While the first quarter financial report was positive, the apartment owner and operator did relate that its second quarter funds from operations per share guidance would have to be reduced by $.02 per share due to a recent $58.1-million offering of preferred stock.
Home Properties' Chairman and Chief Executive Officer Normal Leenhouts explains, "At the time Home Properties raised the preferred capital, we anticipated making a significant acquisition in the Boston market. Unfortunately, due to deterioration in rental rates and occupancy in this market, the potential deal did not meet our hurdle rates, so we terminated discussions with the seller."
He adds that while the failed deal will create some "dilution" in the second quarter, the company is continuing to pursue other acquisitions where the recent offering's capital will be utilized.
For the quarter ended March 31, 2002, funds from operations was $29,183,000, or $.63 per share, compared with $26,953,000, or $.60 per share, for the quarter ended March 31, 2001. The company reported earnings of $6.1 million or $.24 per share as compared to $4.3 million or $.20 per share in the first quarter of 2001.
Commenting on the company's first quarter performance, Leenhouts says, "It is a tremendous accomplishment by Home Properties' employees to achieve 5.8% growth in FFO per share and 9.2% growth in net operating income over last year's first quarter given the weak economy and very difficult operating environment for our industry sector. We believe our geographic markets, 'B' class garden style apartment product type, and strategy of repositioning communities through significant capital upgrades are all contributing to these strong results, which are among the best in the multifamily sector."
In the first quarter of this year, Home Properties reports it acquired six communities with a total of 1,031 apartment units in Long Island, N.Y., and Philadelphia for $100.3 million, including closing costs.
The company in the first three months of this year was also active in disposing of a number of its properties. Home Properties in the first quarter of 2002 sold six communities with a total of 339 apartment units in Eastern Pennsylvania and Baltimore, Maryland for $13.6 million. The company says it also sold a 153-unit development in Rochester, N.Y., for $7.9 million and a 199-unit property in Syracuse, N.Y., for $7.1 million.
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John Jordan
John Jordan is a veteran journalist with 36 years of print and digital media experience.
