs may not be using the same definition for FFO. During 2002, the Company reclassified certain property related operating expenses from General and Administrative to Operating and Maintenance which would impact the segment contribution of FFO. This reclassification is also reflected in the 2001 presentation. The revenues, profit (loss), and assets for each of the reportable segments are summarized as follows as of and for the nine and three-month periods ended September 30, 2002, and 2001.
Nine Months Three Months ----------- ------------ 2002 2001 2002 2001 ---- ---- ---- ---- Revenues Apartments owned Core properties $250,014 $238,785 $ 85,454 $ 81,294 Non-core properties 38,334 19,845 16,746 8,540 Reconciling items 1,530 4,158 154 1,215 ----------- ---------- ----------- --------- Total Revenue $289,878 $262,788 $102,354 $ 91,049 ======== ======== ======== ======== Profit (loss) Funds from operations: Apartments owned Core properties $142,339 $134,250 $ 50,362 $ 48,427 Non-core properties 24,220 11,810 10,911 5,836 Reconciling items 1,530 4,158 154 1,215 ---------- ---------- ----------- --------- Segment contribution to FFO 168,089 150,218 61,427 55,478 General & administrative expenses (8,758) (7,292) (2,837) (2,324) Interest expense (56,964) (48,591) (19,990) (17,099) Depreciation of unconsolidated affiliates 505 291 68 88 Non-real estate depreciation/amortization (823) (426) (420) (115) Redeemable preferred dividend (2,805) - (1,350) - Income from discontinued operations before minority interest, depreciation and gain on disposition of property 3,584 5,269 469 1,790 ---------- ---------- ----------- --------- Funds from Operations 102,828 99,469 37,367 37,818 Depreciation - apartments owned (48,626) (46,960) (17,020) (16,061) Depreciation of unconsolidated affiliates (505) (291) (68) (88) Redeemable preferred dividend 2,805 - 1,350 - Impairment of real property (1,565) - (1,565) - Gain (loss) on disposition of properties (402) 22,085 - 8,437 Income from discontinued operations before minority interest and gain on disposition of property (2,664) (3,388) (402) (1,167) Minority interest (13,655) (24,134) (5,969) (10,318) --------- ----------- ---------- --------- Income from continuing operations $ 38,216 $ 46,781 $ 13,693 $ 18,621 ========= ========= ========= ======== Assets - As of September 30, 2002 and December 31, 2001 2002 2001 ---- ---- Apartments owned: - Core $1,664,469 $1,712,745 - Non-core 593,777 220,769 Reconciling items 129,245 130,275 ----------- ------------ Total Assets $2,387,491 $2,063,789 ========== ==========
HOME PROPERTIES OF NEW YORK, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) 7. Pro Forma Condensed Financial Information The Company acquired fourteen apartment communities ("2002 Acquired Communities") with 3,839 units in four unrelated transactions during the nine-month period ended September 30, 2002. The total purchase price (including closing costs) of $347.6 million equates to approximately $91 per apartment unit. Consideration for the communities included $82.9 million of cash on hand, $128.7 million of assumed debt (fair market value of $145.1 million), $102.4 million from the Company's line of credit and $21.8 million of cash raised through common and preferred equity offerings and $11.8 million in Operating Partnership Units ("OP Units") in the Company (fair market value of $11.5). In addition, during the nine-month period ended September 30, 2002, the Company sold eleven apartment communities ("2002 Disposed Properties") having 1,647 units in seven unrelated transactions as part of its strategic disposition program. The total sales price of $83.9 million equates to $51 per apartment unit. A gain on sale of approximately $9 million, prior to the allocation of minority interest, has been recorded in relation to these sales and is reflected in discontinued operations. The following proforma information was prepared as if the following had occurred on January 1, 2001 (i) the 2002 transactions related to the acquisition of the "2002 Acquired Communities", (ii) the 2001 transactions related to the acquisition of ten apartment communities in nine separate transactions, (iii) the disposition of the "2002 Disposed Properties", (iv) the 2001 transactions related to the disposition of 14 apartment communities in six separate and (v) the 2002 Series F Preferred Share offering and the two common equity offerings. The proforma financial information is based upon the historical consolidated financial statements and is not necessarily indicative of the consolidated results which actually would have occurred if the transactions had been consummated at the beginning of 2001, nor does it purport to represent the results of operations for future periods. Adjustments to the proforma condensed combined statement of operations for the nine-months ended September 30, 2002 and 2001, consist principally of providing net operating activity and recording interest, depreciation and amortization from January 1, 2001 to the acquisition date.
For the Nine-Months Ended September 30, 2002 2001 ---- ---- Total revenues $309,363 $298,780 Net Income 41,215 39,017 Net income available to common shareholders 23,918 21,790 Per common share data: Net income available to common shareholders Basic $0.92 0.97 Diluted $0.91 0.97 Weighted average number of shares outstanding: Basic 25,930,274 22,557,041 Diluted 26,249,167 22,652,756
HOME PROPERTIES OF NEW YORK, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) 8. Derivative Financial Instruments The Company has three interest rate swaps that effectively convert variable rate debt to fixed rate debt. As of September 30, 2002, the aggregate fair value of the Company's interest rate swaps was $1,611 prior to the allocation of minority interest and is included in accrued expenses and other liabilities in the consolidated balance sheets. For the nine and three-months ending September 30, 2002, as the critical terms of the interest rate swaps and the hedged items are the same, no ineffectiveness was recorded in the consolidated statements of operations. All components of the interest rate swaps were included in the assessment of hedge effectiveness. The fair value of the interest rate swaps is based upon the estimate of amounts the Company would receive or pay to terminate the contract at the reporting date and is estimated using interest rate market pricing models. 9. Disposition of Property and Discontinued Operations The Company adopted the provisions of SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" effective January 1, 2002. This standard addresses financial accounting and reporting for the impairment or disposal of long-lived assets. It also retains the basic provisions for presenting discontinued operations in the income statement but broadened the scope to include a component of an entity rather than a segment of a business. Pursuant to the definition of a component of an entity in the SFAS, assuming no significant continuing involvement, the sale of an apartment community is now considered a discontinued operation. In addition, apartment communities classified as held for sale are also considered a discontinued operation. The Company generally considers assets to be held for sale when all significant contingencies surrounding the closing have been resolved which often corresponds with the actual closing date. Included in discontinued operations for the nine and three-months periods ended September 30, 2002 are eleven apartment community dispositions. The operations of these eleven properties have been reflected as discontinued operations on a comparative basis for the nine and three-months periods ended September 30, 2001. For purposes of the discontinued operations presentation, the Company only includes interest expense associated with specific mortgage indebtedness of the properties that are sold or classified as held for sale. As of September 30, 2002, there were no properties classified as held for sale. During the nine-month period ended September 30, 2002, the Company sold eleven apartment communities having 1,647 units in seven unrelated transactions as part of its strategic disposition program. The total sales price of $83.9 million equates to $51 per apartment unit. A gain on sale of approximately $9 million, prior to the allocation of minority interest, has been recorded in relation to these sales and is reflected in discontinued operations. In connection with the Company's strategic asset disposition program, management is constantly reevaluating the performance of its portfolio on a property-by-property basis. The Company from time to time determines that it is in the best interest of the Company to dispose of assets that have reached their potential or are less efficient to operate due to their size or remote location and reinvest such proceeds in higher performing assets located in targeted geographic markets. It is possible that the Company will sell such properties at a loss. In addition, it is possible that for assets held for use, certain holding period assumptions made by the Company may change which could result in the Company's recording of an impairment charge.
HOME PROPERTIES OF NEW YORK, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) 9. Disposition of Property and Discontinued Operations (continued) --------------------------------------------------------------- The operating results of discontinued operations are summarized as follows as of and for the nine and three-months periods ended September 30, 2002, and 2001. Nine Three Months Months 2002 2001 2002 2001 ----------- ------------ ------------ ----------- Revenues: Rental Income $5,361 $ 9,791 $ 594 $3,309 Property other income 94 232 7 87 ----------- ------------ ------------ ----------- Total Revenues 5,455 10,023 601 3,396 Operating and Maintenance 1,637 4,289 132 1,412 Interest expense 234 465 - 194 Depreciation and amortization 920 1,881 67 623 ----------- ------------ ------------ ----------- Total Expenses 2,791 6,635 199 2,229 Income from discontinued operations before minority interest and gain on disposition of property 2,664 3,388 402 1,167 Minority interest 1,021 1,424 151 493 ----------- ------------ ------------ ----------- Income from discontinued operations before gain on disposition of property 1,643 1,964 251 674 Gain on disposition of property, net of minority interest 5,601 - 2,912 - ----------- ------------ ------------ ----------- Income from discontinued operations $7,244 $ 1,964 $3,163 $ 674 =========== ============ ============ ===========
10. Line of Credit In September 2002, the Company extended its revolving line of credit with M&T Bank for a period of three years, increasing the line from $100 million to $115 million. The Company's outstanding balance as of September 30, 2002 was $86 million. Borrowings under the line of credit bear interest at 1.15% over the one-month LIBOR rate. The line of credit expires on September 1, 2005. 11. Contingency The Company had recently undergone a state tax audit whereby the state has assessed taxes of $469 for the 1998 and 1999 tax years under audit. If the state's position is applied to all tax periods through September 30, 2002, the assessment would be approximately $1.5 million. The Company believes that the assessment and the state's underlying position for the tax periods 1998 through 2000 are neither supportable by the law nor consistent with previously provided interpretative guidance from the office of the State Secretary of Revenue. The Company has filed an appeal to the Commonwealth Court in the state for the 1998 and 1999 tax years. There have been no further proceedings to date and the Company intends to vigorously contest the assessments. The Company has been advised that it has meritorious positions for its previous tax filings for the years 1998, 1999, and 2000. However, the Company has accrued HOME PROPERTIES OF NEW YORK, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) 11. Contingency (continued) approximately $660 as of September 30, 2002 for estimated costs associated with this matter. 12. Impairment of Real Property During September, 2002, the Company recorded an impairment charge of $1,565 on an apartment community located in Columbus, Ohio. During the third quarter the Company made the decision to pursue the sale of this property pursuant to its strategic disposition program. Although the Company determined that it did not meet the criteria as held for sale pursuant to SFAS 144, the Company performed an impairment test on a held and used basis which resulted in assigning probabilities of identified cash flows based upon certain alternative courses of action. As a result of this analysis, the Company determined that an impairment was noted. Accordingly, the Company recorded an impairment charge based upon the fair market value of the property, less estimated costs to sell, compared to its net book value. The property, however, has not been reflected in discontinued operations for either the nine or three-month period ended September 30, 2002, as it does not meet the criteria for held for sale classification. 13. Transactions with Affiliates In 1997, certain officers and inside directors of the Company entered into a lease termination agreement with the Company. The agreement provided for a contingent termination fee based upon the performance of the underlying property. During the three-months ended September 30, 2002, $308 became payable and was paid to the Company within the 30 days allowed under the terms of the agreement. This amount was classified in Other Property Income in the Consolidated Statement of Operations. 14. Subsequent Events On October 11, 2002 the Company acquired five communities in the Hudson Valley region of New York with a total of 224 units (collectively the "Wallace Portfolio"). The total purchase price of $12.8 million, including closing costs, equates to approximately $57 per unit and was funded by the assumption of $7.4 million in debt (fair market value of $8.5) and $5.4 million in cash. HOME PROPERTIES OF NEW YORK, INC. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) The following discussion should be read in conjunction with the accompanying consolidated financial statements and notes thereto. Forward-Looking Statements This discussion contains forward-looking statements. Although the Company believes expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be achieved. Factors that may cause actual results to differ include general economic and local real estate conditions, the 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. Liquidity and Capital Resources The Company's principal liquidity demands are expected to be distributions to the common and preferred stockholders and Operating Partnership Unitholders, capital improvements and repairs and maintenance for the properties, acquisition of additional properties, property development and debt repayments. The Company intends to meet its short-term liquidity requirements through net cash flows provided by operating activities and its unsecured line of credit. The Company considers its ability to generate cash to be adequate to meet all operating requirements and make distributions to its stockholders in accordance with the provisions of the Internal Revenue Code, as amended, applicable to REITs. During the quarter, the Company extended its revolving line of credit with M&T Bank for a period of three years, increasing the line from $100 million to $115 million. The Company's outstanding balance as of September 30, 2002 was $86 million. Borrowings under the line of credit bear interest at 1.15% over the one-month LIBOR rate. Accordingly, increases in interest rates will increase the Company's interest expense and as a result will effect the Company's results of operations and financial condition. The line of credit expires on September 1, 2005. To the extent the Company does not satisfy its long-term liquidity requirements through net cash flows provided by operating activities and its credit facility, it intends to satisfy such requirements through the issuance of UPREIT units, proceeds from the Dividend Reinvestment Plan ("DRIP"), proceeds from the sale of properties, long term secured or unsecured indebtedness, or the issuance of additional equity securities. As of September 30, 2002, the Company owned 19 properties with 3,570 apartment units, which were unencumbered by debt. During the fourth quarter of 2002, the Company anticipates closing on various non-recourse mortgage loans totaling approximately $183 million with interest fixed at a weighted average rate of 5.25% with an average term of 6.2 years. These loans will replace $84 million of existing financing with a weighted average interest rate of 8.07%. The annual savings in interest expense on the $84 million is projected to exceed $2.3 million. The net proceeds of $99 million will be used to repay existing indebtedness on the Company's outstanding line of credit and for general corporate purposes including the funding of future acquisitions. In connection with these transactions, an extraordinary item of approximately $2.3 million will be incurred in the fourth quarter relative to prepayment penalties on the existing loans paid off before maturity. In May, 1998, the Company's Form S-3 Registration Statement was declared effective relating to the issuance of up to $400 million of shares of common stock and other securities. The available balance on the shelf at September 30, 2002 is $144.4 million. On September 30, 1999, the Company completed the sale of $50 million of Series B Preferred Stock in a private transaction with GE Capital. The Series B Preferred Stock carried an annual dividend rate equal to the greater of 8.36% or the actual dividend paid on the Company's common shares into which the preferred shares could be converted. The stock had a liquidation preference of $25.00 per share, a conversion price of $29.77 per share, and a five-year, no-call provision. On February 4, 2002, 1.0 million of the Series B Preferred Stock were converted into 839,771 shares of common stock. The conversion had no effect on the reported results of operations. On May 24, 2002 the Company repurchased the remaining 1.0 million shares outstanding at an amount equivalent to 839,772 common shares (as if the preferred shares had been converted). The Company repurchased the shares for $29,392, equal to the $35.00 common stock trading price when the transaction was consummated. A premium of $5,025 was incurred on the repurchase and has been reflected as a charge to net income available to common shareholders' in the consolidated statement of operations. In May and June, 2000, the Company completed the sale of $60 million of Series C Preferred Stock in a private transaction with affiliates of Prudential Real Estate Investors ("Prudential"), Teachers Insurance and Annuity Association of America ("Teachers"), affiliates of AEW Capital Management and Pacific Life Insurance Company. The Series C Preferred Stock carries an annual dividend rate equal to the greater of 8.75% or the actual dividend paid on the Company's common shares into which the preferred shares can be converted. The stock has a conversion price of $30.25 per share and a five-year, no-call provision. As part of the Series C Preferred Stock transaction, the Company also issued 240,000 warrants to purchase common shares at a price of $30.25 per share, expiring in five years. In June, 2000, the Company completed the sale of $25 million of Series D Preferred Stock in a private transaction with The Equitable Life Assurance Society of the United States. The Series D Preferred Stock carries an annual dividend rate equal to the greater of 8.775% or the actual dividend paid on the Company's common shares into which the preferred shares can be converted. The stock has a conversion price of $30 per share and a five-year, no-call provision. In December, 2000, the Company completed the sale of $30 million of Series E Preferred Stock in a private transaction, again with affiliates of Prudential and Teachers. The Series E Preferred Stock carries an annual dividend rate equal to the greater of 8.55% or the actual dividend paid on the Company's common shares into which the preferred shares can be converted. The stock has a conversion price of $31.60 per share and a five-year, no-call provision. In addition, as part of the Series E Preferred Stock transaction, the Company issued warrants to purchase 285,000 common shares at a price of $31.60 per share, expiring in five years. On August 20, 2002, 63,200 of the Series E Convertible Preferred Shares were converted into 200,000 shares of common stock. The conversion had no effect on the reported results of operations. On February 28, 2002, the Company closed on two common equity offerings totaling 704,602 shares of the Company's common stock, at a weighted average price of $30.99 per share, resulting in net proceeds to the Company of approximately $21.8 million. In March, 2002, the Company issued 2,400,000 shares of its 9.00% Series F Cumulative Redeemable Preferred Stock ("Series F Preferred Shares"), with a $25.00 liquidation preference per share. This offering generated net proceeds of approximately $58 million. The net proceeds were used to fund the Series B preferred stock repurchase, property acquisitions, and property upgrades. The Series F Preferred Shares are redeemable by the Company at anytime on or after March 25, 2007 at a redemption price of $25.00 per share, plus any accumulated, accrued and unpaid dividends. Each Series F Preferred share will receive an annual dividend equal to 9.00% of the liquidation preference per share (equivalent to a fixed annual amount of $2.25 per share). The issuance of UPREIT Units for property acquisitions continues to be a significant source of capital. During the third quarter of 2002, the Company acquired an 864-unit property for a total purchase price of $73.7 million. The Company issued UPREIT units valued at approximately $11.8 million (fair market value of $11.5), with the balance funded by the assumption of debt and cash. During 2001, 520 apartment units in two separate transactions were acquired for a total cost of $33 million using UPREIT Units valued at approximately $19 million, with the balance paid in cash or assumed debt. During 2001, $32 million of common stock was issued under the Company's DRIP. An additional $21 million has been raised through the DRIP program during the first nine months of 2002. The DRIP was amended, effective April 10, 2001, in order to reduce management's perceived dilution from issuing new shares at or below the underlying net asset value. The discount on reinvested dividends and optional cash purchases was reduced from 3% to 2%. The maximum monthly investment (without receiving approval from the Company) was reduced from $5 thousand to $1 thousand. As expected, these changes significantly reduced participation in the plan. Management will continue to monitor the relationship between the Company's stock price and estimated net asset value. During times when this difference is small, management has the flexibility to issue waivers to DRIP participants to provide for investments in excess of the $1 thousand maximum monthly investment. In connection with the announcement of the February, 2002 dividend, the Company announced such waivers will be considered beginning with the March 2002 optional cash purchase, as management believes the stock is trading at or above its estimate of net asset value. For the three-month period ended March 31, 2002, the Company granted 53 waivers for purchases aggregating a total of $3.9 million. No waivers were granted during the second and third quarters. On August 6, 2002 the Board of Directors increased its authorization 2,000,000 shares to repurchase its common stock or UPREIT units in connection with the Company's stock repurchase program. The shares/units may be repurchased through open market or privately negotiated transactions at the discretion of Company management. The Board's action does not establish a target stock price or a specific timetable for share repurchase. During the first nine months of 2002, there were no shares or UPREIT Units repurchased by the Company. At September 30, 2002 the Company had authorization to repurchase 3,135,800 shares of common stock and UPREIT Units under the stock repurchase program. As of September 30, 2002, the weighted average rate of interest on mortgage debt is 7.28% and the weighted average maturity is approximately 9 years. Approximately 99.4% of the debt is fixed rate. This limits the exposure to changes in interest rates, minimizing the effect on results of operations and financial condition. Off-Balance Sheet Investments The Company has investments in and advances to approximately 133 limited partnerships where the Company acts as the managing general partner. The Company accounts for these investments on the equity method of accounting, recording its share of the net income or loss based upon the terms of the partnership agreement. To the extent that it is determined that the limited partners cannot absorb their share of the losses, if any, the general partner will record the limited partners share of such losses. The Company has guaranteed the low income housing tax credits to the limited partners for a period of five years in 42 partnerships totaling approximately $48.5 million. Such guarantee requires the Company to operate the properties in compliance with Internal Revenue Code Section 42 for 15 years. In addition, acting as the general partner in certain partnerships, the Company is obligated to advance funds to meet partnership operating deficits. However, such funding requirements in some partnerships cease after a five-year period. Should operating deficits continue to occur, the Company would determine on an individual partnership basis if it is in the best interest of the Company to continue to fund these deficits. These partnerships are funded with non-recourse financing. The Company's proportionate share of non-recourse financing was $5.7 million at September 30, 2002. The Company has guaranteed a total of $602 of debt associated with two of these partnerships. In addition, the Company, including the Management Companies, has provided loans and advances to certain of the partnerships aggregating $23.5 million at September 30, 2002. The Company assesses the financial status and cash flow of each of the partnerships at each balance sheet date in order to assess recoverability of its investment in and advances to these affiliates. The Company believes the properties operations conform to the applicable requirements as set forth above and do not anticipate any payment on the guarantees described above. Acquisitions and Dispositions During the third quarter of 2002, the Company acquired two communities in Maryland with a total of 1,455 apartment units in two unrelated transactions. Total consideration for the two communities was $115 million, including closing costs, or an average of $79 per unit. Consideration for the properties included $58.8 million in assumed debt (fair market value of $69.7 million), $44.4 million cash, and $11.8 million in Operating Partnership Units in the Company (fair market value of $11.5). The weighted average first year cap rate on the acquisitions closed during 2002 is 8.6%. Also, during the third quarter of 2002, the Company sold one community with a total of 664 units located in Virginia for total consideration of $41.6 million or an average of $62,700 per unit. A gain on sale of approximately $4.7 million (before allocation of minority interest) was reported in the third quarter and is reflected in discontinued operations. The weighted average first year cap rate on the sale is 8.4% (before a reserve for capital expenditures). In conformity with NAREIT guidelines, the gains from real property are not included in reported FFO results. In connection with the Company's strategic asset disposition program, management is constantly reevaluating the performance of its portfolio on a property-by-property basis. The Company from time to time determines that it is in the best interest of the Company to dispose of assets that have reached their potential or are less efficient to operate due to their size or remote location and reinvest such proceeds in higher performing assets located in targeted geographic markets. It is possible that the Company will sell such properties at a loss. In addition, it is possible that for assets held for use, certain holding period assumptions made by the Company may change which could result in the Company's recording of an impairment charge. Capital Improvements The Company has a policy to capitalize costs related to the acquisition, development, rehabilitation, construction and improvement of properties. Capital improvements are costs that increase the value and extend the useful life of an asset. Ordinary repair and maintenance costs that do not extend the useful life of the asset are expensed as incurred. Costs incurred on a lease turnover due to normal wear and tear by the resident are expensed on the turn. Recurring capital improvements typically include: appliances, carpeting and flooring, HVAC equipment, kitchen/ bath cabinets, new roofs, site improvements and various exterior building improvements. Non- recurring upgrades include, among other items: community centers, new windows, and kitchen/ bath apartment upgrades. The Company capitalizes interest and certain internal personnel costs related to the communities under rehabilitation and construction. The Company estimates that on an annual basis $525 per unit is spent on recurring capital expenditures. During the three and nine-month periods ended September 30, 2002, approximately $131 and $393 per unit was estimated to be spent on recurring capital expenditures, respectively. The table below summarizes the actual total capital improvements incurred by major categories for the three and nine-month periods ended September 30, 2002 and 2001 and an estimate of the breakdown of total capital improvements by major categories between recurring and non-recurring, revenue generating capital improvements for the three and nine-month periods ended September 30, 2002 as follows:
For the three-month period ended September 30, (in thousands, except per unit data) 2002 2001 ------------------------------------------------------------------ ----------------------- Recurring Non-Recurring Total Capital Total Capital Cap Ex Per Unit(a) Cap Ex Per Unit(a) Improvements Per Unit(a) Improvements Per Unit(a) New Buildings $ - $ - $ 642 $ 16 $ 642 $ 16 $ 824 $ 23 Major building improvements 911 22 4,014 100 4,925 122 6,623 181 Roof replacements 348 9 1,007 25 1,355 34 1,357 37 Site improvements 334 8 2,664 67 2,998 75 4,748 130 Apartment upgrades 657 16 9,574 239 10,231 255 11,547 316 Appliances 546 14 845 21 1,391 35 1,527 42 Carpeting/Flooring 1,714 43 1,619 40 3,333 83 2,926 80 HVAC/Mechanicals 505 13 3,369 84 3,874 97 2,883 79 Miscellaneous 224 6 658 16 882 22 610 17 ---- -- ---- --- ---- --- --- --- Totals 5,239 $131 $24,392 $608 $29,631 $ 739 $33,045 $ 905
(a) Calculated using the weighted average number of units outstanding, including 34,540 core units, 2001 acquisition units of 2,820 and 2002 acquisition units of 2,683 for the three-months ended September 30, 2002 and 34,540 core units and 2001 acquisition units of 1,993 for the three-months ended September 30, 2001.
For the nine-month period ended September 30, (in thousands, except per unit data) 2002 2001 --------------------------------------------------------------------------- ----------------------- Recurring Non-Recurring Total Capital Total Capital Cap Ex Per Unit(a) Cap Ex Per Unit(a) Improvements Per Unit(a) Improvements Per Unit(a) New Buildings $ - $ - $3,799 $ 98 $ 3,799 $ 98 $ 2,705 $ 77 Major building improvements 2,653 68 12,420 320 15,073 388 18,581 526 Roof replacements 1,014 26 2,435 63 3,449 88 2,779 79 Site improvements 971 25 7,614 196 8,585 221 9,387 266 Apartment upgrades 1,914 49 23,430 603 25,344 652 28,448 805 Appliances 1,590 41 1,790 46 3,380 87 3,731 106 Carpeting/Flooring 4,991 128 3,294 85 8,284 214 7,544 213 HVAC/Mechanicals 1,470 38 7,381 190 8,851 228 7,806 221 Miscellaneous 652 18 2,453 62 3,105 80 2,284 65 ---- --- ------ --- ------ --- --- ---- Totals $ 15,255 $ 393 $64,616 $1,663 $79,871 $2,056 $ 83,265 2,358
(a) Calculated using the weighted average number of units outstanding, 34,540 core units, 2001 acquisition units of 2,820 and 2002 acquisition units of 1,498 for the nine-months ended September 30, 2002 and 35,204 core units and 2001 acquisition units of 811 for the nine-months ended September 30, 2001. The schedule below summarizes the breakdown of total capital improvements between core and non-core as follows:
For the three-month period ended September 30, (in thousands, except per unit data) 2002 2001 -------------------------------------------------------------- --------------------- Recurring Non-recurring Total Capital Total Capital Cap Ex Per Unit Cap Ex Per Unit Improvements Per Unit Improvements Per Unit Core Communities owned < 5 years $ 3,842 $ 131 $ 17,221 $ 587 $ 21,063 $ 718 $ 29,802 $ 971 Core Communities owned > 5 years 678 131 1,820 351 2,498 482 2,569 669 ---- ----- ------ ---- ------ ---- ----- --- Core Communities-subtotal 4,520 131 19,041 551 23,561 682 32,271 937 2002 Acquisition Communities 351 131 2,121 791 2,472 922 - - 2001 Acquisition Communities 368 131 3,230 1,145 3,598 1,276 674 338 ---- ------ ------ ----- ------ ------ ------ --- Sub-total 5,239 131 24,392 608 29,631 739 33,045 905 2002 Disposed Communities 181 131 204 148 385 279 881 535 2001 Disposed Communities - - - - - - 458 242 Corporate office expenditures (1) - - - - 735 - 1,296 - ---- ------ ------ ----- ------ ------ ------ --- $ 5,420 $ 131 $ 24,596 $ 594 $ 30,751 $ 725 $ 35,680 $ 858
For the nine-month period ended September 30, (in thousands, except per unit data) 2002 2001 -------------------------------------------------------------- --------------------- Recurring Non-recurring Total Capital Total Capital Cap Ex Per Unit Cap Ex Per Unit Improvements Per Unit Improvements Per Unit Core Communities owned < 5 years $ 11,527 $ 393 $ 48,174 $ 1,641 $ 59,701 $ 2,034 $ 75,671 $ 2,465 Core Communities owned > 5 years 2,033 393 5,403 1,043 7,436 1,436 6,887 1,792 ------ ------ ----- ----- ------ ----- ----- ----- Core Communities-subtotal 13,560 393 53,577 1,551 67,137 1,944 82,558 2,390 2002 Acquisition Communities 588 393 3,219 2,149 3,807 2,542 - - 2001 Acquisition Communities 1,107 393 7,820 2,773 8,927 3,166 707 874 ------ ------ ----- ------ ----- ----- --- --- Sub-total 15,255 393 64,616 1,663 79,871 2,056 83,265 2,358 2002 Disposed Communities 340 393 632 729 972 1,122 1,866 1,133 2001 Disposed Communities - - - - - - 2,120 1,225 Corporate office expenditures (1) - - - - 2,995 - 2,250 - ------ ------ ----- ------ ----- ----- --- --- $ 15,595 $ 393 $ 65,248 $ 1,642 $83,838 $ 2,035 $ 89,501 $ 2,253 (1) No distinction is made between recurring and non-recurring expenditures for corporate office.
Contractual Obligations and Other Commitments The primary obligations of the Company relate to its mortgage notes payable and its borrowings under the line of credit. The Company's mortgage notes payable and line of credit outstanding at September 30, 2002 and December 31, 2001 are summarized as follows (in thousands):
September 30, 2002 December 31, 2001 --------------- --------------- Fixed rate mortgage notes payable $1,155,226 $954,203 Variable rate mortgage notes payable 6,055 6,155 ------------- ----------- Total mortgage notes payable 1,161,281 960,358 Variable rate line of credit facility 86,000 32,500 ------------ ---------- Total mortgage notes payable and line of credit facility $1,247,281 $992,858 ========== ========
Mortgage notes payable are collateralized by certain apartment communities and mature at various dates from November, 2002 through June, 2036. The weighted average interest rate of the Company's variable rate notes and credit facility was 3.01% and 3.27% at September 30, 2002 and December 31, 2001, respectively. The weighted average interest rate of the Company's fixed rate notes was 7.30% and 7.27% at September 30, 2002 and December 31, 2001, respectively. The Company has a non-cancelable operating ground lease for one of its properties. The lease expires May 1, 2020, with options to extend the term of the lease for two successive terms of twenty-five years each. The lease provides for contingent rental payments based on certain variable factors. As discussed in the section entitled "Off-Balance Sheet Investments," the Company has the following guarantees or commitments relating to its equity method partnership investments: a) guarantee for a total of $602 of debt associated with two partnerships, b) guarantee of the low income housing tax credits to the limited partners for a period of five years in 42 partnerships totaling approximately $48.5 million, and c) the Company is obligated to advance funds to meet partnership operating deficits for certain partnerships. The Company believes the properties operations conform to the applicable requirements as set forth above and do not anticipate any payment on these guarantees. Results of Operations Comparison of nine months ended September 30, 2002 to the same period in 2001 The Company had 122 apartment communities with 34,540 units which were owned during the nine-month periods being presented (the "Core Properties"). The Company acquired an additional 24 apartment communities with 6,659 units during 2001 and 2002 (the "Acquired Communities"). In addition, the Company also disposed of 27 properties with a total of 5,319 units during 2001 and 2002. These dispositions, excluding the eleven property dispositions that occurred during 2002, classified as discontinued operations both in 2002 and 2001, are herein referred to as the Disposed Communities. The inclusion of these Acquired Communities, net of Disposed Communities, generally accounted for the significant changes in operating results for the nine-months ended September 30, 2002. A summary of the Core Properties net operating income is as follows (in thousands):
Nine Months Three Months -------------------------------------- -------------------------------------- 2002 2001 % Chg 2002 2001 % Chg ---- ---- ----- ---- ---- ----- Rental income $240,187 $229,927 4.5% $81,691 $78,247 4.4% Property other income 9,827 8,858 10.9% 3,763 3,047 23.5% --------- --------- ----- -------- -------- ----- Total income 250,014 238,785 4.7% 85,454 81,294 5.1% Operating and maintenance (107,675) (104,535) (3.0%) (35,092) (32,867) (6.8%) --------- --------- ------ -------- -------- ------ Net operating income $142,339 $134,250 6.0% $50,362 48,427 4.0% ======== ======== ===== ======= ====== =====
Of the $28,874 increase in rental income, $18,614 is attributable to the Acquired Communities, net of Disposed Communities. The balance of this increase, which is from the Core Properties, was the result of an increase of 6.7% in weighted average rental rates, offset by a decrease in occupancy from 94.0% to 92.1%. Property other income, which consists primarily of income from operation of laundry facilities, late charges, administrative fees, garage and carport charges, net profits from corporate apartments, cable revenue, pet charges, miscellaneous charges to residents and equity in earnings of the general partnership interests increased by a net amount of $844. Of this increase $862 is attributable to the Acquired Communities along with $969 representing a 10.9% increase for the Core Properties. These increases were offset by decreases attributable to the Disposed Communities of $428 and $559 attributable to a decrease in earnings from the general partnerships interests. Interest and dividend income decreased $1,469 due to decreased levels of financing to affiliates. Interest income includes interest earned on certain officer and director notes for stock purchases. These loans were granted in 1996, 1997, 1998, and 2001. The terms have not changed since the original grant date. Additional detail on these loans can be found in Note 8 in the Company's Form 10-K for the year ended December 31, 2001. Other income, which reflects the net contribution from management and development activities after allocating certain overhead and interest expense, decreased by $1,159 due primarily to an increase in the Company's share of losses from the Management Companies and partnership investments. Of the $9,219 increase in operating and maintenance expenses, $12,035 is attributable to the Acquired Communities offset by a decrease of $5,956 attributable to Disposed Communities. The balance, a $3,140 increase, is attributable to the Core Properties and is primarily due to an increase in real estate taxes and personnel expense partially offset by savings in natural gas utility costs. General and administrative expense increased in 2002 by $1,466, or 20%. General and administrative expenses as a percentage of total revenues were 3.0% for 2002 as compared to 2.8% for 2001. The increase can be attributed to increased acquisition related expenses as well as incentive compensation costs. During 2002, the Company reclassified certain property related operating expenses from General and Administrative to Operating and Maintenance, on a comparative basis. Interest expense increased $8,373 due to the increase in the amount of debt outstanding. Depreciation and amortization increased $3,024 due to the depreciation on the Acquired Communities and the additions to the Core Properties. This increase is net of the effect of the change in accounting estimate made by management in the first quarter related to certain depreciable lives of real estate and related assets. The change reduced the depreciation expense for the period by approximately $7.8 million. The Company expects this change in useful lives to increase net income by approximately $10.3 million in 2002 over 2001. The $402 loss on disposition of property primarily relates to additional expenses incurred in the first quarter of 2002 for a sale which closed in the fourth quarter of 2001. These costs represent a change in estimate from those accrued at the time of sale. The impairment of real property of $1,565 relates to apartment community located in Columbus, Ohio. During the third quarter the Company made the decision to pursue the sale of this property pursuant to its strategic disposition program. Although the Company determined that it did not meet the criteria as held for sale pursuant to SFAS 144, the Company performed an impairment test on a held and used basis which resulted in assigning probabilities of identified cash flows based upon certain alternative courses of action. As a result of this analysis, the Company determined that an impairment was noted. Accordingly, the Company recorded an impairment charge based upon the fair market value of the property, less estimated costs to sell, compared to its net book value. The property however, has not been reflected in discontinued operations for either the nine or three-month period ended September 30, 2002, as it does not meet the criteria for held for sale classification. The property is not currently under contract to be sold, however, based upon the properties estimated selling price at a comparable cap rate for the region, less estimated selling costs, as compared to the current net book value of the property, an impairment charge was incurred. Minority interest decreased $10,479 primarily due to the decrease in the gain on disposition of property when compared to the previous period. The Company adopted the provisions of Statement of Financial Accounting Standard No. 144 (SFAS), "Accounting for the Impairment or Disposal of Long-Lived Assets" effective January 1, 2002. This standard addresses financial accounting and reporting for the impairment or disposal of long-lived assets. It also retains the basic provisions for presenting discontinued operations in the income statement but broadened the scope to include a component of an entity rather than a segment of a business. Pursuant to the definition of a component of an entity in the SFAS, assuming no significant continuing involvement, the sale of an apartment community is now considered a discontinued operation. In addition, apartment communities classified as held for sale are also considered a discontinued operation. The Company generally considers assets to be held for sale when all significant contingencies surrounding the closing have been resolved which often corresponds with the actual closing date. As of September 30, 2002 there were no properties held for sale. Included in discontinued operations for the nine-month period ended September 30, 2002 are eleven apartment community dispositions. The operations of these eleven properties have been reflected on a comparative basis for the period ended September 30, 2001. Of the $3,285 decrease in net income, $3,443 is attributable to an increase in income before gain (loss) on disposition of property, minority interest and discontinued operations offset by the lower gains on sale of property, including discontinued operations, in the first three quarters of 2002 as compared to 2001 after the allocation of income to minority interest. Comparison of the three months ended September 30, 2002 to the same period in 2001. Of the $11,509 increase in rental income, $8,065 is attributable to the Acquired Communities, net of Disposed Communities. The balance of this increase, which is from the Core Properties, was the result of an increase of 6.7% in weighted average rental rates, offset by a decrease in occupancy from 94.2% to 92.2%. Property other income, which consists primarily of income from operation of laundry facilities, late charges, administrative fees, garage and carport charges, net profits from corporate apartments, cable revenue, pet charges, miscellaneous charges to residents and equity in earnings of the general partnership interests increased by $857. Of this increase $217 is attributable to the Acquired Communities, $716 represents a 23.5% increase for the Core Properties, and $5 is attributable to an increase in earnings from the general partnership interests. These increases were offset by a decrease attributable to the Disposed Communities of $81. Interest and dividend income decreased $247 due to decreased levels of financing to affiliates. Other income, which reflects the net contribution from management and development activities after allocating certain overhead and interest expense, decreased by $814 due primarily to an increase in the Company's share of losses from the Management Companies and partnership investments. Of the $5,356 increase in operating and maintenance expenses, $4,136 is attributable to the Acquired Communities offset by a decrease of $1,005 attributable to Disposed Communities. The balance, a $2,225 increase, is attributable to the Core Properties and is primarily due to an increase in real estate taxes, repairs and maintenance and personnel costs, offset by a reduction in natural gas utility expenses and property insurance. General and administrative expense increased in 2002 by $513, or 22.1%. General and administrative expenses as a percentage of total revenues were consistent over the same periods representing 2.8% for 2002 as compared to 2.6% for 2001. During 2002, the Company reclassified certain property related operating expenses from General and Administrative to Operating and Maintenance, on a comparative basis. Interest expense increased $2,891 due to the increase in the amount of debt outstanding. Depreciation and amortization increased $1,820 due to the depreciation on the Acquired Communities and the additions to the Core Properties. This increase is net of the effect of the change in accounting estimate made by management in the first quarter related to certain depreciable lives of real estate and related assets. The change reduced the depreciation expense for the period by approximately $2.6 million. The Company expects this change in useful lives to increase net income by approximately $10.3 million in 2002 over 2001. Minority interest decreased $4,349 primarily due to the decrease in the gain on disposition of property, including discontinued operations, when compared to the previous period. Included in discontinued operations for the nine-month period ended September 30, 2002 are eleven apartment community dispositions. The operations of these eleven properties have been reflected on a comparative basis for the period ended September 30, 2001. Of the $2,439 decrease in net income, $840 is attributable to a decrease in income before gain (loss) on disposition of property, minority interest and discontinued operations. The remainder is the result of lower gains on sale of property, including discontinued operations, in the second quarter of 2002 as compared to 2001 after the allocation of income to minority interest. Funds From Operations Management considers funds from operations ("FFO") to be an appropriate measure of performance of an equity REIT. FFO is generally defined as net income (loss) before gains (losses) from the sale of property and business, non-cash impairment charges and extraordinary items, before minority interest in the Operating Partnership, plus real estate depreciation. This presentation excludes the dividends on the Series F Preferred Stock and assumes the conversion of dilutive common stock equivalents and convertible preferred stock. FFO for the nine-month period ended September 30, 2002 adjusts for the add back of the premium on the Series B preferred stock repurchase. Management believes that in order to facilitate a clear understanding of the consolidated historical operating results of the Company, FFO should be considered in conjunction with net income as presented in the consolidated financial statements included elsewhere herein. FFO does not represent cash generated from operating activities in accordance with generally accepted accounting principles and is not necessarily indicative of cash available to fund cash needs. Cash provided by operating activities was $105,066 and $106,136 for the nine-month periods ended September 30, 2002 and 2001, respectively. Cash used in investing activities was $221,391 and $114,544 for the nine-month periods ended September 30, 2002 and 2001, respectively. Cash provided by financing activities was $113,420 and $3,156 for the nine-month periods ended September 30, 2002 and 2001, respectively. FFO should not be considered as an alternative to net income as an indication of the Company's performance or to cash flow as a measure of liquidity. The calculation of FFO for the nine and three-months periods ended September 30, 2002 and 2001 are presented below (in thousands):
Nine-months Three-months Sept. 30 Sept. 30 Sept. 30 Sept. 30 2002 2001 2002 2001 ---- ---- ---- ---- Net income available to common shareholders $29,408 $35,253 13,063 $14,797 Convertible preferred dividends 8,222 13,492 2,443 4,498 Series B preferred stock redemption 5,025 - - - Minority interest 13,655 24,134 5,969 10,318 Minority interest - income from discontinued operations 1,021 1,424 151 493 Depreciation from real property 48,626 46,960 17,020 16,061 Depreciation from real property from unconsolidated entities 505 291 68 88 Impairment of real property 1,565 - 1,565 - (Gain) loss on disposition of property 402 (22,085) (8,437) (Gain) loss on disposition of discontinued operations (5,601) - (2,912) - -------- -------- ------- ------- FFO $102,828 $99,469 $37,367 $37,818 ======== ======= ======= ======= Weighted average common shares/units outstanding: - Basic 41,739.9 37,687.0 42,364.2 38,010.4 - Diluted 46,370.1 44,895.1 46,367.7 45,281.1
All REITs may not be using the same definition for FFO. Accordingly, the above presentation may not be comparable to other similarly titled measures of FFO of other REITs. Covenants In connection with the issuance of the Series F Preferred Stock, the Company is required to maintain for each fiscal quarterly period a fixed charge coverage ratio, as defined in the Series F Cumulative Redeemable Preferred Stock Article Supplementary, of 1.75 to 1.0. The fixed charge coverage ratio and the components thereof do not represent a measure of cash generated from operating activities in accordance with generally accepted accounting principles and are not necessarily indicative of cash available to fund cash needs. Further, this ratio should not be considered as an alternative measure to net income as an indication of the Company's performance or of cash flow as a measure of liquidity. The calculation of the fixed charge coverage ratio for the three most recent quarters since the issuance of the Series F Preferred Stock are presented below (in thousands). Net operating income from discontinued operations in the calculation below is defined as total revenues from discontinued operations less operating and maintenance expenses as presented Note 9 to the consolidated financial statements.
Three-months Sept. 30 June 30 March 31 2002 2002 2002 ---- ---- ---- EBITDA Total revenues $102,354 $98,633 $92,397 Net operating income from discontinued operations 469 519 382 Operating and maintenance (40,927) (39,451) (42,469) General and administrative (2,837) (2,822) (3,099) --------- --------- --------- $59,059 $56,879 $47,211 Fixed Charges Interest expense $19,990 $18,973 $18,026 Interest expense on discontinued operations - 153 56 Preferred dividends 3,793 3,852 3,382 Capitalized interest 230 269 230 --------- --------- --------- $24,013 $23,247 $21,694 Times Coverage ratio: 2.46 2.45 2.18
Economic Conditions Substantially all of the leases at the communities are for a term of one year or less, which enables the Company to seek increased rents upon renewal of existing leases or commencement of new leases. These short-term leases minimize the potential adverse effect of inflation on rental income, although residents may leave without penalty at the end of their lease terms and may do so if rents are increased significantly. Historically, real estate has been subject to a wide range of cyclical economic conditions, which affect various real estate sectors and geographic regions with differing intensities and at different times. In 2001 and continuing into 2002 many regions of the United States have experienced varying degrees of economic recession and certain recessionary trends, such as the cost of obtaining sufficient property and liability insurance coverage, short-term interest rates, and a temporary reduction in occupancy. In light of this, we will continue to review our business strategy however, we believe that given our property type and the geographic regions in which we are located, we do not anticipate any changes in our strategy or material effects in financial performance. Declaration of Dividend On October 29, 2002, the Company declared a dividend of $.61 per common share for the period from July 1, 2002 to September 30, 2002. This is the equivalent of an annual distribution of $2.44 per share. The dividend is payable November 27, 2002 to shareholders of record on November 15, 2002. On October 29, 2002 the Company also declared a regular dividend of $0.5625 per share on its Series F Cumulative Redeemable Preferred Stock, for the quarter ending November 30, 2002. The dividend on the preferred shares is payable on December 2, 2002, to shareholders of record on November 15, 2002. This dividend is equivalent to an annualized rate of $2.25 per share. Subsequent Events On October 11, 2002 the Company acquired five communities in the Hudson Valley region of New York with a total of 224 units (collectively the "Wallace Portfolio"). The total purchase price of $12.8 million, including closing costs, equates to approximately $57 per unit and was funded by the assumption of $7.4 million in debt (fair market value of $8.5 million) and $5.4 million in cash. The weighted average expected first year cap rate for these communities is 7.1%. Contingency The Company had recently undergone a state tax audit whereby the state has assessed taxes of $469 for the 1998 and 1999 tax years under audit. If the state's position is applied to all tax periods through September 30, 2002, the assessment would be approximately $1.4 million. The Company believes that the assessment and the state's underlying position for the tax periods 1998 through 2000 are neither supportable by the law nor consistent with previously provided interpretative guidance from the office of the State Secretary of Revenue. The Company has filed an appeal to the Commonwealth Court in the state for the 1998 and 1999 tax years. There have been no further proceedings to date and the Company intends to vigorously contest the assessments. The Company has been advised that it has meritorious positions for its previous tax filings for the years 1998, 1999, and 2000. However, the Company has accrued approximately $663 as of September 30, 2002 for estimated costs associated with this matter. New Accounting Standards In April 2002, the FASB issued SFAS No. 145 -- "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections" which eliminates the requirement to report gains and losses from extinguishment of debt as extraordinary unless they meet the criteria of APB Opinion 30. This statement also amends other existing authoritative pronouncements to make various technical corrections, clarify meanings, or describe their applicability under changed conditions. The new standard becomes effective for the Company for the year ending December 31, 2003. The Company does not expect this pronouncement to have a material impact on the Company's financial position, results of operations, or cash flows. In June 2002, the FASB issued SFAS No. 146 - "Accounting for Costs Associated with Exit or Disposal Activities." This statement requires the recognition of a liability for costs associated with an exit or disposal activity to be recorded at fair value when incurred. The company's commitment to a plan, by itself does not create a present obligation that meets the definition of a liability. The new standard becomes effective for exit and disposal activities initiated after December 31, 2002. The Company does not expect this pronouncement to have a material impact on the Company's financial position, results of operations, or cash flows. HOME PROPERTIES OF NEW YORK, INC. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company's primary market risk exposure is interest rate risk. At September 30, 2002 and December 31, 2001, approximately 99% and 96%, respectively, of the Company's debt bore interest at fixed rates with a weighted average maturity of approximately 9 and 10 years, respectively, and a weighted average interest rate of approximately 7.30% and 7.27%, respectively. The remainder of the Company's debt bears interest at variable rates with a weighted average maturity of approximately 3 and 1 years and a weighted average interest rate of 3.01% and 3.27%, at September 30, 2002 and December 31, 2001, respectively. The Company does not intend to utilize variable rate debt to acquire properties in the future. On occasion, the Company may assume variable rate debt in connection with a property acquisition. The Company believes, however, that in no event would increases in interest expense as a result of inflation significantly impact the Company's distributable cash flow. At September 30, 2002 and December 31, 2001, the interest rate risk on $25.2 million and $35 million, respectively of such variable rate debt has been mitigated through the use of interest rate swap agreements (the "Swaps") with major financial institutions. The Company is exposed to credit risk in the event of non-performance by the counter-parties to the Swaps. The Company believes it mitigates its credit risk by entering into these Swaps with major financial institutions. The Swaps effectively convert an aggregate of $25.2 million in variable rate mortgages to fixed rates of 5.91%, 8.22% and 8.40% and $35 million in variable rate mortgages to fixed rates of 5.91%, 7.66%, 8.22% and 8.40%. At September 30, 2002 and December 31, 2001, the fair value of the Company's fixed rate debt, including the $25.2 million which was swapped to a fixed rate, amounted to a liability of $1.20 billion and $958 million compared to its carrying amount of $1.16 billion and $960 million, respectively. The Company estimates that a 100 basis point decrease in market interest rates at September 30, 2002 would have changed the fair value of the Company's fixed rate debt to a liability of $1.27 billion. The Company intends to continuously monitor and actively manage interest costs on its debt portfolio and may enter into swap positions based upon market fluctuations. In addition, the Company believes that it has the ability to obtain funds through additional equity offerings or the issuance of UPREIT Units. Accordingly, the cost of obtaining such interest rate protection agreements in relation the Company's access to capital markets will continue to be evaluated. The Company has not, and does not plan to, enter into any derivative financial instruments for trading or speculative purposes. As of September 30, 2002, the Company had no other material exposure to market risk. HOME PROPERTIES OF NEW YORK, INC. ITEM 4. CONTROLS AND PROCEDURES The Company evaluated the design and operation of its disclosure controls and procedures to determine whether they are effective in ensuring that the disclosure of required information is timely made in accordance with the Securities Exchange Act of 1934 and the rules and forms of the Securities and Exchange Commission. This evaluation was made under the supervision and with the participation of management, including the Company's principal executive officers and principal financial officer within the 90-day period prior to the filing of this Quarterly Report on Form 10-Q. The principal executive officers and principal financial officer have concluded, based on their review, that the Company's disclosure controls and procedures, as defined at Exchange Act Rules 13a-14(c) and 15d-14(c), are effective to ensure that information required to be disclosed by the Company in reports that it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. No significant changes were made to the Company's internal controls or other factors that could significantly affect these controls subsequent to the date of their evaluation. PART II - OTHER INFORMATION HOME PROPERTIES OF NEW YORK, INC. Item 6. Exhibits and Reports or Form 8-K (a) Exhibit 10.60 Amendment 52 to the Partnership Agreement Exhibit 10.61 Amendment 53 to the Partnership Agreement Exhibit 10.62 Amendment 54 to the Partnership Agreement Exhibit 10.63 Amendment 55 to the Partnership Agreement, including Schedule A Exhibit 10.64 Amendment 2 to the Credit Agreement (b) Reports on Form 8-K: - Form 8-K was filed on October 22, 2002, date of report January 23, 2002, with respect to Item 5 disclosures reflecting the impact of the classification as discontinued operations of the apartment communities sold on or after January 1, 2002 in certain sections of the Company's annual report filed on Form 10-K for the year ended December 31, 2001. - Form 8-K was filed on October 25, 2002, date of report March 1, 2002, with respect to Items 5 and 7 disclosures relating to certain real estate acquisitions and dispositions. - Form 8-K was filed on November 7, 2002, date of report November 1, 2002, with respect to Items 7 and 9 disclosures regarding the Registrant's press release announcing its results for the third quarter of 2002 and the third quarter 2002 investor conference call. - Form 8-K was filed on November 14, 2002, date of report November 14, 2002, with respect to Items 7 and 9 disclosures regarding Regulation FD disclosures pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. HOME PROPERTIES OF NEW YORK, INC. -------------------------------- (Registrant) Date: November 14, 2002 ----------------------------------- By: /s/ Norman P. Leenhouts ----------------------------------- Norman P. Leenhouts Chairman and Co-Chief Executive Officer Date: November 14, 2002 ----------------------------------- By: /s/ David P. Gardner -------------------------------------------- David P. Gardner Senior Vice President and Chief Financial Officer CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13a-14 PROMULGATED BY THE SECURITIES AND EXCHANGE COMMISSION (Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002) I, Norman Leenhouts, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Home Properties of New York, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. By: /s/ Norman Leenhouts ------------------------------- Norman Leenhouts Chairman of the Board of Directors and Co-Chief Executive Officer November 14, 2002 CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13a-14 PROMULGATED BY THE SECURITIES AND EXCHANGE COMMISSION (Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002) I, Nelson Leenhouts, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Home Properties of New York, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. By: /s/ Nelson Leenhouts ------------------------------- Nelson Leenhouts President and Co-Chief Executive Officer November 14, 2002 CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13a-14 PROMULGATED BY THE SECURITIES AND EXCHANGE COMMISSION (Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002) I, David P. Gardner, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Home Properties of New York, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. By: /s/ David P. Gardner ------------------------------- David P. Gardner Senior Vice President and Chief Financial Officer November 14, 2002 EX-10 3 amendment52thirdquarter.txt AMEND52 TO SCHEDULE A AMENDMENT NO. 52 TO THE SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF HOME PROPERTIES OF NEW YORK, L.P. This AMENDMENT NO. 52 TO THE SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF HOME PROPERTIES OF NEW YORK, L.P., dated as of March 25, 2002 (this "Amendment") is being executed by Home Properties of New York, Inc., a Maryland corporation (the "General Partner"), as the general partner of Home Properties of New York, L.P., a New York limited partnership (the "Partnership"), pursuant to the authority conferred on the General Partner by Section 9.10(b)(iii) of the Second Amended and Restated Agreement of Limited Partnership of Home Properties of New York, L.P., dated as of September 23, 1997, as amended (the "Agreement"). Capitalized terms used, but not otherwise defined herein, shall have the respective meanings ascribed thereto in the Agreement. WHEREAS, on March 21, 2002, the General Partner filed Articles Supplementary amending its Charter to designate a classify 3,000,000 shares of authorized but unissued shares of its preferred stock, par value $0.01 per share, as shares of its Series F Cumulative Redeemable Preferred Stock (the Series F Preferred Stock"); WHEREAS, in accordance with Section 3.04 of the Agreement, upon the issuance of any such shares of Series F Preferred Stock, the General Partner will contribute the net cash proceeds from such issuance to the QRS (as defined in the Agreement), which will contribute such net proceeds to the Partnership in exchange for a number of Partnership Preferred Units equal to the number of shares of Series F Preferred Stock so issued, which Partnership Preferred Units shall have designations, preferences and other rights, terms and provisions that are substantially the same as the designations, preferences and other rights, terms and provisions of the Series F Preferred Stock, except as otherwise set forth herein; and WHEREAS, pursuant to Section 3.03(a) of the Agreement, the General Partner is authorized to determine the relative rights and powers of such Partnership Preferred Units in its sole discretion. NOW THEREFORE, in consideration of the foregoing, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged: 1. The Agreement is hereby amended by the addition of a new exhibit, entitled "Exhibit H", in the form attached hereto, which shall be attached and made part of the Agreement. 2. Except as specifically amended hereby, the terms, covenants, provisions and conditions of the Agreement shall remain unmodified and continue in full force and effect and, except as amended hereby, all of the terms, covenants, provisions and conditions of the Agreement are hereby ratified and confirmed in all respects. IN WITNESS WHEREOF, this Amendment has been executed as of the date first written above. GENERAL PARTNER HOME PROPERTIES OF NEW YORK, INC. By: /s/ Ann M. McCormick -------------------------------------------------- Name: Ann M. McCormick ------------------------------------------------ Title: Senior Vice President and General Counsel ----------------------------------------------- Exhibit H PARTNERSHIP UNIT DESIGNATION OF THE SERIES F PARTNERSHIP PREFERRED UNITS OF HOME PROPERTIES OF NEW YORK, L.P. 1. Number of Units and Designation. A class of Partnership Preferred Units is hereby designated as "Series F Partnership Preferred Units," and the number of Partnership Preferred Units constituting such series shall be 3,000,000. 2. Definitions. For purposes of the Series F Partnership Preferred Units, the following terms shall have the meanings indicated in this Section 2, and capitalized terms used and not otherwise defined herein shall have the meanings assigned thereto in the Agreement: "Agreement" shall mean the Second Amended and Restated Agreement of Limited Partnership of the Partnership, dated as of September 23, 1997, as amended. "Call Date" shall have the meaning set forth in paragraph (a) of Section 5 of this Exhibit H. "Common Stock" shall mean the Common Stock, $0.01 par value per share, of the General Partner or such shares of the General Partner's capital stock into which outstanding shares of Common Stock shall be reclassified. "Distribution Payment Date" shall mean any date on which cash dividends are paid on all outstanding shares of the Series F Preferred Stock. "Junior Partnership Units" shall have the meaning set forth in paragraph (c) of Section 7 of this Exhibit H. "Parity Partnership Units" shall have the meaning set forth in paragraph (b) of Section 7 of this Exhibit H. "Partnership" shall mean Home Properties of New York, L.P., a New York limited partnership. "Partnership Common Units" shall mean a fractional, undivided share of the Partnership Interests of all Partners issued pursuant to Section 3.01 and 3.02 of the Agreement. "Senior Partnership Units" shall have the meaning set forth in paragraph (a) of Section 7 of this Exhibit H. "Series F Articles Supplementary" means the Articles Supplementary to the Amended and restated Articles of Incorporation of the General Partner, dated March 18, 2002, designating the Series F Preferred Stock. "Series F Partnership Preferred Unit" means a Partnership Preferred Unit with the designations, preferences and relative, participating, optional or other special rights, powers and duties as are set forth in this Exhibit H. It is the intention of the General Partner that each Series F Partnership Preferred Unit shall be substantially the economic equivalent of one share of Series F Preferred Stock. "Series F Preferred Stock" means the Series F Cumulative Redeemable Preferred Stock, par value $0.01 per share, of the General Partner, with the preferences and other rights, voting powers, restrictions, limitations as to dividends, qualifications and terms and conditions of redemption set forth in the Series F Articles Supplementary. 3. Distributions. On every Distribution Payment Date, the holders of Series F Partnership Preferred Units shall be entitled to receive distributions payable in cash in an amount per Series F Partnership Preferred Unit equal to the per share dividend payable on the Series F Preferred Stock on such Distribution Payment Date. Each such distribution shall be payable to the holders of record of the Series F Partnership Preferred Units, as they appear on the records of the Partnership at the close of business on the record date for the dividend payable with respect to the Series F Preferred Stock on such Distribution Payment Date. Holders of Series F Partnership Preferred Units shall not be entitled to any distributions on the Series F Partnership Preferred Units, whether payable in cash, property or stock, except as provided herein. 4. Liquidation Preference. (a) In the event of any liquidation, dissolution or winding up of the Partnership, whether voluntary or involuntary, before any payment or distribution of the Partnership (whether capital, surplus or otherwise) shall be made to or set apart for the holders of Junior Partnership Units, the holders of Series F Partnership Preferred Units shall be entitled to receive Twenty-Five Dollars ($25) per Series F Partnership Preferred Unit (the "Liquidation Preference"), plus an amount per Series F Partnership Preferred Unit equal to all dividends (whether or not declared) accumulated, accrued and unpaid on one share of Series F Preferred Stock to the date of final distribution to such holders; but such holders shall not be entitled to any further payment. Until the holders of the Series F Partnership Preferred Units have been paid the Liquidation Preference in full, plus an amount equal to all dividends (whether or not declared) accumulated, accrued and unpaid on the Series F Preferred Stock to the date of final distribution to such holders, no payment shall be made to any holder of Junior Partnership Units upon the liquidation, dissolution or winding up of the Partnership. If, upon any liquidation, dissolution or winding up of the Partnership, the assets of the Partnership, or proceeds thereof, distributable among the holders of Series F Partnership Preferred Units shall be insufficient to pay in full the preferential amount aforesaid and liquidating payments on any Parity Partnership Units, then such assets, or the proceeds thereof, shall be distributed among the holders of Series F Partnership Preferred Units and any such Parity Partnership Units ratably in the same proportion as the respective amounts that would be payable on such Series F Partnership Preferred Units and any such other Parity Partnership Units if all amounts payable thereon were paid in full. For the purposes of this Section 4, (i) a consolidation or merger of the Partnership with one or more partnerships, or (ii) a sale or transfer of all or substantially all of the Partnership's assets shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Partnership. (b) Upon any liquidation, dissolution or winding up of the Partnership, after payment shall have been made in full to the holders of Series F Partnership Preferred Units and any Parity Partnership Units, as provided in this Section 4, any other series or class or classes of Junior Partnership Units shall, subject to the respective terms thereof, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Series F Partnership Preferred Units and any Parity Partnership Units shall not be entitled to share therein. 5. Redemption. Series F Partnership Preferred Units shall be redeemable by the Partnership as follows: (a) At any time that the General Partner exercises its right to redeem all or any of the shares of Series F Preferred Stock, the General Partner shall cause the Partnership to redeem an equal number of Series F Partnership Preferred Units, at a redemption price per Series F Partnership Preferred Unit equal to the same price paid by the General Partner to redeem the Series F Preferred Stock, and such price shall be paid in the same manner as paid by the General Partner for the Series F Preferred Stock redeemed on the same date as the date of redemption of the Series F Preferred Stock (the "Call Date"), in the manner set forth herein; provided, however, that in the event of a redemption of Series F Partnership Preferred Units, if the Call Date occurs after a dividend record date for the Series F Preferred Stock and on or prior to the related Distribution Payment Date, the distribution payable on such Distribution Payment Date in respect of such Series F Partnership Preferred Units called for redemption shall be payable on such Distribution Payment Date to the holders of record of such Series F Partnership Preferred Units on the applicable dividend record date, and shall not be payable as part of the redemption price for such Series F Partnership Preferred Units. (b) If the Partnership shall redeem Series F Partnership Preferred Units pursuant to paragraph (a) of this Section 5, from and after the Call Date (unless the Partnership shall fail to make available the amount of cash or other forms of consideration necessary to effect such redemption), (i) except for payment of the redemption price, the Partnership shall not make any further distributions on the Series F Partnership Preferred Units so called for redemption, (ii) said units shall no longer be deemed to be outstanding, and (iii) all rights of the holders thereof as holders of Series F Partnership Preferred Units of the Partnership shall cease except the rights to receive the cash payable upon such redemption, without interest thereon; provided, however, that if a Call Date occurs after a dividend record date for the Series F Preferred Stock and on or prior to the related Distribution Payment Date, the full distribution payable on such Distribution Payment Date in respect of such Series F Partnership Preferred Units called for redemption shall be payable on such Distribution Payment Date to the holders of record of such Series F Partnership Preferred Units on the applicable dividend record date notwithstanding the prior redemption of such Series F Partnership Preferred Units. No interest shall accrue for the benefit of the holders of Series F Partnership Preferred Units to be redeemed on any cash set aside by the Partnership. 6. Status of Reacquired Units. All Series F Partnership Preferred Units which shall have been issued and reacquired in any manner by the Partnership shall be deemed canceled. 7. Ranking. Any class or series of Partnership Units of the Partnership shall be deemed to rank: (a) prior or senior to the Series F Partnership Preferred Units, as to the payment of distributions and as to distributions of assets upon liquidation, dissolution or winding up, if the holders of such class or series shall be entitled to the receipt of distributions and of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of Series F Partnership Preferred Units ("Senior Partnership Units"); (b) on a parity with the Series F Partnership Preferred Units, as to the payment of distributions and as to distribution of assets upon liquidation, dissolution or winding up, whether or not the distribution rates, distribution payment dates or redemption or liquidation prices per unit or other denomination thereof be different from those of the Series F Partnership Preferred Units if the holders of such class or series of Partnership Units and the Series F Partnership Preferred Units shall be entitled to the receipt of distributions and of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective amounts of accrued and unpaid distributions per unit or other denomination or liquidation preferences, without preference or priority one over the other (the Partnership Units referred to in this paragraph being hereinafter referred to as "Parity Partnership Units"), and (c) junior to the Series F Partnership Preferred Units, as to the payment of distributions and as to the distribution of assets upon liquidation, dissolution or winding up, if such class or series of Partnership Units shall be Partnership Common Units or the holders of Series F Partnership Preferred Units shall be entitled to receipt of distributions or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of such class or series of Partnership Units (the Partnership Units referred to in this paragraph being hereinafter referred to, collectively, as "Junior Partnership Units"). 8. Special Allocations. (a) Gross income and, if necessary, gain shall be allocated to the holders of Series F Partnership Preferred Units for any Fiscal Year (and, if necessary, subsequent Fiscal Years) to the extent that the holders of Series F Partnership Preferred Units receive a distribution on any Series F Partnership Preferred Units (other than an amount included in any redemption pursuant to Section 5 hereof) with respect to such Fiscal Year. (b) If any Series F Partnership Preferred Units are redeemed pursuant to Section 5 hereof, for the Fiscal Year that includes such redemption (and, if necessary, for subsequent Fiscal Years) (a) gross income and gain (in such relative proportions as the General Partner in its discretion shall determine) shall be allocated to the holders of Series F Partnership Preferred Units to the extent that the redemption amounts paid or payable with respect to the Series F Partnership Preferred Units so redeemed exceeds the aggregate Capital Contributions (net of liabilities assumed or taken subject to by the Partnership) per Series F Partnership Preferred Unit allocable to the Series F Partnership Preferred Units so redeemed and (b) deductions and losses (in such relative proportions as the General Partner in its discretion shall determine) shall be allocated to the holders of Series F Partnership Preferred Units to the extent that the aggregate Capital Contributions (net of liabilities assumed or taken subject to by the Partnership) per Series F Partnership Preferred Unit allocable to the Series F Partnership Preferred Units so redeemed exceeds the redemption amount paid or payable with respect to the Series F Partnership Preferred Units so redeemed. 9. Restrictions on Ownership. The Series F Partnership Preferred Units shall be owned and held solely by the General Partner or the QRS. 10. Vote Required for Amendment, Merger, Consolidation, etc. So long as any Series F Partnership Preferred Units are outstanding, in addition to any other vote or consent required by law or by the Agreement, the affirmative vote of at least 66-2/3% of the holders of the Series F Partnership Preferred Units, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating: (a) Any amendment, alteration or repeal of any of the provisions of the Agreement, the Amendment, or this Exhibit H thereto, that materially and adversely affects the powers, rights or preferences of the holders of the shares of Series F Partnership Preferred Units; provided, however, that the amendment of the provisions of the Agreement so as to authorize or create or to increase the authorized amount of, any Junior Partnership Units, or other Units that are not senior in any respect to the Series F Partnership Preferred Units or any Parity Partnership Units shall not be deemed to materially adversely affect the powers, rights or preferences of the holders of Series F Partnership Preferred Units; or (b) An exchange that affects the Series F Partnership Preferred Units, a consolidation with or merger of the Partnership into another entity, or a consolidation with or merger of another entity into the Partnership, unless in each such case each Series F Partnership Preferred Unit (i) shall remain outstanding without a material and adverse change to its terms and rights or (ii) shall be converted into or exchanged for convertible preferred securities of the surviving entity having preferences, conversion or other rights, powers, restrictions, limitations as to distributions, qualifications and terms or conditions of redemption thereof identical to that of a Series F Partnership Preferred Unit (except for changes that do not materially and adversely affect the holders of the Series F Partnership Preferred Units); or (c) The authorization, reclassification or creation of, or the increase in the authorized amount of, any Units of any series, or any security convertible into Units of any series, ranking prior to the Series F Partnership Preferred Units in the distribution of assets on any liquidation, dissolution or winding up of the Partnership or in the payment of distributions; or (d) Any increase in the authorized amount of Series F Partnership Preferred Units or decrease in the authorized amount of Series F Partnership Preferred Units below the number of Series F Partnership Preferred Units then issued and outstanding; provided, however, that no such vote of the holders of Series F Partnership Preferred Units shall be required if, at or prior to the time when such amendment, alteration or repeal is to take effect, or when the issuance of any such prior Units or convertible security is to be made, as the case may be, provision is made for the redemption of all Series F Partnership Preferred Units at the time outstanding to the extent such redemption is authorized by Section 5 hereof. For purposes of the foregoing provisions of this Section 10, each Series F Partnership Preferred Unit shall have one (1) vote, except that when any other series of Preferred Units shall have the right to vote with the Series F Partnership Preferred Units as a single class on any matter, then the Series F Partnership Preferred Units and such other series shall have with respect to such matters one (1) vote per $25.00 of stated liquidation preference. Except as otherwise required by applicable law or as set forth herein, the Series F Partnership Preferred Units shall not have any relative, participating, optional or other special voting rights and powers other than as set forth herein, and the consent of the holders thereof shall not be required for the taking of any Partnership action. 11. General (a) The ownership of Series F Partnership Preferred Units may (but need not, in the sole and absolute discretion of the General Partner) be evidenced by one or more certificates. The General Partner shall amend Exhibit A to the Agreement from time to time to the extent necessary to reflect accurately the issuance of, and subsequent redemption, or any other event having an effect on the ownership of, Series F Partnership Preferred Units. (b) The rights of the General Partner and the QRS, in their capacity as holders of the Series F Partnership Preferred Units, are in addition to and not in limitation of any other rights or authority of the General Partner or the QRS, respectively, in any other capacity under the Agreement or applicable law. In addition, nothing contained herein shall be deemed to limit or otherwise restrict the authority of the General Partner or the QRS under the Agreement, other than in their capacity as holders of the Series F Partnership Preferred Units. 12. Economic Equivalency. Notwithstanding any other provision of this Exhibit H, the shares of Series F Preferred Stock and the Series F Partnership Preferred Units are intended to be substantially equivalent in distributions and other payments. In the event that any provision of this Exhibit H would result in a different distribution or other payments being made to the holder of a Series F Partnership Preferred Units than to a holder of a share of Series F Preferred Stock, this Exhibit H shall be deemed automatically amended to conform to the terms of the Series F Articles Supplementary with respect to such distribution or other payment. EX-10 4 amend53thirdquarter.txt AMENDMENT 53 TO SCHEDULE A Home Properties of New York, L.P. Amendment No. Fifty-Three to Second Amended and Restated Agreement of Limited Partnership The Second Amended and Restated Agreement of Limited Partnership of Home Properties of New York, L.P. (the "Partnership Agreement") is hereby amended effective May 20, 2002 to substitute the "Schedule A" attached hereto for the "Schedule A" currently attached to the Partnership Agreement. "Schedule A" is hereby amended to reflect various changes. GENERAL PARTNER Home Properties of New York, Inc. /s/ Ann M. McCormick - --------------------------------- Ann M. McCormick Secretary LIMITED PARTNERS LISTED ON ATTACHED SCHEDULE A By: Home Properties of New York, Inc. as attorney in fact /s/ Ann M. McCormick - ----------------------------------- Ann M. McCormick Secretary EX-10 5 amend54thirdquarter.txt AMENDMENT 54 TO SCHEDULE A Home Properties of New York, L.P. Amendment No. Fifty-Four to Second Amended and Restated Agreement of Limited Partnership The Second Amended and Restated Agreement of Limited Partnership of Home Properties of New York, L.P. (the "Partnership Agreement") is hereby amended effective August 19, 2002 to substitute the "Schedule A" attached hereto for the "Schedule A" currently attached to the Partnership Agreement. "Schedule A" is hereby amended to reflect various changes. GENERAL PARTNER Home Properties of New York, Inc. /s/ Ann M. McCormick - --------------------------------- Ann M. McCormick Secretary LIMITED PARTNERS LISTED ON ATTACHED SCHEDULE A By: Home Properties of New York, Inc. as attorney in fact /s/ Ann M. McCormick - ----------------------------------- Ann M. McCormick Secretary EX-10 6 amend55thirdquarter.txt AMENDMENT 55 TO SCHEDULE A Home Properties of New York, L.P. Amendment No. Fifty-Five to Second Amended and Restated Agreement of Limited Partnership The Second Amended and Restated Agreement of Limited Partnership of Home Properties of New York, L.P. (the "Partnership Agreement") is hereby amended effective September 27, 2002 to substitute the "Schedule A" attached hereto for the "Schedule A" currently attached to the Partnership Agreement. "Schedule A" is hereby amended to reflect various changes, including the issuance of Units to the former owner of the Cider Mill Apartments located in Maryland. GENERAL PARTNER Home Properties of New York, Inc. /s/ Ann M. McCormick - --------------------------------- Ann M. McCormick Secretary LIMITED PARTNERS LISTED ON ATTACHED SCHEDULE A By: Home Properties of New York, Inc. as attorney in fact /s/ Ann M. McCormick - ----------------------------------- Ann M. McCormick Secretary EX-10 7 schedulea10qthirdquarter.txt SCHEDULE A
September 27, 2002 SCHEDULE A HOME PROPERTIES OF NEW YORK, L.P. PARTNERS, UNITS AND PERCENTAGE INTERESTS GENERAL PARTNER Number of Percentage Name and Identifying Number Business or Residence Address Units Held Interest - --------------------------- ----------------------------- ---------- ---------- Home Properties of New York, Inc. 850 Clinton Square 464,142.499 1.00000% Rochester, New York 14604 LIMITED PARTNERS Number of Percentage Name and Identifying Number Business or Residence Address Units Held Interest - --------------------------- ----------------------------- ---------- -------- PREFERRED UNITS SERIES C PARTNERSHIP PREFERRED UNITS Home Properties Trust 850 Clinton Square 600,000 1.29271% Rochester, New York 14604 SERIES D PARTNERSHIP PREFERRED UNITS Home Properties Trust 850 Clinton Square 250,000 0.53863% Rochester, New York 14604 SERIES E PARTNERSHIP PREFERRED UNITS Home Properties Trust 850 Clinton Square 236,800 0.51019% Rochester, New York 14604 SERIES F PARTNERSHIP PREFERRED UNITS Home Properties Trust 850 Clinton Square 2,400,000 5.17083% Rochester, New York 14604 COMMON UNITS Home Properties Trust 850 Clinton Square 26,225,468.400 56.50305% Rochester, New York 14604 Home Leasing Corporation 850 Clinton Square 429,376 0.92510% Rochester, New York 14604 Leenhouts Ventures 850 Clinton Square 8,010 0.01726% Rochester, New York 14604 Norman P. Leenhouts 850 Clinton Square 467 0.00101% Rochester, New York 14604 Nelson B. Leenhouts 850 Clinton Square 219 0.00047% Rochester, New York 14604 Arlene Z. Leenhouts 850 Clinton Square 50,000 0.10773% Rochester, New York 14604 Nancy E. Leenhouts 850 Clinton Square 50,000 0.10773% Rochester, New York 14604 Amy L. Tait 850 Clinton Square 11,195 0.02412% Rochester, New York 14604 Number of Percentage Name and Identifying Number Business or Residence Address Units Held Interest - --------------------------- ----------------------------- ---------- -------- Amy L. Tait and 850 Clinton Square 2,548 0.00549% Robert C. Tait Rochester, New York 14604 Ann M. McCormick 850 Clinton Square 565 0.00122% Rochester, New York 14604 Ann M. McCormick and 850 Clinton Square 1,737 0.00374% Patrick M. McCormick Rochester, New York 14604 David P. Gardner 850 Clinton Square 3,506 0.00755% Rochester, New York 14604 William E. Beach 850 Clinton Square 2,433 0.00524% Rochester, New York 14604 William E. Beach and 850 Clinton Square 3,046 0.00656% Richelle A. Beach Rochester, New York 14604 Paul O'Leary 850 Clinton Square 3,207 0.00691% Rochester, New York 14604 Richard J. Struzzi 850 Clinton Square 2,363 0.00509% Rochester, New York 14604 Robert C. Tait 850 Clinton Square 70 0.00015% Rochester, New York 14604 Timothy A. Florczak 850 Clinton Square 600 0.00129% Rochester, New York 14604 Laurie Leenhouts 850 Clinton Square 6,033 0.01300% Rochester, New York 14604 - -------------------------------------------- HARBORSIDE J. Neil Boger 27 Arlington Drive 1,225 0.00264% Pittsford, New York 14534 Joyce P. Caldarone 162 Anchor Drive 1,225 0.00264% Vero Beach, Florida 32963 Peter L. Cappuccilli, Sr. 605 Genesee Street 6,250 0.01347% Syracuse, New York 13204 Rocco M. Cappuccilli 605 Genesee Street 6,250 0.01347% Syracuse, New York 13204 Linda Wells Davey 17 Green Valley Road 1,225 0.00264% Pittsford, New York 14534 Richard J. Dorschel 32 Whitestone Lane 1,225 0.00264% Rochester, New York 14618 Elizabeth Hatch Dunn P.O. Box 14261 2,450 0.00528% North Palm Beach, Florida 33408 Jeremy A. Klainer 295 San Gabriel Drive 612 0.00132% Rochester, New York 14610 J. Robert Maney 506 Panorama Trail 2,450 0.00528% Rochester, New York 14625 Number of Percentage Name and Identifying Number Business or Residence Address Units Held Interest - --------------------------- ----------------------------- ---------- -------- John A. McAlpin and Mary E. McAlpin 6270 Bopple Hill Road 1,225 0.00264% Trustees or their successors in trust Naples, New York 14512-9771 under the McAlpin Living Trust, dated January 19, 1999 and any amendments thereto George E. Mercier 99 Ridgeland Road 1,225 0.00264% Rochester, New York 14623 Michelle Mercier 99 Ridgeland Road 1,225 0.00264% Rochester, New York 14623 Jack E. Post 11 Oakfield Way 1,225 0.00264% Pittsford, New York 14534 Carolyn M. Steklof 144 Dunrovin Lane 1,225 0.00264% Rochester, New York 14618 William T. Uhlen, Jr. 5556 Vardon Drive 2,450 0.00528% Canandaigua, NY 14424 - -------------------------------------------- CONIFER Lawrence R. Brattain 31790 Lake Road 500 0.00108% Avon Lake, OH 44012 C. Terence Butwid 183 East Main Street, 6th Floor 4,146 0.00893% Rochester, New York 14604 C.O.F. Inc. 183 East Main Street, 6th Floor 330,131 0.71127% Rochester, New York 14604 Conifer Development, Inc. 183 East Main Street, 6th Floor 20,738 0.04468% Rochester, New York 14604 Richard J. Crossed 183 East Main Street, 6th Floor 58,021 0.12501% Rochester, New York 14604 Kathleen M. Dunham 113 Huckleberry Lane 200 0.00043% Syracuse, NY 13219-2113 John H. Fennessey 204 Newfield Road 30,700 0.06614% DeWitt, NY 13214-1613 Timothy D. Fournier 183 East Main Street, 6th Floor 6,100 0.01314% Rochester, New York 14604 Barbara Lopa 850 Clinton Square 100 0.00022% Rochester, New York 14604 Peter J. Obourn 480 Bluhm Road 30,700 0.06614% Fairport, NY 14450 John Oster 509 Manitou Road 3,245 0.00699% Hilton, NY 14468-8988 Number of Percentage Name and Identifying Number Business or Residence Address Units Held Interest - --------------------------- ----------------------------- ---------- -------- Eric Stevens 183 East Main Street, 6th Floor 100 0.00022% Rochester, New York 14604 Tamarack Associates c/o Mr. Timothy D. Fournier 2,316 0.00499% 183 East Main Street, 6th Floor Rochester, New York 14604 Tamarack II Associates 183 East Main Street, 6th Floor 2,027 0.00437% Rochester, New York 14604 Burton S. August 11 Woodbury Place 4,246 0.00915% Rochester, New York 14618 Charles J. August 47 Woodbury Drive 4,246 0.00915% Rochester, New York 14618 Robert W. August 222 Shoreham Drive 1,158 0.00249% Rochester, New York 14618 John H. Cline 35 Vick Park A 2,316 0.00499% Rochester, New York 14607 Ralph DeStephano, Sr. 1249-1/2 Long Pond Road 2,316 0.00499% Rochester, New York 14626 Gerald A. Fillmore 3800 Delano Road 2,316 0.00499% F/B/O Living Trust of G.A.F. Oxford, Michigan 48371 Richard J. Katz, Jr. 136 Spyglass Lane 2,316 0.00499% Jupiter, Florida 33477 Anwer Masood, MD 1445 Portland Avenue 2,316 0.00499% Rochester, New York 14621 Ernest Reveal Family Trust c/o Jim Lieb 976 0.00210% #321001870 JP Morgan Chase P.O. Box 31412 Rochester, New York 14603 Hazel E. Reveal Marital Trust c/o Jim Lieb 1,340 0.00289% #321001860 JP Morgan Chase P.O. Box 31412 Rochester, New York 14603 Gregory J. Riley, MD 9 Beach Flint Way 2,256 0.00486% Victor, New York 14564 Thomas P. Riley 346 Beach Avenue 2,316 0.00499% Rochester, New York 14612 William G. vonberg 8 Old Landmark Drive 2,316 0.00499% Rochester, New York 14618 Cheryl S. Bickett Trustee U/T/A 70 Woodland Road 2,316 0.00499% dated June 2, 1994 Short Hills, New Jersey 07078 Stephen C. Whitney 43 Devonwood Lane 869 0.00187% Pittsford, New York 14534 Mr. and Mrs. Frank Zamiara 136 Mendon-Ionia Road 2,316 0.00499% Mendon, New York 14506 Number of Percentage Name and Identifying Number Business or Residence Address Units Held Interest - --------------------------- ----------------------------- ---------- -------- - -------------------------------------------- ROYAL GARDENS Daniel Solondz P.O. Box 6119 261,678 0.56379% East Brunswick, NJ 08816 Gaby Solondz 1997 Trust dated 9/1/97 28 Fordham Road 25,000 0.05386% Livingston, NJ 07039 Philip J. Solondz 15 Bleeker Street 236,678 0.50993% Suite 201 P.O. Box 661 Millburn, NJ 07041-0661 Julia S. Weinstein Living Trust c/o Carol Vinelli 56,051 0.12076% 308 E. 72nd St., Apt. 4D New York, New York 10021 - -------------------------------------------- CURREN 9/30/97 Peter B. Baker 300 Park Street 4,871 0.01049% Haworth, NJ 07641 John F. Barna 4 Highmeadow 5,977 0.01288% Norwalk, CT 06854 Nadine L. Barna 4 Highmeadow 4,042 0.00871% Norwalk, CT 06854 Robert E. & Barbara T. Buce 16846 Glynn Drive 1,282 0.00276% Pacific Palisades, CA 90272 Vincent J. Cannella Living Trust 24350-45 Whispering Ridge Way 4,635 0.00999% Scottsdale, AZ 85255 John J. Chopack 202 Hedgemere Drive 444 0.00096% Devon, PA 19333 Harris R. Chorney 43 Mountain Brook Road 705 0.00152% West Hartford, CT 06117 Ralph W. Clermont 2311 Clifton Forge Drive 1,324 0.00285% St. Louis, MO 63131 Thomas J. Coffey 5 Brampton Road 662 0.00143% Malvern, PA 19355 Barbara G. Collins 2141 Ponus Ridge 1,324 0.00285% New Canaan, CT 06840 Charles T. Collins 684 Fernfield Circle 5,942 0.01280% Wayne, PA 19087 John D. Collins 2141 Ponus Ridge Road 6,227 0.01342% New Canaan, CT 06840 Patricia A. Collins 684 Fernfield Circle 388 0.00084% Wayne, PA 19087 Michael A. Conway 15 Berndale Drive 6,227 0.01342% Westport, CT 06880 Number of Percentage Name and Identifying Number Business or Residence Address Units Held Interest - --------------------------- ----------------------------- ---------- -------- Veronica A. Conway 15 Berndale Drive 3,571 0.00769% Westport, CT 06880 Mildred M. Cozine 5 Manchester Court 1,986 0.00428% Morristown, NJ 07960 William J. Cozine 5 Manchester Court 6,663 0.01436% Morristown, NJ 07960 Kenneth Daly 1359 Shadowoak Drive 1,104 0.00238% Malvern, PA 19355 Anthony J. Del Tufo Two Hidden Harbor 462 0.00100% Point Pleasant, NJ 08742 Jack C. Dixon Revocable Trust 16 Lands End Drive 3,589 0.00773% Greensboro, NC 27408-3841 Priscilla M. Elder 230 Sundial Court 5,788 0.01247% Vero Beach, FL 32963-3469 Doris E. Ficca 415 Lancaster Avenue, Unit 8 776 0.00167% Haverford, PA 19041 John J. Ficca, Jr. 415 Lancaster Avenue - Unit 8 9,150 0.01971% Haverford, PA 19041 John & Doris Ficca 415 Lancaster Avenue, Unit 8 2,295 0.00494% Haverford, PA 19041 Alfred W. Fiore 27 Copper Beach Road 444 0.00096% Greenwich, CT 06830 Carol T. Fort 38 Cedar Knoll Road 6,006 0.01294% Hunt Valley, MD 21030 Jeffrey Fish 602 Spring Avenue 450 0.00097% Lutherville, MD 21093 Joseph H. Fisher 345 W. Mountain Road 10,600 0.02284% West Simsbury, CT 06092 John A. Flack 89 Perkins Road 642 0.00138% Grenwich, CT 06830 F. David Fowler 9724 Beman Woods Way 1,821 0.00392% Potomac, MD 20854 Freedom House Foundation P.O. Box 367 250 0.00054% Glen Gardner, NJ 08826-0367 James L. Goble 11 St. Laurent Place 11,228 0.02419% Dallas, TX 75225 LaVonne B. Graese, Trustee 5193 Fairway Oaks Drive 49,321 0.10626% Windermere, FL 34786 James J. Grifferty 57 Woods Lane 23,515 0.05066% Scarsdale, NY 10583 John M. Guinan 4 Denford Drive 778 0.00168% Newtown Square, PA 19073 Number of Percentage Name and Identifying Number Business or Residence Address Units Held Interest - --------------------------- ----------------------------- ---------- -------- M. Candace Guinan 4 Denford Drive 773 0.00167% Newtown Square, PA 19073 William A. Hasler 102 Golden Gate Avenue 923 0.00199% Belvedere, CA 94920 Maxine S. Holton 700 Ocean Royale Way 6,418 0.01383% Apartment 801 Juno Beach, FL 33408 Thomas L. Holton 700 Ocean Royale Way 8,136 0.01753% Apartment 801 Juno Beach, FL 33408 Mary Anne Hopkins 1121 Tintern Drive 6,202 0.01336% Ambler, PA 19002 Richard Isserman 165 W. 66th Street 4,428 0.00954% Apartment 21B New York, New York 10023 Thomas F. Keaveney 175 Putnam Park 8,016 0.01727% Greenwich. CT 06830 Patrick W. Kenny 33 Fulton Place 642 0.00138% West Hartford, CT 06107 Frank Kilkenny and Irene M. Kilkenny 42 Highland Circle 5,884 0.01268% JTWROS Bronxville, NY 10708 Janet T. Klion 25 Bailiwick Road 7,608 0.01639% Greenwich, CT 06831 Howard J. Krongard 9 Cornell Way 8,387 0.01807% Upper Montclair, NJ 07043 Louis E. Levy 26 Farmstead Road 13,086 0.02819% Short Hills, NJ 07078 Sandra H. Levy 26 Farmstead Road 3,000 0.00646% Short Hills, NJ 07078 RJL Marital Trust I c/o William E. Logan 2,835 0.00611% 3613 Sarah Drive Wantagle, NY 11793 Jerome Lowengrub 7 Lee Terrace 6,111 0.01317% Short Hills, NJ 07078 Kelly Lowengrub Custodian for 30 Randall Shea Drive 300 0.00065% Kaycee Lowengrub Swansea, MA 02777-2912 Kelly Lowengrub Custodian for 30 Randall Shea Drive 350 0.00075% Kate Lowengrub Swansea, MA 02777-2912 Kelly Lowengrub Custodian for 30 Randall Shea Drive 200 0.00043% Kristopher Lowengrub Swansea, MA 02777-2912 Kelly Lowengrub 30 Randall Shea Drive 75 0.00016% Swansea, MA 02777-2912 Michael C. Lowengrub Custodian for 3 Shoreham Drive West 250 0.00054% Robin Lowengrub Dix Hills, NY 11746-6510 Number of Percentage Name and Identifying Number Business or Residence Address Units Held Interest - --------------------------- ----------------------------- ---------- -------- Michael C. Lowengrub Custodian for 3 Shoreham Drive West 500 0.00108% Jason Lowengrub Dix Hills, NY 11746-6510 Nancy Lowengrub, custodian for 3 Shoreham Drive, West 250 0.00054% Robin Lowengrub Dix Hills, NY 11746 Roderick C. McGeary 1911 Waverly Street 3,710 0.00799% Palo Alto, CA 94301 Ingunn T. McGregor Two Cherry Lane 8,335 0.01796% Old Greenwich, CT 06870-1902 Michael Meltzer 6362 Innsdale Drive 887 0.00191% Los Angeles, CA 90068 Martin F. Mertz 150 East 69th Street 6,700 0.01444% New York, New York 10021 Bernard J. Milano 134 MacIntyre Lane 662 0.00143% Allendale, NJ 07401 Burton M. Mirsky 21 Woodcrest Drive 4,216 0.00908% Morristown, NJ 07960 Mary Jane & Jay Patchen 9406 Mary Tucker Cove 1,324 0.00285% Memphis, TN 38133 Michael C. Plansky 156 Beach Avenue 802 0.00173% Larchmont, NY 10538 Dorothy Powers 892 Castle Falls Drive 1,528 0.00329% Atlanta, GA 30329 Henry A. Quinn 603 Benson House 145,383 0.31323% Rosemont, PA 19010 Michael J. Regan 14 Brenner Place 10,984 0.02367% Demarest, NJ 07627 Lavoy Robison 1001 Green Oaks Drive 2,469 0.00532% Greenwood Village, CO 80121 Eugene G. Schorr KPMG Peat Marwick 444 0.00096% 345 Park Avenue New York, NY 10154 William Simon KPMG Peat Marwick 12,212 0.02631% 725 South Figueroa Street Los Angeles, CA 90017 Dallas E. Smith 1018 Fourth Street, #101 222 0.00048% Santa Monica, CA 90403 Harold I. Steinberg Revocable 1221 Ranleigh Road 2,855 0.00615% Inter Vivos Trust under agreement McLean, VA 22101 dated 5/24/91 Denis J. Taura 90 Montadale Drive 8,892 0.01916% Princeton, NJ 08540 Number of Percentage Name and Identifying Number Business or Residence Address Units Held Interest - --------------------------- ----------------------------- ---------- -------- Shaileen & Timothy Tracy 111 Lampwick Lane 1,100 0.00237% Fairfield, CT 06430 Timothy P. Tracy Pension Trust 111 Lampwick Lane 1,552 0.00334% Fairfield, CT 06430 Edward W. Trott 97 Sea Beach Drive 4,176 0.00900% Stamford, CT 06902 Katharine E. Van Riper 57 Foremost Mountain Road 9,311 0.02006% Montville, NJ 07045 Eileen M. Walsh 37 Beechwood Road 449 0.00097% Irvington, NY 10533 Lillian D. Walsh 29986 Maple View Drive 2,835 0.00611% Rainier, OR 97048 Sam Yellen 22433 Oxnard Street 9,938 0.02141% Woodland Hills, CA 91367 Thomas J. Yoho 12 Indian Rock Lane 1,572 0.00339% Greenwich, CT 06830 - ----------------------------------------------------------- BERGER/LEWISTON 10/29/97 B&L Realty Investments 21790 Coolidge Highway 33,560 0.07231% Limited Partnership Oak Park, MI 48237 Berger/Lewiston Associates 21790 Coolidge Highway 1,076,594 2.31953% Limited Partnership Oak Park, MI 48237 Big Beaver-Rochester Properties 21790 Coolidge Highway 528,348 1.13833% Limited Partnership Oak Park, MI 48237 Century Realty Investment Company 21790 Coolidge Highway 99,195 0.21372% Limited Partnership Oak Park, MI 48237 Greentrees Apartments 21790 Coolidge Highway 275,905 0.59444% Limited Partnership Oak Park, MI 48237 Kingsley-Moravian Company 21790 Coolidge Highway 376,288 0.81072% Limited Partnership Oak Park, MI 48237 Stephenson-Madison Heights Company 21790 Coolidge Highway 104,541 0.22523% Limited Partnership Oak Park, MI 48237 Southpointe Square Apartments 21790 Coolidge Highway 155,623 0.33529% Limited Partnership Oak Park, MI 48237 Woodland Garden Apartments 21790 Coolidge Highway 319,860 0.68914% Limited Partnership Oak Park, MI 48237 - ----------------------------------------------------------- HILL COURT/HUDSON ARMS 10/31/97 John M. DiProsa 32 Sydenham Road 6,150 0.01325% Rochester, NY 14609 Number of Percentage Name and Identifying Number Business or Residence Address Units Held Interest - --------------------------- ----------------------------- ---------- -------- Claude S. Fedele 7 Dickinson Crossing 23,765 0.05120% Fairport, NY 14450 Anthony M. Julian 204 Angelus Drive 5,575 0.01201% Rochester, NY 14622 Natalie M. Julian 204 Angelus Drive 5,575 0.01201% Rochester, NY 14622 Joanne M. Lobozzo 1176 Hillsboro Cove Circle 164,145 0.35365% Webster, NY 14580 Geraldine B. Lynch 92 Eagle Ridge Circle 3,922 0.00845% Rochester, NY 14617 Michael E. McCusker and Elaine R. 51 Barrington Street 31,687 0.06827% McCusker, Trustees under the Michael E. Rochester, NY 14607 and Elaine R. McCusker Living Trust dated August 30, 1994 Jack P. Schifano 916 Highland Trails Avenue 3,961 0.00853% Henderson, NV 89015 - ----------------------------------------------------------- CANDLEWOOD 2/9/98 Stephen W. Hall P.O. Box 370068 90,000 0.19391% Las Vegas, NV 89137-0068 Donald H. Schefmeyer 63262 Orange Road 102,250 0.22030% South Bend, IN 46614 - ----------------------------------------------------------- PARK SHIRLINGTON/BRADDOCK LEE 2/13/98 Beverly B. Bernstein P.O. Box 25370 73,862 0.15914% Washington, DC 20007 Leona Libby Feldman 575 Greensward Lane 4,483 0.00966% Delray Beach, FL 33445 Park Shirlington Apartments c/o 11501 Huff Court 73,862 0.15914% Limited Partnership N. Bethesda, MD 20895 Lauren Mercadante 537 Hilarie Road 22,411 0.04828% St. Davids, PA 19807 Steven M. Reich 1976 Trust c/o Stephen A. Bodzin Trustee 30,295 0.06527% FBO Lisa B. Reich 1156 15th Street, NW Suite 329 Washington, DC 20005 Steven M. Reich 1976 Trust c/o Stephen A. Bodzin Trustee 30,296 0.06527% FBO Hilary L. Reich 1156 15th Street, NW Suite 329 Washington, DC 20005 Amy S. Rubenstein 76 Pierce Street 13,984 0.03013% San Francisco, CA 94117 Number of Percentage Name and Identifying Number Business or Residence Address Units Held Interest - --------------------------- ----------------------------- ---------- -------- Barton S. Rubenstein 4819 Dorset Avenue 13,984 0.03013% Chevy Chase, MD 20815 Beth Rubenstein Trustee U/T/A/ 8/9/00 451 29th Street 13,984 0.03013% San Francisco, CA 94131 Lee G. Rubenstein 4915 Linnean Avenue, NW 2,869 0.00618% Washington, DC 20008 Sarah Selsky 1801 East Jefferson Street 43,701 0.09415% Apartment 608 Rockville, MD 20852 Tower Capital, LLC 11501 Huff Court 285,811 0.61578% N. Bethesda, MD 20852 WHC Associates, LLC 11300 Rockville Pike 85,160 0.18348% Suite 908 N. Bethesda, MD 20852 - ----------------------------------------------------------- KAPLAN 4/30/98 Estate of Merrill L. Bank c/o Herbert Bank, Helen S. Bank and 19,783 0.04262% Penny Bank, Personal Representatives 200 Bradley Place, Unit 305 Palm Beach, FL 33480 Ariel Golden Behr 151 W. 88th Street 1,469 0.00316% New York, NY 10027 Doris Berliner 7 Slade Avenue 2,637 0.00568% Apartment 108 Baltimore, MD 21208 Phillip Chmar 7 Slade Avenue 3,830 0.00825% Apartment 713 Baltimore, MD 21208 Louis K. Coleman 2508 Guilford Avenue 7,152 0.01541% Baltimore, MD 21218 Paul Goldberg 7111 Park Heights Avenue, 509 0.00110% Apartment 712 Baltimore, MD 21215 Carol Golden P.O. Box 9691 2,486 0.00536% Jerusalem, Israel 91090 Joseph Goldman Maplewood Park Place 3,661 0.00789% 9707 Old Georgetown Road Apartment 1404 Bethesda, MD 20814 Dr. Milton L. Goldman 3240 Patterson Street, N.W. 8,363 0.01802% Washington, D.C. 20015-1661 Samuel Hanik 5800 Nicholson Lane 16,582 0.03573% Apartment 1-903 Rockville, MD 20852 Number of Percentage Name and Identifying Number Business or Residence Address Units Held Interest - --------------------------- ----------------------------- ---------- -------- Muriel Hettleman Revocable Trust Muriel Hettleman, Trustee 6,906 0.01488% 12613 Waterspout Court Owings Mills, MD 21117 Charles Heyman 3409 Old Post Drive 1,406 0.00303% Baltimore, MD 21208 Samuel Hillman Marital Trust Bank of America 9,758 0.02102% Business Advisory & Valuation Services P.O. Box 842056 Dallas, TX 75284-2056 Samuel Hillman Residuary Trust Bank of America 9,758 0.02102% Business Advisory & Valuation Services P.O. Box 842056 Dallas, TX 75284-2056 Arnold S. Kaplan 1001 Light Street 500 0.00108% Baltimore, MD 21230 Stanley A. Kaplan 2216 Shefflin Court 5,275 0.01137% Baltimore, MD 21209 Ellen S. Feinglass One Oak Hollow Court 5,275 0.01137% Balitmore, MD 21208 Milton Klein 1 Slade Avenue 7,305 0.01574% Apartment 706 Baltimore, MD 21208 Dr. Lee Kress 417 Barby Lane 7,152 0.01541% Cherry Hill, NJ 08003 Richard & Cheryl Kress 15 W. Aylesbery Road 7,152 0.01541% Suite 700 Timonium, MD 21093 LBK Holdings, LLC 15 W. Aylesbury Road 30,152 0.06496% Suite 700 Timonium, MD 21093 ACRK, LLC 15 W. Aylesbury Road 30,153 0.06496% Suite 700 Timonium, MD 21093 Elmer W. Leibensperger 1900 Dumont Court 859 0.00185% Timonium, MD 21093 Merrill & Natalie S. Levy 5906 Eastcliff Drive 2,637 0.00568% Baltimore, MD 21209 Gertrude S. Myerberg Family Trust 725 Mt. Wilson Lane 14,611 0.03148% Gertrude S. Myerberg, Trustee Apt. 129 Baltimore MD 21208 Bertha Pollock 7101 Longwood Drive 2,486 0.00536% Bethesda, MD 20817 Lawrence E. Putnam Family Trust 5550 Tuckerman Lane 5,424 0.01169% Apartment 432 North Bethesda, MD 20852 Number of Percentage Name and Identifying Number Business or Residence Address Units Held Interest - --------------------------- ----------------------------- ---------- -------- Stephen F. Rosenberg 3 Greenwood Place 367 0.00079% Suite 307 Baltimore, MD 21208 Z. Valeere Sass, Trustee 758 Regency Lakes Drive, E501 2,637 0.00568% Boca Raton, FL 33433 Isidore Schnaper 11 Slade Avenue 10,421 0.02245% Apartment 304 Baltimore, MD 21208 M. Gerald Sellman Revocable Trust 2 Yearling Way 18,347 0.03953% Agreement dated November 30, 1998 Lutherville, MD 21093 Albert Shapiro Revocable Trust Albert Shapiro, Trustee 13,196 0.02843% dated 10/6/89 and amended 4/20/00 100 Sunrise Avenue Palm Beach, FL 33480 Earle K. Shawe Shawe & Rosenthal 85,085 0.18332% 20 S. Charles Street Baltimore, MD 21201 Rhoda E. Silverman, Trustee R. Silverman Revoc. Trust 1,469 0.00316% 4701 Willard Avenue Apartment 1034 Chevy Chase, MD 20815 The Herbert J. Siegel Trust, 6 Windsor Court 419,094 0.90294% Herbert J. Siegel, trustee under Agreement Palm Beach, FL 33480 of Trust, dated December 4, 2001 Siegel Family, LLLP c/o Herbert J. Siegel 31,995 0.06893% 20 Pleasant Ridge Drive, Suite A Owings Mills, MD 21117 Dr. Edgar Sweren 77 Seminary Farm Road 1,018 0.00219% Timonium, MD 21093 Dr. Myra Jody Whitehouse 1 Staffordshire Road 2,085 0.00449% Cherry Hill, NJ 08003 Ms. Terry Whitehouse 3848 Harrison Street 2,085 0.00449% Washington, D.C. 20015 - ----------------------------------------------------------- RACQUET CLUB 7/7/98 Harold M. Davis 2180 Twinbrook Road 229,754 0.49501% Berwyn, PA 19312 Nicholas V. Martell Realend Properties 229,754 0.49501% 1000 Chesterbrook Blvd., Suite 100 Berwyn, PA 19312 R.C.E. Developers, Inc. 1000 Chesterbrook Blvd 4,642 0.01000% Berwyn, PA 19312 - ----------------------------------------------------------- Number of Percentage Name and Identifying Number Business or Residence Address Units Held Interest - --------------------------- ----------------------------- ---------- -------- SHERRY LAKE 7/23/98 Frances Berkowitz 29 East 64th Street 1,358 0.00293% Apartment 7D New York, New York 10021 Richard A. Eisner 1107 Fifth Avenue 10,180 0.02193% New York, New York 10128 Michael Glick 1035 Fifth Avenue 18,664 0.04021% New York, New York 10028 Ronnie Glick 1035 Fifth Avenue 1,696 0.00365% Apartment 14B New York, New York 10028 Claire Morse 240 Lee Street 5,090 0.01097% Brookline, MA 02445-5915 Enid Morse 840 Park Avenue 5,090 0.01097% #7/8A New York, New York 10021 Lester Morse, Jr. 840 Park Avenue 19,088 0.04113% #7/8A New York, New York 10021 Richard Morse 240 Lee Street 6,999 0.01508% Brookline, MA 02445 - ----------------------------------------------------------- ROLLING PARK 9/15/98 Leslie G. Berman 505 Harborview Drive 36,000 0.07756% Baltimore, MD 21230 - ----------------------------------------------------------- CARRIAGE HILL 9/29/98 Norman J. Cohen Living Trust 1547 Island Lane 17,025 0.03668% UAD 8/8/88 Bloomfield Hills, MI 48302 Rochelle Fang 253 West 73rd Street 6,767 0.01458% Apartment 14A New York, NY 10023 Aaron H. Ginsberg Living Trust Aaron H. Ginsberg, Trustee 4,597 0.00990% UAD 11/25/86 30875 River Crossing Bingham Farms, MI 48025 Anne Ginsberg Living Trust Anne Ginsberg, Trustee 4,511 0.00972% UAD 7/27/98 30875 River Crossing Bingham Farms, MI 48025 Sandra Greenstone 10918 Kirwick 28,332 0.06104% Houston, TX 77024 Sharon Hart 5377 Old Pond Way 10,215 0.02201% West Bloomfield, MI 48323 Shirley Latessa Two Fifth Avenue, #12A 9,023 0.01944% New York, NY 10011 Number of Percentage Name and Identifying Number Business or Residence Address Units Held Interest - --------------------------- ----------------------------- ---------- -------- Laurence M. Sims 50 Elder Drive 4,257 0.00917% Marquette, MI 49855 Lynn Morgan 9565 Rod Road 2,128 0.00458% Alpharetta, Georgia 30022 Vivian K. Berry and Vivian K. Berry Revocable Trust 4,256 0.00917% Milton L. Berry, Trustee 10485 Elgin Huntington Woods, MI 48070 Daniel Levenson 1000 Old Carriage Court 2,128 0.00458% Apex, NC 27502 Dave Muskovitz Associates c/o Melvn Muskovitz 34,156 0.07359% Limited Partnership 2101 Woodside Ann Arbor, MI 48104 Jerry Muskovitz 6085 Ledgeway Drive 34,156 0.07359% West Bloomfield, MI 48322 Jerome Pershin Marital Trust Helen Pershin, Trustee 22,771 0.04906% Dated 2/13/75 25225 Franklin Park Drive Franklin, MI 48025 Ran Family Limited Partnership 2025 W. Long Lake Road 9,640 0.02077% Suite 104 Troy, MI 48098 Phyllis Ring 330 E. Strawberry Drive 10,215 0.02201% Mill Valley, CA 94941 Annette Stollman 7500 N.E. Dolphin Drive 9,640 0.02077% Bainbridge Island, WA 98110 Bernard H. Stollman Living Trust Bernard H. Stollman, Trustee 29,437 0.06342% UAD 8/17/87 2025 W. Long Lake Road Suite 104 Troy, MI 48098 Gerald H. Stollman 4864 Hidden Lane 17,025 0.03668% West Bloomfield, MI 48323 Melvyn J. Stollman Trust Bernard H. Stollman, Trustee 29,481 0.06352% 2025 W. Long Lake Road Suite 104 Troy, MI 48098 Stollman Investments, LLC Gerald H. Stollman, Manager 43,071 0.09280% 2025 W. Long Lake Road Suite 104 Troy, MI 48098 West Side Real Estate Corp. Bernard H. Stollman, President 3,405 0.00734% 2025 W. Long Lake Road Suite 104 Troy, MI 48098 - ----------------------------------------------------------- Number of Percentage Name and Idendifying Number Business or Residence Address Units Held Interest - --------------------------- ----------------------------- ---------- -------- PINES OF PERINTON 9/29/98 William S. Beinecke c/o Antaeus Enterprises, Inc. 1,946 0.00419% 99 Park Avenue Suite 2200 New York, New York 10016 Robert K. Kraft c/o Chestnut Hill Management Corp. 1,946 0.00419% One Boston Place Boston, MA 02108 Robert J. Sharp 23 Misty Brook Lane 1,946 0.00419% New Fairfield, CT 06812 - ----------------------------------------------------------- DUNEDIN 11/17/98 Patricia D. Moore Trust No. 413 103 Brooksby Village Drive 4,012 0.00864% Apartment 419 Peabody, MA 01960-1467 - ----------------------------------------------------------- PSC ASSOCIATES 4/7/99 The Enid Barden Trust of Enid Barden, Trustee 9,566 0.02061% June 28, 1995 74 E. Long Lake Road Bloomfield Hills, MI 48304-2379 Fairway Property Company c/o Allan Nachman 5,324 0.01147% 100 Bloomfield Hills Parkway, Suite 200 Bloomfield Hills, MI 48304-2949 David A. Gumenick, Trustee Capital Management Trust 7,454 0.01606% 30160 Orchard Lake Road-110 Farmington Hills, MI 48334 David Herskovits 705 Whitemere Court 2,130 0.00459% Atlanta, GA 30327 Constance W. Jacob 26110 Carol Avenue 2,662 0.00574% Franklin, MI 48025 The Howard J. Leshman Revocable Howard J. Leshman, Trustee 7,839 0.01689% Trust Dated May 20, 1983 as Amended 4457 Motorway Drive and Restated on March 4, 1998 Waterford, MI 48328 Lyle Properties Limited Partnership Marc W. Pomeroy, General Partner 11,758 0.02533% 74 E. Long Lake Road Bloomfield Hills, MI 48304-2379 David K. Page 2290 First National Building 7,986 0.01721% Detroit, MI 48226 Keith J. Pomeroy Trust of 12/13/76 Keith J. Pomeroy, Trustee 24,598 0.05300% as Amended and Restated 6/28/95 74 E. Long Lake Road Bloomfield Hills, MI 48304-2379 David Sillman 380 North Old Woodward 15,000 0.03232% Suite 240 Birmingham, MI 48009 Number of Percentage Name and Idendifying Number Business or Residence Address Units Held Interest - --------------------------- ----------------------------- ---------- -------- Lionel J. Stober Trust Lionel J. Stober, Trustee 5,324 0.01147% 6013 Shawdow Lake Drive Toledo, OH 43623 Ruth Stober 6670 Vachon Court 5,324 0.01147% Bloomfield Hills, MI 48301 Jonah L. Stutz 29757 Farmbrook Villa Lane 5,324 0.01147% Southfield, MI 48034 Leah Stutz 734 Bay Street, Apartment A 2,662 0.00574% SanFrancisco, CA 94109 Steven I. Victor Trust 401 S. Old Woodward 5,324 0.01147% Suite 333 Birmingham, MI 48009 Woodridge Properties Limited Partnership Stephen R. Polk, Managing General 15,972 0.03441% Partner 26955 Northwestern Highway Southfield, MI 48034 - ----------------------------------------------------------- CRC 7/1/99 Richard Bacas 2413 N. Edgewood Street 2,136 0.00460% Arlington, VA 22207-4926 Julie Bender Silver 1120 Connecticut Ave NW, #1200 7,854 0.01692% Washington, DC 20036 David Bender 1120 Connecticut Ave NW, #1200 7,854 0.01692% Washington, DC 20036 Jay Bender 12721 Maidens Bower Dirve 6,283 0.01354% Potomac, MD 20854-6052 Lisa Bender-Feldman 2579 Eagle Run Lane 6,283 0.01354% Ft. Lauderdale, FL 33327 Scott M. Bender Revocable 12700 Glen Mill Road 6,283 0.01354% Trust dated 4/20/98 Potomac, MD 20854 Barbara Bender-Laskow 1120 Connecticut Avenue, NW #1200 7,854 0.01692% Washington, DC 20036 Caplin Family Investments, LLC c/o Mortimer Caplin 111,705 0.24067% Caplin & Drysdale One Thomas Circle Washington, DC 20005 Michael A. Caplin 8477 Portland Place, NW 26,284 0.05663% McLean, VA 22102 Jeremy O. Caplin 360 Ardwood Road 39,425 0.08494% Earlysville, VA 22936 Catherine Caplin 1219 Sunset Plaza Drive, #7 32,854 0.07078% Los Angeles, CA 90069-1254 The Caplin Family Trust P.O. Box 854 32,854 0.07078% Pebble Beach, CA 93953 Number of Percentage Name and Identifying Number Business or Residence Address Units Held Interest - --------------------------- ----------------------------- ---------- -------- Community Realty Company, Inc. 6305 Ivy Lane, Suite 210 160,360 0.34550% Greenbelt, MD 20770 Benedict C. Cosimano 3505 Fulton Street, NW 2,136 0.00460% Washington, DC 20007 Samuel Diener, Jr. Revocable Trust Samuel Diener, M.D., Trustee 16,758 0.03611% 786 Eastern Point Road Annapolis, MD 21401 Clarence Dodge, Jr. Revocable Trust 5146 Palisade Lane 154,036 0.33187% dated 1/10/92 Washington, DC 20016 Marcia Esterman Living Trust Marcia Esterman, Trustee 7,900 0.01702% 5709 Mayfair Manor Drive Rockville, MD 20852 Lydia Funger McClain 12201 Lake Potomac Terrace 21,807 0.04698% Potomac, MD 20854 William S. Funger 6 Great Elm Court 21,807 0.04698% Potomac, MD 20854 Keith P. Funger 10530 South Glen Road 21,807 0.04698% Potomac, MD 20854 Morton Funger 1650 Tysons Boulevard, #620 150,898 0.32511% McLean, VA 22102 Bernard S. Gewirz 1666 K Street, NW 27,219 0.05864% Suite 430 Washington, DC 20006 Bernard and Sarah Gewirz Foundation 1666 K Street, NW 39,000 0.08403% Suite 430 Washington, DC 20006 Steven B. Gewirz 1666 K Street, NW 7,150 0.01540% Suite 430 Washington, DC 20006 Michael AK Gewirz 1666 K Street, NW 9,534 0.02054% Suite 430 Washington, DC 20006 Diane Goldblatt Apt 420 5,713 0.01231% 10500 Rockville Pike Rockville, MD 20852 Herbert Goldblatt 11936 Canfield Road 5,713 0.01231% Potomac, MD 20854 Barbara Goldman 3210 N. Leisure World Blvd. 7,900 0.01702% Apartment 217 Silver Spring, MD 20906 Theodore L. Gray 1200 Jossie Lane 1,971 0.00425% McLean, VA 22102 Eileen Greenberg 1120 Connecticut Ave NW, #1200 7,854 0.01692% Washington, DC 20036 Number of Percentage Name and Identifying Number Business or Residence Address Units Held Interest - --------------------------- ----------------------------- ---------- -------- Hermen Greenberg 7501 Wisconsin Avenue 1,006,836 2.16924% Suite 1103 Bethesda, MD 20814 William Kaplan, Trustee 19674 Waters End Drive, #1002 83,779 0.18050% and all successor trustees of Boca Raton, Florida 33434 the William Kaplan Revocable Trust dated May 17, 2000 Herman Kraft Sunrise Assisted Living, #212 2,628 0.00566% 5910 Wilson Blvd. Arlington, VA 22205 Patricia A. Mancuso 11912 Tallwood Court 493 0.00106% Potomac, MD 20854 Charles and Lupe Mancuso, T.B.T.E. 9421 Reach Road 493 0.00106% Potomac, MD 20854 Melanie F. Nichols 21 Crescent Lane 21,801 0.04697% San Anselmo, CA 94960 Jeffrey W. Ochsman 9505 Newbridge Drive 21,807 0.04698% Potomac, MD 20854 Bruce D. Ochsman 8905 Hunt Valley Court 21,807 0.04698% Potomac, MD 20854 Ralph Ochsman 1650 Tysons Boulevard, #620 150,898 0.32511% McLean, VA 22102 Michael P. & Esther K. Ochsman Tenants By the Entirety 21,807 0.04698% P.O. Box 2948 Ketcham, ID 83340 Sharon Lynn Ochsman c/o Terri Weisenberger 21,807 0.04698% 1650 Tysons Blvd. #620 McLean, VA 22102 The Wendy A. Ochsman Family Trust Jeffrey W. Ochsman and 21,807 0.04698% Bruce D. Ochsman, Trustee 8905 Hunt Valley Court Potomac, MD 20854 Ralmor Corporation c/o Terri Weisenberger 392,503 0.84565% 1650 Tysons Blvd., #620 McLean, VA 22102 Jerome Shapiro 9511 Orion Court 7,903 0.01703% Burke, VA 22015 Sophie B. Shapiro Family Trust c/o Bobbie Goldman 62,369 0.13437% 3210 N. Leisure World Blvd. Apartment 217 Silver Spring, MD 20906 Albert H. Small 7501 Wisconsin Avenue 1,006,836 2.16924% Suite 1103 Bethesda, MD 20814 David Stearman 17094 Ryton Lane 83,779 0.18050% Boca Raton, FL 33496 Number of Percentage Name and Identifying Number Business or Residence Address Units Held Interest - --------------------------- ----------------------------- ---------- -------- MIDATLANTIC 7/15/99 Arthur Baitch 119 Swan Hill Court 14,785 0.03185% Baltimore, MD 21208 Stuart Brager 6 Schloss Court 4,290 0.00924% Baltimore, MD 21208-1926 David C. Browne 910 Rambling Drive 77,222 0.16638% Baltimore, MD 21228 C. Coleman Bunting, Jr. RD 1, Box 140 15,369 0.03311% Selbyville, DE 19975 Genine Macks Fidler 4750 Owings Mills Blvd 101,126 0.21788% Owings Mills, MD 21117 Josh E. Fidler 4750 Owings Mills Blvd 72,539 0.15629% Owings Mills, MD 21117 Thomas O'R. Frech 16 Deer Woods Ct 9,473 0.02041% Glen Arm, MD 21057 Melvin Friedman, M.D. 8108 Anita Rd. 9,000 0.01939% Baltimore, MD 21208 George H. Greenstein 7724 Grasty Rd. 9,771 0.02105% Baltimore, MD 21208 Mildred Hemstetter 47-H Queen Anne Way 2,123 0.00457% Chester, MD 21619 Sanford G. Jacobson Suite 616, 901 Dulaney Valley Rd. 17,620 0.03796% Towson, MD 21204 James C. Johnson and 3955 Olean Gateway 2,145 0.00462% Sandra J. Johnson Linkwood, MD 21835 William R. Kahn 7903 Long Meadow Rd. 8,279 0.01784% Baltimore, MD 21208 Kanode Partnership 8213 A Stevens Rd. 77,222 0.16638% Thurmont, MD 21788 Allan Krumholz and 3908 N. Charles Street 4,290 0.00924% Francine Krumholz Apartment 603 Baltimore, MD 21218 Burton H. Levinson 11 Slade Ave #316 13,000 0.02801% Baltimore, MD 21208 Eugene K. Lewis and 842 Wyndemere Way 3,600 0.00776% Suzanne D. Lewis Naples, FL 34105 Arthur M. Lopatin Revocable Trust 11312 Wingfood Dr. 4,931 0.01062% Boynton Beach, FL 33437 Number of Percentage Name and Identifying Number Business or Residence Address Units Held Interest - --------------------------- ----------------------------- ---------- -------- Lawrence Macks 4750 Owings Mills Blvd 173,664 0.37416% Owings Mills, MD 21117 Martha Macks 3908 N. Charles St., #500 90,886 0.19581% Baltimore, MD 21218 Morton J. Macks 4750 Owings Mills Blvd 343,442 0.73995% Owings Mills, MD 21117 Joseph W. Mosmiller 687 Ardmore Lane 4,290 0.00924% Naples, FL 34108 Oscar Camp 7560 Fairmont Court 4,991 0.01075% Boca Raton, FL 33496 Orlinsky Family Limited Partnership 899 N.E. 32nd Street 2,145 0.00462% Boca Raton, FL 33431 Albert Perlow 7903 Winterset Ave. 4,290 0.00924% Baltimore, MD 21208 Anne Louise Perlow 10 Talton Court 6,435 0.01386% Baltimore, MD 21208 Alleck A. Resnick 3402 Old Forest Rd. 4,290 0.00924% Harriet Resnick Baltimore, MD 21208 Stanley Safier 6210 Frankford Ave. 4,290 0.00924% Baltimore, MD 21206 Arnold Sagner PO Box 416 11,065 0.02384% Ellicott City, MD 21041 Donald I. Saltzman 3407 Engelmeade Rd. 5,434 0.01171% Baltimore, MD 21208 Murray Saltzman Revocable Living c/o Murray Saltzman 2,145 0.00462% Trust u/a/d 9/5/95 8216 N.W. 80th Street Tamarac, FL 33321 William G. Scaggs 1520 Royal Palm Way 8,579 0.01848% Boca Raton, FL 33432 Earle K. Shawe c/o Shawe & Rosenthal 29,645 0.06387% 20 S. Charles Street Baltimore, MD 21201 Steven D. Shawe Shawe & Rosenthal 5,014 0.01080% 20 S. Charles Street Baltimore, MD 21201 Karolyn Solomon 3706 Breton Way 4,991 0.01075% Baltimore, MD 21208-1707 William B. Warren Dewey Ballantine LLP 2,145 0.00462% 1301 Avenue of Americas New York, NY 10019 Robert M. Wertheimer 8 Greenlea Drive 2,145 0.00462% Baltimore, MD 21208 Number of Percentage Name and Identifying Number Business or Residence Address Units Held Interest - --------------------------- ----------------------------- ---------- -------- - ----------------------------------------------------------- RIDLEY PORTFOLIO 7/28/99 Leonard Klorfine 1105 Bryn Tyddyn Drive 170,312 0.36694% Gladwyne, PA 19035 Klorfine Interest, Ltd. 1105 Bryn Tyddyn Road 157,813 0.34001% Gladwyne, PA 19035 - ----------------------------------------------------------- COMMUNITY INVESTMENT STRATEGIES 7/30/99 Community Investment Strategies, Inc. 120 Albany Street 44,150 0.09512% 8th Floor New Brunswick, New Jersey 08901 - ----------------------------------------------------------- OLD FRIENDS 2/1/00 Louis J. Siegel The Siegel Organization 143 0.00031% 20 Pleasant Ridge Drive Suite A Owings Mills, MD 21117 Andrew N. Siegel 71 Beecham Court 143 0.00031% Owings Mills, MD 21117 - ----------------------------------------------------------- GATESIDE 3/15/00 Ronald Altman 38 Crawford Road 163,929 0.35319% Harrison, NY 10528 Cottonwood Associates c/o The Gateside Corporation 2,446 0.00527% 555 Theodore Fremd Avenue Suite B-304 Rye, New York 10580 Estate of David M. Dolgenos Ronald Altman, Executor 121,361 0.26147% Weissbarth, Altman & Michaelson 156 W. 56th Street New York, New York 10019 Norman Feinberg c/o The Gateside Corporation 163,925 0.35318% 555 Theodore Fremd Avenue Suite B-304 Rye, New York 10580 King Road Associates c/o The Gateside Corporation 22,899 0.04934% 555 Theodore Fremd Avenue Suite B-304 Rye, New York 10580 Edith Lipiner 300 E. 74th Street 1,868 0.00402% Apartment 28D New York, New York 10021 Number of Percentage Name and Identifying Number Business or Residence Address Units Held Interest - --------------------------- ----------------------------- ---------- -------- Sagar Points, Inc. c/o Parker Chapin - J. Poretsky 58,858 0.12681% Parker Chapin LLP 405 Lexington Avenue New York, New York 10174 Staf-Arms Corp. c/o Parker Chapin - J. Poretsky 225,689 0.48625% Parker Chapin LLP 405 Lexington Avenue New York, New York 10174 Helene Sterling Trust Under Helene Sterling, Trustee 6,398 0.01378% Trust dated 4/14/89 12 Schoolhouse Lane Great Neck, New York 11020 - ----------------------------------------------------------- DEERFIELD WOODS/MACOMB 3/22/00 Burton D. Farbman c/o The Farbman Group 1,817 0.00391% 28400 Northwestern Highway 4th Floor Southfield, MI 48034 Macomb Apartments Limited Partnership David Schostak 151,672 0.32678% 25800 Northwestern Highway Suite 750 Southfield, MI 48075 Deerfield Woods Venture Limited David Schostak 65,416 0.14094% Partnership 25800 Northwestern Highway Suite 750 Southfield, MI 48075 OREO Investment Company, LLC c/o Eric Stein 5,451 0.01174% 2230 Francisco #112 San Francisco, CA 94123 - ----------------------------------------------------------- ELMWOOD TERRACE 6/30/00 Lois M. Brodsky 55 Woods Lane 29,324 0.06318% Boynton Beach, Florida 33436 Roni Slavin Pekins 10 Beards Landing 5,865 0.01264% Durham, New Hampshire 03824 Evelyn Schabb P.O. Box 1377 23,824 0.05133% Brooklandville, MD 21022 The Slavin Children Trust c/o Richard L. Philipson, Trustee 58,649 0.12636% 8601 Georgia Avenue, Suite 1001 Silver Spring, MD 20910 Doris E. Slavin 6912 Barrett Lane 117,297 0.25272% Bethesda, MD 20814 James M. Slavin 6308 Lenox Road 14,662 0.03159% Bethesda, MD 20817 Jeffrey Zane Slavin 5706 Warwick Place 5,865 0.01264% Chevy Chase, MD 20815 Number of Percentage Name and Identifying Number Business or Residence Address Units Held Interest - --------------------------- ----------------------------- ---------- -------- Jonathan M. Slavin 6308 Lenox Road 14,662 0.03159% Bethesda, MD 20817 Sanford Slavin 6912 Barrett Lane 158,352 0.34117% Bethesda, MD 20814 SS Associates, LLC c/o Sanford Slavin, Member 5,865 0.01264% 200-A Monroe Street, Suite 105 Rockville, MD 20850 - ----------------------------------------------------------- S&S REALTY 9/11/00 Julius Schneider Testamentary Trust 124 Cedarhurst Avenue 26,002 0.05602% Cedarhurst, NY 11516 Carol Schneider 755 Lakeside Blvd. 17,502 0.03771% Boca Raton, FL 33434 - ----------------------------------------------------------- HAMPTON COURT 9/29/00 David & Lily Broner 4686 Maura Lane 2,365 0.00510% West Bloomfield, MI 48323 Nettie Cohen 15075 West Lincoln Drive #1028 1,182 0.00255% Oak Park, MI 48237 Ada Eisenfeld 38 Breitmeyer Place 1,182 0.00255% Mount Clemens, MI 48043 William Farber 32640 Whatley Road 2,365 0.00510% Franklin, MI 48025 Richard Frank 25631 Avondale 2,365 0.00510% Dearborn Hts., MI 48125 Sam Frank 3467 Sutton Place 1,182 0.00255% Bloomfield Hills, MI 48301 Joel S. Golden 4661 McEwen Drive 394 0.00085% Bloomfield Hills, MI 48302 Harvey Gordon 1348 Charrington Road 2,365 0.00510% Bloomfield Hills, MI 48301 Robert J. Gordon One Woodward Avenue 394 0.00085% Suite 2400 Detroit, MI 48226 Seymour Gordon Living Trust 31090 Nottingham 1,182 0.00255% Franklin, MI 48025 Jeffrey G. Heuer c/o Jaffe, Raitt, Heuer 394 0.00085% One Woodward Avenue, Suite 2400 Detroit, MI 48226 Austin Kanter 100 Galleria Office Centre #401 2,365 0.00510% Southfield, MI 48034 Number of Percentage Name and Identifying Number Business or Residence Address Units Held Interest - --------------------------- ----------------------------- ---------- -------- Ellsworth & Janet Levine 8315 Lincoln Drive 2,365 0.00510% Huntington Woods, MI 48043 Stanford Morris Revocable Trust, U/T/A 4210 N.W. 24th Way 2,365 0.00510% dated July 10, 1980 Boca Raton, FL 33431 Cecil G. Raitt 28470 S. Harwich 394 0.00085% Farmington Hills, MI 48334 Gary Shapiro 7001 Orchard Lake Road #200 2,122 0.00457% West Bloomfield, MI 48322 The Harry Shapiro Revocable Trust 4786 Tara Court 4,487 0.00967% under agreement dated January 3, 1990, West Bloomfield, MI 48323 as amended Richard Silverman 7111 Lindenmere 2,365 0.00510% Bloomfield Hills, MI 48301 Lawrence K. Snider 1320 N. State Parkway 394 0.00085% Chicago, IL 60610 Gerald Timmis 4733 West Wickford 1,182 0.00255% Bloomfield Hills, MI 48302 Arthur A. Weiss One Woodward Avenue 394 0.00085% Suite 2400 Detroit, MI 48226 Louis & Crystal Whitaker 4798 S. Florida. Avenue #406 2,365 0.00510% Lakeland, FL 33813 Eleanor Thal Wolf, Trustee of the 1896 Pine Ridge Court 2,365 0.00510% Eleanor Thal Wolf Revocable Living Trust Bloomfield Hills, MI 48302 U/A/D dated January 15, 1991 - ----------------------------------------------------------- BAYBERRY PLACE 9/29/00 John K. Rye 1301 W. Long Lake Road 88,247 0.19013% Suite 190 Troy, MI 48098 - ----------------------------------------------------------- CYPRESS PLACE 12/27/00 Deborah M. Allen 1171 Drewsbury Court 2,131 0.00459% Smyrna, GA 30080 Seymour Bagan Trust 4220 W. Chase Avenue 6,443 0.01388% Lincolnwood, IL 60712 Bank One Trust Company, NA P.O. Box 37 8,738 0.01883% as Trustee of the Anthony J. DelBianco Westerville, OH 43086-0037 Trust Bernard Ecker 38304 N. North Shore Avenue 5,155 0.01111% Beach Park, IL 60087 Irving M. Friedman 5519 Hyde Park Blvd. 4,123 0.00888% Chicago, IL 60637 Number of Percentage Name and Identifying Number Business or Residence Address Units Held Interest - --------------------------- ----------------------------- ---------- -------- Martin L. Gecht 1110 N. Lakeshore Drive #34 13,287 0.02863% Chicago, IL 60611-1054 Robert D. Gecht 852 W. George 1,031 0.00222% Chicago, IL 60657 Gail Goldstein 1111 Crofton 1,288 0.00278% Highland Park, IL60035 Esther Steinback Kane 1300 N. Lake Shore Drive 4,795 0.01033% Apartment 9D Chicago, IL 60610 Harold A. Katz 1180 Terrace Ct. 4,123 0.00888% Glencoe, IL 60022 Franklin Leibow and Shirley Leibow, as 2142 Magnolia Lane 4,639 0.00999% co-trustees of Trust A of the Hilton and Highland Park, IL 60035 Shirley G. Leibow Revocable Trust Carol Linch 284 Hastings Road 1,288 0.00278% Highland Park, IL 60035 Miriam Lutwak Revocable Trust 1764 Lake Avenue 2,577 0.00555% Highland Park, IL 60035 Sonia D. Nathan 10155 Collins Avenue #206 5,155 0.01111% Bal Harbour, FL 33154 Gladys Newman 4001 Hillcrest Drive 2,577 0.00555% Apartment 417 Hollywood, FL 33021 Lawrence Perlman 180 E. Pearson Street 2,320 0.00500% Apartment 4106 Chicago, IL 60611 Jerome Schur, Trustee 2416 Meadow Drive South 1,031 0.00222% Wilmette, IL 60091 Manford Steinfeld 499 Merchandise Mart 2,320 0.00500% Chicago, IL 60654 Bernard R. Wolf 3504 Lakeview Drive 2,763 0.00595% Hazelcrest, IL 60429 Jonathan C. Wolf 7228 Werkner Road 2,131 0.00459% Chelsea, MI 48118 - ----------------------------------------------------------- WOODHOLME 3/20/01 Edward Lederberg 6113 Clearwood Road 20,470 0.04410% Bethesda, MD 20817 Jacob Lehrman Testamentary Trust Jacob Lehrman Testamentary Trust 10,235 0.02205% "A" Fbo Isabelle Scott "A" Fbo Isabelle Scott c/o Sun Trust Bank P.O. Box 85144 Richmond, VA 23285-5144 Number of Percentage Name and Identifying Number Business or Residence Address Units Held Interest - --------------------------- ----------------------------- ---------- -------- Jacob Lehrman Testamentary Trust Jacob Lehrman Testamentary Trust 10,235 0.02205% "B" Fbo Heidi L. Berry "B" Fbo Heidi L. Berry c/o Sun Trust Bank P.O. Box 85144 Richmond, VA 23285-5144 Jacob Lehrman Testamentary Trust Jacob Lehrman Testamentary Trust 10,235 0.02205% "C" Fbo Samuel M. Lehrman "C" Fbo Samuel M. Lehrman c/o Sun Trust Bank P.O. Box 85144 Richmond, VA 23285-5144 Jacob Lehrman Testamentary Trust Jacob Lehrman Testamentary Trust 10,235 0.02205% "D" Fbo Robert F. Lehrman "D" Fbo Robert F. Lehrman c/o Sun Trust Bank P.O. Box 85144 Richmond, VA 23285-5144 Charles P. Liff Revocable Trust c/o Edward Lederberg, Trustee 20,470 0.04410% 6113 Clearwood Road Bethesda, MD 20817 - ----------------------------------------------------------- VIRGINIA VILLAGE 6/1/01 Brown Family Partnership c/o Donald Brown 22,737 0.04899% 5301 Wisconsin Avenue, NW Suite 300 Washington, DC 20015 Jeanne Clayman Grantor Annuity Trust 5600 Wisconsin Avenue #306 60,961 0.13134% Chevy Chase, MD 20815 Melvin Clayman 16584 Ironwood Drive 127,932 0.27563% Delray Beach, FL 33445 Stanley C. Clayman 5600 Wisconsin Avenue #306 6,011 0.01295% Chevy Chase, MD 20815 Stanley S. Clayman Grantor Annuity Trust 5600 Wisconsin Avenue #306 60,961 0.13134% Chevy Chase, MD 20815 Joseph Gildenhorn 2030 24th Street, NW 22,737 0.04899% Washington, DC 20008 Helen Keyes Trust, U/T/A 4680 Fair Hill Lane 123,219 0.26548% dated April 4, 2002 Charlottesvile, VA 22903 Jerome W. Keyes, Jr. 7905 Derbyshire Lane 8,021 0.01728% Fairfax Station,VA 22039 The Dale and Linda Kerns Living Trust 8658 Pine Stake Road 24,043 0.05180% Dated April 21, 2000 Rhoadesville, VA 22542 Jerome W. and Barbara D. Keyes, Jr. 7905 Derbyshire Lane 12,021 0.02590% Fairfax Station, VA 22039 Sharon Keyes Skaggs 238 Castle Pines Drive 24,043 0.05180% Kerrville, TX 78028 Number of Percentage Name and Identifying Number Business or Residence Address Units Held Interest - --------------------------- ----------------------------- ---------- -------- J. Webb, Inc. 7857 Heritage Drive 62,052 0.13369% Suite 300 Annandale, VA 22003 John C. Webb Revocable Trust 7857 Heritage Drive 6,011 0.01295% Suite 300 Annandale, VA 22003 Shauna M. and Raymond Wertheim 7008 Fawn Trail Ct. 4,560 0.00982% Bethesda, MD 20817 - ----------------------------------------------------------- CIDER MILL 9/27/02 JBG-Hamlet Associates, L.L.C. 5301 Wisconsin Avenue, NW 326,517 0.70348% Suite 300 Washington, DC 20015 ------------------------------------ TOTAL UNITS/INTERESTS 46,414,249.899 100.00%
EX-10 8 mtamendmentthirdquarter.txt AMENDMENT 2 TO CREDIT AGREEMENT AMENDMENT NO. 2 TO CREDIT AGREEMENT This AMENDMENT NO. 2 TO CREDIT AGREEMENT (this "Amendment No. 2") is made and entered into as of the 1st day of September, 2002 by and between HOME PROPERTIES OF NEW YORK, L.P. (the "Borrower") and MANUFACTURERS AND TRADERS TRUST COMPANY, as Administrative Agent (in such capacity, the "Administrative Agent"), for each of the lenders (the "Lenders") now or hereafter party to the Credit Agreement referenced below. R E C I T A L S: A. The Borrower, the Administrative Agent, Manufacturers and Traders Trust Company ("M&T") and Citizens Bank of Rhode Island ("CBRI") entered into a Credit Agreement dated as of August 23, 1999 (the "1999 Credit Agreement"), pursuant to which the Lenders agreed to make certain revolving credit and letters of credit facilities available to the Borrower. B. On or about July 12, 2000, M&T assigned to Chevy Chase Bank, FSB ("CCB") a portion of its Commitment which constituted 15% of all Commitments and loans previously made pursuant thereto. C. The Borrower, the Administrative Agent, M&T, CBRI and CCB entered into Amendment No. 1 to Credit Agreement, dated as of September 6, 2000, ("Amendment No. 1") pursuant to which certain amendments to the 1999 Credit Agreement were made. The 1999 Credit Agreement as amended by Amendment No. 1 and as hereby amended and as from time to time further amended, supplemented, modified, replaced or restated is hereinafter referred to as the "Credit Agreement." D. Borrower has requested the Lenders to further amend the Credit Agreement as provided herein and subject to the terms and conditions set forth herein, and the Required Lenders are willing to amend the Credit Agreement as set forth herein. Amendments made by Amendment No. 1 are hereinafter restated with any further modification or amendments made by this Amendment No. 2. P R O V I S I O N S: NOW, THEREFORE, in consideration of any prior extension of credit by the Lenders to Borrower, and/or in consideration of the Lenders having entered into the Credit Agreement with Borrower, and in consideration of the mutual promises set forth below, Borrower, Administrative Agent and the Lenders hereby agree as follows: 1. Definitions. The term "Credit Agreement" as used herein and in the Loan Documents shall mean the Credit Agreement as hereby amended and modified. Any capitalized terms used herein without definition shall have the meaning set forth in the Credit Agreement. 2. Amendment Effective Date. This Amendment No. 2 shall be effective on the later of September 1, 2002 or the first date that the following conditions have been satisfied (the "Effective Date"): 2.1 The Administrative Agent shall have received a fully executed counterpart of this Amendment No.2 from the Lenders, the Borrower and the Guarantor and the fully executed Notes from the Borrower. 2.2 The Administrative Agent shall have received an opinion of counsel to the Borrower and the Guarantor acceptable to it in its sole discretion and such other certificates, instruments and other writings pertaining to the Borrower and the Guarantor as it shall require in connection herewith. 2.3 The Administrative Agent shall have received payment in immediately available funds of any and all fees agreed to between the Borrower and the Administrative Agent and all out-of-pocket expenses incurred by the Administrative Agent in connection with the preparation, negotiation and execution of this Amendment No. 2 and related documents. 3. Amendment of Certain Provisions of the Credit Agreement. Subject to the terms and conditions set forth herein, the Credit Agreement is hereby amended as set forth below: (a) Section 1.01 of the Credit Agreement is hereby amended to amend and restate in its entirety the definitions of "Applicable Eurodollar Margin," "Capital Expenditure Reserve Account," "Commitment," "Fixed Charges," "Maturity Date," "Management Company" and "Maximum Availability," and "Total Property Value" to read as follows: "Applicable Eurodollar Margin" means, as of any date of determination, the percentage set forth below under the appropriate heading corresponding to an "implied" or "corporate" rating as rated by Fitch IBCA ("Fitch IBCA") and/or S&P (the "S&P Rating") and/or Moody's (the "Moody's Rating" and, each of the Fitch IBCA, S&P Rating and the Moody's Rating referred to herein as a "Rating"). Rating Service Rating Applicable Eurodollar Margin BBB+ 105 basis points BBB 115 basis points BBB- 125 basis points The Administrative Agent shall determine the Applicable Eurodollar Margin from time to time in accordance with the above table and notify the Borrower and the Banks of such determination from time to time. In the event the Borrower is Rated by two Rating Services and there is a different Rating between the two Rating Services, the lower Rating from the two Rating Services shall be used to determine the Applicable Eurodollar Margin. In the event the Borrower is Rated by more than two Rating Services, the lower Rating, of the two highest Ratings, shall be used to determine the Applicable Eurodollar Margin. In the event the Rating by any Rating Service is not in the BBB range, the Applicable Eurodollar Margin shall be (i) 105 basis points if the Rating is above BBB+ or (ii) 125 basis points if the Rating is below BBB-. In the event the Borrower ceases to be Rated by any Rating Service, a Rate equivalent to the most recent Rating of the Borrower by any Rating Service shall be used to determine the Applicable Eurodollar Margin. Any necessary adjustment in the Applicable Eurodollar Margin pursuant to the terms hereof, shall become effective immediately upon any change in a Rating. "Capital Expenditure Reserve Amount" means, for any period, an amount equal to (i) $300 multiplied by the number of apartment units contained in all Projects multiplied by (ii) a fraction, the numerator of which is equal to the number of days in such period and the denominator of which is equal to 365. "Commitment" means, with respect to each Lender, the commitment of such Lender to make Revolving Loans and to acquire participations in Letters of Credit hereunder, expressed as an amount representing the maximum aggregate amount of such Lender's Revolving Credit Exposure hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.07 and (b) reduced or increased from time to time pursuant to assignments by or to such lender pursuant to Section 9.04. The initial amount of each Lender's Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender shall have assumed its Commitment, as applicable. The initial aggregate amount of the Lenders' Commitments is $115,000,000. "Fixed Charges" means, with respect to any fiscal period, the sum of (i) Total Interest Expense and (ii) the aggregate of all scheduled principal payments on Indebtedness made or required to be made during such fiscal period for the Consolidated Businesses (but excluding balloon payments of principal due upon the stated maturity of an Indebtedness) and (iii) the aggregate of all dividends declared and payable on any of the Company's, the Borrower's or any of their Subsidiaries' preferred stock, convertible preferred stock or preferred partnership units, as the case may be, provided, however, that the distributions payable on the currently outstanding Class A Limited Partnership Interests, Class B Limited Partnership Interests, Class C Limited Partnership Interests, and Class D Limited Partnership Interests of the Borrower shall not be included in this clause (iii). "Management Company" means Home Properties Management, Inc. and Home Properties Resident Services, Inc., both Maryland corporations of which no less than 95% of the issued and outstanding capital stock is and shall continue to be owned, beneficially and of record, by the Borrower. "Maturity Date" means September 1, 2005, unless (i) the Borrower advises the Administrative Agent on or before June 1, 2005, in writing of its desire to extend the Maturity Date and pays the Administrative Agent an extension fee (the "Extension Fee") equal to the product of the Commitment and 15 basis points, and (ii) there exists no Event of Default under the Credit Agreement or any of the other Loan Documents, in which case "Maturity Date" means September 1, 2006. Upon payment, the Extension Fee shall be fully earned and non-refundable. "Maximum Availability" means the lesser of (a) $115,000,000 or (b) the sum of (i) 60% of the Total Property Value of Unencumbered Eligible Projects plus (ii) 60% of the Total Property Value of Encumbered Eligible Projects minus the amount of any Secured Indebtedness affecting such Projects, provided that such amount in this clause (ii) shall not be less than zero. "Total Property Value" means, as of any date, the sum of (i) with respect to all Eligible Projects which have been owned by the Borrower for not less than four full consecutive calendar quarters, as of the first day of each fiscal quarter for the immediately preceding consecutive four calendar quarters, an amount equal to Adjusted NOI relating to such Eligible Project for such period divided by an annual interest rate equal to 9.0% and (ii) with respect to all Eligible Projects which have been owned by the Borrower for less than four full consecutive calendar quarters, an amount equal to the cost of acquiring such Eligible Projects less reasonable and customary transaction costs incurred in connection with such acquisition. (b) Section 1.01 of the Credit Agreement is further amended to insert the following ------------- definitions: "Rating Service" means Fitch IBCA Rating or any other nationally recognized, independent, securities rating service acceptable to the Agent. "Total Unencumbered Value" means, as of any measurement date, the sum of (i) with respect to all Unencumbered Eligible Projects which have been owned by the Borrower, as of the measurement date, for not less than four (4) full consecutive calendar quarters, an amount equal to Adjusted NOI for such Unencumbered Eligible Project for the immediately preceding four (4) consecutive calendar quarters as of the measurement date, divided by 9.0%; (ii) with respect to all Unencumbered Eligible Projects which have been owned by the Borrower for less than four (4) full consecutive calendar quarters as of the measurement date, an amount equal to the cost of acquiring such Unencumbered Eligible Projects less reasonable and customary transaction costs incurred in connection with such acquisition and (iii) an amount equal to the EBITDA derived from management and development activities of the Consolidated Businesses for the immediately preceding consecutive four (4) calendar quarters as of the measurement date divided by 15%, however, not to exceed $20 million. The sum of (i) and (ii) shall never fall below $100,000,000. "Unsecured Indebtedness" means, for any applicable period, without duplication, (a) all obligations for borrowed money or advances of any kind, (b) all obligations evidenced by bonds, debentures, notes or similar instruments, and (c) all obligations upon which interest charges are customarily paid, that are not secured by a Lien. "Annual Facility Fee Rate" means, as of any date of determination, the percentage set forth below under the appropriate heading corresponding to the Rating Service Rating Rating Service Rating Annual Facility Fee --------------------- -------------------- BBB+ 10 basis points BBB 15 basis points BBB- 20 basis points The Administrative Agent shall determine the Annual Facility Fee Rate from time to time in accordance with the above table and notify the Borrower and the Lenders of such determination from time to time. In the event the Borrower is Rated by two Rating Services and there is a different Rating between the two Rating Services, the lower Rating from the two Rating Services shall be used to determine the Annual Facility Fee Rate. In the event the Borrower is Rated by more than two Rating Services, the lower Rating, of the two highest Ratings, shall be used to determine the Annual Facility Fee Rate. In the event the Rating by any Rating Service is not in the BBB range, the Annual Facility Fee Rate shall be (i) 10 basis points if the Rating is above BBB+; or (ii) 20 basis points if the Rating is below BBB-. In the event the Borrower ceases to be Rated by any Rating Service, a Rate equivalent to the most recent Rating of the Borrower by any Rating Service shall be used to determine the Annual Facility Fee Rate. Any necessary adjustment in the Annual Facility Fee Rate pursuant to the terms hereof, shall become effective immediately upon any change in a Rating. (c) Section 2.10(b) of the Credit Agreement is hereby deleted in its entirety and replaced ---------------- with the following: "(b) Borrower agrees to pay to the Administrative Agent for the account of each Lender, an annual facility fee, which as of the measurement date shall accrue at a rate per annum based on the Annual Facility Fee Rate. The annual facility fee shall be the product of the Commitment of such Lender during the period from and including the Effective Date to but excluding the date on which such Commitment terminates and the Annual Facility Fee Rate; provided that, if such Lender continues to have any Revolving Credit Exposure after its Commitment terminates, then such annual facility fee shall continue to accrue on the daily amount of such Lender's Revolving Credit Exposure from and including the date on which its Commitment terminates to but excluding the date on which such Lender ceases to have any Revolving Credit Exposure. Accrued annual facility fees shall be payable in arrears on the last day of March, June, September and December of each year and on the date on which the Commitments terminate, commencing on the first such date to occur after the date hereof, provided that any annual facility fees accruing after the date on which the Commitments terminate shall be payable on demand. All annual facility fees shall be computed on the basis of a year of three hundred sixty (360) days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). Any necessary adjustment in the annual facility fee pursuant to the terms hereof, shall become effective immediately upon any change in a Rating. " (d) Section 2.04(b)(i) of the Credit Agreement is hereby deleted in its entirety and ------------------ replaced with the following: "(i) the LC Exposure shall not exceed $15,000,000" (e) Section 5.08(g) of the Credit Agreement is hereby deleted in its entirety and replaced ---------------- with the following: "(g) Working capital needs of the Borrower, provided, however, in no event shall the LC Exposure and the amount of the Loans used by the Borrower for working capital purposes exceed 20% of the Maximum Availability in the aggregate." (f) Section 6.01(e) of the Credit Agreement is hereby deleted in its entirety and replaced ---------------- with the following: "Total Unencumbered Value. At no time shall (i) the Unsecured Indebtedness be greater than 60% of the Total Unencumbered Value, (ii) the Total Unencumbered Value be less than $100,000,000 or (iii) the Unencumbered Eligible Projects consist of less than ten (10) Eligible Projects." (g) An additional Section 6.01(i) of the Credit Agreement is hereby added - --------------- as follows: "(i) Minimum Occupancy Level for Unencumbered Eligible Projects. As of the first day of each calendar quarter for the immediately preceding four consecutive calendar quarters, the weighted average economic occupancy for Unencumbered Eligible Projects shall not be less than 80% with the exception that each individual project within the definition of Unencumbered Eligible Projects shall have an occupancy level of not less than 75%. If the occupancy level of an individual project falls below 75%, a capitalization rate of 10% will be used to determine the value of the individual Unencumbered Eligible Project. Notwithstanding the foregoing, the property known as 1600 East Avenue in Rochester, New York shall be excluded from this calculation through and including the covenant compliance period ending September 30, 2003. Borrower will include a schedule of occupancy levels of Unencumbered Eligible Projects within its Quarterly Compliance Certificates." (h) Schedules 2.01, 3.02, 3.04, 3.07 and 3.13 of the Credit Agreement are replaced by the corresponding revised schedules that are made a part hereof. 4. Representations and Warranties. In order to induce the Administrative Agent and the Lenders to enter into this Amendment No. 2, the Borrower represents and warrants to the Administrative Agent and the Lenders as follows: (a) The execution, delivery and performance by Borrower of this Amendment No. 2 and the consummation of the transactions contemplated hereby, are within the Borrower's powers, have been duly authorized by all necessary action, and do not (i) contravene Borrower's Partnership Agreement, (ii) violate any law (including, without limitation, the Securities Exchange Act of 1934), rule, regulation (including, without limitation, Regulation X of the Board of Governors of the Federal Reserve System), order, writ, judgment, injunction, decree, determination or award applicable to the Borrower, (iii) conflict with or result in the breach of, or constitute a default under, any contract, loan agreement, indenture, mortgage, deed of trust, lease or other instrument binding on or affecting the Borrower or any of its properties other than as specified in the Credit Agreement, or (iv) result in or require the creation or imposition of any Lien upon or with respect to any of the properties of Borrower. (b) Other than those that have already been obtained and are in full force and effect, or as would not reasonably be expected to have a Material Adverse Effect, no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or any other third party is required to be obtained by the Borrower for the due execution, delivery or performance by Borrower of this Amendment No. 2. (c) This Amendment No. 2 has been duly executed and delivered by the Borrower. This Amendment No. 2 is the legal, valid and binding obligation of each party hereto, enforceable against the Borrower in accordance with its terms except as may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws relating to or limiting creditors' rights or by equitable principles generally. (d) All of the Borrower's representations and warranties contained in the Credit Agreement are true and correct, the Borrower is in compliance with all the affirmative covenants contained in the Credit Agreement, the Borrower has not violated any of the negative covenants contained in the Credit Agreement and no Event of Default has occurred under the terms of the Credit Agreement and/or any of the Loan Documents. (e) There has been no material adverse change in the condition, financial or otherwise, of the Borrower since the date of the most recent financial reports of the Borrower received by the Administrative Agent and each Lender under Section 5.01 of the Credit Agreement. (f) The business and properties of the Borrower are not, and since the most recent financial report of the Borrower received by the Administrative Agent and the Lenders under Section 5.01 of the Credit Agreement, have not been, materially adversely affected in any substantial way as the result of any fire, explosion, earthquake, accident, strike, lockout, combination of workers, flood, embargo, riot, activities of armed forces, war or acts of God or the public enemy, or the cancellation or loss of any major contracts. 5. Attorneys' Fees and Expenses. The Borrower shall pay all of the Administrative Agent's and the Lenders' attorneys' fees, plus expenses and disbursements, incurred and to be incurred in connection with the preparation, negotiation and execution of this Amendment No. 2. 6. Entire Agreement. This Amendment No. 2 sets forth the entire understanding and agreement of the parties hereto in relation to the subject matter hereof and supersedes any prior negotiations and agreements among the parties relative to such subject matter. No promise, condition, representation or warranty, express or implied, not herein set forth shall bind any party hereto, and not one of them has relied on any such promise, condition, representation or warranties. Each of the parties hereto acknowledges that, except as in this Amendment No. 2 otherwise expressly stated, no representations, warranties or commitments, express or implied, have been made by any party to the other. None of the terms or conditions of this Amendment No. 2 may be changed, modified, waived or canceled orally or otherwise, except as provided in the Credit Agreement. Upon the Effective Date, Amendment No. 1 shall be superceded and replaced by this Amendment No. 2. 7. Full Force and Effect of Credit Agreement. Except as hereby specifically amended, modified, waived or supplemented, the Credit Agreement and all other Loan Documents are hereby confirmed and ratified in all respects and shall remain in full force and effect according to their respective terms. The parties agree that each reference in the Credit Agreement to "the Credit Agreement", "thereunder", "thereof", "therein" or words of like import referring to the Credit Agreement and each referenced in the Loan Documents to the "Credit Agreement" shall mean and be a reference to the Credit Agreement, as amended and otherwise modified by this Amendment No. 2. 8. Counterparts. This Amendment No. 2 may be executed in any number of counterparts, each of which shall be deemed an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. 9. Governing Law. This Amendment No. 2 is governed by New York law. Any litigation involving this Amendment No. 2, the Credit Agreement, the Notes or any other Loan Document shall, at the Administrative Agent's sole option, be triable only in a court located in Monroe County, New York. BORROWER, ADMINISTRATIVE Agent and the Lenders party hereto WAIVE THE RIGHT TO A JURY TRIAL IN ANY LITIGATION IN WHICH BORROWER, AND ADMINISTRATIVE Agent and the Lenders party hereto ARE PARTIES. No other Person is a third party beneficiary of this jury trial waiver. 10. Enforceability. Should any one or more of the provisions of this Amendment No. 2 be determined to be illegal or unenforceable as to one or more of the parties hereto, all other provisions nevertheless shall remain effective and binding on the parties hereto. 11. Successors and Assigns. This Amendment No. 2 shall be binding upon and inure to the benefit of each of the Borrower, the Lenders and the Administrative Agent, and their respective successors, assigns and legal representatives; provided, however, that the Borrower, without the prior consent of all of the Lenders, may not assign any rights, powers, duties or obligations hereunder. 12. Consent of Guarantor. Home Properties of New York, Inc., a Maryland corporation, by its execution and delivery hereof (a) consents and agrees to the amendments to the Credit Agreement set forth herein and (b) reaffirms its obligations set forth in the Guaranty. IN WITNESS WHEREOF, Borrower, Agent and the Lenders have executed and unconditionally delivered this Amendment No. 2 all as of the day and year first above written. HOME PROPERTIES OF NEW YORK, LP By: Home Properties of NY, Inc., its General Partner By: /s/ Gerald B. Korn ----------------------------------------------------- Name: Gerald B. Korn Title: Vice President MANUFACTURERS AND TRADERS TRUST COMPANY, as Lender and as Administrative Agent By: /s/ Lisa A. Plescia ----------------------------------------------------- Name: Lisa A. Plescia Title: Vice President CITIZENS BANK OF RHODE ISLAND By: /s/ Craig R. Schermerhorn ----------------------------------------------------- Name: Craig E. Schermerhorn Title: Vice President CHEVY CHASE BANK, FSB By: /s/ J. Jordan O'Neill, III ----------------------------------------------------- Name: J. Jordan O'Neill, III Title: Vice President STATE OF NEW YORK ) COUNTY OF MONROE ) ss: On the ____ day of _______________ in the year 2002 before me, the undersigned, a Notary Public in and for said State, personally appeared Gerald B. Korn of Home Properties of New York, Inc., personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity, and that by his signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument. Notary Public STATE OF NEW YORK ) COUNTY OF MONROE ) ss: On the ____ day of _______________ in the year 2002 before me, the undersigned, a Notary Public in and for said State, personally appeared Lisa A. Plescia of Manufacturers and Traders Trust Company, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity, and that by his signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument. Notary Public STATE OF ) COUNTY OF ) ss: On the ____ day of _______________ in the year 2002 before me, the undersigned, a Notary Public in and for said State, personally appeared Craig E. Schermerhorn of Citizens Bank of Rhode Island, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity, and that by his signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument. Notary Public STATE OF ) COUNTY OF ) ss: On the ____ day of _______________ in the year 2002 before me, the undersigned, a Notary Public in and for said State, personally appeared J. Jordan O'Neill III of Chevy Chase Bank, FSB, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity, and that by his signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument. Notary Public The undersigned by its execution and delivery hereof (a) consents and agrees to the Amendment No.2 herein and (ii) ratifies and reaffirms its obligations set forth in the Guaranty, (iii) acknowledges and agrees that the Guaranty is, and shall continue to be, in full force and (iv), except that, on and after the Amendment Effective Date, each reference in the Guaranty to "the Credit Agreement", "thereunder", "thereof", "therein" or words of like import referring to the Credit Agreement shall mean and be a reference to the Credit Agreement, as amended and otherwise modified by Amendment No. 2 . This Consent shall be governed by, and construed in accordance with, the laws of the State of New York. Home Properties of New York, Inc. By: /s/ Gerald B. Korn ----------------------------------------------------- Name: Gerald B. Korn Title: Vice President Schedule 2.01 Lenders' Commitments Manufacturers and Traders Trust Company $74,750,000.00 Citizens Bank of Rhode Island $23,000,000.00 Chevy Chase Bank, F.S.B. $17,250,000.00 Schedule 3.02 Schedule 3.04 Schedule 3.07 Schedule 3.13 -----END PRIVACY-ENHANCED MESSAGE-----