EX-99
3
hme8k06302006ex991.htm
NEWS RELEASE 6/29/2006
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
HOME PROPERTIES COMPLETES SALE OF
SOUTHEAST MICHIGAN PORTFOLIO
Company Repurchases Common Shares and Purchases Two Properties
ROCHESTER, NY, JUNE 29, 2006 -- Home Properties, Inc. (NYSE:HME) today announced
completion of the sale of its entire portfolio of 19 properties containing 5,046
apartment units in the Detroit, Michigan area for total consideration of $230
million, or approximately $45,600 per unit, to the Lakewood, New Jersey-based
Lightstone Group. Net proceeds to Home Properties, after closing costs and $72.7
million in debt repayments, were $150.4 million. The weighted average first year
capitalization rate on the sale is 7.6% after applying a 3% management fee and
after a $300 per unit reserve for capital expenditures. Any gain or loss, which
is estimated to be close to breakeven, will be recorded in the 2006 second
quarter. In addition, interest expense reported in discontinued operations will
include approximately $3 million of prepayment penalties and unamortized loan
acquisition costs triggered by the loan payoffs upon sale. Neither the gain
(loss) nor the interest costs will be included in the Company's reported Funds
from Operations for the second quarter of 2006.
"Home Properties' exit from the Michigan market is consistent with our strategy
of focusing our operations in high barrier, high growth markets along the East
Coast", said Edward J. Pettinella, Home Properties' President and CEO. "The sale
of the Detroit portfolio will improve the Company's future financial
performance, which was muted in recent years by the negative net operating
income growth of these properties".
In 2005, year-over-year net operating income (NOI) growth for the Detroit-area
properties was negative 9.8%. For the first quarter of 2006 compared to the
first quarter of 2005, NOI growth was negative 5.2%. During these same periods,
rental rate and rental revenue growth for the Detroit properties also were
negative. In the first quarter of 2006, the Detroit properties produced 7.1% of
Home Properties' net operating income and comprised 11.6% of the total apartment
units owned by the Company.
In earnings guidance presented during its fourth quarter 2005 conference call,
the Company said it had assumed a gross purchase price of $240 million for the
Detroit portfolio with net proceeds from the sale of $153.7 million. At the
actual $230 million purchase price, net proceeds were $150.4 million due to $6.7
million less in closing costs than had been estimated previously. Home
Properties continues to expect the sale and ultimate use of proceeds will be
seven cents per share dilutive in 2006, identical to previously published
guidance.
The Company said it expects to use approximately $77 million of the net proceeds
for common share repurchase and the balance for property acquisitions in the
Company's targeted East Coast markets. From May 19, 2006 to June 20, 2006, in
anticipation of the closing of the Detroit property sale, Home Properties
repurchased 1,572,721 shares at a weighted average price of $50.87 per share or
a total of $80.0 million. The Company has Board authorization to buy back up to
approximately 1.5 million additional shares of its common stock or Operating
Partnership Units.
Also in anticipation of the Detroit sale, the Company recently completed two
acquisitions in the Boston, Massachusetts suburb of Randolph, which is
approximately 12 miles south of downtown Boston.
Highland House (172 units) was purchased on May 31, 2006 for $17.9 million,
including closing costs, which equates to approximately $104,000 per unit. The
transaction consisted of assumption of a mortgage of $6.3 million at 6.99%
maturing on January 1, 2029. The balance was funded through the Company's line
of credit. Built between 1965 and 1969, Highland House is 94.7% occupied with
monthly rents averaging $1,077. The property has four three-story buildings and
one four-story building. Buildings are of wood frame construction on poured
concrete slab foundations with brick exteriors and pitched, asphalt-shingled
roofs. The unit mix consists of 26 studio, 73 one-bedroom and 73 two-bedroom
apartments. The average apartment size is 764 square feet. Highland House has
natural gas-fired baseboard heat from boilers, sleeve air conditioning units in
each apartment and individually metered electric service. Amenities include an
outdoor swimming pool, tennis court and fitness center.
During the first few years of ownership, the Company expects to spend a total of
approximately $1.1 million in improvements to correct deferred replacements,
repair the parking lot, improve signage and landscaping, and upgrade kitchens
and baths. Management anticipates a 6.3% weighted average first year
capitalization rate on this acquisition. (The return is calculated after
allocating 3.0% of rental revenues for management and overhead expenses and
before normalized capital expenditures of approximately $525 per unit annually.)
Liberty Place (107 units) was purchased on June 6, 2006 for a total purchase
price of $14.9 million, including closing costs, which equates to approximately
$139,000 per apartment unit. Consideration included the assumption of a $6.2
million mortgage at an interest rate of 6.79%, maturing on November 1, 2012. The
balance was funded through the Company's line of credit. The property is
currently 93.0% occupied with monthly rents averaging $1,368.
Built in 1988, the property consists of twelve three-story buildings with
elevators. Buildings are of wood frame construction on poured concrete slabs
with vinyl and wood exteriors. Roofs are pitched with asphalt shingles. The unit
mix consists of 12 one-bedroom and 84 two-bedroom apartments and 11
three-bedroom townhouse units. Each unit has a natural gas-fired forced hot air
furnace, a hot water tank, electric central air conditioning and individually
metered electric service. There is a laundry room in each building. The average
apartment size is 972 square feet. Amenities include a clubhouse with fitness
center, an outdoor swimming pool and a tennis court.
During the first few years of ownership, the Company expects to spend a total of
approximately $1.0 million in improvements to correct deferred replacements,
repair and clean building exteriors, repair the parking lot, improve signage and
landscaping, and upgrade kitchens and baths. Management anticipates a 6.6%
weighted average first year capitalization rate.
With the two Randolph, Massachusetts acquisitions, Home Properties owns a total
of five properties with 1,531 units in the Boston, Massachusetts suburbs.
This press 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, 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 dispositions, and continued access to capital to fund growth.
Home Properties is a publicly traded apartment real estate investment trust that
owns, operates, acquires and rehabilitates apartment communities primarily in
selected Northeast, Mid-Atlantic and Southeast Florida markets. Currently, Home
Properties operates 139 communities containing 42,146 apartment units. Of these,
38,577 units in 134 communities are owned directly by the Company; 868 units are
partially owned and managed by the Company as general partner, and 2,701 units
are managed for other owners. For more information, visit Home Properties' Web
site at www.homeproperties.com.
###
For further information:
------------------------
David P. Gardner, Executive Vice President and Chief Financial Officer, (585)
246-4113
Charis W. Warshof, Vice President, Investor Relations, (585) 295-4237

EX - 99 3 hme8k06302006ex991 . htm NEWS RELEASE 6 / 29 / 2006 EXHIBIT 99 . 1 FOR IMMEDIATE RELEASE HOME PROPERTIES COMPLETES SALE OF SOUTHEAST MICHIGAN PORTFOLIO Company Repurchases Common Shares and Purchases Two Properties ROCHESTER , NY , JUNE 29 , 2006 -- Home Properties , Inc . ( NYSE : HME ) today announced completion of the sale of its entire portfolio of 19 properties containing 5,046 apartment units in the Detroit , Michigan area for total consideration of $ 230 million , or approximately $ 45,600 per unit , to the Lakewood , New Jersey - based Lightstone Group . Net proceeds to Home Properties , after closing costs and $ 72.7 million in debt repayments , were $ 150.4 million . The weighted average first year capitalization rate on the sale is 7 . 6 % after applying a 3 % management fee and after a $ 300 per unit reserve for capital expenditures . Any gain or loss , which is estimated to be close to breakeven , will be recorded in the 2006 second quarter . In addition , interest expense reported in discontinued operations will include approximately $ 3 million of prepayment penalties and unamortized loan acquisition costs triggered by the loan payoffs upon sale . Neither the gain ( loss ) nor the interest costs will be included in the Company 's reported Funds from Operations for the second quarter of 2006 . " Home Properties ' exit from the Michigan market is consistent with our strategy of focusing our operations in high barrier , high growth markets along the East Coast " , said Edward J . Pettinella , Home Properties ' President and CEO . " The sale of the Detroit portfolio will improve the Company ' s future financial performance , which was muted in recent years by the negative net operating income growth of these properties " . In 2005 , year - over - year net operating income ( NOI ) growth for the Detroit - area properties was negative 9 . 8 % . For the first quarter of 2006 compared to the first quarter of 2005 , NOI growth was negative 5 . 2 % . During these same periods , rental rate and rental revenue growth for the Detroit properties also were negative . In the first quarter of 2006 , the Detroit properties produced 7 . 1 % of Home Properties ' net operating income and comprised 11 . 6 % of the total apartment units owned by the Company . In earnings guidance presented during its fourth quarter 2005 conference call , the Company said it had assumed a gross purchase price of $ 240 million for the Detroit portfolio with net proceeds from the sale of $ 153.7 million . At the actual $ 230 million purchase price , net proceeds were $ 150.4 million due to $ 6.7 million less in closing costs than had been estimated previously . Home Properties continues to expect the sale and ultimate use of proceeds will be seven cents per share dilutive in 2006 , identical to previously published guidance . The Company said it expects to use approximately $ 77 million of the net proceeds for common share repurchase and the balance for property acquisitions in the Company ' s targeted East Coast markets . From May 19 , 2006 to June 20 , 2006 , in anticipation of the closing of the Detroit property sale , Home Properties repurchased 1,572,721 shares at a weighted average price of $ 50.87 per share or a total of $ 80.0 million . The Company has Board authorization to buy back up to approximately 1 . 5 million additional shares of its common stock or Operating Partnership Units . Also in anticipation of the Detroit sale , the Company recently completed two acquisitions in the Boston , Massachusetts suburb of Randolph , which is approximately 12 miles south of downtown Boston . Highland House ( 172 units ) was purchased on May 31 , 2006 for $ 17.9 million , including closing costs , which equates to approximately $ 104,000 per unit . The transaction consisted of assumption of a mortgage of $ 6.3 million at 6 . 99 % maturing on January 1 , 2029 . The balance was funded through the Company 's line of credit . Built between 1965 and 1969 , Highland House is 94 . 7 % occupied with monthly rents averaging $ 1,077 . The property has four three - story buildings and one four - story building . Buildings are of wood frame construction on poured concrete slab foundations with brick exteriors and pitched , asphalt - shingled roofs . The unit mix consists of 26 studio , 73 one - bedroom and 73 two - bedroom apartments . The average apartment size is 764 square feet . Highland House has natural gas - fired baseboard heat from boilers , sleeve air conditioning units in each apartment and individually metered electric service . Amenities include an outdoor swimming pool , tennis court and fitness center . During the first few years of ownership , the Company expects to spend a total of approximately $ 1.1 million in improvements to correct deferred replacements , repair the parking lot , improve signage and landscaping , and upgrade kitchens and baths . Management anticipates a 6 . 3 % weighted average first year capitalization rate on this acquisition . ( The return is calculated after allocating 3 . 0 % of rental revenues for management and overhead expenses and before normalized capital expenditures of approximately $ 525 per unit annually . ) Liberty Place ( 107 units ) was purchased on June 6 , 2006 for a total purchase price of $ 14.9 million , including closing costs , which equates to approximately $ 139,000 per apartment unit . Consideration included the assumption of a $ 6.2 million mortgage at an interest rate of 6 . 79 % , maturing on November 1 , 2012 . The balance was funded through the Company 's line of credit . The property is currently 93 . 0 % occupied with monthly rents averaging $ 1,368 . Built in 1988 , the property consists of twelve three - story buildings with elevators . Buildings are of wood frame construction on poured concrete slabs with vinyl and wood exteriors . Roofs are pitched with asphalt shingles . The unit mix consists of 12 one - bedroom and 84 two - bedroom apartments and 11 three - bedroom townhouse units . Each unit has a natural gas - fired forced hot air furnace , a hot water tank , electric central air conditioning and individually metered electric service . There is a laundry room in each building . The average apartment size is 972 square feet . Amenities include a clubhouse with fitness center , an outdoor swimming pool and a tennis court . During the first few years of ownership , the Company expects to spend a total of approximately $ 1.0 million in improvements to correct deferred replacements , repair and clean building exteriors , repair the parking lot , improve signage and landscaping , and upgrade kitchens and baths . Management anticipates a 6 . 6 % weighted average first year capitalization rate . With the two Randolph , Massachusetts acquisitions , Home Properties owns a total of five properties with 1,531 units in the Boston , Massachusetts suburbs . This press 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 , 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 dispositions , and continued access to capital to fund growth . Home Properties is a publicly traded apartment real estate investment trust that owns , operates , acquires and rehabilitates apartment communities primarily in selected Northeast , Mid - Atlantic and Southeast Florida markets . Currently , Home Properties operates 139 communities containing 42,146 apartment units . Of these , 38,577 units in 134 communities are owned directly by the Company ; 868 units are partially owned and managed by the Company as general partner , and 2,701 units are managed for other owners . For more information , visit Home Properties ' Web site at www.homeproperties.com . # # # For further information : ------------------------ David P . Gardner , Executive Vice President and Chief Financial Officer , ( 585 ) 246 - 4113 Charis W . Warshof , Vice President , Investor Relations , ( 585 ) 295 - 4237
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