Market Overview

Home Properties Reports Second Quarter 2015 Results

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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.

Home Properties.

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 Compared to

Second Quarter 2015 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

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