HOME PROPERTIES, INC. ROCHESTER, N.Y., July 30, 2015 /PRNewswire/ -- Home Properties, Inc. (NYSE: HME) today reported financial results for the quarter ended June 30, 2015. All per share results are reported on a diluted basis.
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Results for the Quarter
-- Earnings per share ("EPS") increased 20.2% to $0.47 from $0.39 in the
second quarter of 2014.
-- Funds from Operations ("FFO") per share increased 11.2% to $1.16 from
$1.04 in the prior year period.
-- Operating Funds from Operations ("OFFO") per share increased 9.6% to
$1.21 from $1.11 in the prior year period.
Results for the Six Months
-- Earnings per share ("EPS") increased 22.3% to $1.45 from $1.18 in the
first six months of 2014.
-- Funds from Operations ("FFO") per share increased 10.0% to $2.25 from
$2.04 in the prior year period.
-- Operating Funds from Operations ("OFFO") per share increased 9.4% to
$2.30 from $2.10 in the prior year period.
Same-Property Operating Results( (1))
Second Quarter 2015 Second Quarter 2015
Compared to Compared to
Second
Quarter
2014 First Quarter 2015
------- ------------------
Rental Income 3.6% increase 1.9% increase
------------- ------------- -------------
Total Revenues 3.5% increase 0.8% increase
-------------- ------------- -------------
Property Level
Operating Expenses 1.2% decrease 9.8% decrease
------------------ ------------- -------------
Net Operating Income ("NOI") 6.2% increase 7.3% increase
--------------------------- ------------- -------------
Average Physical 95.9%, or a 95.9%, or a
Occupancy(2) 50 basis point increase 90 basis point increase
----------- ----------------------- -----------------------
Average Monthly Rental Rates 3.0% increase to $1,371 1.0% increase to $1,371
---------------------------- ----------------------- -----------------------
(1) For 113 core properties
containing 38,569
apartment units owned
since January 1, 2014.
(2) The number of occupied
apartment units divided
by total apartment
units.
Acquisitions and Dispositions
There were no acquisitions or dispositions of apartment communities during the quarter.
Development
Construction continues at The Courts at Spring Mill Station, the Company's last remaining development project. The first of two buildings in this Conshohocken, Pennsylvania community became ready for occupancy in the fourth quarter of 2014, and the second building is nearing completion. Approximately 51% of the units are currently leased.
Capital Markets
On June 30, 2015 the Company repaid a mortgage for approximately $28 million at a fixed rate of 5.75%.
As of June 30, 2015:
-- The Company had approximately $7.8 million of cash on hand and an
additional $128 million of available capacity on its corporate credit
facility.
-- Unencumbered assets represented 57.5% of total undepreciated assets, up
from 56.7% at December 31, 2014.
-- The Company's ratio of debt-to-total market capitalization was 32.9%.
-- Total debt of $2.4 billion was outstanding at a weighted average
interest rate of 4.1% and staggered maturities averaging 3.0 years.
-- Approximately 82% of total indebtedness was at fixed rates.
-- Interest coverage for the quarter was 4.3 times and the fixed charge
ratio was 4.1 times.
Guidance
The Company announced on June 22, 2015 that it had entered into definitive agreements to be acquired by an affiliate of Lone Star Funds and to contribute a portfolio of up to six properties to an affiliate of UDR, Inc. As a result of these pending transactions, the Company is not providing an outlook for the remainder of 2015 nor updating or affirming its previously issued guidance for the full-year 2015.
Supplemental Information
The Company produces supplemental information that includes details regarding property operations, other income, acquisitions, dispositions, 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.
Second Quarter Earnings Conference Call
Due to the proposed acquisition of the Company, no quarterly earnings call will be conducted.
Forward-Looking Statements
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 are described under the heading "Risk Factors" in the Company's Annual Report on Form 10-K and in other filings with the Securities and Exchange Commission and include the ability of the Company to obtain required stockholder approval required to consummate the proposed merger of Home Properties; the ability of the Home Properties, L.P. to obtain the required unitholder approval to consummate the proposed partnership merger; the satisfaction or waiver of other conditions in the merger agreement; the outcome of any legal proceedings that may be instituted against the Company and others related to the merger agreement; the ability of third parties to fulfill their obligations relating to the proposed transactions, including providing financing under current financial market conditions; the risk that the Company merger, the partnership merger or the other transactions contemplated by the merger agreement may not be completed in the time frame expected by the parties or at all, general economic and local real estate conditions, 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 dispositions, and continued access to capital to fund growth. The Company assumes no obligation to update or supplement forward-looking statements because of subsequent events.
About Home Properties
Home Properties is a publicly traded multifamily real estate investment trust that owns, operates, acquires and repositions apartment communities in suburbs of major metropolitan areas, primarily along the East Coast of the United States. An S&P 400 Company, Home Properties owns and operates 121 communities containing 41,994 apartment units. For more information, please visit the Company's website at www.homeproperties.com.
HOME PROPERTIES, INC.
SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands - Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
------- -------
2015 2014 2015 2014
---- ---- ---- ----
Revenues:
Rental
income $163,112 $152,431 $323,992 $302,266
Property
other
income 13,542 12,973 28,989 28,294
Other
income 230 179 547 321
--- --- --- ---
Total
revenues 176,884 165,583 353,528 330,881
------- ------- ------- -------
Expenses:
Operating
and
maintenance 61,006 59,468 128,313 125,039
General
and
administrative 7,399 7,126 15,942 16,384
Interest 25,130 24,717 50,614 49,570
Depreciation
and
amortization 48,314 44,569 96,179 88,346
Other
expenses 3,385 274 3,762 282
Impairment
and
other
charges (500) 3,842 (319) 3,842
---- ----- ---- -----
Total
expenses 144,734 139,996 294,491 283,463
------- ------- ------- -------
Income
from
continuing
operations,
before
gain
on
disposition
of
real
estate 32,150 25,587 59,037 47,418
Gain
on
disposition
of
land - - 70 -
Gain
on
disposition
of
property - - 40,346 -
--- --- ------ ---
Income
from
continuing
operations 32,150 25,587 99,453 47,418
Discontinued operations:
Income
from
discontinued
operations - 876 - 1,710
Gain
on
disposition
of
property - - - 31,306
--- --- --- ------
Discontinued
operations - 876 - 33,016
--- --- --- ------
Net
income 32,150 26,463 99,453 80,434
Net
income
attributable
to
noncontrolling
interest (4,719) (3,994) (14,664) (12,174)
------ ------ ------- -------
Net
income
attributable
to
common
stockholders $27,431 $22,469 $84,789 $68,260
======= ======= ======= =======
Reconciliation from net income
attributable to
common stockholders to Funds
From Operations:
Net
income
attributable
to
common
stockholders $27,431 $22,469 $84,789 $68,260
Real
property
depreciation
and
amortization 47,703 44,587 94,975 88,676
Noncontrolling
interest 4,719 3,994 14,664 12,174
Gain
on
disposition
of
property - - (40,346) (31,306)
--- --- ------- -------
FFO
-
basic
and
diluted,
as
defined
by
NAREIT 79,853 71,050 154,082 137,804
Loss
from real
early estate
extinguishment
of
debt
in
connection
with
sale
of - - - 802
--- --- --- ---
FFO
-
basic
and
diluted
(1) $79,853 $71,050 $154,082 $138,606
======= ======= ======== ========
(1) Pursuant to guidance provided by
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
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 adds back debt
extinguishment costs and other
one-time costs incurred as a
result of repaying property-
specific debt triggered upon sale
of a property. Because of the
limitations of the FFO definition
as published by NAREIT as set
forth above, the Company has made
certain interpretations in
applying the definition. The
Company believes all adjustments
not specifically provided for are
consistent with the definition.
Similarly titled measures
disclosed by other companies may
not be calculated in the same
manner.
HOME PROPERTIES, INC.
SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share/unit - Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
------- -------
2015 2014 2015 2014
---- ---- ---- ----
FFO
-
basic
and
diluted $79,853 $71,050 $154,082 $138,606
Merger
costs
incurred
and
included
in
other
expenses 3,428 - 3,428 -
Acquisition
costs
of
closed
deals
included
in
other
expenses (43) 274 334 282
Gain
on
land
sale - - (70) -
Impairment
and
other
charges - 3,842 3 3,842
--- ----- --- -----
Operating
FFO
(2) $83,238 $75,166 $157,777 $142,730
======= ======= ======== ========
FFO
-
basic
and
diluted $79,853 $71,050 $154,082 $138,606
Recurring
non-
revenue
generating
capital
expenses (9,129) (9,094) (18,324) (18,225)
------ ------ ------- -------
AFFO
(3) $70,724 $61,956 $135,758 $120,381
======= ======= ======== ========
Operating
FFO $83,238 $75,166 $157,777 $142,730
Recurring
non-
revenue
generating
capital
expenses (9,129) (9,094) (18,324) (18,225)
------ ------ ------- -------
Operating
AFFO
(2)
(3) $74,109 $66,072 $139,453 $124,505
======= ======= ======== ========
Weighted average shares/
units outstanding:
Shares
-
basic 58,048.7 57,247.9 57,960.5 57,162.3
Shares
-
diluted 58,684.7 57,795.1 58,561.9 57,660.2
Shares/
units
-
basic
(4) 68,061.8 67,452.0 68,000.7 67,379.1
Shares/
units
-
diluted
(4) 68,697.8 67,999.3 68,602.2 67,877.0
Per share/unit:
Net
income
-
basic $0.47 $0.39 $1.46 $1.19
Net
income
-
diluted $0.47 $0.39 $1.45 $1.18
FFO
-
basic $1.17 $1.05 $2.27 $2.06
FFO
-
diluted $1.16 $1.04 $2.25 $2.04
Operating
FFO
(2) $1.21 $1.11 $2.30 $2.10
AFFO
(3) $1.03 $0.91 $1.98 $1.77
Operating
AFFO
(2)
(3) $1.08 $0.97 $2.03 $1.83
Common
dividend
paid $0.76 $0.73 $1.52 $1.46
(2) Operating FFO is defined as
FFO adjusted for the addback
of acquisition costs on
closed deals, land impairment
costs, gain on land sale and
incurred merger costs.
(3) Adjusted Funds From Operations
("AFFO") is defined as FFO
less an annual reserve for
anticipated recurring, non-
revenue generating
capitalized costs of $900 per
apartment unit. The resulting
sum is divided by the
weighted average shares/
units on a diluted basis to
arrive at AFFO per share/
unit.
(4) Basic includes common stock
outstanding plus operating
partnership 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)
June 30, 2015 December 31, 2014
------------- -----------------
Assets
Real estate:
Land $803,156 $815,565
Land held for sale 36,804 13,114
Construction in progress 57,620 118,595
Buildings, improvements and equipment 4,924,425 4,817,453
--------- ---------
5,822,005 5,764,727
Less: accumulated depreciation (1,429,699) (1,371,227)
---------- ----------
Real estate, net 4,392,306 4,393,500
Cash and cash equivalents 7,807 11,131
Cash in escrows 28,245 24,118
Accounts receivable, net 19,144 19,556
Prepaid expenses 11,985 23,484
Deferred charges, net 8,029 9,250
Other assets 9,291 7,496
----- -----
Total assets $4,476,807 $4,488,535
========== ==========
Liabilities and Equity
Mortgage notes payable $1,561,337 $1,637,175
Unsecured notes payable 550,000 550,000
Unsecured line of credit 318,500 269,000
Accounts payable 26,215 25,835
Accrued interest payable 8,564 7,732
Accrued expenses and other liabilities 42,501 38,732
Security deposits 19,766 18,631
------ ------
Total liabilities 2,526,883 2,547,105
Common stockholders' equity 1,664,388 1,653,218
Noncontrolling interest 285,536 288,212
------- -------
Total equity 1,949,924 1,941,430
--------- ---------
Total liabilities and equity $4,476,807 $4,488,535
========== ==========
Total shares/units outstanding:
Common stock 57,995.3 57,704.0
Operating partnership units 10,012.1 10,114.4
-------- --------
68,007.4 67,818.4
======== ========
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SOURCE Home Properties, Inc.
