Home Properties Reports Second Quarter 2015 Results

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.

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 early extinguishment of debt in connection with sale of real estate

-

-

-

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