-----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, Sq8Xq2YlTw8X1cHtXRFeARrHDVb6Gu7xnHUVTQABu9MOWzP92+FXHBIW1Pg+qWDx RNhQlFWkrxXohN6rlZy/7A== 0000923118-98-000025.txt : 19980518 0000923118-98-000025.hdr.sgml : 19980518 ACCESSION NUMBER: 0000923118-98-000025 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980515 SROS: NYSE 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: SEC FILE NUMBER: 001-13136 FILM NUMBER: 98625938 BUSINESS ADDRESS: STREET 1: 850 CLINTON SQ CITY: ROCHESTER STATE: NY ZIP: 14604 BUSINESS PHONE: 7162464105 MAIL ADDRESS: STREET 1: 850 CLINTON SQUARE CITY: ROCHESTER STATE: NY ZIP: 14604 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER 1-13136 HOME PROPERTIES OF NEW YORK, INC. (Exact name of registrant as specified in its charter) MARYLAND 16-1455126 (State or other jurisdiction of (IRS Employer Identification incorporation or organization) Number) 850 CLINTON SQUARE, ROCHESTER, NEW YORK 14604 (Address of principal executive offices) (Zip Code) (716) 546-4900 (Registrant's telephone number, including area code) N/A (Former name, former address and former year, if changed since last report) Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: CLASS OF COMMON STOCK OUTSTANDING AT APRIL 30, 1998 $.01 par value 11,905,593 Page 1 of 15 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS HOME PROPERTIES OF NEW YORK, INC.
CONSOLIDATED BALANCE SHEETS MARCH 31, 1998 AND DECEMBER 31, 1997 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) 1998 1997 (Unaudited) (Note 1) ASSETS Real estate: Land $ 78,455 $ 62,640 Buildings, improvements and equipment 520,300 462,488 598,755 525,128 Less: accumulated depreciation ( 50,586) ( 46,531) Real estate, net 548,169 478,597 Cash and cash equivalents 2,821 3,809 Cash in escrows 10,511 10,211 Accounts receivable 3,612 3,531 Prepaid expenses 7,211 5,305 Deposits 2,656 605 Investments in and advances to affiliates 36,287 35,585 Deferred financing costs 1,497 1,637 Other assets 5,326 4,543 Total assets $618,090 $543,823 LIABILITIES AND STOCKHOLDERS' EQUITY Mortgage notes payable $217,376 $210,096 Line of credit 22,250 8,750 Accounts payable 4,574 5,082 Accrued interest payable 1,157 1,077 Accrued expenses and other liabilities 3,296 4,374 Security deposits 6,909 6,165 Total liabilities 255,562 235,544 Minority interest 187,841 156,847 Commitments and contingencies Stockholders' equity: Preferred stock, $.01 par value; 10,000,000 shares authorized; no shares issued - - Common stock, $.01 par value; 30,000,000 shares authorized; 10,334,332 and 9,317,556 shares issued and outstanding at March 31, 1998 and December 31, 1997, respectively 104 93 Excess stock, $.01 par value; 10,000,000 shares authorized; no shares issued - - Additional paid-in capital 200,759 176,021 Distributions in excess of accumulated earnings ( 21,302) ( 19,700) Treasury stock, at cost, 20,000 shares ( 426) ( 426) Officer and director notes for stock purchases( 4,448) ( 4,556) Total stockholders' equity 174,687 151,432 Total liabilities and stockholders' equity $618,090 $543,823 The accompanying notes are an integral part of these consolidated financial statements.
Page 2 of 15 HOME PROPERTIES OF NEW YORK, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) 1998 1997 Revenues: Rental income $25,094 $12,579 Property other income 502 436 Interest income 914 265 Other income 263 562 Total revenues 26,773 13,842 Expenses: Operating and maintenance 12,140 6,930 General and administrative 1,209 379 Interest 4,398 2,354 Depreciation and amortization 4,079 2,338 Total expenses 21,826 12,001 Income before minority interest 4,947 1,841 Minority interest 2,172 572 Net income $ 2,775 $ 1,269 Per share data: Net income - Basic $.29 $.20 - Diluted $.28 $.20 Weighted average number of shares outstanding - Basic 9,702,975 6,378,441 - Diluted 9,900,451 6,521,345
The accompanying notes are an integral part of these consolidated financial statements. Page 3 of 15 HOME PROPERTIES OF NEW YORK, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED, IN THOUSANDS) 1998 1997 Cash flows from operating activities: Net income $ 2,775 $ 1,269 Adjustments to reconcile net income to net cash provided by operating activities: Equity in income of HP Management and Conifer Realty 208 ( 78) Income allocated to minority interest 2,172 572 Depreciation and amortization 4,239 2,572 Changes in assets and liabilities: Other assets ( 2,260) ( 3,510) Accounts payable and accrued liabilities ( 762) ( 106) Total adjustments 3,597 ( 550) Net cash provided by operating activities 6,372 719 Cash flows used in investing activities: Purchase of properties, net of mortgage notes assumed ( 35,644) ( 17,402) Additions to properties ( 6,808) ( 2,835) Deposits on property ( 2,051) - Advances to affiliates ( 6,068) ( 6,690) Payments on advances to affiliates 5,366 2,387 Other ( -) ( 169) Net cash used in investing activities ( 45,205) ( 24,709) Cash flows from financing activities: Proceeds from sale of common stock 24,650 18,458 Proceeds from mortgage and other notes payable 8,000 - Payments of mortgage and other notes payable ( 720) ( 294) Proceeds from line of credit 33,000 24,700 Payments on line of credit ( 19,500) ( 16,000) Additions to deferred loan costs ( 21) - Additions to cash escrows ( 300) ( 390) Dividends and distributions paid ( 7,264) ( 3,214) Net cash provided by financing activities 37,845 23,260 Net increase (decrease) in cash ( 988) ( 730) Cash and cash equivalents: Beginning of period 3,809 1,523 End of period $ 2,821 $ 793 Supplemental disclosure of cash flow information: Cash paid for interest $ 4,157 $2,190
The accompanying notes are an integral part of these consolidated financial statements. Page 4 of 15 HOME PROPERTIES OF NEW YORK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) 1. UNAUDITED INTERIM FINANCIAL STATEMENTS The interim consolidated financial statements of Home Properties of New York, Inc. (the "Company") are prepared pursuant to the requirements for reporting on Form 10-Q. Accordingly, certain disclosures accompanying annual financial statements prepared in accordance with generally accepted accounting principles are omitted. The year-end balance sheet data was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles. In the opinion of management, all adjustments, consisting solely of normal recurring adjustments, necessary for the fair presentation of the consolidated financial statements for the interim periods have been included. The current period's results of operations are not necessarily indicative of results which ultimately may be achieved for the year. The interim consolidated financial statements and notes thereto should be read in conjunction with the financial statements and notes thereto included in the Company's Form 10-K, as filed with the Securities and Exchange Commission on March 24, 1998. 2. ORGANIZATION AND BASIS OF PRESENTATION ORGANIZATION Home Properties of New York, Inc. (the " Company " ) was formed in November 1993, as a Maryland corporation and is engaged primarily in the ownership, management, acquisition and development of residential apartment communities in the Northeastern, Mid-Atlantic and Midwestern United States. As of March 31, 1998, the Company operated 162 apartment communities with 22,862 apartments. Of this total, the Company owned 67 communities, consisting of 15,514 apartments, managed as general partner 4,802 apartments and fee managed 2,546 apartments for affiliates and third parties. The Company also fee manages 1.7 million square feet of office and retail properties. BASIS OF PRESENTATION The accompanying consolidated financial statements include the accounts of the Company and its 55.0% (70.6% at March 31, 1997) general partnership interest in the Operating Partnership. The remaining 45.0% (29.4% at March 31, 1997) is reflected as Minority Interest in these consolidated financial statements. All significant intercompany balances and transactions have been eliminated in these consolidated financial statements. 3. EARNINGS PER COMMON SHARE The Company has adopted Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per Share", which was issued by the Financial Accounting Standards Board in February 1997. SFAS No. 128 requires dual presentation of basic earnings per share (EPS) and diluted EPS on the face of all statements of earnings for periods ending after December 15, 1997. Basic EPS is computed as net income 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. 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. Page 5 of 15 HOME PROPERTIES OF NEW YORK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONT'D (UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) 3. EARNINGS PER COMMON SHARE CONT'D Net income is the same for both the basic and diluted calculation. The reconciliation of the basic weighted average shares outstanding and diluted weighted average shares outstanding for the three months ended March 31, 1998 and 1997 is as follows: 1998 1997 Basic weighted average number of shares outstanding 9,702,975 6,378,441 Effect of dilutive stock options 197,476 142,904 Diluted weighted average number of shares outstanding 9,900,451 6,521,345 Page 6 of 15 HOME PROPERTIES OF NEW YORK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) 4. PRO FORMA FINANCIAL INFORMATION Pro Forma Combined Statement of Operations FOR THE THREE MONTHS ENDED MARCH 31, 1998 Home Properties Pro Forma Company HISTORICAL ADJUSTMENT PRO FORMA Revenue: Rental income $25,094 $1,594 $26,688 Property other income 502 26 528 Interest income 914 - 914 Other income 263 - 263 Total Revenues 26,773 1,620 28,393 Expenses: Operating and Maintenance 12,140 720 12,860 General and administrative 1,209 50 1,259 Interest 4,398 477 4,875 Depreciation and amortization 4,079 300 4,379 Total Expenses 21,826 1,547 23,373 Income before minority interest $ 4,947 $ 73 5,020 Minority Interest 2,342 Net income $ 2,678 Net income per common share - Basic $0.28 - Diluted $0.27 Weighted average number of shares outstanding - Basic 9,702,975 - Diluted 9,900,451 The pro forma information was prepared as if the transactions related to the acquisition of Candlewood Apartments (on January 9, 1998, 310 units for $13,350), Cedar Glen Apartments (on March 2, 1998, 110 units for $2,600), Park Shirlington Apartments and Braddock Lee Apartments (on March 13, 1998, 548 units for $26,401) and Apple Hill Apartments (on March 27, 1998, 498 units for $23,500) had occurred on January 1, 1998. Adjustments to the pro forma combined statements of operations for the three months ended March 31, 1998, consist principally of providing net property operating activity and recording interest, depreciation and amortization from January 1, 1998 to the acquisition date. Page 7 of 15 HOME PROPERTIES OF NEW YORK, INC. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION The following discussion is based primarily on the consolidated financial statements of Home Properties of New York, Inc. as of March 31, 1998 and 1997 and for the three month periods then ended. This information 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, other conditions that might affect operating expenses, the timely completion of repositioning and current development activities within anticipated budgets, the actual pace of future acquisitions and developments and continued access to capital to fund growth. LIQUIDITY AND CAPITAL RESOURCES The Company's principal liquidity demands are expected to be distributions to stockholders, capital improvements and repairs and maintenance for the properties, acquisition of additional properties, property development and scheduled debt maturities. 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 continue to be adequate to meet all operating requirements and make distributions to its stockholders in accordance with the provisions of the Internal Revenue Code, as amended, to enable the Company to qualify as a REIT. The Company has an unsecured line of credit from Chase Manhattan Bank of $50 million with an available capacity of $27.8 million at March 31, 1998. Borrowings under the line of credit bear interest at 1.25% 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 unsecured line of credit expires on September 4, 1999, with a one year extension at the Company's option. As of April 30, 1998, the entire $50 million is available as a result of using the net proceeds from equity raised in a direct placement to a major institutional investor to repay the outstanding balance. To the extent that the Company does not satisfy its long-term liquidity requirements through net cash flows provided by operating activities and its unsecured line of credit, it intends to satisfy such requirements through the issuance of UPREIT units, proceeds from the Dividend Reinvestment Plan ("DRIP"), long term secured or unsecured indebtedness, or the issuance of additional equity securities. As of March 31, 1998, the Company owned twenty- four properties with 4,962 apartment units, which were unencumbered by debt. As of February 28, 1997, the Company's Form S-3 Registration Statement was declared effective relating to the issuance of up to $100 million of shares of common stock or other securities. At December 31, 1997, $59 million remained available under the shelf. During March 1998, $10.5 million of common shares were issued under the shelf registration, with an additional $35 million of common shares issued in a direct placement to a major institutional investor in April 1998, leaving a capacity of $13.5 million. On May 14, 1998, the Company filed a Form S-3 Registration Statement relating to the issuance of up to $400 million of unsecured debt, preferred stock or other equity securities. Page 8 of 15 HOME PROPERTIES OF NEW YORK, INC. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION CONT'D The issuance of UPREIT Units for property acquisitions continues to be a significant source of capital. During 1997, 5,636 apartment units in four separate transactions were acquired for a total cost of $195 million using UPREIT Units valued in excess of $106 million, with the balance paid in cash or assumed debt. During 1998, 858 apartment units in two separate transactions were acquired for a total cost of $40 million using UPREIT Units valued in excess of $31 million, with the balance paid in cash or assumed debt. In addition, over $36 million was raised during 1997 through the Company's DRIP, including over $4.5 million from officers and directors financed partially by a Company loan of $2.3 million. An additional $20 million has been raised through the DRIP program during the first four months of 1998. The Company's Board of Directors approved a stock repurchase program under which the Company may repurchase up to one million shares of its outstanding common stock. The Board's action did not establish a target price or a specific timetable for repurchase. During June 1997, the Company repurchased 20,000 shares at a cost of $.426 million. As of March 31, 1998, the weighted average rate of interest on mortgage debt is 7.6% and the weighted average maturity is 7.0 years. Most of the debt is fixed rate, with only 9% variable rate debt. This limits the exposure to changes in interest rates, minimizing the effect on results of operations and financial condition. Page 9 of 15 The following table sets forth information regarding the mortgage indebtedness at March 31, 1998. Principal Interest Balance as of Rate as of Maturity March 31, 1998
COMMUNITIES LOCATION MARCH 31, 1998 DATE (000'S) FIXED RATE Landon Court Philadelphia, PA 7.75% 11/01/98 1,189 Williamstowne Village Buffalo, NY 2.50% 12/31/99 28 Westminster Syracuse, NY 7.22% 09/01/00 3,222 Perinton and Riverton Rochester, NY 6.75% (1) 09/01/00 11,956 Executive House Philadelphia, PA 8.50% 06/01/01 2,564 Harmark Village Square Philadelphia, PA 8.50% 06/01/01 2,885 Karen Court Philadelphia, PA 8.00% 09/01/01 1,307 Patricia Court Philadelphia, PA 8.00% 09/01/01 1,720 Springwood Philadelphia, PA 8.50% 11/01/01 1,507 Valley View Philadelphia, PA 8.50% 11/01/01 3,416 Royal Gardens Piscataway, NJ 7.66% 08/01/02 11,834 Williamstowne Village Buffalo, NY 7.37% (2) 10/27/02 9,838 Brook Hill Rochester, NY 7.75% 11/01/02 4,923 Garden Village Buffalo, NY 7.75% 11/01/02 4,633 1600 Elmwood Rochester, NY 7.75% 11/01/02 5,405 Village Green Syracuse, NY 7.75% 11/01/02 4,826 Chesterfield Philadelphia, PA 8.25% 01/01/03 6,800 Curren Terrace Philadelphia, PA 8.355% 11/01/03 9,699 Fairview Heights Ithaca, NY 7.71% (3) 11/01/03 3,993 Finger Lakes Manor Rochester, NY 7.71% (3) 11/01/03 3,993 Glen Manor Philadelphia, PA 8.125% 05/01/04 3,740 Springcreek/ Meadows Rochester, NY 7.63% (4) 08/01/04 3,191 Idylwood Buffalo, NY 8.625% 11/01/05 9,370 Mid Island Estates Bay Shore, NY 7.25% (5) 05/01/06 6,675 Newcastle Rochester, NY 6.00% (6) 07/31/06 6,150 Raintree Island Buffalo, NY 8.50% 11/01/06 6,472 Woodgate Place Rochester, NY 7.865% 01/01/07 3,465 Valley Park South Bethlehem, PA 6.93% 01/01/08 10,158 Hamlet Court Rochester, NY 7.11% 02/01/08 1,809 Candlewood South Bend, ID 7.02% 03/01/08 8,000 Ten Communities Detroit, MI 7.51% 06/01/08 49,828 Conifer Village Syracuse, NY 7.20% 06/01/10 2,910 Harborside Manor Syracuse, NY 8.92% 04/01/14 4,180 Village Green (Fairways) Syracuse, NY 8.23% 10/01/19 4,494 Raintree Island Buffalo, NY 8.50% 05/01/20 1,196 217,376
Page 10 of 15 Interest Balance as of Rate as of Maturity March 31, 1998 COMMUNITIES LOCATION MARCH 31, 1998 DATE (000'S) LINE OF CREDIT
Unsecured N/A 30 day LIBOR On Demand 22,250 +1.25% $239,626
(1) Fixed through August 4, 1999, then prime +.5% until maturity. (2) Fixed through November 1, 2000, then prime +.5% until maturity. (3) Fixed through April 30, 2000, then prime +.5% until maturity. (4) Fixed through July 31, 2000, then prime +.5% until maturity. (5) Fixed through March 31, 1998; 7.5%. April 1, 1998 through March 31, 2001; then 7.75% until maturity. (6) Fixed through July 31, 1999, then variable. RESULTS OF OPERATIONS COMPARISON OF THREE MONTHS ENDED MARCH 31, 1998 TO THE SAME PERIOD IN 1997 The Company had 27 apartment communities with 6,552 units and one small ancillary convenience shopping area which were owned during both of the three month periods being presented (the "Core Properties"). The Company has acquired an additional 40 apartment communities with 8,962 units during 1997 and 1998 (the "Acquired Communities"). The inclusion of these Acquired Communities generally accounted for the significant changes in operating results for three months ended March 31, 1998. A summary of the Core Property net operating income is as follows: 1998 1997 %CHANGE Rent $11,467,000 $11,108,000 3.2% Property other income 376,000 322,000 16.8% Total income 11,843,000 11,430,000 3.6% Operating and Maintenance ( 5,805,000) ( 6,189,000) 6.2% Net operating income $ 6,038,000 $ 5,241,000 15.2% Of the $12,515,000 increase in rental income, $12,156,000 is attributable to the Acquired Communities. The balance of this increase, which is from the Core Properties, was the result of an increase of 2.5% in weighted average rental rates, plus an increase in occupancy from 93.0% to 93.7%. Of the $66,000 increase in property other income, $261,000 is attributable to the Acquired Communities, with $54,000 representing a 17% increase for the Core Properties. This increase reflects bringing more laundry "in-house" versus contracting out. The balance, a $249,000 decrease, is from the Company's share of income/loss from various general partnership interests. Interest income increased $649,000, primarily attributable to an increase in construction loans and advances made to affiliated tax credit development partnerships. Other income decreased by $299,000 due primarily to differences in the amount of bonus accruals recorded during each period by the Management Companies. Page 11 of 15 Of the $5,210,000 increase in operating and maintenance expenses, $5,594,000 is attributable to the Acquired Communities. The balance for the Core Properties represents a 6.2% decrease over 1997. The major areas of decrease in the Core Properties occurred in utilities and snow removal costs. Our extreme mild 1998 weather, combined with normal gas rates (compared to very high rates in 1997) resulted in a positive variance in utilities of $357,000, or 21.4%, and $47,000, or 16.7% in snow removal costs. General and administrative expense increased in 1998 by $830,000, or 219% during a period when the Company more than doubled the number of owned apartment units. General and administrative expenses as a percentage of total revenues increased from 2.7% in 1997 to 4.5% in 1998. The biggest reason for this percentage growth is a result of the Company's incentive compensation plan which rewards exceptional FFO growth per share. The extraordinary growth during the first quarter of 1998 resulted in a $200,000 bonus accrual this year compared to no bonus accrual in the first quarter of 1997. In addition, the Company recorded a $73,000 non-recurring expense related to doing business in the State of Pennsylvania. FUNDS FROM OPERATIONS Management considers funds from operations to be an appropriate measure of performance of an equity REIT. The National Association of Real Estate Investment Trusts ("NAREIT") revised White Paper definition of funds from operations is income (loss) before gains (losses) from the sale of property and extraordinary items, before minority interest in the Operating Partnership, plus real estate depreciation. Management believes that in order to facilitate a clear understanding of the combined historical operating results of the Company, funds from operations should be considered in conjunction with net income as presented in the consolidated financial statements included elsewhere herein. Funds from operations does not represent cash generated from operating activities in accordance with generally accepted accounting principles and is not necessarily indicative of cash available to fund cash needs. Funds from operations should not be considered as an alternative to net income as an indication of the Company's performance or to cash flow as a measure of liquidity. The calculation of funds from operations for the previous six quarters are presented below: March 31 Dec. 31 Sept. 30 June 30 March 31 Dec. 31 1998 1997 1997 1997 1997 1996 Net income $2,775 $2,417 $ 828 $1,876 $1,269 $1,215 Minority interest 2,172 2,451 423 802 572 271 Extraordinary item - 1,037 - - - - Depreciation from real property 4,038 3,715 2,654 2,389 2,305 2,241 Depreciation from real property from unconsolidated entities 196 168 76 76 4 183 (Gain) Loss from sale of property - ( 872) 2,155 - - - FFO $9,181 $8,916 $6,136 $5,143 $4,150 $3,910 Weighted average common shares/ units outstanding - Basic 17,303.6 15,215.0 10,827.1 10,139.1 9,254.7 7,168.4 - Diluted 17,501.1 15,417.7 10,950.1 10,229.5 9,397.6 7,223.9 All REITs may not be using the strict White Paper definition for new FFO. Accordingly, the above presentation may not be comparable to other similarly titled measures of FFO of other REITs. INFLATION Substantially all of the leases at the communities are for a term of one year or less, which enables the Company to seek increased rents upon renewal of existing leases or commencement of new leases. These short-term leases minimize the potential adverse effect of inflation on rental income, although Page 12 of 15 residents may leave without penalty at the end of their lease terms and may do so if rents are increased significantly. DECLARATION OF DIVIDEND On May 5, 1998, the Board of Directors approved a dividend of $.45 per share for the period from October 1, 1997 to December 31, 1997. This is the equivalent of an annual distribution of $1.80 per share. The dividend is payable May 27, 1998 to shareholders of record on May 15, 1998. SUBSEQUENT EVENTS On April 30, 1998, the Company acquired 1,589 apartment units plus 6.8 acres of vacant land in 4 communities located in Baltimore, Maryland and its suburbs. The total purchase price and closing costs of $53.7 million included the assumption of existing debt of approximately $8.8 million plus the issuance of UPREIT units valued at approximately $21.4 million, new mortgage financing in the amount of $20.6 million, plus cash of $2.9 million. The Company paid $.5 million in prepayment penalties at closing, which will be expensed during the second quarter. OTHER INCOME Other income for the three months ended March 31, 1998 and 1997 is summarized as follows: 1998 1997 Management fees $271 $116 Development fees 171 353 Other 29 15 Management Companies ( 208) 78 $263 $562 Certain property management, leasing and development activities are performed by Home Properties Management, Inc. and Conifer Realty Corporation (the "Management Companies"). The Operating Partnership owns non-voting common stock in the Management Companies which entitles the Operating Partnership to receive 99% of the economic interest in the Management Companies. The Company's share of income from the Management Companies for the three months ended March 31, 1998 and 1997 is summarized as follows: 1998 1997 Management fees $793 $738 Development fees 954 519 Miscellaneous 26 25 General and administrative (1,789) (1,106) Interest expense ( 130) ( 59) Other expenses ( 64) ( 38) Net income ($ 210) $ 79 Company's share ($ 208) $ 78 Page 13 of 15 PART II - OTHER INFORMATION HOME PROPERTIES OF NEW YORK, INC. ITEM 6. EXHIBITS AND REPORTS OR FORM 8-K (a) Exhibits: There are no exhibits which are filed with, or incorporated by reference, to this report. (b) Reports or Form 8-K: -- Form 8-K was filed on April 15, 1998, date of report April 13, 1998, with respect to an item 5 disclosure concerning an agreement with a major institutional investor to purchase $35,000,000 of common shares, before expenses. -- Form 8-K was filed on March 26, 1998, date of report March 24, 1998, with respect to an item 5 disclosure concerning an underwriting agreement with Wheat First Securities, Inc. to purchase $9,500,000 of common shares, before expenses. Page 14 of 15 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. HOME PROPERTIES OF NEW YORK, INC. (Registrant) Date: MAY 15, 1998 By: /S/ DAVID P. GARDNER David P. Gardner Vice President Chief Financial Officer and Treasurer Date: MAY 15, 1998 By: /S/ NORMAN LEENHOUTS Norman Leenhouts Chairman and Co-Chief Executive Officer Page 15 of 15 EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM HOME PROPERTIES OF NEW YORK, INC.'S FINANCIAL STATEMENTS CONTAINED IN ITS MARCH 31, 1998 FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 U.S. DOLLARS 3-MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 1 2,821 0 3,612 0 0 0 598,755 50,586 618,090 0 217,376 0 0 104 174,583 618,090 0 26,773 0 17,428 0 0 4,398 4,947 0 2,775 0 0 0 2,775 .29 .28
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