Home Properties Reports Third Quarter 2012 Results

              Home Properties Reports Third Quarter 2012 Results

FFO Per Share Exceeds Wall Street's Mean Estimate by 4 Cents

PR Newswire

ROCHESTER, N.Y., Nov. 1, 2012

ROCHESTER, N.Y., Nov. 1, 2012 /PRNewswire/ --Home Properties, Inc. (NYSE:
HME) today released financial results for the third quarter ended September
30, 2012. All results are reported on a dilutedbasis.

(Logo: http://photos.prnewswire.com/prnh/20101026/NY89070LOGO )

"Home Properties benefited from positive fundamentals in the multifamily real
estate sector during the third quarter of 2012, producing same-store net
operating income growth of 8.3% compared to the prior year third quarter,
which is the largest year-over-year third quarter increase since 2001," said
EdwardJ.Pettinella, Home Properties President and CEO. "Increased rent
growth, continued high occupancy, favorable expense control and strong results
from recent acquisitions and new construction have contributed to excellent
quarterly results."

Earnings per share ("EPS") for the quarter ended September 30, 2012 was $0.71,
compared to $0.20 for the quarter ended September 30, 2011. The $0.51
increase in EPS is primarily attributable to a $19.7 million gain on
disposition of property combined with a $13.5 million increase in income from
continuing operations from both the properties owned throughout 2011 and 2012
(the "Core" properties) and those acquired, developed, or redeveloped
subsequent to January 1, 2011 (the "Non-Core" properties).

For the quarter ended September 30, 2012, Funds From Operations ("FFO") was
$67.3 million, or $1.09 per share, compared to $46.4 million, or $0.87 per
share, for the quarter ended September 30, 2011, which equates to a 26.3%
increase on a per-share basis. Third quarter 2012 FFO of $1.09 per share was
$0.04 above the midpoint of the guidance range provided by management and the
analysts' mean estimate, as reported by Thomson. A reconciliation of GAAP net
income to FFO is included in the financial data accompanying this news
release.

Third Quarter Operating Results

For the third quarter of 2012, same-property comparisons (for 111 Core
properties containing 37,386 apartment units owned since January 1, 2011)
reflected an increase in rental income of 4.2% and a 4.3% increase in total
revenues compared to the same quarter a year ago. Netoperating income
("NOI") increased by 8.3% from the third quarter of 2011. Property level
operating expenses decreased by 2.1% compared to the prior year quarter,
primarily due to decreases in repairs and maintenance, personnel costs and
property management general and administrative costs, which were partially
offset by an increase in real estate taxes.

Average physical occupancy for the Core properties was 95.5% during the third
quarter in both 2012 and 2011. Average monthly rental rates of $1,240 in the
2012 third quarter represent a 3.9% increase compared to the year-ago period.

On a sequential basis, compared to the 2012 second quarter results for Core
properties, average monthly rental rates were up 1.4% in the third quarter of
2012. This increase was offset by a 0.9% seasonal decline in economic
occupancy resulting in a 0.5% increase in rental income and total revenues.
Expenses decreased 0.7% producing an NOI increase of 1.1%. Average physical
occupancy decreased 0.7% to 95.5%.

Physical occupancy for the 6,421 apartment units
acquired/developed/redeveloped between January 1, 2011 and September 30, 2012
averaged 92.0% during the third quarter of 2012, at average monthly rents of
$1,370.

Year-to-Date Operating Results

For the nine months ended September 30, 2012, same-property comparisons for
the Core properties reflected an increase in total revenues of 4.6% and a
decrease in total expense of 1.8% resulting in an 8.8% increase in NOI
compared to the first nine months of 2011. Property level operating expenses
in 2012 decreased, primarily due to lower electricity, natural gas heating
costs, personnel and snow removal costs. These decreases were partially
offset by increases in property insurance and real estate taxes.

Average physical occupancy for the Core properties was 95.7% during the first
nine months of 2012, up from 95.6% a year ago, with average monthly rental
rates of $1,224, an increase of 4.4% over the prior year period.

Acquisitions/Dispositions/Development

There were no acquisitions of apartment communities in the third quarter of
2012.

During the third quarter of 2012, the Company closed on two separate sale
transactions, with a total of 424 units, for $41.2 million, producing
approximately $40.1 million in net proceeds after closing costs. A gain on
sale of approximately $19.7 million was recorded in the third quarter related
to these sales. The two apartment communities sold were located in the
Philadelphia and Baltimore regions.

Subsequent to the end of the quarter, on October 11, 2012, the Company sold
one property with 318 units in the Philadelphia region for $29.8 million,
producing approximately $4.7 million in net proceeds after mortgage payoffs
and closing costs. A gain on sale of approximately $15.9 million will be
recorded in the fourth quarter of 2012 related to this sale.

The weighted average historical cap rate for these three dispositions was
6.3%.

During the third quarter, the Company fully completed the development of The
Apartments at Cobblestone Square, located in Fredericksburg, Va. The property
averaged 84.1% occupancy during the third quarter of 2012; and, as of October
31, 97.1% of the 314 units were occupied with 98.4% of the units leased.

Capital Markets Activities

As of September 30, 2012, the Company's ratio of debt-to-total market
capitalization was 43.3% (based on a September 28, 2012 stock price of $61.27
used to determine equity value), with $128million outstanding on its $275
million revolving credit facility and $8.2 million of unrestricted cash on
hand. Total debt of $2.9 billion was outstanding, at interest rates averaging
4.5% and with staggered maturities averaging five years. Approximately 85% of
total indebtedness is at fixed rates. Interest coverage for the quarter was
3.1 times and the fixed charge ratio was 3.0 times.

On May 14, 2012, the Company extended its At-The-Market (ATM) equity offering
program, with authorization to sell up to 4.4 million common shares. During
the third quarter, 1,272,225 shares were sold (including 10,100 shares with a
settlement date in early October) at an average price of $63.61 generating
gross proceeds of $80.9 million and net proceeds of $79.3 million. Year to
date, the Company issued 1,970,824 shares at an average price of $62.64
generating gross proceeds of $123.5 million and net proceeds of $120.9
million. There are approximately 2.4 million common shares remaining under
this program.

Outlook

Based on higher third quarter results than expected and higher results
anticipated for the balance of the year, the Company has increased the
midpoint of its prior FFO guidance by seven cents to $4.07 and the range of
FFO per share to $4.05 to $4.09 from $3.96 to $4.04. This guidance range
reflects management's current assessment of economic and market conditions,
including a net one-half cent charge from the effect of Hurricane Sandy.
Operating FFO has been increased by six cents to $4.11 at the midpoint with a
range of $4.09 to $4.13. The difference between FFO and OFFO is due solely to
expensed acquisition costs. Because projected acquisition costs are minimal,
the guidance for the fourth quarter of 2012 for FFO and OFFO per share results
is identical at a range from $1.02 to $1.06, which also includes the one-half
cent reserve for Hurricane Sandy after taking into account various insurance
coverages and deductibles.

Dividend Declared

The Company announced a regular cash dividend on the Company's common shares
of $0.66per share for the quarter ended September 30, 2012. The dividend is
payable on November 27, 2012 to shareholders of record on November 15, 2012
and is equivalent to an annualized rate of $2.64 per share. The current
annual dividend represents a 4.42% yield based on the October 26, 2012 closing
price of $59.70. Home Properties' common stock will begin trading ex-dividend
on November 13, 2012.

Supplemental Information

The Company produces supplemental information that includes details regarding
property operations, other income, acquisitions, sales, geographic market
breakdown, debt and new development. The supplemental information is
available via the Company's website through the "Investors" section or e-mail
upon request.

Third Quarter 2012 Earnings Conference Call

The Company will conduct a conference call and simultaneous webcast tomorrow
at 11:00AMET to review and comment on the information reported in this
release. The webcast, which includes audio and a slide presentation, will be
available, live at 11:00 AM and archived by 1:00 PM, through the "Investors"
section home page of the website www.homeproperties.com. For live audio-only
participation, please dial 800-913-1647 (International 212-231-2900).

Fourth Quarter 2012 Earnings Release and Conference Call

The Company's fourth quarter 2012 financial results are scheduled to be
released after the stock market closes on Thursday, February 7, 2013. A
conference call, which will be simultaneously webcast, is scheduled for
Friday, February 8, 2013 at 11:00AM ET and will be accessible following the
instructions for the current quarter's conference call.

Fourth Quarter 2012 Conference/Event Schedule

Home Properties' President and CEO, Edward J. Pettinella, is scheduled to
participate in REITWorld®: NAREIT's Annual Convention for All Things REIT® in
San Diego
November 13-15. Any presentation and related materials will be available in
the "Investors" section of www.homeproperties.com.

This release contains forward-looking statements. Although the Company
believes expectations reflected in such forward-looking statements are based
on reasonable assumptions, it can give no assurance that its expectations will
be achieved. Factors that may cause actual results to differ include general
economic and local real estate conditions, weather and other conditions that
might affect operating expenses, the timely completion of repositioning and
new development activities within anticipated budgets, the actual pace of
future acquisitions and dispositions, and continued access to capital to fund
growth.

Home Properties is a publicly traded multifamily real estate investment trust
(REIT) that owns, operates, develops, acquires and rehabilitates apartment
communities primarily in selected Northeast and Mid-Atlantic markets. An S&P
400 Company, Home Properties owns and operates 124 communities containing
43,489 apartment units. For more information, visit HomeProperties' website
at www.homeproperties.com.



HOME PROPERTIES, INC.
SUMMARY OF OCCUPANCY AND PROPERTY OPERATING RESULTS
                       Avg. Physical
Third Quarter Results: Occupancy^(a)   3Q 2012  3Q 2012 vs. 3Q 2011 % Growth
                                       Average
                                       Monthly  Base
                                       Rent/    Rental   Total    Total
                       3Q 2012 3Q 2011 Occ Unit Rates    Revenue  Expense NOI
Core Properties^(b)    95.5%   95.5%   $1,240   3.9%     4.3%     (2.1%)  8.3%
Non-Core               92.0%   NA      $1,370   NA       NA       NA      NA
Properties^(c)
TOTAL PORTFOLIO        94.9%   NA      $1,259   NA       NA       NA      NA
                       Avg. Physical
Year-To-Date Results:  Occupancy^(a)   YTD 2012 YTD 2012 vs. YTD 2011 % Growth
                                       Average
                                       Monthly  Base
                       YTD     YTD     Rent /   Rental   Total    Total
                       2012    2011    Occ Unit Rates    Revenue  Expense NOI
Core Properties^(b)    95.7%   95.6%   $1,224   4.4%     4.6%     (1.8%)  8.8%
Non-Core               90.4%   NA      $1,404   NA       NA       NA      NA
Properties^(c)
TOTAL PORTFOLIO        95.0%   NA      $1,246   NA       NA       NA      NA

       Average physical occupancy is defined as total possible rental income,
^(a) net of vacancy expense, as a percentage of total possible rental
       income. Total possible rental income is determined by valuing occupied
       units at contract rates and vacant units at market rents.
^(b) Core Properties consist of 111 properties with 37,386 apartment units
       owned throughout 2011 and2012.
       Non-Core Properties consist of 14 properties with 6,421 apartment units
       acquired, developed, or redeveloped subsequent to January1, 2011, such
^(c)  that full year comparable operating results are not available.
       Non-Core Properties excludes properties still under development where
       construction is not 100% complete.





HOME PROPERTIES, INC.
SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data – Unaudited)
                                  Three Months Ended     Nine Months Ended
                                  September 30           September 30
                                  2012       2011        2012       2011
Rental income                     $ 155,335  $ 132,902   $ 448,331  $ 387,952
Property other income             12,654     10,517      39,785     35,017
Other income                      32         25          63         94
 Total revenues                 168,021    143,444     488,179    423,063
Operating and maintenance         59,975     54,838      178,945    165,785
General and administrative        8,018      7,803       27,367     22,865
Interest                          32,871     32,696      95,843     98,403
Depreciation and amortization     43,186     35,996      124,602    104,564
Other expenses                    15         1,630       2,726      1,739
 Total expenses                 144,065    132,963     429,483    393,356
Income from continuing operations 23,956     10,481      58,696     29,707
Discontinued operations
 Income from discontinued       466        277         1,216      920
operations
 Gain on disposition of         19,667     -           19,667     -
property
Discontinued operations           20,133     277         20,883     920
Net income                        44,089     10,758      79,579     30,627
Net income attributable to        (7,676)    (2,250)     (14,051)   (6,700)
noncontrolling interest
Net income attributable to common $  36,413 $   8,508 $  65,528 $  23,927
stockholders
Reconciliation from net income
attributable to
common stockholders to Funds From
Operations:
Net income available to common    $  36,413 $   8,508 $  65,528 $ 23,927
stockholders
Real property depreciation and    42,863     35,625      123,442    103,493
amortization
Noncontrolling interest           7,676      2,250       14,051     6,700
Gain on disposition of property   (19,667)   -           (19,667)   -

                                  $  67,285 $  46,383  $ 183,354  $ 134,120
FFO - basic and diluted ^(1)

      Pursuant to the updated guidance for Funds From Operations provided by
      the Board of Governors of the National Association of Real Estate
      Investment Trusts ("NAREIT"), FFO is defined as net income (computed in
      accordance with accounting principles generally accepted in the United
^(1) States of America ("GAAP")) excluding gains or losses from disposition
      of property, impairment write-downs of depreciable real estate,
      noncontrolling interest and extraordinary items plus depreciation from
      real property. The Company believes all adjustments not specifically
      provided for are consistent with the definition. Other similarly titled
      measures may not be calculated in the same manner.





HOME PROPERTIES, INC.
SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data – Unaudited)
                                        Three Months Ended Nine Months Ended
                                        September 30       September 30
                                        2012      2011     2012      2011
FFO – basic and diluted                 $ 67,285  $ 46,383 $ 183,354 $ 134,120
FFO – basic and diluted                 $ 67,285  $ 46,383 $ 183,354 $ 134,120
Acquisition costs of closed deals       15        1,630    2,726     1,739
included in other expenses
Operating FFO ^(2)                      $ 67,300  $ 48,013 $ 186,080 $ 135,859
FFO – basic and diluted                 $ 67,285  $ 46,383 $ 183,354 $ 134,120
Recurring non-revenue generating        (9,363)   (7,973)  (27,285)  (23,550)
capital expenses
Addback of non-cash interest expense    -         553      -         1,639
AFFO ^ (3)                              $ 57,922  $ 38,963 $ 156,069 $ 112,209
Operating FFO                           $ 67,300  $ 48,013 $ 186,080 $ 135,859
Recurring non-revenue generating        (9,363)   (7,973)  (27,285)  (23,550)
capital expenses
Addback of non-cash interest expense    -         553      -         1,639
Operating AFFO ^ (2) (3)                $ 57,937  $ 40,593 $ 158,795 $ 113,948
Weighted average shares/units
outstanding:
 Shares – basic                       50,255.2  41,707.7 49,218.7  39,743.3
 Shares – diluted                     50,934.2  42,531.0 49,848.4  40,462.5
 Shares/units – basic ^(4)            60,868.0  52,767.7 59,873.9  50,910.7
 Shares/units – diluted ^(4)          61,547.0  53,591.1 60,503.6  51,630.0
Per share/unit:
 Net income – basic                   $0.72     $0.20    $1.33     $0.60
 Net income – diluted                 $0.71     $0.20    $1.31     $0.59
 FFO – basic                          $1.11     $0.88    $3.06     $2.63
 FFO – diluted                        $1.09     $0.87    $3.03     $2.60
 Operating FFO ^ (2)                  $1.09     $0.90    $3.08     $2.63
 AFFO ^(3)                            $0.94     $0.73    $2.58     $2.17
 Operating AFFO ^ (2) (3)             $0.94     $0.76    $2.62     $2.21
 Common Dividend paid                 $0.66     $0.62    $1.98     $1.86

       Operating FFO is defined as FFO as computed in accordance with NAREIT
^(2) definition, adjusted for the add back of acquisition costs on closed
       deals.
       Adjusted Funds From Operations ("AFFO") is defined as gross FFO less an
       annual reserve for anticipated recurring, non-revenue generating
       capitalized costs of $848 and $800 per apartment unit in 2012 and 2011,
^(3) respectively. Non-cash interest expense of the exchangeable senior
       notes in accordance with ASC 470-20 (formerly APB14-1) has been added
       back for 2011. The resulting sum is divided by the weighted average
       shares/units on a diluted basis to arrive at AFFO per share/unit.
       Basic includes common stock outstanding plus operating partnership
^(4) units in Home Properties, L.P., which can be converted into shares of
       common stock. Diluted includes additional common stock equivalents.





HOME PROPERTIES, INC.
SUMMARY CONSOLIDATED BALANCE SHEETS
(in thousands - Unaudited)
                                       September 30, 2012 December 31, 2011
Land                                   $  799,272       $  721,542
Construction in progress               64,655             64,201
Buildings, improvements and equipment  4,606,058          4,256,581
                                       5,469,985          5,042,324
Accumulated depreciation               (1,094,705)        (983,759)
Real estate, net                       4,375,280          4,058,565
Cash and cash equivalents              8,195              8,297
Cash in escrows                        74,207             32,604
Accounts receivable                    10,288             12,142
Prepaid expenses                       23,490             15,994
Deferred charges                       14,230             16,322
Other assets                           12,058             9,282
Total assets                           $ 4,517,748        $ 4,153,206
Mortgage notes payable                 $ 2,208,427        $ 2,260,836
Unsecured notes payable                550,000            400,000
Unsecured line of credit               128,000            2,500
Accounts payable                       29,829             20,953
Accrued interest payable               12,239             10,286
Accrued expenses and other liabilities 32,273             29,474
Security deposits                      19,789             19,513
Total liabilities                      2,980,557          2,743,562
Common stockholders' equity            1,274,554          1,153,668
Noncontrolling interest                262,637            255,976
Total equity                           1,537,191          1,409,644
Total liabilities and equity           $ 4,517,748        $ 4,153,206
Total shares/units outstanding:
Common stock                           51,234.4           48,321.3
Operating partnership units            10,591.1           10,739.8
                                       61,825.5           59,061.1



SOURCE Home Properties, Inc.

Website: http://www.homeproperties.com
Contact: David P. Gardner, Executive Vice President and Chief Financial
Officer, +1-585-246-4113; or Charis W. Warshof, Vice President, Investor
Relations, +1-585-295-4237
 
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