Home Properties Reports First Quarter 2015 Results and Announces Quarterly Dividend
ROCHESTER, N.Y., April 30, 2015 /PRNewswire/ -- Home Properties, Inc. (NYSE: HME) today reported financial results for the quarter ended March 31, 2015. All per share results are reported on a diluted basis.
- Earnings per share ("EPS") increased 23.4% to $0.98 from $0.79 in the first quarter of 2014. 2015 EPS includes the impact of higher gains on the disposition of property of $0.13 per share.
- Funds from Operations ("FFO") per share increased 8.7% to $1.08 from $1.00 in the prior year period.
- Operating Funds from Operations ("OFFO) per share increased 9.2% to $1.09 from $1.00 in the prior year period.
"We generated growth in rental income of 3.2% for the quarter, equal to assumptions provided in our guidance," said Edward J. Pettinella, President and Chief Executive Officer. "Occupancy was steady at 95.0% for the quarter, unchanged from the first quarter of 2014 and up 10 basis points from year-end 2014.
"I am pleased with these achievements in light of the challenging weather conditions experienced in seven of our eight markets. In the first quarter of 2015, temperatures were significantly lower than the 30-year historical average and snowfall was higher, contributing to lower prospective resident traffic and higher operating expenses. Operating expenses related to weather were approximately three cents per share higher than our forecast. Nonetheless, our core portfolio generated a strong 5.2% increase in NOI. In light of recent positive operating trends, particularly in our Washington, D.C. market, and our outlook for the remainder of 2015, today we reaffirmed the midpoint of previously-provided FFO and OFFO guidance."
Same-Property Operating Results (1)
| First Quarter 2015 Compared to |
First Quarter 2015 Compared to |
|
| First Quarter 2014 |
Fourth Quarter 2014 |
|
| Rental Income |
3.2% increase |
0.5% increase |
| Total Revenues |
2.6% increase |
0.8% increase |
| Property Level |
||
| Operating Expenses |
1.3% decrease |
5.2% increase |
| Net Operating Income ("NOI") |
5.2% increase |
1.8% decrease |
| Average Physical |
95.0%, |
95.0%, |
| Occupancy(2) |
unchanged from prior year |
10 basis point increase |
| Average Monthly Rental Rates |
3.0% increase to $1,357 |
0.3% increase to $1,357 |
| (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
During the quarter, the Company added 710 units in its Chicago region and 241 units in Northern New Jersey for a combined purchase price of $123 million.
- Two adjacent apartment communities were acquired on January 7 in the northwest suburbs of Chicago – The Mansions of Mountshire and The Mansions Apartments – and they are being operated as one community named Park Grove Apartments. Park Grove is located in Mount Prospect near three major Chicago area expressways and within 5 miles of O'Hare International Airport.
- Longbrook Apartments in Matawan, New Jersey was acquired on February 19 and renamed Sutton Pointe Apartments. The community is located within walking distance of the Aberdeen-Matawan Train Station and is a 45-minute drive from Manhattan.
Dispositions
The Company sold two apartment communities with 1,141 units during the quarter for approximately $126 million, resulting in a gain on sale of $40.3 million.
Apartment communities sold were:
- The New Colonies – 672 units in Steger, Illinois (Chicago region) sold on January 26.
- The Coves at Chesapeake – 469 units in Glen Burnie, Maryland (Baltimore region) sold on March 25.
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 41% of the units are currently leased.
Capital Markets
During the quarter, the Company repaid first and second mortgages on one community totaling approximately $33 million at a weighted average fixed rate of 5.22%. The property is now part of the unencumbered asset pool.
As of March 31, 2015:
- The Company had approximately $22 million of cash on hand and an additional $155 million of available capacity on its corporate credit facility.
- Unencumbered assets represented 57.6% of total undepreciated assets, up from 56.7% at December 31, 2014.
- The Company's ratio of debt-to-total market capitalization was 34.1%.
- Total debt of $2.4 billion was outstanding at a weighted average interest rate of 4.1% and staggered maturities averaging 3.2 years.
- Approximately 83% of total indebtedness was at fixed rates.
- Interest coverage for the quarter was 4.0 times and the fixed charge ratio was 3.8 times.
Guidance
For 2015, the Company expects FFO between $4.59 and $4.71 per share, which will produce growth of 6.1% to 8.9% when compared to 2014 results. The guidance range of expected FFO per share for the second quarter of 2015 is $1.13 to $1.17.
The Company expects 2015 OFFO per share between $4.54 and $4.66. The guidance range of expected OFFO per share for the second quarter of 2015 is $1.13 to $1.17.
Assumptions for 2015 guidance are included in the Company's supplemental information. The Company expects to include additional commentary on projected results for the balance of the year when it announces second quarter 2015 financial results.
Dividend Declared
The Company announced a regular cash dividend on the Company's common shares of $0.76 per share for the quarter ended March 31, 2015. The dividend is payable on May 22, 2015 to shareholders of record on May 12, 2015 and is equivalent to an annualized rate of $3.04 per share. The current annual dividend represents a 4.1% yield based on the April 29 closing price of $73.89. Home Properties' common stock will begin trading ex-dividend on May 8, 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.
First Quarter Earnings Conference Call
The Company will conduct a conference call and simultaneous webcast tomorrow at 11:00 AM ET to discuss quarterly results. The webcast, which includes a slide presentation, will be available on the Presentations page of the Investors section of the Company's website, www.homeproperties.com. For live audio-only participation, you may dial 800-913-1647 (International 212-231-2900).
Second Quarter Conference/Event Schedule
Home Properties is scheduled to participate in REITWeek 2015®: NAREIT's Investor Forum® on June 9-11, 2015 in New York City. Management will participate in a roundtable discussion at the event on Tuesday, June 9 at 10:15 AM. A link to the live webcast will be available on the Presentations page of the Investors section of the Company's website, with a replay available for 90 days. The Company's presentation materials for the conference will be available at the same location.
Second Quarter Earnings Release and Conference Call
The Company's second quarter 2015 financial results are scheduled to be released after the stock market closes on Thursday, July 30, 2015. A conference call, which will be simultaneously webcast, is scheduled for Friday, July 31, 2015 at 11:00 AM ET. The call will be accessible following the same instructions as the current quarter's conference call.
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 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 41,917 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 |
||
| March 31, |
||
| 2015 |
2014 |
|
| Revenues: |
||
| Rental income |
$ 160,880 |
$ 149,836 |
| Property other income |
15,447 |
15,321 |
| Other income |
317 |
141 |
| Total revenues |
176,644 |
165,298 |
| Expenses: |
||
| Operating and maintenance |
67,307 |
65,571 |
| General and administrative |
8,543 |
9,258 |
| Interest |
25,485 |
24,852 |
| Depreciation and amortization |
47,864 |
43,778 |
| Other expenses |
377 |
8 |
| Impairment and other charges |
181 |
- |
| Total expenses |
149,757 |
143,467 |
| Income from continuing operations, before gain on disposition of real estate |
26,887 |
21,831 |
| Gain on disposition of land |
70 |
- |
| Gain on disposition of property |
40,346 |
- |
| Income from continuing operations |
67,303 |
21,831 |
| Discontinued operations: |
||
| Income from discontinued operations |
- |
834 |
| Gain on disposition of property |
- |
31,306 |
| Discontinued operations |
- |
32,140 |
| Net income |
67,303 |
53,971 |
| Net income attributable to noncontrolling interest |
(9,945) |
(8,180) |
| Net income attributable to common stockholders |
$ 57,358 |
$ 45,791 |
| Reconciliation from net income attributable to |
||
| Net income attributable to common stockholders |
$ 57,358 |
$ 45,791 |
| Real property depreciation and amortization |
47,272 |
44,088 |
| Noncontrolling interest |
9,945 |
8,180 |
| Gain on disposition of property |
(40,346) |
(31,306) |
| FFO - basic and diluted, as defined by NAREIT |
74,229 |
66,753 |
| Loss from early extinguishment of debt in connection with sale of real estate |
- |
802 |
| FFO - basic and diluted (1) |
$ 74,229 |
$ 67,555 |
| (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 |
||
| March 31, |
||
| 2015 |
2014 |
|
| FFO – basic and diluted |
$ 74,229 |
$ 67,555 |
| Acquisition costs of closed deals included in other expenses |
377 |
8 |
| Gain on land sale |
(70) |
- |
| Impairment and other charges |
3 |
- |
| Operating FFO (2) |
$ 74,539 |
$ 67,563 |
| FFO – basic and diluted |
$ 74,229 |
$ 67,555 |
| Recurring non-revenue generating capital expenses |
(9,192) |
(9,129) |
| AFFO (3) |
$ 65,037 |
$ 58,426 |
| Operating FFO |
$ 74,539 |
$ 67,563 |
| Recurring non-revenue generating capital expenses |
(9,192) |
(9,129) |
| Operating AFFO (2) (3) |
$ 65,347 |
$ 58,434 |
| Weighted average shares/units outstanding: |
||
| Shares – basic |
57,872.6 |
57,106.9 |
| Shares – diluted |
58,505.7 |
57,620.7 |
| Shares/units – basic (4) |
67,940.3 |
67,336.5 |
| Shares/units – diluted (4) |
68,573.4 |
67,850.3 |
| Per share/unit: |
||
| Net income – basic |
$0.99 |
$0.80 |
| Net income – diluted |
$0.98 |
$0.79 |
| FFO – basic |
$1.09 |
$1.00 |
| FFO – diluted |
$1.08 |
$1.00 |
| Operating FFO (2) |
$1.09 |
$1.00 |
| AFFO (3) |
$0.95 |
$0.86 |
| Operating AFFO (2) (3) |
$0.95 |
$0.86 |
| Common dividend paid |
$0.76 |
$0.73 |
| (2) Operating FFO is defined as FFO adjusted for the addback of acquisition costs on closed deals and land impairment 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) |
||
| March 31, 2015 |
December 31, 2014 |
|
| Assets |
||
| Real estate: |
||
| Land |
$ 803,156 |
$ 815,565 |
| Land held for sale |
36,746 |
13,114 |
| Construction in progress |
83,611 |
118,595 |
| Buildings, improvements and equipment |
4,859,169 |
4,817,453 |
| 5,782,682 |
5,764,727 |
|
| Less: accumulated depreciation |
(1,381,762) |
(1,371,227) |
| Real estate, net |
4,400,920 |
4,393,500 |
| Cash and cash equivalents |
22,130 |
11,131 |
| Cash in escrows |
25,978 |
24,118 |
| Accounts receivable, net |
17,053 |
19,556 |
| Prepaid expenses |
17,003 |
23,484 |
| Deferred charges, net |
8,590 |
9,250 |
| Other assets |
2,299 |
7,496 |
| Total assets |
$ 4,493,973 |
$ 4,488,535 |
| Liabilities and Equity |
||
| Mortgage notes payable |
$ 1,596,881 |
$ 1,637,175 |
| Unsecured notes payable |
550,000 |
550,000 |
| Unsecured line of credit |
291,500 |
269,000 |
| Accounts payable |
27,376 |
25,835 |
| Accrued interest payable |
9,819 |
7,732 |
| Accrued expenses and other liabilities |
42,812 |
38,732 |
| Security deposits |
19,161 |
18,631 |
| Total liabilities |
2,537,549 |
2,547,105 |
| Common stockholders' equity |
1,669,300 |
1,653,218 |
| Noncontrolling interest |
287,124 |
288,212 |
| Total equity |
1,956,424 |
1,941,430 |
| Total liabilities and equity |
$ 4,493,973 |
$ 4,488,535 |
| Total shares/units outstanding: |
||
| Common stock |
57,900.9 |
57,704.0 |
| Operating partnership units |
10,017.1 |
10,114.4 |
| 67,918.0 |
67,818.4 |
|
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SOURCE Home Properties, Inc.
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