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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1-13136
HOME PROPERTIES OF NEW YORK, INC.
(Exact name of Registrant as specified in its Charter)
MARYLAND 16-1455126
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
850 CLINTON SQUARE
ROCHESTER, NEW YORK 14604
(Address of principal executive offices)
Registrant's telephone number, including area code: (716) 546-4900
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange on
TITLE OF EACH CLASS WHICH REGISTERED
Common Stock, $.01 par value New York Stock Exchange
Indicate by check mark whether registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X No
---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.
The aggregate market value of the shares of common stock held by non-affiliates
(based upon the closing sale price on the New York Stock Exchange) on March 23,
2000 was approximately $524,868,266. As of March 23, 2000, there were
20,071,433 shares of common stock, $.01 par value outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
The proxy statement to be issued in connection with the Company's 2000 Annual
Meeting of Stockholders is incorporated by reference into Items 11, 12 and 13
of Part III of this Report.
HOME PROPERTIES OF NEW YORK, INC.
TABLE OF CONTENTS
PART I.
Item 1. Business
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
Item X. Executive Officers and Key Employees
PART II.
Item 5. Market of the Registrant's Common Equity
and Related Shareholder Matters
Item 6. Selected Financial and Operating Information
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure
PART III.
Item 10. Directors and Executive Officers of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management
Item 13. Certain Relationships and Related Transactions
PART IV.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
PART I
ITEM 1. BUSINESS
THE COMPANY
Home Properties of New York, Inc. ("Home Properties" or the "Company") is
a self-administered and self-managed real estate investment trust ("REIT")
that owns, manages, acquires, rehabilitates and develops apartment
communities. The Company's properties are regionally focused in the
Northeastern, Mid-Atlantic and Midwestern United States. It was formed to
continue and expand the operations of Home Leasing Corporation ("Home
Leasing"). The Company completed an initial public offering of 5,408,000
shares of common stock (the "IPO") on August 4, 1994.
The Company conducts its business through Home Properties of New York,
L.P. (the "Operating Partnership"), a New York limited partnership in
which the Company held a 62.4% partnership interest as of December 31,
1999 (64% at December 31, 1998) and two management companies (the
"Management Companies") - Home Properties Management, Inc. ("HP
Management") and Conifer Realty Corporation ("Conifer Realty"), both of
which are Maryland corporations.
Home Properties, through its affiliates described above, as of December
31, 1999, operated 291 communities with 44,982 apartment units. Of these,
33,807 units in 126 communities are owned outright (the "Owned
Properties"), 7,710 units in 125 communities are managed and partially
owned by the Company as general partner, and 3,465 units in 40 communities
are managed for other owners (collectively, the "Managed Properties").
The Management Companies and the Operating Partnership are also involved
in the development and redevelopment of government-assisted apartment
communities and certain other development activities.
The Owned Properties and the Managed Properties (collectively, the
"Properties") are concentrated in the following market areas:
APARTMENTS OWNED AND MANAGED AT 12/31/99
Apts. Apts. Managed As Apts. Apt.
MARKET AREA OWNED GENERAL PARTNER FEE MANAGED TOTALS
Baltimore, MD 6,232 0 1,583 7,815
Detroit, MI 5,031 0 108 5,139
Eastern, PA 4,163 0 0 4,163
Rochester, NY 2,975 1,447 668 5,090
Northern, NJ 2,657 256 0 2,913
Buffalo, NY 2,519 156 0 2,675
Downstate NY 1,605 235 0 1,840
Northern VA/DC Area 1,590 0 103 1,693
Syracuse, NY 1,564 1,145 260 2,969
Chicago, IL 1,455 0 0 1,455
Central VA 1,244 0 0 1,244
South Bend, IN 706 168 0 874
Portland, ME 596 0 0 596
Hamden, CT 498 0 0 498
Delaware 432 0 0 432
Western PA 298 2,036 225 2,559
Columbus, OH 242 1,124 0 1,366
Other NYS Areas 0 1,143 518 1,661
Total # of Units 33,807 7,710 3,465 44,982
Total Number of
Communities 126 125 40 291
Subsequent to December 31, 1999 and as of March 16, 2000, the Company
has acquired 2,113 additional units in Philadelphia, Pennsylvania.
The Company's mission is to provide investors with dependable
financial returns that exceed those of comparable investments. The
Company intends to pursue this mission in a socially responsible
manner, by remaining committed to improving the quality of life for
its residents, enhancing the broader communities in which the Company
operates and providing employees with opportunities for growth and
accomplishment.
The Company's business strategy includes: (i) aggressively managing
and improving its communities to achieve increased net operating
income; (ii) acquiring additional apartment communities with
attractive returns at prices significantly below replacement costs;
(iii) selectively developing and rehabilitating apartment communities
that serve low to moderate income households to generate management
and development fee revenues and (iv) maintaining a conservative
capital structure with cost effective access to the capital markets.
STRUCTURE
The Company was formed in November, 1993 as a Maryland corporation and
is the general partner of the Operating Partnership. On December 31,
1999, it owned a 62.4% interest in the Operating Partnership - one
percent as general partner and the remainder as a limited partner
through its wholly owned subsidiary, Home Properties Trust. A portion
of the limited partner interests held by Home Properties Trust as of
December 31, 1999 consisted of all of the Class A Limited Partnership
Interests (1,666,667 interests or 4.5% of the total interests in the
Operating Partnership) and all of the Series B Limited Partnership
Units (2,000,000 units or 5.4% of the total). Those preferred
interests in the Operating Partnership have rights and preferences
that mirror the rights and preferences of the holders of the Series A
and Series B preferred shares in Home Properties held by the State of
Michigan Retirement Systems and GE Capital Equity Investment, Inc.,
respectively. The remaining units (19,225,470 or 51.5% of the total)
held by Home Properties Trust have basically the same rights as the
other limited partner interests (the "Units") in the Operating
Partnership. Those other Units are owned by certain individuals who
acquired Units in the Operating Partnership as partial consideration
for their interests in entities owning apartment communities purchased
by the Operating Partnership, as well as certain officers of the
Company.
The Operating Partnership is a New York limited partnership
formed in December, 1993. Holders of Units in the Operating
Partnership may redeem a Unit for one share of the Company's
common stock or cash equal to the fair market value at the time
of the redemption, at the option of the Company. The Company
currently anticipates that it will issue shares of common stock
rather than pay cash in connection with such redemptions.
Management expects that it will continue to utilize Units as
partial consideration for a significant portion of its
acquisition properties.
Both of the Management Companies were formed to comply with the
technical requirements of federal income tax laws. Both are Maryland
corporations. HP Management was formed in January, 1994 and Conifer
Realty was formed in December, 1995. As of December 31, 1999, the
Operating Partnership held 95% of the economic interest in both
Management Companies, with Nelson and Norman Leenhouts (the
"Leenhoutses") holding the remaining five percent interest in HP
Management and the Leenhoutses and Richard J. Crossed, holding the
remaining five percent interest in Conifer Realty. The Management
Companies manage, for a fee, certain of the residential, commercial
and development activities of the Company and provide construction,
development and redevelopment services for the Company.
In September 1997, Home Properties Trust ("QRS") was formed as a
Maryland real estate trust and as a qualified REIT subsidiary, with
100% of its shares being owned by the Company. The QRS has been
admitted as a limited partner of the Operating Partnership and the
Company transferred all but one percent of its interest in the
Operating Partnership to the QRS.
The Company currently has approximately 1,925 employees and its
executive offices are located at 850 Clinton Square, Rochester, New
York 14604. Its telephone number is (716) 546-4900.
OPERATING STRATEGIES
The Company will continue to focus on enhancing the investment returns
of its Properties by: (i) acquiring apartment communities at prices
below new construction costs and repositioning those properties for
long-term growth; (ii) reinforcing its decentralized company
orientation by encouraging employees' personal improvement and by
providing extensive training; (iii) enhancing the quality of living
for the Company's residents by improving the quality of service and
physical amenities available at each community every year; (iv)
readily adopting new technology so that the time and cost spent on
administration can be decreased and the time spent attracting and
serving residents can be increased; (v) continuing to utilize its
written "Pledge" of customer satisfaction that is the foundation on
which the Company has built its name-brand recognition; and (vi)
engaging in aggressive cost controls and taking advantage of volume
discounts, thus benefiting from economies of scale while constantly
improving the level of customer service.
ACQUISITION AND DEVELOPMENT STRATEGIES
The Company's strategy is to make acquisitions in geographic regions
that have similar climates, easy access to the Company's headquarters,
enough apartments available for acquisition to achieve a critical mass
and minimal investment ownership by other apartment REITs. Targeted
markets also possess other characteristics similar to the Company's
existing markets, including a limited amount of new construction,
acquisition opportunities below replacement costs, a mature housing
stock and stable or moderate job growth. The Company expects that
its growth will be focused in select metropolitan areas within the
Northeast, Mid-Atlantic and Midwest United States, where it has
already established a regional presence. Continued geographic
specialization is expected to have a greater impact on operating
efficiencies than widespread accumulation of properties. The Company
will pursue acquisition of individual properties as well as larger
portfolios. It may also consider strategic investments in other
apartment companies.
In addition, the Company intends to continue to develop and re-develop
apartment communities utilizing various government programs, with
expansion of these activities being primarily in areas where the
Company already has established operations. These activities are
expected to generate development fees, ongoing management and
incentive management fees and participation in residual value for the
Company. They also increase the Company's volume purchasing ability,
provide a pipeline for future acquisitions and re-development
opportunities and position the Company to build market rate
communities when and if market factors warrant.
FINANCING AND CAPITAL STRATEGIES
The Company intends to adhere to the following financing policies:
(i) maintaining a ratio of debt-to-total market capitalization (total
debt of the Company as a percentage of the market value of outstanding
diluted common stock and Units plus total debt) of approximately 50%
or less; (ii) utilizing primarily fixed rate debt; (iii) varying debt
maturities to avoid significant exposure to interest rate changes upon
refinancing; and (iv) maintaining a line of credit so that it can
respond quickly to acquisition opportunities.
On December 31, 1999, the Company's debt was approximately $670
million and the debt-to-total market capitalization ratio was 40%
based on the year-end closing price of the Company's stock at
$27.4375. The weighted average interest rate on the Company's
mortgage debt as of December 31, 1999 was 7.4% and the weighted
average maturity was approximately 12 years. Debt maturities are
staggered. As of December 31, 1999, the Company had an unsecured line
of credit facility from M&T Bank of $100 million. This facility is
available for acquisition and other corporate purposes and bears an
interest rate at 1.25% over the one-month LIBOR rate or at a money
market rate as quoted on a daily basis by the lending institution, at
the Company's option. As of December 31, 1999, there was
approximately $51 million outstanding on the line of credit.
Management expects to continue to fund a significant portion of its
continued growth by taking advantage of its UPREIT structure and using
Units as currency in acquisition transactions. The Company issued
approximately $149 million worth of Units as partial consideration in
acquisition transactions during 1999.
The Company also intends to continue to structure other creative
equity transactions to raise capital with limited transaction costs.
In 1999, $50 million of Series B Convertible Cumulative Preferred
Stock ("Series B Preferred") was issued in a private sale to GE
Capital Equity Investments, Inc. Approximately $49 million was also
raised in 1999 under the Company's Dividend Reinvestment and Direct
Stock Purchase Plan (the "Dividend Reinvestment Plan"). The Dividend
Reinvestment Plan currently provides a 3% discount from the current
market price for purchases up to $5,000 by existing shareholders. In
its discretion, the Company can permit investments in excess of $5,000
under the Dividend Reinvestment Plan at discounts between 0% and 3%.
The Dividend Reinvestment Plan has provided a steady source of capital
to fund the Company's continued growth.
COMPETITION
The Company competes with other multifamily developers and other real
estate companies in seeking properties for acquisition, potential
residents and land for development. The Company's Properties are
primarily in developed areas where there are other properties of the
same type which directly compete for residents. The Company, however,
believes that its focus on service and resident satisfaction will
enable it to maintain its historic occupancy levels. The Company also
believes that the moderate level of new construction of multifamily
properties in its markets in 1999 will not have a material adverse
effect on its turnover rates, occupancies or ability to increase rents
and minimize operating expenses. To date, the Company has faced
limited competition in acquiring properties from other REIT's or other
operators from outside the region. However, other apartment REITs are
becoming more interested in the Company's markets and the Company may
encounter competition from others as it seeks attractive properties in
a broader geographic area. Given the perceived depth of available
opportunities, management does not believe that increased competition
will pose a significant problem.
MARKET ENVIRONMENT
The markets in which Home Properties operates can be characterized as
stable, with moderate levels of job growth. Occupancies are
relatively high, and new apartment construction activity is low
relative to the existing multifamily rental housing stock. Zoning
restrictions, a scarcity of land and high construction costs make new
development difficult to justify in many of the Company's markets.
After considering the obsolescence of older communities and the
conversion of rental housing to condominiums or co-ops, the Company
views the net increase in the multifamily rental housing stock in the
Company's markets as representing only a fraction of the estimated
number of new units needed to satisfy increased demand.
New construction in the Company's markets for the past two decades has
been limited, with most of the existing housing stock built before
1980. In 1999, Home Properties' markets represented 18% of the total
estimated existing U.S. multifamily housing stock, but only 10% of the
country's estimated net new supply of multifamily housing units.
An analysis of future multifamily supply compared to projected
multifamily demand can indicate whether a particular market is
tightening, softening or in equilibrium. The fourth to last column in
the following Multifamily Supply and Demand table on page 9 reflects
current estimated net new multifamily supply as a percentage of new
multifamily demand for the Company's markets and the United States.
Net new multifamily supply as a percent of new multifamily demand for
1999 in the Home Properties' markets was approximately 47%, compared
to a national average of 71%.
The third to the last column in the Multifamily Supply and Demand
table on page 9 shows the net new multifamily supply as percent of
existing multifamily housing stock. In the Company's markets, net new
supply only represents 0.6% of the existing multifamily housing stock.
This compares to the national average net new multifamily supply
estimates at 1.1% of the multifamily housing stock.
The information on the following Market Demographics table on page 8
was compiled by the Company from the sources indicated on the table.
The methods used includes estimates and, while the Company feels that
the estimates are reasonable, there can be no assurance that the
estimates are accurate. There can also be no assurance that the
historical information included on the table will be consistent with
future trends.
MARKET DEMOGRAPHICS
December December
Job Job
Growth Growth 1999 Multifamily 1999
% of 1999 Trailing Trailing December Median Units as % of Multifamily
MSA Market Area Owned Number of 12 Months 12 Months Unemployment Home Total Housing Housing
Units Households % Change Actual Rate Value Stock(5) Stock(6)
Baltimore, MD 18.4% 941,316 1.4% 16,800 3.1% 124,091 18.5% 187,498
Detroit, MI 14.9% 1,703,582 1.3% 27,600 2.7% 98,190 15.8% 287,999
Eastern PA(1) 12.3% 2,058,202 1.1% 29,900 3.4% 129,705 15.4% 344,410
Rochester, NY 8.8% 409,099 0.5% 2,600 4.0% 97,517 13.3% 58,461
Northern NJ (2) 7.8% 2,028,084 1.9% 51,000 3.4% 215,851 18.4% 404,628
Buffalo, NY 7.4% 456,684 (0.1%) (300) 4.8% 86,848 10.8% 53,132
Downstate NY (3) 4.8% 1,614,899 2.7% 54,100 2.8% 247,424 14.2% 249,449
Northern VA/DC 4.7% 1,754,488 2.5% 64,700 2.2% 190,085 30.5% 579,731
Syracuse, NY 4.6% 274,050 0.6% 2,200 4.3% 84,270 14.9% 45,127
Chicago, IL 4.3% 2,858,123 1.1% 45,600 3.8% 150,357 28.2% 870,728
Central VA 3.7% 948,372 2.3% 28,500 2.5% 105,342 18.7% 193,009
South Bend, IN 2.1% 98,075 (1.1%) (1,500) 3.1% 71,565 12.7% 13,389
Portland, ME 1.8% 94,175 2.4% 3,600 1.8% 143,787 15.9% 17,650
Hamden, CT 1.5% 197,276 0.2% 500 2.3% 189,277 19.8% 43,528
Delaware 1.3% 217,093 2.1% 6,600 2.8% 134,468 17.5% 40,376
Western PA (4) 0.9% 957,631 1.0% 10,800 3.5% 71,438 12.9% 135,354
Columbus, OH 0.7% 571,917 1.4% 12,300 2.2% 101,308 19.6% 120,656
HOME PROPERTIES MARKETS 100.0% 17,183,066 1.5% 355,000 3.1% 131,854 17.4% 3,645,125
United States 102,048,200 2.1% 2,666,000 3.7% 105,041 17.7% 20,131,622
(1) Eastern Pennsylvania is defined for this report as Philadelphia, PA MSA &
Allentown-Bethlehem-Easton MSA.
(2) Northern New Jersey is defined for this report as Middlesex-Somerset-
Hunterdon MSA, Bergen-Passaic MSA, Monmouth-Ocean MSA, & Newark MSA.
(3) Downstate New York is defined for this report as the Hudson Valley Region
of Dutchess Co MSA, Newburgh NY-PA MSA, Putnam & Ulster Counties; Long
Island, NY (Nassau-Suffolk MSA); Westchester County MSA; & Rockland
County MSA.
(4) Western Pennsylvania is defined for this report as Pittsburgh, PA MSA
and Erie, PA MSA.
(5) Based on 1990 U.S. Census figures
(6) 1999 MULTIFAMILY HOUSING STOCK = 1999 total housing stock multiplied by
the % of the total housing stock in each market that consists of
multifamily units (based on 1990 U.S. Census figures).
SOURCES: BUREAU OF LABOR STATISTICS (BLS); CLARITAS, INC.; US CENSUS
BUREAU - MANUFACTURING & CONSTRUCTION DIV.; NEW YORK STATE DEPARTMENT OF
LABOR, DIV. OF RESEARCH AND STATISTICS.
DATA COLLECTED IS DATA AVAILABLE AS OF FEBRUARY 2, 2000 AND IN SOME CASES
MAY BE PRELIMINARY.
MULTIFAMILY SUPPLY AND DEMAND
Estimated Estimated
Estimated Net New Net New
Estimated Estimated 1999 Multifamily Multifamily
1999 Estimated 1999 New Supply as a Supply as a Expected
New 1999 Net New Multifamily % of New % of the Expected Excess
MSA Market Supply of Multifamily Multifamily Household Multifamily Multifamily Excess Revenue
Area Multifamily(a) Obsolescence(b) Supply(c) Demand(d) Demand Stock Demand(e) Growth(f)
Baltimore, MD 2,912 937 1,974 2,072 95.3% 1.1% 98 0.1%
Detroit, MI 2,721 1,440 1,281 2,914 44.0% 0.4% 1,633 0.6%
Eastern PA 2,505 1,722 783 3,062 25.6% 0.2% 2,279 0.7%
Rochester, NY 1,112 292 819 231 354.5% 1.4% (588) (1.0%)
Northern NJ 2,324 2,023 301 6,243 4.8% 0.1% 5,942 1.5%
Buffalo, NY 573 266 307 (22) (1,395.5%) 0.6% (329) (0.6%)
Downstate NY 1,766 1,247 519 5,123 10.1% 0.2% 4,604 1.8%
Northern 8,803 2,899 5,904 13,161 44.9% 1.0% 7,257 1.3%
VA/DC
Syracuse, NY 24 226 (202) 218 (92.7%) (0.4%) 420 0.9%
Chicago, IL 7,549 4,354 3,195 8,587 37.2% 0.4% 5,392 0.6%
Central VA 2,137 965 1,172 3,549 33.0% 0.6% 2,377 1.2%
South Bend, 390 67 324 (127) (255.1%) 2.4% (451) (3.4%)
IN
Portland, ME 0 88 (88) 382 (23.0%) (0.5%) 470 2.7%
Hamden, CT 284 218 66 66 100.0% 0.2% - -
Delaware 333 202 132 772 17.1% 0.3% 640 1.6%
Western PA 1,613 677 936 928 100.9% 0.7% (8) -
Columbus, OH 5,902 603 5,299 1,610 329.1% 4.4% (3,689) (3.1%)
HOME 40,948 18,226 22,722 48,769 46.6% 0.6% 26,047 0.7%
PROPERTIES
MARKETS
United States 323,665 100,658 223,007 314,814 70.8% 1.1% 91,807 0.5%
(a) ESTIMATED 1999 NEW SUPPLY OF MULTIFAMILY =
Multifamily permits (1999 figures U.S. Census Bureau, Mfg. & Constr. Div.,
5+ permits only) adjusted by the average % of permits resulting in a
construction start (estimated at 95%).
(b) ESTIMATED 1999 MULTIFAMILY OBSOLESCENCE = 0.5% of the 1999 Multifamily
Housing Stock.
(c) ESTIMATED 1999 NET NEW MULTIFAMILY SUPPLY = Estimated 1999 New Supply
of Multifamily minus the Estimated 1999 Multifamily Obsolescence.
(d) ESTIMATED 1999 NEW MULTIFAMILY HOUSEHOLD DEMAND =
Trailing 12 month job growth (Nonfarm, not seasonally adjusted payroll
employment figures) (12/31/98-12/31/99) multiplied by the expected % of
new household formations resulting from new jobs (66.7%) and by the %
of the total housing stock in each market that consists of multifamily
units (based on 1990 U.S. Census figures).
(e) EXPECTED EXCESS DEMAND = Estimated 1999 New Multifamily Household Demand
minus the Estimated 1999 Net New Multifamily Supply.
(f) EXPECTED EXCESS REVENUE GROWTH = Expected Excess Demand divided by the
1999 Multifamily Housing Stock. This percentage is expected to reflect
the relative impact that changes in the supply and demand for multifamily
housing units will have on occupancy rates and/or rental rates in each
market, beyond the impact caused by broader economic factors such as
inflation and interest rates.
REGULATION
Many laws and governmental regulations are applicable to the Properties and
changes in the laws and regulations, or their interpretation by agencies and
the courts, occur frequently. Under the Americans with Disabilities Act of
1990 (the "ADA"), all places of public accommodation are required to meet
certain federal requirements related to access and use by disabled persons.
In addition, the Fair Housing Amendments Act of 1988 (the "FHAA") requires
apartment communities first occupied after March 13, 1990 to be accessible to
the handicapped. Non-compliance with the ADA or the FHAA could result in
the imposition of fines or an award of damages to private litigants.
Management believes that the Owned Properties are substantially in compliance
with present ADA and FHAA requirements.
Under various laws and regulations relating to the protection of the
environment, an owner of real estate may be held liable for the costs of
removal or remediation of certain hazardous or toxic substances located on
or in its property. These laws often impose liability without regard to
whether the owner was responsible for, or even knew of, the presence of
such substances. The presence of such substances may adversely affect the
owner's ability to rent or sell the property or use the property as collateral.
Independent environmental consultants have conducted "Phase I" environmental
audits (which involve visual inspection but not soil or groundwater analysis)
on substantially all of the Owned Properties. Phase I audit reports did not
reveal any environmental liability that would have a material adverse effect
on the Company. In addition, the Company is not aware of any environmental
liability that management believes would have a material adverse effect on the
Company. There is no assurance that Phase I reports would reveal all
environmental liabilities or that environmental conditions not known to the
Company may exist now or in the future which would result in liability to the
Company for remediation or fines, either under existing laws and regulations
or future changes to such requirements.
Under the Federal Fair Housing Act and state fair housing laws,
discrimination on the basis of certain protected classes is prohibited.
Violation of these laws can result in significant damage awards to victims.
The Company has a strong policy against any kind of discriminatory behavior
and trains its employees to avoid discrimination or the appearance of
discrimination. There is no assurance, however, that an employee will not
violate the Company's policy against discrimination and thus violate fair
housing laws. This could subject the Company to legal actions and the
possible imposition of damage awards.
ITEM 2. PROPERTIES
As of December 31, 1999, the Owned Properties consisted of 126 multifamily
residential properties containing 33,807 apartment units. At the time of
the IPO, Home Properties owned 11 communities containing 3,065 units and
simultaneously with the closing of the IPO acquired an additional four
communities containing 926 units. From the time just prior to the IPO to
December 31, 1999, the Company therefore experienced a compounded
annualized growth rate of 55% in the number of apartment units it
owned. In 1999 alone, Home Properties acquired 10,127 apartment units in
30 communities for a total purchase price of approximately $487 million,
including $6.2 million allocated to the purchase of management contracts.
In addition, during the first quarter of 2000, the Operating Partnership
has acquired six additional properties, representing an
increase of 2,113 Units. During 1999, the Company sold a 35,000 square
foot ancillary shopping center located adjacent to a multifamily property.
The Owned Properties are generally located in established markets in
suburban neighborhoods and are well maintained and well leased. Average
economic occupancy at the Owned Properties held throughout 1998 and 1999
was 94.5% for 1999. The Owned Properties are typically two and three story
garden style apartment buildings in landscaped settings and a majority are
of brick or other masonry construction. The Company believes that its
strategic focus on appealing to middle income and senior residents and
the quality of the services it provides to such residents result in low
turnover. Average turnover at the Owned Properties was approximately 40%
for 1999, which is significantly below the national average of 65% for
garden apartments.
Resident leases are generally for one year terms and security deposits
equal to one month's rent are generally required.
Certain of the Owned Properties secure mortgage loans. See Note 4 to
the Consolidated Financial Statements contained herein.
The table on the following pages illustrates certain of the important
characteristics of the Owned Properties as of December 31, 1999.
COMMUNITIES WHOLLY OWNED AND MANAGED BY HOME PROPERTIES
(3) 1999 1998
(2) 1999 (4) (4) Avg Mo Avg Mo 12/31/99
# Age Average 1999 % Resident 1999 1998 Rent Rent Total
of In Year Apt Size % Mature Turnover Average % Average % Rate Rate Cost
REGIONAL AREA Apts Years Acq (Sq Ft) Residents Occupancy Occupancy per Apt per Apt ($000)
Core
Communities(1)
MI - Detroit Canterbury Square 336 28 1997 789 12% 41% 97.8% 98.5% $667 $632 $14,290
MI - Detroit Charter Square 494 29 1997 914 7% 51% 97.7% 96.3% 734 693 $23,706
MI - Detroit Fordham Green 146 24 1997 869 20% 50% 95.3% 97.0% 745 701 $6,672
MI - Detroit Golfview Manor 44 41 1997 662 21% 18% 96.3% 96.8% 475 468 $707
MI - Detroit Greentrees
Apartments 288 29 1997 863 14% 42% 93.3% 95.1% 566 541 $10,513
MI - Detroit Kingsley
Apartments 328 30 1997 792 29% 54% 93.7% 94.0% 617 602 $14,452
MI - Detroit Oak Park Manor 298 45 1997 887 16% 28% 98.2% 98.6% 634 594 $10,984
MI - Detroit Parkview Gardens 483 46 1997 731 11% 39% 92.3% 95.9% 532 505 $9,103
MI - Detroit Scotsdale
Apartments 376 25 1997 790 13% 41% 96.2% 95.6% 602 575 $14,584
MI - Detroit Southpointe
Square 224 29 1997 776 19% 46% 96.2% 95.7% 565 542 $6,098
MI - Detroit Stephenson House 128 33 1997 668 14% 48% 96.1% 98.2% 593 552 $3,365
MI - Detroit Woodland Gardens 337 34 1997 719 13% 50% 96.5% 96.0% 659 622 $14,212
NJ - Northern Royal Gardens 550 32 1997 800 17% 21% 94.7% 92.9% 796 744 $25,581
NY - Buffalo Emerson Square 96 30 1997 650 42% 28% 98.6% 89.4% 546 521 $3,267
NY - Buffalo Fairways 32 39 1997 900 9% 38% 97.2% 75.8% 650 587 $1,288
Apartments
NY - Buffalo Garden Village 315 28 1994 850 67% 29% 97.1% 97.8% 620 601 $10,509
NY - Buffalo Idylwood 720 30 1995 700 10% 58% 94.7% 95.5% 577 560 $22,550
NY - Buffalo Paradise Lane 324 28 1997 676 10% 43% 96.1% 78.0% 584 534 $11,084
at Raintree
NY - Buffalo Raintree Island 504 28 1985 704 28% 37% 96.9% 95.1% 604 587 $16,893
NY - Buffalo Williamstowne
Village 528 28 1985 708 100% 19% 91.4% 92.7% 619 609 $18,685
NY -
Downstate Carriage Hill 140 27 1996 845 26% 56% 94.0% 93.5% 805 768 $5,848
NY -
Downstate Cornwall Park 75 33 1996 1,320 11% 53% 94.2% 88.7% 1,046 954 $5,905
NY - Lakeshore
Downstate Villas 152 25 1996 956 10% 43% 97.1% 96.3% 642 618 $6,211
NY - Sunset
Downstate Gardens 217 29 1996 662 10% 47% 93.1% 93.7% 600 574 $6,584
NY - Lake
Downstate Grove 368 30 1997 879 15% 32% 95.9% 96.2% 893 820 $24,590
NY - Mid-Island
Downstate Estates 232 35 1997 690 24% 34% 94.3% 95.3% 827 788 $11,922
NY - 1600 East
Rochester Avenue 164 41 1997 800 77% 73% 80.5% 80.2% 1,324 1252 $12,808
NY - 1600
Rochester Elmwood 210 40 1983 891 9% 56% 94.6% 95.6% 778 748 $11,075
NY - Brook
Rochester Hill 192 28 1994 999 23% 49% 93.0% 89.7% 812 785 $10,403
NY - Finger Lakes
Rochester Manor 153 29 1983 924 44% 50% 92.2% 95.6% 712 684 $7,702
NY - Hamlet
Rochester Court 98 29 1996 696 78% 32% 94.2% 93.2% 635 613 $3,196
NY - Hill Court
Rochester South 95 36 1997 730 66% 29% 96.2% 94.8% 584 565 $3,087
NY - Ivy Ridge
Rochester Apartments 135 36 1997 740 56% 36% 95.0% 91.4% 578 560 $4,324
NY - Newcastle
Rochester Apartments 197 25 1982 873 26% 50% 95.8% 92.1% 693 677 $10,356
NY - Northgate
Rochester Manor 224 37 1994 800 31% 44% 90.8% 92.5% 627 596 $9,696
NY - Perinton
Rochester Manor 224 30 1982 928 41% 32% 96.1% 95.6% 738 716 $11,439
NY - Riverton
Rochester Knolls 240 26 1983 911 19% 73% 86.4% 93.2% 768 714 $13,271
NY - Spanish
Rochester Gardens 220 26 1994 1,030 30% 35% 96.5% 93.9% 618 608 $11,645
NY -
Rochester Springcreek 82 27 1984 913 54% 20% 96.8% 98.7% 554 540 $3,065
NY - The
Rochester Meadows 113 29 1984 890 46% 42% 93.3% 95.9% 615 601 $5,211
NY - Woodgate
Rochester Place 120 27 1997 1,100 6% 58% 96.3% 97.2% 696 662 $5,151
NY - Syracuse Candlewood
Gardens 126 29 1996 855 28% 51% 97.5% 97.9% 498 475 $3,375
NY - Syracuse Conifer
Village 199 21 1994 499 95% 19% 100.0% 100.0% 566 566 $9,212
NY - Syracuse Fairview
Heights 210 36 1985 798 8% 65% 95.4% 94.0% 743 714 $10,071
NY - Syracuse Harborside
Manor 281 27 1995 823 14% 52% 95.0% 92.8% 576 562 $8,659
NY - Syracuse Pearl Street 60 29 1995 855 9% 65% 90.0% 95.1% 488 464 $1,480
NY - Syracuse Village Green 448 14 1994 908 31% 39% 94.1% 90.0% 610 594 $17,646
NY - Syracuse Westminster Place
240 28 1996 913 11% 53% 96.2% 95.3% 551 541 $7,525
PA - Eastern Chesterfield
Apartments 247 27 1997 812 8% 40% 94.1% 94.2% $664 $632 $11,395
PA - Eastern Curren Terrace 318 29 1997 782 8% 46% 96.6% 96.9% 707 665 $15,093
PA - Eastern Executive House 100 35 1997 696 46% 51% 92.9% 90.4% 724 648 $5,671
PA - Eastern Glen Manor 174 24 1997 667 15% 32% 96.6% 97.5% 591 570 $6,062
PA - Eastern Lansdowne Group-
Karen Court 49 37 1997 844 * * * * * * *
PA - Eastern Lansdowne Group-
Landon Court 44 30 1997 873 * * * * * * *
PA - Eastern Lansdowne Group-
Marshall
House*(5) 63 71 1997 653 35% 30% 95.8% 95.5% 627 611 $8,973
PA - Eastern Lansdowne Group-
Patricia Court 66 32 1997 838 * * * * * * *
PA - Eastern New Orleans Park 308 29 1997 693 11% 42% 93.9% 97.3% 612 573 $12,921
PA - Eastern Springwood
Apartments 77 26 1997 755 16% 68% 89.5% 92.3% 595 557 $2,638
PA - Eastern Valley Park South
384 27 1996 987 24% 47% 95.4% 94.0% 745 724 $19,769
PA - Eastern Valley View
Apartments 176 27 1997 769 19% 78% 89.0% 92.2% 646 591 $7,803
PA - Eastern Village Square 128 27 1997 795 17% 55% 95.0% 91.4% 650 600 $5,830
PA - Western Cloverleaf
Village 148 42 1997 716 27% 49% 88.6% 85.8% 535 489 $4,059
Core Communities
Total/Weighted
Avg 14,048 30 806 26% 43% 94.5% 94.0% $661 $631 $580,214
(1) "CORE COMMUNITIES" REPRESENTS THE 14,048 APARTMENT UNITS OWNED CONSISTENTLY
THROUGHOUT 1998 AND 1999.
(2) "% MATURE RESIDENTS" IS THE PERCENTAGE OF RESIDENTS AGED 55 YEARS OR OLDER
AS OF DECEMBER 31, 1999.
(3) "% RESIDENT TURNOVER" REFLECTS, ON AN ANNUAL BASIS, THE NUMBER OF MOVEOUTS
DIVIDED BY THE TOTAL NUMBER OF APARTMENT UNITS.
(4) "AVERAGE % OCCUPANCY" IS THE AVERAGE ECONOMIC OCCUPANCY FOR THE 12 MONTHS
ENDED DECEMBER 31, 1998 AND 1999.
FOR COMMUNITIES ACQUIRED DURING 1998 AND 1999, THIS IS THE AVERAGE
OCCUPANCY FROM THE DATE OF ACQUISITION.
(5) THE LANSDOWNE GROUP CONSOLIDATED FIGURES ARE REFLECTED IN THE MARSHALL
HOUSE LINE.
Communities Wholly Owned and Managed by Home Properties
1998
(3) (4) (4) 1999 Avg Mo
Average (2) 1999 1999 1998 Avg Mo Rent 12/31/99
# Age Apt Size 1999 % Average Average Rent Rate per Total
of In Year (Sq Ft) % Mature Resident % % Rate per Apt Cost
REGIONAL AREA Apts Years Acq Residents Turnover Occupancy Occupancy Apt ($000)
1998
Acquisition
Communities
CT - Hamden Apple Hill 498 28 1998 789 33% 36% 96.4% 96.3% $751 $713 $25,932
Apartments
IL - Chicago Colonies 672 26 1998 656 12% 49% 85.1% 77.4% 568 576 $27,155
Apartments
IN - South Bend Candlewood 310 15 1998 1,000 8% 61% 90.4% 95.5% 639 620 $14,012
Apartments
MD - Baltimore Carriage House 50 34 1998 786 29% 26% 97.8% 92.3% 513 502 $1,267
Apartments
MD - Baltimore Country Village 344 29 1998 868 34% 40% 95.1% 92.6% 609 587 $14,472
Apartments
MD - Baltimore Morningside 1,050 35 1998 870 9% 39% 93.3% 90.9% 584 565 $39,855
Heights
Apartments
MD - Baltimore Rolling Park 144 27 1998 1,125 24% 28% 97.5% 96.0% 606 575 $6,068
Apartments
MD - Baltimore Strawberry 145 35 1998 780 14% 45% 94.5% 90.6% 547 531 $3,979
Hill
Apartments
ME - Portland Mill Co. 96 49 1998 550 21% 44% 97.0% 97.7% 506 475 $2,262
Gardens
ME - Portland Redbank 500 56 1998 836 26% 26% 95.4% 98.0% 553 516 $17,112
Village
MI - Detroit Carriage Hill 168 34 1998 783 49% 37% 97.8% 98.9% 687 654 $7,201
Apartments
MI - Detroit Carriage Park 256 33 1998 777 18% 44% 95.0% 97.9% 643 615 $10,877
Apartments
MI - Detroit Cherry Hill 164 28 1998 878 9% 54% 90.4% 96.2% 561 535 $5,580
Club Apartments
MI - Detroit Cherry Hill 224 34 1998 742 15% 43% 96.4% 98.9% 619 592 $8,308
Village
Apartments
NJ - Northern East Hill 33 42 1998 695 94% 12% 96.0% 94.9% 828 779 $1,945
Gardens
NJ - Northern Lakeview 106 31 1998 492 19% 32% 95.3% 98.8% 780 732 $5,654
Apartments
NJ - Northern Oak Manor 77 44 1998 775 29% 22% 96.9% 97.9% 1,074 992 $5,412
Apartments
NJ - Northern Pleasant View 1,142 32 1998 745 34% 28% 94.4% 96.3% 739 702 $56,719
Gardens
Apartments
NJ - Northern Pleasure Bay 270 29 1998 667 3% 26% 94.6% 97.7% 635 606 $8,651
Apartments
NJ - Northern Towers, The 137 38 1998 916 70% 15% 96.5% 98.5% 943 913 $7,427
NJ - Northern Wayne Village 275 35 1998 725 38% 19% 96.0% 97.7% 804 771 $15,986
NJ - Northern Windsor Realty 67 47 1998 675 33% 18% 96.0% 97.9% 747 720 $3,982
NY - Downstate Mountainside 227 27 1998 759 35% 16% 97.8% 98.6% 789 764 $9,012
Apartments
NY - Downstate Patricia 100 26 1998 770 29% 29% 97.8% 99.2% 834 796 $5,208
Apartments
NY - Downstate Coventry 94 25 1998 718 32% 38% 95.2% 93.2% 910 863 $3,920
Village
NY - Rochester Pines of 508 23 1998 818 25% 26% 99.1% 99.2% 515 489 $9,049
Perinton
OH - Columbus Weston Gardens 242 27 1998 804 5% 49% 92.5% 91.3% 467 444 $7,079
PA - Eastern Beechwood 160 33 1998 775 47% 21% 97.7% 95.8% 599 578 $4,328
Gardens
PA - Eastern Cedar Glen 110 33 1998 726 51% 28% 96.2% 97.6% 445 433 $3,067
Apartments
PA - Eastern Racquet Club 467 29 1998 850 22% 41% 95.1% 96.0% 769 742 $25,826
East Apartments
PA - Eastern Sherry Lake 298 35 1998 811 35% 47% 96.4% 97.3% 826 785 $18,777
Apartments
PA - Western Payne Hill 150 19 1998 793 17% 42% 88.1% 88.0% 612 578 $5,446
Gardens
VA - No. VA/DC Braddock Lee 254 45 1998 758 17% 25% 97.1% 97.1% 780 744 $13,534
Apartments
VA - No. VA/DC Park 294 45 1998 758 16% 30% 96.5% 97.0% 811 776 $15,300
Shirlington
Apartments
1998 Total/
Weighted
Average 9,632 32 791 24% 35% 94.7% 94.5% $666 $639 $410,402
(1) "Core Communities" represents the 14,048 apartment units owned consistently
throughout 1998 and 1999.
(2) "% Mature Residents" is the percentage of residents aged 55 years or
older as of December 31, 1999.
(3) "% Resident Turnover" reflects, on an annual basis, the number of
moveouts divided by the total number of apartment units.
(4) "Average % Occupancy" is the average economic occupancy for the 12 months
ended December 31, 1998 and 1999.
For communities acquired during 1998 and 1999, this is the average
occupancy from the date of acquisition.
(5) The Lansdowne Group consolidated figures are reflected in the Marshall
House line.
Communities Wholly Owned and Managed by Home Properties
(2) (3) (4) (4)
# Age Avg. 1999 1999 1999 1998 1999 1998 12/31/99
of In Year Apt Size % % Average % Average % Avg Mo Avg Mo Total
REGIONAL AREA Apts Years Acq (Sq Ft) Mature Resident Occupancy OccupancY Rent Rent Cost
ResidenTS Turnover Rate Rate per ($000)
per Apt Apt
1999 Acquisition
Communities
DE Chestnut 432 32 1999 856 10% NA 95.2% NA $551 NA $15,454
Crossing
IL - Chicago Colony 783 27 1999 704 3% NA 98.2% NA 744 NA $42,039
Apartments
IN - South Bend Maple Lane 396 17 1999 950 29% NA 94.8% NA 627 NA $17,637
MD - Baltimore Bonnie Ridge 966 34 1999 1,023 5% NA 91.6% NA 840 NA $48,285
MD - Baltimore Canterbury 618 22 1999 933 16% NA 96.4% NA 613 NA $26,392
Apartments
MD - Baltimore Country Club 150 35 1999 783 34% NA 92.3% NA 579 NA $5,191
Apartments
MD - Baltimore Doub Meadow 95 19 1999 1,037 5% NA 97.7% NA 608 NA $3,830
MD - Baltimore Falcon Crest 396 31 1999 993 6% NA 86.3% NA 649 NA $14,768
MD - Baltimore Gateway 132 11 1999 965 4% NA 98.3% NA 770 NA $7,964
Village
MD - Baltimore Laurel Pines 236 36 1999 680 8% NA 92.8% NA 683 NA $7,703
MD - Baltimore Owings Run 504 5 1999 1,142 5% NA 94.6% NA 839 NA $38,174
MD - Baltimore Pavilion 432 32 1999 951 45% NA 96.9% NA 1,096 NA $30,589
Apartments
MD - Baltimore Selford 102 13 1999 1,115 10% NA 95.1% NA 768 NA $5,465
Townhomes
MD - Baltimore Shakespeare 82 17 1999 833 88% NA 99.9% NA 600 NA $3,923
Park
MD - Baltimore Tamarron 132 13 1999 1,097 12% NA 98.0% NA 851 NA $9,825
Apartments
MD - Baltimore Timbercroft 284 28 1999 990 3% NA 93.2% NA 615 NA $8,745
Townhomes
MD - Baltimore Village 370 32 1999 1,045 9% NA 97.6% NA 665 NA $16,018
Square
MI - Detroit Lakes 434 13 1999 948 18% NA 88.0% NA 810 NA $25,962
Apartments
MI - Detroit Springwells 303 59 1999 1,014 19% NA 91.8% NA 872 NA $18,726
Park
PA - Eastern Arbor Crossing 134 31 1999 667 31% NA 98.1% NA 645 NA $5,431
PA - Eastern Glen Brook 173 37 1999 689 33% NA 92.6% NA 624 NA $6,524
PA - Eastern Hill Brook 274 32 1999 709 12% NA 92.2% NA 642 NA $11,446
Place
PA - Eastern Ridgeway 66 27 1999 800 27% NA 91.1% NA 610 NA $2,217
Court
PA - Eastern Ridley Brook 244 37 1999 731 30% NA 98.5% NA 649 NA $9,749
PA - Eastern Sherwood 103 31 1999 821 14% NA 87.9% NA 613 NA $4,505
Gardens
VA - Central Carriage 664 33 1999 949 96% NA 96.7% NA 752 NA $37,333
Hill
VA - Central Riverdale 580 35 1999 925 26% NA 95.1% NA 575 NA $15,949
VA - No. VA/DC Manor, The 198 26 1999 844 5% NA 95.6% NA 680 NA $7,455
VA - No. VA/DC Seminary 296 40 1999 884 4% NA 93.9% NA 849 NA $13,297
Hill
VA - No. VA/DC Seminary 548 36 1999 875 20% NA 92.7% NA 872 NA $25,710
Towers
1999 Total/ 10,127 29 914 21% NA 94.4% NA $711 NA $486,306
Weighted
Average
Owned 33,807 30 834 24% 40% 94.6% 94.2% $674 $641 $1,476,922
Portfolio
Total/
Weighted Avg
(1) "Core Communities" represents the 14,048 apartment units owned consistently
throughout 1998 and 1999.
(2) "% Mature Residents" is the percentage of residents aged 55 years or older
as of December 31, 1999.
(3) "% Resident Turnover" reflects, on an annual baisi, the number of moveouts
divided by the total number of apartment units.
(4) "Average % Occupancy" is the average economic occupancy for the 12 months
ended December 31, 1998 and 1999.
For communities acquired during 1998 and 1999, this is the average
occupancy from the date of acquisition.
(5) The Lansdowne Group consolidated figures are reflected in the Marshall
House line.
PROPERTY DEVELOPMENT
Management believes that new construction of market rate multifamily
apartments is not economically feasible in most of its markets. Therefore,
Home Properties' development and redevelopment activities have been
limited to government-assisted multifamily housing. In 1996, the Operating
Partnership acquired substantially all of the assets of C.O.F., Inc.
(formerly Conifer Realty, Inc.) and Conifer Development, Inc.
(collectively, "Conifer"), a developer and manager of government-assisted
multifamily housing. Through these predecessors, the Company has been
developing affordable housing for over 20 years. Management anticipates
that this experience, coupled with the financial and property management
strengths of the Company, positions the Company as a regional leader in
the affordable housing arena.
Home Properties' strategy has been to expand its development activities
carefully into areas where it has already established operations. It
currently operates and develops affordable housing communities in six
states.
Through affiliated partnerships, in 1999 the Company commenced
development or redevelopment of 1,304 units in nine communities, completed
three communities with 926 units and continued progress on 734 units in
three communities. Management is optimistic about opportunities for
continued growth due to the Company's broadened geographic reach and
continued partnering with not-for-profit sponsors.
LOW INCOME HOUSING TAX CREDIT PROGRAM. Since its inception in 1986, the
LIHTC program has been responsible for the creation or rehabilitation of
more than 1 million rental units for low or moderate income Americans.
Under this program, states are authorized to allocate federal tax credits
as an incentive for developers to build rental housing for low income
households. Each state has received an allocation of tax credits from
the Internal Revenue Service in an amount equal to $1.25 per state
resident. This amount has not been adjusted for over a decade. However,
legislation has been introduced to increase the housing credit allocations
by 40% over five years. This graduated increase would put the per capita
allocation at $1.35 for the 2000 calendar year and at $1.75 per capita by
2004. It is expected that the cap increase, if adopted, will generate
the construction of an additional 30,000 units of affordable housing each
year.
Although REITs do not pay income taxes at the corporate level, the Company
benefits from the credits by structuring transactions where the Operating
Partnership serves as the managing general partner and limited partners
contribute substantial equity in exchange for the tax credits. The
economic benefits of management and ownership to the Company include:
* Initial developer fee revenue
* Receipt of certain of the project cash flow
after debt service as "incentive management fees"
* Substantial property management fees
* Participation in future equity build-up
* Involvement in the real estate as the
managing general partner
TAX EXEMPT BOND FINANCING. The increased competition for tax credits
has led developers to the tax exempt bond market for financing. Projects
can be financed with tax exempt bonds if they meet a threshold of
having at least 20% of the units rented to households at 50% or less of
the area median income, or 40% of the units at 60% or less of the area
median income. The bond program provides a reduced level of tax
credits, automatically, without the need to go through the competitive
allocation process for tax credits. While this program has historically
not been as competitive, the recent increasing popularity has resulted
in most states running out of their available tax exempt bond allocations.
Legislation has also been introduced to significantly increase the volume
cap levels for tax-exempt bonds.
HUD SECTION 8 PROGRAM. Within a decade, it is expected that virtually
all of HUD's roughly three million Section 8 project and tenant-based
contracts will expire. Many of the affected properties will need to be
recycled into other programs or repositioned to compete as market rate
communities. The Company's financial strength and expertise in
this area could lead to attractive investment opportunities as these
properties are sold or restructured. Currently, the Company holds five
Section 8 communities in its owned portfolio, Conifer Village (199 units),
Doub Meadow (95 units), Pines of Perinton (508 units), Shakespeare Park
(82 units) and Timbercroft Townhomes (284 units). The rental
subsidy contracts extend for several more years on all properties except
Doub Meadow and Shakespeare Park, both of which expire in 2000. The
Company expects to renew these two expiring contracts for at
least one additional year.
PROPERTY MANAGEMENT
As of December 31, 1999, the Managed Properties consist of: (i) 7,710
apartment units where Home Properties is the general partner of the
entity that owns the property; (ii) 3,465 apartment units managed
for others; (iii) commercial properties which contain approximately 1.7
million square feet of gross leasable area; (iv) a master planned
community known as Gananda; (v) a 140-lot Planned Unit Development
known as College Greene; (vi) a 202-lot Planned Unit Development known
as Riverton; and (vii) 153 acres of vacant land in Old Brookside, the
development of which, if it occurs, will be managed by HP Management.
Management fees are based on a percentage of rental revenues or costs
and, in certain cases, revenues from sales. The Company may pursue the
management of additional properties not owned by the Company, but will
only do so when such additional properties can be effectively and
efficiently managed in conjunction with other properties owned or managed
by Home Properties.
The table on the following pages details managed communities broken down
by market area.
The commercial properties consist of: (i) approximately 1,025,000 square
feet of office space; (ii) approximately 400,000 square feet of retail
space; (iii) approximately 75,000 square feet of industrial space; and
(iv) approximately 164,000 square feet of warehouse space.
MANAGED COMMUNITIES BY MARKET AREA
Communities Managed as General Partner
COMMUNITY NAME CITY # of
APTS.
UPSTATE NEW YORK
Buffalo, NY Area
Linda Lane Apartments Cheektowaga 156
Rochester, NY Area
Abraham Lincoln Rochester 69
Ambassador Apartments Rochester 54
Brown Square Village II Ontario 32
College Greene Senior Apartments N. Chili 110
East Court Apartments Rochester 85
Evergreen Hills Macedon 152
Fort Hill Canandaigua 57
Geneva Garden Apartments Geneva 53
Highland Park Dundee 91
Huntington Park Apartments Rochester 75
Lima Manor Apartments Lima 32
Maple Apartments Alfred 24
Monica Place Rochester 21
Sandy Creek Albion 24
Springside Meadows Apartments West Henrietta 54
St. Bernard's Park Rochester 59
St. Bernard's Park II Rochester 88
St. Michael's Senior Housing Rochester 28
St. Patrick's Apartments Elmira 39
Totiakton Manor Honeoye Falls 56
Village Square Painted Post 75
Walnut Hill Dundee 59
Washington Park Castile 24
YWCA Rochester 86
Syracuse, NY Area
Candlelight Lane Apartments Liverpool 244
Church Street Apartments Port Byron 39
Circle Drive Apartments I Sidney 32
Circle Drive Apartments II Sidney 24
Greenway Place Apartments Syracuse 43
Macartovin Utica 66
Mayrose Apartments Oneonta 32
Meadowview I Central Square 60
Meadowview II Central Square 46
Meadowview III Central Square 24
Northcliffe Apartments Cortland 58
Norwich Senior Housing Norwich 32
Oak Square Apartments Oneonta 30
Read Memorial Senior Apartments Hancock 28
Schoolhouse Apartments Waterville 56
Schoolhouse Gardens Groton 28
Sherburne Senior Housing Sherburne 29
Wedgewood Apartments Kirkville 70
Wedgewood II Senior Apartments Kirkville 24
Windsor Place Apartments N. Syracuse 180
DOWNSTATE NEW YORK
Hudson Valley NY Area
Greencourt Apartments Mt. Vernon 76
South 15th Apartments Mt. Vernon 66
Terrace View Apartments Yonkers 48
Trinity Senior Apartments Yonkers 45
OTHER NEW YORK STATE AREAS
Albany, NY Area
Adam Lawrence Apts Corinth 40
Apple Meadow Village Hudson 48
Apple Meadow Village Hudson 10
Cynthia Meadows Greenwich 36
Louis Apartments Coxsackie 24
Peppertree Apartments Coxsackie 24
Peppertree Park Coxsackie 24
Riverwood Apartments I Stillwater 24
Riverwood Apartments II Stillwater 24
Southern Tier NY Area
Arcade Manor Arcade 24
Belmont Village Court Belmont 24
Blairview Apartments Blairsville 42
Bolivar Manor Bolivar 24
Canisteo Manor Canisteo 24
Carrollton Heights Limestone 18
Cattaraugus Manor Cattaraugus 24
Little Valley Estates Little Valley 24
Maple Leaf Apartments Franklinville 24
Portville Manor Portville 24
Portville Square Portville 24
Yorkshire Corners Delevan 24
Watertown, NY Area
Albert Carriere Apartments Rouses Point 56
Black Brook Senior Housing Au Sable Forks 24
Bonnie View Terrace Apts Wilmington 24
Canton Manor Apartments Canton 30
Champion Apartments West Carthage 32
Champion Apartments II West Carthage 32
Hunters Run Dexter 40
LaFarge Senior Housing Lafargeville 24
Lakeside Manor Apartments Schroon Lake 24
Ledges Evans Mills 100
Maple Ridge Senior Housing Malone 40
Nichols Schoolhouse Apartments Nichols 13
Penet Square Apartments Lafargeville 24
Pontiac Terrace Apartments Oswego 70
Roderick Rock Senior Housing Rouses Point 24
Webster Manor Apts Malone 32
WESTERN PENNSYLVANIA
Erie, PA Area
Brandy Spring Apartments Mercer 40
Bridgeview Apartments Emlenton 36
Connellsville Heights Connellsville 36
Creekside Apartments Leechburg 30
Derry Round House Derry 26
Freedom Apartments Ford City 28
Green Meadow Apartments (Knolls) Pittsburgh 1,079
Greenwood Apartments Mt. Pleasant 36
Harrison City Commons Harrison City 38
Independence Apartments Mt. Pleasant 28
Lake City Apartments Lake City 44
Lake Street Apartments Girard 32
Liberty Apartments Brookville 28
Lincoln Woods Apartments Warren 44
Little Creek (Isabella Estates) Saxonburg 26
Mercer Manor Mercer 26
Millwood Arms Ford City 28
Oswayo Apartments Shinglehouse 18
Parkview Apartments Brookway 24
Rivercourt Apartments Tionesta 18
Scottdale Plaza Apartments Scottdale 22
Communities Managed as General Partner
# OF
COMMUNITY NAME CITY APTS.
WESTERN PENNSYLVANIA
Erie, PA Area - continued
Seneca Woods Apartments Seneca 40
Sheffield Country Manor Sheffield 24
Silver Maples Apartments Ulysses 24
Summit Manor Cresson 24
Taylor Terrace W. Pittsburgh 30
Tionesta Manor Tionesta 36
Tower View Apartments Tower City 25
Townview Apartments St. Mary's 36
Tremont Station Tremont 24
Washington Street Apartments Conneautville 30
Woodside Apartments Grove City 32
Wright Village Sandy Lake 24
INDIANA
Dunedin Apartments South Bend 168
NORTHERN/CENTRAL OHIO
Briggs/Wedgewood Apartments Columbus 868
Cherrywood Apartments Toledo 176
Sunset West Apartments Conneaut 40
Villas of Geneva Geneva 40
NEW JERSEY
Leland Gardens Plainfield 256
Total Communities Managed
as General Partner 7,710
Communities Fee Managed
COMMUNITY NAME CITY # of
APTS.
UPSTATE NEW YORK
Rochester, NY Area
Bernard Housing Dansville 32
Brown Square Village I Ontario 60
Fight Village Rochester 246
Foster Block Clifton Springs 44
Hudson Housing Rochester 55
Pinehurst Honeoye Falls 68
St. Joseph's Apartments Elmira 66
Towpath Manor Palmyra 65
Towpath Manor II Palmyra 32
Syracuse, NY Area
Academy Court Syracuse 29
Courtyard at James Syracuse 73
Moses DeWitt House Syracuse 37
Nettleton Commons Syracuse 61
Seneca Garden Apartments Syracuse 60
OTHER NEW YORK STATE AREAS
Albany, NY Area
Brookview Court Schenectady 82
Council Meadows Burnt Hills 25
English Village Gansevoort 111
Green Meadow Apts Chester 36
Hillcrest Village Schenectady 240
Watertown, NY Area
Bateman Hotel Lowville 24
WESTERN PENNSYLVANIA
Erie, PA Area
Arlington Manor Greenville 48
Brookville Apartments Brookville 16
Buchanan Court Warren 18
Rose Square Connellsville 11
Rose Terrace Bradford 32
Spring Street Apartments 1 Corry 48
Spring Street Apartments 2 Corry 28
Springboro Country Place Springboro 24
BALTIMORE, MD
2400 Pennsylvania Avenue Washington 103
2101 East Baltimore Baltimore 5
Allenbee Garden Apartments Forestville 36
Annapolis Roads Apartments Annapolis 282
Chesapeake Bay Apartments Annapolis 108
Elmwood Terrace Frederick 504
Green Ridge House Greenbelt 101
Hyattsville House Hyattsville 65
Old Friends Baltimore 51
Silver Hill Gardens Suitland 324
Towne Crest Apartments Gaithersburg 107
DETROIT, MI
Woodward Heights Apartments Royal Oak 108
Total Communities Fee Managed 3,465
SUPPLEMENTAL PROPERTY INFORMATION
At December 31, 1999, none of the Properties have an individual net book
value equal to or greater than ten percent of the total assets of the
Company or would have accounted for ten percent or more of the Company's
aggregate gross revenues for 1999.
ITEM 3. LEGAL PROCEEDINGS
The Company is a party to certain legal proceedings. All such
proceedings, taken together, are not expected to have a material adverse
effect on the Company. The Company is also subject to a variety
of legal actions for personal injury or property damage arising in the
ordinary course of its business, most of which are covered by liability
insurance. While the resolution of these matters cannot be predicted
with certainty, management believes that the final outcome of such legal
proceedings and claims will not have a material adverse effect on the
Company's liquidity, financial position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
None.
ITEM X. EXECUTIVE OFFICERS AND KEY EMPLOYEES
The following table sets forth the six executive officers and certain
of the key employees of the Company, together with their respective
ages (as of March 23, 2000), positions and offices.
NAME AGE POSITION
Norman P. Leenhouts 64 Chairman, Co-Chief Executive Officer and
Director of Home Properties, Chairman and
Director of HP Management and Director of
Conifer Realty
Nelson B. Leenhouts 64 President, Co-Chief Executive Officer and Director of Home Properties, President, Chief
Executive Officer and Director of HP Management and Director and Vice President of Conifer
Realty.
Richard J. Crossed 60 Executive Vice President and Director of Home Properties and President, Chief Executive
Officer and Director of Conifer Realty
Amy L. Tait 41 Executive Vice President and Director of Home Properties and Director of HP Management
David P. Gardner 44 Vice President, Chief Financial Officer and Treasurer of Home Properties, Conifer Realty and
HP Management
Ann M. McCormick 44 Vice President, General Counsel and Secretary of Home Properties and HP Management and General
Counsel and Secretary of Conifer Realty
William E. Beach 53 Vice President, Commercial Property Management of Home Properties and HP Management
C. Terence Butwid 55 Vice President, Development of Home Properties, Executive Vice President of Conifer
Realty and Vice President of HP Management
Lavonne R. Childs 37 Vice President, Residential Property Management of Home Properties
Scott A. Doyle 38 Vice President, Residential Property Management of Home Properties
Kathleen M. Dunham 54 Vice President, Residential Property Management of
Home Properties and Conifer Realty
Douglas Erdman 41 Vice President, Residential Property Management of
Home Properties
Johanna A. Falk 35 Vice President, Information Systems of Home
Properties
John H. Fennessey 61 Vice President, Development of Home Properties, Conifer Realty and HP Management
Rhonda Finehout 49 Vice President, Residential Property Management of Home Properties and Conifer Realty
Timothy A. Florczak 44 Vice President, Residential Property Management of Home Properties and Conifer Realty
Christiana Foglio 38 Vice President, Development of Home Properties and Conifer Realty
Thomas L. Fountain 41 Vice President, Commercial Property Management of Home Properties, Conifer Realty and HP
Management
Timothy Fournier 39 Vice President, Development of Home Properties, Executive Vice President of Conifer Realty and
Vice President of HP Management
Gerald B. Korn 53 Vice President, Mortgage Finance of Home Properties
Laurie Leenhouts 43 Vice President, Residential Property Marketing of Home Properties and HP Management
Robert J. Luken 35 Vice President and Controller of Home Properties, Conifer Realty and HP Management
Paul O'Leary 48 Vice President, Acquisitions and Due Diligence of Home Properties
John Oster 50 Vice President, Development of Home Properties, Conifer Realty and HP Management
James E. Quinn, Jr. 44 Vice President, Residential Property Management of Home Properties
Sharon Sanfratello 45 Vice President, Residential Property Management of Home Properties
John E. Smith 49 Vice President, Acquisitions of Home Properties
Eric Stevens 44 Vice President, Residential Property Management of Home Properties and Conifer Realty
Richard J. Struzzi 46 Vice President, Development of Home Properties and HP Management
Robert C. Tait 42 Vice President, Commercial Property Management of Home Properties and HP Management
Marilyn Thomas 49 Vice President, Residential Property Management of
Properties and Conifer Realty
Information regarding Richard Crossed, Nelson and Norman Leenhouts and
Amy Tait is set forth below under "Board of Directors" in Item 10.
DAVID P. GARDNER has served as Vice President and Chief Financial
Officer of the Company, HP Management and Conifer Realty since their
inception. Mr. Gardner joined Home Leasing Corporation in 1984
as Vice President and Controller. In 1989, he was named Treasurer
of Home Leasing and Chief Financial Officer in December, 1993.
From 1977 until joining Home Leasing, Mr. Gardner was an accountant at
Cortland L. Brovitz & Co. Mr. Gardner is a graduate of the Rochester
Institute of Technology and is a Certified Public Accountant.
ANN M. MCCORMICK has served as Vice President, General Counsel and
Secretary of the Company and HP Management since their inception.
She has also served as Secretary and General Counsel of Conifer
Realty since 1998. Mrs. McCormick joined Home Leasing in 1987 and was
named Vice President, Secretary and General Counsel in 1991. Prior to
joining Home Leasing, she was an associate with the law firm of Nixon,
Hargrave, Devans & Doyle. Mrs. McCormick is a graduate of Colgate
University and holds a Juris Doctor from Cornell University.
WILLIAM E. BEACH has served as Vice President of the Company and HP
Management since their inception. He joined Home Leasing in 1972 as
a Vice President. Mr. Beach is a graduate of Syracuse University and
is a Certified Property Manager (CPM) as designated by the Institute of
Real Estate Management.
C. TERENCE BUTWID has served as Vice President of the Company and
Executive Vice President of Conifer Realty since 1996. He also
served as Vice President of HP Management since 1998. He joined
Conifer in 1990 as a Vice President. Prior to joining Conifer,
Mr. Butwid was employed by Chase Lincoln First Bank as Vice President
and Manager of Corporate Banking National Accounts. He was also
President of Ontario Capital Management. Mr. Butwid is a graduate
of Bowling Greene State University. He has an MBA from American
University and graduated from The National School of Credit and
Financial Management at Dartmouth College.
LAVONNE R. CHILDS has served as Vice President of the Company since 1997.
She joined Home Properties in December of 1996 as a Regional Property
Manager. Mrs. Childs has been in property management for 15
years. Prior to joining Home Properties, she worked with Walden
Residential, United Dominion Realty Trust and Winthrop Management.
SCOTT A. DOYLE has served as Vice President of the Company since 1997.
He joined Home Properties in 1996 as a Regional Property Manager.
Mr. Doyle has been in property management for 17 years. Prior to
joining Home Properties he worked with CMH Properties, Inc., Rivercrest
Realty Associates and Arcadia Management Company. Mr. Doyle is a graduate
of S.U.N.Y. at Plattsburgh, New York.
KATHLEEN M. DUNHAM has served as Vice President of the Company and
Conifer Realty since 1996. She joined Conifer in 1978 and was named
Vice President in 1990. Ms. Dunham is a Certified Property Manager
(CPM) as designated by the Institute of Real Estate Management.
DOUGLAS ERDMAN has served as Vice President of the Company since 1999.
Prior to joining Home Properties, he was President of Community Realty
Company, Inc., a Washington D. C. based real estate firm providing
commercial and multi-family property management, commercial leasing,
brokerage, general contracting, and real estate development services.
Mr. Erdman is a graduate of Towson University, is a Certified Property
Manager (CPM) and holds real estate brokers licenses in Maryland,
Virginia and Washington D. C. Mr. Erdman serves on the Multi-housing
Council of the Urban Land Institute and on the Board of Directors of
JFGH, an organization of group homes for disabled adults.
JOHANNA A. FALK has served as a Vice President of the Company since
1997. She joined the Company in 1995 as an investor relations
specialist and is currently responsible for the Information Systems
Department. Prior to joining the Company, Mrs. Falk was employed
as a marketing manager at Bausch & Lomb Incorporated and Champion
Products, Inc. and as a financial analyst at Kidder Peabody. She is a
graduate of Cornell University and holds a Masters Degree in Business
Administration from the Wharton School of The University of Pennsylvania.
JOHN H. FENNESSEY has served as Vice President of the Company and
Conifer Realty since 1996. He has also been a Vice President of HP
Management since 1998. He joined Conifer in 1975 as a founder and
Vice President, responsible for the operation of Conifer's Syracuse
office. Prior to joining Conifer, he was a Project Director with the
New York State Urban Development Corporation. Mr. Fennessey
is a graduate of Harpur College and holds a Masters Degree in regional
planning from the Maxwell School, Syracuse University. He is a Charter
Member of the American Institute of Certified Planners (AICP).
RHONDA FINEHOUT has served as a Vice President of the Company and
Conifer Realty since 1998. She joined the Company in 1996 as a
regional property manager with responsibilities in market rate, rural
development, low income housing tax credit and fee managed properties.
Ms. Finehout is a graduate of the State University of New York at Oswego.
TIMOTHY A. FLORCZAK has served as a Vice President of the Company since
its inception. He joined Home Leasing in 1985 as a Vice President.
Prior to joining Home Leasing, Mr. Florczak was Vice President of
Accounting of Marc Equity Corporation. Mr. Florczak is a graduate of
the State University of New York at Buffalo.
CHRISTIANA FOGLIO has served as a Vice President of the Company since
1999. Prior to joining Home Properties, Ms. Foglio served as President of
Community Investment Strategies, an affordable housing developer in New
Jersey. Ms Foglio served as the Executive Director of the New Jersey
Housing and Mortgage Finance Agency as well as the Chair of the
New Jersey Council on Affordable Housing. She received a Bachelor of
Arts in Economics as well as a Masters Degree in City and Regional
Planning from Rutgers University.
THOMAS L. FOUNTAIN, JR. has served as a Vice President of the Company
and Conifer Realty since 1996 and as a Vice President of HP Management
since 1997. He joined Conifer in 1994 as the Director of Commercial
Properties. Prior to joining Conifer, Mr. Fountain was the Leasing
Manager for Faber Management Services, Inc. and Vice President of
Asset Management for Realty Diversified Services,Inc. Mr. Fountain is
a graduate of West Virginia University.
TIMOTHY FOURNIER has served as Vice President of Home Properties and
Executive Vice President of Conifer Realty since 1996. He has also
been a Vice President of HP Management since 1998. He joined Conifer
in 1986 as Vice President of Finance. Prior to joining Conifer, Mr.
Fournier was an accountant at PricewaterhouseCoopers. Mr. Fournier is
a graduate of New Hampshire College and is a Certified Public Accountant.
GERALD B. KORN has served as a Vice President and been employed at the
Company since 1998. From 1984 until 1998, he was employed by Rochester
Community Savings Bank in various capacities, including as a Senior Vice
President in charge of the bank's national commercial real estate
portfolio. Prior to 1984, Mr. Korn was employed for 11 years as a FDIC
Bank Examiner. Mr. Korn is a graduate of the Rochester Institute of
Technology.
LAURIE LEENHOUTS has served as a Vice President of the Company since
its inception and has been a Vice President of HP Management since 1998.
She joined Home Leasing in 1987 and has served as a Vice President since
1992. Ms. Leenhouts is a graduate of the University of Rochester.
She is the daughter of Norman Leenhouts.
ROBERT J. LUKEN has served as Controller of the Company since 1996 and
as a Vice President since 1997. He has also served as a Vice President
and Controller of Conifer Realty and HP Management since 1998. Prior to
joining the Company, he was the Controller of Bell Corp. of Rochester
and an Audit Supervisor for PricewaterhouseCoopers. Mr. Luken is
a graduate of St. John Fisher College and is a Certified Public
Accountant.
PAUL O'LEARY has served as a Vice President of the Company since its
inception. He joined Home Leasing in 1974 and has served as Vice
President of Home Leasing since 1978. Mr. O'Leary is a graduate of
Syracuse University and is a Certified Property Manager (CPM) as
designated by the Institute of Real Estate Management.
JOHN OSTER has served as Vice President of the Company and Conifer
Realty since 1996. He has also been a Vice President of HP Management
since 1998. He joined Conifer as a Vice President in 1988.
Before joining Conifer, Mr. Oster was Director of Operations for the
New York State Division of Housing and Community Renewal. He is a
graduate of Hamilton College.
JAMES E. QUINN, JR. has served as Vice President of the Company since
1998. He joined the Company in 1997 as the regional leader for the
Philadelphia region. Prior to joining the Company, Mr. Quinn was
Vice President of Mill Creek Realty Group. Mr. Quinn is a graduate of
Drexel University.
SHARON SANFRATELLO has served as a Vice President of the Company since
1998. She joined Home Properties in 1993 as a property manager.
Mrs. Sanfratello has been in property management for 19 years. Prior to
joining Home Properties, Mrs. Sanfratello worked for Beacon Residential.
JOHN E. SMITH joined Home Properties as Vice President of Acquisitions
in 1997. Prior to joining the Company, Mr. Smith was general manager for
Direct Response Marketing, Inc. and Executive Vice President for The
Equity Network, Inc. Mr. Smith was Director of Investment Properties
at Hunt Commercial Real Estate for 20 years. He has been a Certified
Commercial Investment Member (CCIM) since 1982, a New York State
Certified Instructor and has taught commercial real estate courses in
four states.
ERIC STEVENS has served as a Vice President of the Company and Conifer
Realty since 1998. He joined the Company in 1996 in connection with
the merger with Conifer. At Conifer, he was a property manager
for 13 years in the affordable housing area, including working with
the Low Income Housing Tax Credit Program, New York State Housing Finance
Agency, New York State Division of Housing and Community Renewal and
the U.S. Department of Housing and Urban Development. Mr. Stevens is
on the Board of Directors of the Housing Council in Monroe County, Inc.
Mr. Stevens is a graduate of Babson College.
RICHARD J. STRUZZI has served as a Vice President of the Company and
HP Management since their inception. He joined Home Leasing in 1983
as a Vice President. Mr. Struzzi is a graduate of the State University
of New York at Potsdam and holds a Masters Degree in Public School
Administration from St. Lawrence University. He is the son-in-law of
Nelson Leenhouts.
ROBERT C. TAIT has served as a Vice President of the Company and HP
Management since their inception. He joined Home Leasing in 1989
and served as a Vice President of Home Leasing since 1992. Prior to
joining Home Leasing, he was a manufacturing/industrial engineer with
Moscom Corp. Mr. Tait is a graduate of Princeton University, holds a
Masters Degree in Business Administration from Boston University and
holds the Real Property Administrator Degree from the Building Owners
and Managers International Institute. Married to Amy L. Tait, he is
the son-in-law of Norman Leenhouts.
MARILYN THOMAS has served as a Vice President of the Company since 1999.
She joined the Company in 1998. Prior to joining Home Properties, Mrs.
Thomas was a Vice President at Patterson-Erie Corporation for 15
years, working in the affordable housing, market rate apartment and
development areas. Mrs. Thomas is a licensed Pennsylvania real estate
broker and has been a Certified Property Manager since 1988.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
The Common Stock has been traded on the New York Stock Exchange ("NYSE")
under the symbol "HME" since July 28, 1994. The following table sets
forth for the previous two years the quarterly high and low sales prices
per share reported on the NYSE, as well as all distributions paid.
HIGH LOW DISTRIBUTION
1998
First Quarter $28-1/16 $24-15/16 $.45
Second Quarter $27-7/8 $24-7/8 $.45
Third Quarter $27-3/16 $21-3/16 $.45
Fourth Quarter $26-15/16 $24-1/4 $.48
1999
First Quarter $26-1/8 $22-15/16 $.48
Second Quarter $29-1/8 $22-1/4 $.48
Third Quarter $28-7/8 $26-1/16 $.48
Fourth Quarter $28-1/8 $24-13/16 $.53
As of March 23, 2000, the Company had approximately 4,400 shareholders.
It has historically paid distributions on a quarterly basis in the months
of February, May, August and November. The Credit Agreement relating to
the Company's $100 million line of credit provides that the Company may
not pay any distribution if a distribution, when added to other
distributions paid during the three immediately preceding fiscal
quarters, exceeds the greater of: (i) 90% of funds from operations and
110% of cash available for distribution; and (ii) the amounts required to
maintain the Company's status as a REIT.
Item 6. SELECTED FINANCIAL DATA
The following table sets forth selected financial and operating data on a
historical basis for the Company and the Original Properties and should
be read in conjunction with the financial statements appearing elsewhere
in this Form 10-K.
1999 1998 1997 1996 1995
Revenues:
Rental Income $217,591 $137,557 $64,002 $42,214 $31,705
Other Income 16,872 11,686 5,695 3,456 2,596
TOTAL REVENUES 234,463 149,243 69,697 45,670 34,301
Expenses:
Operating and maintenance 95,200 63,136 31,317 21,859 15,911
General & administrative 10,696 6,685 2,255 1,482 1,200
Interest 39,558 23,980 11,967 9,208 6,432
Depreciation & amortization 37,350 23,191 11,200 8,077 6,258
Loss on available-for-sale securities 2,123 - - - -
Non-recurring acquisition expense 6,225 - - - -
TOTAL EXPENSES 191,152 116,992 56,739 40,626 29,801
Income before gain (loss) on disposition of
property, minority interest and extraordinary
item 43,311 32,251 12,958 5,044 4,500
Gain (loss) on disposition of property 457 - 1,283 - -
Income before minority interest and
extraordinary item 43,768 32,251 11,675 5,044 4,500
Minority interest 17,390 12,603 4,248 897 455
Income before extraordinary item 26,378 19,648 7,427 4,147 4,045
Extraordinary item, prepayment penalties,
net of allocation to minority interest (96) (960) (1,037) - (1,249)
Net income before preferred dividends 26,282 18,688 6,390 4,147 2,796
Preferred dividends (1,153) - - - -
Net income available to common shareholders $25,129 $18,688 $6,390 $4,147 $2,796
Net income per common share:
Basic $1.34 $1.34 $.86 $.74 $.52
Diluted $1.34 $1.33 $.84 $.74 $.52
Cash dividends declared per
common share $1.97 $1.83 $1.74 $1.69 $1.66
Balance Sheet Data:
Real estate, before accumulated depreciation $1,480,753 $940,788 $525,128 $261,773 $198,203
Total assets 1,503,617 1,012,235 543,823 248,631 181,462
Total debt 669,701 418,942 218,846 105,176 91,119
Stockholders' equity 497,123 361,956 151,432 83,030 75,780
Other Data:
Funds from Operations (1) $89,132 $56,260 $24,345 $13,384 $11,025
Cash available for distribution (2) $78,707 $49,044 $21,142 $11,022 $9,348
Net cash provided by operating activities $90,571 $60,548 $27,285 $14,241 $9,811
Net cash used in investing activities ($190,937) ($297,788) ($102,460) ($25,641) ($21,348)
Net cash provided by financing activities $71,662 $266,877 $77,461 $12,111 $10,714
Weighted average number of shares outstanding:
Basic 18,697,731 13,898,221 7,415,888 5,601,027 5,408,474
Diluted 18,800,907 14,022,329 7,558,167 5,633,004 5,408,474
Total communities owned at end of period* 126 96 63 28 20
Total apartment units owned at end of period* 33,807 23,680 14,048 7,176 5,650
*Excludes 256 units at Leland Gardens in New Jersey owned at December 31,
1998 in an affiliated entity in contemplation of rehabilitating under the
Low Income Housing Tax Credit Program. In January, 1999, a 99% limited
partnership interest was transferred to the ultimate tax credit partner.
Item 6. SELECTED FINANCIAL DATA (CONTINUED)
(1) Management considers Funds from Operations to be an appropriate
measure of the performance of an equity REIT. "Funds from Operations"
is generally defined by NAREIT as net income (loss) before gains (losses)
from the sale of property, extraordinary items, plus real estate depreciation,
including adjustments for unconsolidated partnerships and joint ventures.
Funds from Operations does not represent cash generated from operating
activities in accordance with GAAP and is not necessarily indicative of cash
available to fund cash needs. Funds from Operations should not be considered
as an alternative to net income as an indication of the Company's
performance or to cash flow as a measure of liquidity. Funds from Operations
does not actually represent the cash made available to investors in the
periods presented.
Funds from Operations is calculated as follows:
1999 1998 1997 1996 1995
Net income available to common
shareholders $25,129 $18,688 $6,390 $4,147 $2,796
Preferred dividends 1,153 - - - -
Depreciation - real property* 37,473 23,715 11,387 8,332 6,525
Non-recurring expense 6,225 294 - - -
Disposition of property 1,666 - 1,283 8 -
Minority interest 17,390 12,603 4,248 897 455
Extraordinary item (prepayment penalties) 96 960 1,037 - 1,249
Funds from Operations $89,132 $56,260 $24,345 $13,384 $11,025
Weighted average shares/units:
Basic 31,513.8 22,871.7 11,373.9 6,813.2 6,015.1
Diluted 32,044.9 22,995.8 11,516.1 6,845.1 6,015.1
*Includes amounts passed through from unconsolidated investments.
The FFO presentation above may not be comparable to other similarly titled
measures of FFO of other REITs.
Quarterly information on Funds from Operations for the two most recent years
is as follows:
1999 1ST 2ND 3RD 4TH TOTAL
Funds from
Operations before
minority interest $ 16,915 $ 19,627 $ 25,189 $ 27,403 $ 89,132
Weighted Average
Shares/Units:
Basic 27,810.1 28,530.2 34,485.9 35,116.1 31,513.8
Diluted 27,898.4 28,634.8 34,630.9 36,904.1 32,044.9
1998 1ST 2ND 3RD 4TH TOTAL
Funds from
Operations before
minority interest $ 9,181 $ 12,813 $ 16,380 $ 17,886 $ 56,260
Weighted Average
Shares/Units:
Basic 17,303.6 21,312.3 25,603.7 27,129.4 22,871.7
Diluted 17,501.1 21,500.9 25,746.9 27,245.7 22,995.8
Item 6. SELECTED FINANCIAL DATA NOTES
(CONTINUED)
(2) Cash Available for Distribution is defined as Funds from Operations
less an annual reserve for anticipated recurring, non-revenue generating
capitalized costs of $375 ($350 for 1996-1997 and $300 for 1995) per
apartment unit, $94 per manufactured home site and $.25 per square foot
for the 35,000 square foot ancillary convenient shopping area at Wedgewood.
It is the Company's policy to fund its investing activities and financing
activities with the proceeds of its Line of Credit or new debt or by the
issuance of additional Units in the Operating Partnership.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
The following discussion is based primarily on the Consolidated Financial
Statements of Home Properties of New York, Inc.. This should be read in
conjunction with the financial statements appearing elsewhere in this
report. Certain capitalized terms, as used herein, are defined in the
Notes to the Consolidated Financial Statements.
The Company is engaged primarily in the ownership, management,
acquisition and development of residential apartment communities in the
Northeastern, Mid-Atlantic and Midwestern United States. As
of December 31, 1999, the Company operated 291 apartment communities
with 44,982 apartments. Of this total, the Company owned 126 communities,
consisting of 33,807 apartments, managed as general partner 125
partnerships that owned 7,710 apartments and fee managed 3,465 apartments
for affiliates and third parties. The Company also fee manages 1.7
million square feet of office and retail properties.
This annual report 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, the actual
pace of acquisitions, and continued access to capital to fund growth.
RESULTS OF OPERATIONS
COMPARISON OF YEAR ENDED DECEMBER 31, 1999 TO YEAR ENDED DECEMBER 31, 1998.
The Company owned 62 communities with 14,048 apartment units throughout
1998 and 1999 where comparable operating results are available for the
years presented (the "1999 Core Properties"). For the year ending
December 31, 1999, the 1999 Core Properties showed an increase in rental
revenues of 5.3% and a net operating income increase of 9.0% over the 1998
year-end period. Property level operating expenses increased 1.7%.
Average economic occupancy for the 1999 Core Properties increased from
94.0% to 94.5%, with average monthly rental rates increasing 4.8% to $661.
A summary of the 1999 Core Property net operating income is as follows:
1999 1998 %CHANGE
Rent $105,388,000 $100,048,000 5.3%
Property Other Income 3,255,000 2,816,000 15.6%
Total Income 108,643,000 102,864,000 5.6%
Operating and Maintenance (48,653,000) (47,840,000) (1.7%)
Net Operating Income $59,990,000 $55,024,000 9.0%
During 1999, the Company acquired a total of 10,127 apartment
units in 30 newly acquired communities (the "1999 Acquisition
Communities"). In addition, the Company experienced full year results
for the 9,632 apartment units in 34 apartment communities (the "1998
Acquisition Communities") acquired during 1998. The inclusion of
these acquired communities generally accounted for the significant
changes in operating results for the year ended December 31, 1999.
The 1998 Acquisition Communities exclude 256 units at Leland
Gardens in New Jersey owned at December 31, 1998 in an affiliated entity
in contemplation of rehabilitating under the Low Income Housing Tax
Credit Program. In January, 1999, a 99% limited partnership interest
was transferred to the ultimate tax credit partner.
The Company also disposed of one property during 1999, a 35,000 square
foot ancillary shopping center located adjacent to a multifamily
community, which had partial results for 1999 (the "1999 Disposed
Community").
For the year ended December 31, 1999, operating income (income before
loss on disposition of property, minority interest and extraordinary
item) increased by $11,060,000 when compared to the year ended
December 31, 1998. The increase was primarily attributable to the
following factors: an increase in rental income of $80,034,000 and
an increase in other income of $5,186,000. These changes were partially
offset by an increase in operating and maintenance expense of $32,064,000,
an increase in general and administrative expense of $4,011,000, an
increase in interest expense of $15,578,000, an increase in
depreciation and amortization of $14,159,000 and loss on available-for-
sale securities and non-recurring acquisition expense totaling
$8,348,000 not previously incurred.
Of the $80,034,000 increase in rental income, $35,554,000 is
attributable to the 1998 Acquisition Communities and $39,295,000
is attributable to the 1999 Acquisition Communities, offset in part by
a $155,000 reduction attributable to the 1999 Disposed Community.
The balance of $5,340,000 is a 5.3% increase from the 1999 Core Properties
due primarily to an increase of 4.8% in weighted average rental rates,
plus an increase in occupancy from 94.0% to 94.5%.
Property other income, which consists primarily of income from operation
of laundry facilities, administrative fees, garage and carport rentals
and miscellaneous charges to residents, increased in 1999 by $3,264,000.
Of this increase, $1,358,000 is attributable to the 1998 Acquisition
Communities, $1,191,000 is attributable to the 1999 Acquisition
Communities, $439,000 represents a 15.6% increase from the 1999
Core Properties, offset in part by a $28,000 reduction attributable to
the 1999 Disposed Community. In addition, $304,000 represents
the increase in the net results for limited partnerships accounted for on
the equity method.
Interest and dividend income increased in 1999 by $1,990,000, primarily
attributable to an increase in construction loans and advances made to
affiliated tax credit development partnerships, as well as increased
levels of cash reserves invested. Dividend income of $714,000 and
$147,000 in 1999 and 1998, respectively, from investments in marketable
securities, are not expected to continue
into 2000.
Other income reflects the net contribution from management and development
activities after allocating certain overhead and interest expense. The
net contribution decreased by $68,000, or 2% from 1998 to 1999. Increased
activities in government assisted housing contributed to an 11.5% annual
increase in gross management and development fee revenues. These revenue
gains were offset by increased outlays to expand the staff and carrying
costs associated with land in inventory for future development.
Of the $32,064,000 increase in operating and maintenance expenses,
$16,302,000 is attributable to the 1998 Acquisition Communities,
$14,980,000 is attributable to the 1999 Acquisition Communities and a
reduction of $31,000 is attributable to the 1999 Disposed Community.
The balance for the 1999 Core Properties, a $813,000 increase in
operating expenses or 1.7%, is primarily a result of increases in
utilities, real estate taxes, and snow removal costs.
The operating expense ratio (the ratio of operating and maintenance
expense compared to rental and property other income) for the 1999 Core
Properties was 44.8% and 46.5% for 1999 and 1998, respectively. This 1.7%
reduction is a result of the 5.6% increase in total rental and property
other income achieved through ongoing efforts to upgrade and reposition
properties for maximum potential. In general, the Company's operating
expense ratio is higher than that experienced in other parts of the
country due to relatively high real estate taxes in its markets and
the Company's practice, typical in its markets, of including heating
expenses in base rent. The exposure to swings in heating costs have
been reduced as the number of units in the entire portfolio including
heat in base rent has been reduced from 85% at December 31, 1998 to
70% at December 31, 1999.
General and administrative expenses increased in 1999 by $4,011,000,
or 60% from $6,685,000 in 1998 to $10,696,000 in 1999. As the Company
expands geographically, travel and lodging expenses have increased,
along with expenses associated with new and expanding regional offices.
In addition, personnel costs have increased to handle the growing owned
portfolio, which increased in size by 41% as of December 31, 1999 compared
to a year ago. The percentage of G&A compared to total revenue was 4.6%
for 1999 compared to 4.5% for 1998.
Interest expense increased in 1999 by $15,578,000 as a result of the
acquisition of the 1999 Acquisition Communities and full year interest
expense for the 1998 Acquisition Communities. The 1998 Acquisition
Communities, costing in excess of $376,000,000, were acquired with
$81,000,000 of assumed debt in addition to the use of UPREIT Units.
The 1999 Acquisition Communities, costing in excess of $480,000,000,
were acquired with $203,000,000 of assumed debt, in addition to
the use of UPREIT Units. Amortization relating to interest rate reduction
agreements of $198,000 and $335,000 was included in interest expense
during 1999 and 1998, respectively. In addition, amortization from
deferred charges relating to the financing of properties totaling $516,000
and $457,000 was included in interest expense for 1999 and 1998,
respectively. Finally, $294,000 of unamortized fees related to a standby
loan facility, which allowed the Company to enter into a non-contingent
contract for a 17 property portfolio acquisition, were written off during
the third quarter of 1998, as the facility was only partially used and
quickly repaid.
During 1999, the Company disposed of a 35,000 square foot shopping center
in Columbus, Ohio that was ancillary to an adjacent multifamily property
formerly owned by the Company. The property was sold for approximately
$1,000,000, resulting in a gain on disposition of $457,000. In addition,
the Company liquidated its original $11.6 million investment in common
stock of Associated Estates Realty Corporation (NYSE:AEC), recognizing a
loss of $2,123,000. Finally, the Company reported a non-recurring
acquisition expense of $6,225,000 during the third quarter of 1999.
In conjunction with the acquisition of two large portfolios, this amount
of the reported acquisition price was allocated (based on the contracts)
to the purchase of the related management contracts. As the Company is
self-managing the properties, these management contracts have no future
value and the cost was expensed to operations in the current year.
COMPARISON OF YEAR ENDED DECEMBER 31, 1998 TO YEAR ENDED DECEMBER 31, 1997.
The Company owned 27 communities with 6,552 apartment units throughout
1997 and 1998 where comparable operating results are available for the
years presented (the "1998 Core Properties"). For the year ending
December 31, 1998, the 1998 Core Properties showed an increase in rental
revenues of 2.3% and a net operating income increase of 6.9% over the
1997 year-end period. Property level operating expenses decreased
1.9%. Average economic occupancy for the 1998 Core Properties decreased
from 94.7% to 94.1%, with average monthly rental rates increasing 2.9%
to $627.
A summary of the 1998 Core Property net operating income is as follows:
1998 1997 % CHANGE
Rent $46,587,000 $45,542,000 2.3%
Property Other Income 1,613,000 1,428,000 13.0%
Total Income 48,200,000 46,970,000 2.6%
Operating and Maintenance (22,491,000) (22,919,000) 1.9%
Net Operating Income $25,709,000 $24,051,000 6.9%
During 1998, the Company acquired a total of 9,632 apartment units in 34
newly acquired communities (the "1998 Acquisition Communities"). In
addition, the Company experienced full year results for the 7,496
apartment units in 35 newly acquired apartment communities (the "1997
Acquisition Communities") acquired during 1997. The inclusion of these
acquired communities generally accounted for the significant changes in
operating results for the year ended December 31, 1998. The 1998
Acquisition Communities exclude 256 units at Leland Gardens in New Jersey
owned at December 31, 1998 in an affiliated entity in contemplation of
rehabilitating under the Low Income Housing Tax Credit Program. In
January, 1999, a 99% limited partnership interest was transferred to the
ultimate tax credit partner.
The Company also disposed of two communities during 1997 with 624
apartment units and a 202-site manufactured home community, all of
which had partial results in 1997 (the "1997 Disposed Communities").
For the year ended December 31, 1998, operating income (income before
loss on disposition of property, minority interest and extraordinary item)
increased by $19,293,000 when compared to the year ended December 31,
1997. The increase was primarily attributable to the following factors:
an increase in rental income of $73,555,000 and an increase in other
income of $5,991,000. These changes were partially offset by an
increase in operating and maintenance expense of $31,819,000, an increase
in general and administrative expense of $4,430,000, an increase in
interest expense of $12,013,000 and an increase in depreciation and
amortization of $11,991,000.
Of the $73,555,000 increase in rental income, $38,127,000 is attributable
to the 1997 Acquisition Communities and $37,316,000 is attributable to
the 1998 Acquisition Communities, offset in part by a $2,933,000 reduction
attributable to the 1997 Disposed Communities. The balance is a 2.3%
increase from the 1998 Core Properties due primarily to an increase of
2.9% in weighted average rental rates, offset by a decrease in occupancy
from 94.7% to 94.1%.
Property other income, which consists primarily of
income from operation of laundry facilities, administrative fees,
garage and carport rentals and miscellaneous charges to residents,
increased in 1998 by $1,392,000. Of this increase, $643,000 is
attributable to the 1997 Acquisition Communities, $1,026,000 is
attributable to the 1998 Acquisition Communities and $185,000 represents a
13.0% increase from the 1998 Core Properties. In addition, $452,000
represents the decrease in the net results for limited partnerships
accounted for on the equity method.
Interest income increased in 1998 by $2,906,000, primarily attributable
to an increase in construction loans and advances made to affiliated tax
credit development partnerships.
Other income increased in 1998 by $1,693,000, including $1,093,000 from
increased management fees from residential properties and $329,000 from
increased development fee income recognized directly by the Company from
communities developed under the federal government's Low Income Housing
Tax Credit Program where the Company is the general partner. The increased
management fee activity resulted from full year results on 1,020 units
managed in Detroit (acquired October, 1997) and 1,337 units in 46 Rural
Development properties added in May of 1998.
Of the $31,819,000 increase in operating and maintenance expenses,
$18,469,000 is attributable to the 1997 Acquisition Communities,
$15,236,000 is attributable to the 1998 Acquisition Communities and a
reduction of $1,458,000 is attributable to the 1997 Disposed Communities.
The balance for the 1998 Core Properties, a $428,000 reduction in
operating expenses, is primarily due to lower gas rates and relatively
mild winter weather. Core Property operating expenses, excluding utility
expenses, increased approximately 2.0%.
The operating expense ratio (the ratio of operating and maintenance
expense compared to rental and property other income) for the 1998 Core
Properties was 46.7% and 48.8% for 1998 and 1997, respectively. This 2.1%
reduction is a direct result of lower than normal utility expenses. In
general, the Company's operating expense ratio is higher than that
experienced in other parts of the country due to relatively high real
estate taxes in its markets and the Company's practice, typical in its
markets, of including heating expenses in base rent.
General and administrative expenses increased in 1998 by $4,430,000,
or 196% from $2,255,000 in 1997 to $6,685,000 in 1998. A higher bonus
in 1998 compared to 1997 ($1,210,000 versus $287,000) resulted from our
incentive compensation plan which rewards exceptional FFO growth per
share, contributing 40% of the 196% increase in total G&A. As the Company
expands geographically, travel and lodging expenses have increased, along
with expenses associated with new and expanding regional offices. In
addition, personnel costs have increased to handle the growing owned
portfolio, which increased in size by 70% as of December 31, 1998 compared
to a year ago. The growth of management fee income recognized directly
by the Company, along with its affect on G&A, makes it difficult
to compare G&A to historical numbers. If the management fee income is
netted against G&A expense, the percentage of remaining G&A compared to
adjusted revenue is 3.5% and 2.7% for 1998 and 1997, respectively.
Interest expense increased in 1998 by $12,013,000 as a result of the
acquisition of the 1998 Acquisition Communities and full year interest
expense for the 1997 Acquisition Communities. The 1997 Acquisition
Communities, costing in excess of $266,000,000, were acquired with
$87,000,000 of assumed debt in addition to the use of UPREIT Units. The
1998 Acquisition Communities, costing in excess of $376,000,000, were
acquired with $81,000,000 of assumed debt, in addition to the use of
UPREIT Units. Amortization relating to interest rate reduction
agreements of $335,000 was included in interest expense during 1998 and
1997. In addition, amortization from deferred charges relating to the
financing of properties totaling $457,000 and $276,000 was included
in interest expense for 1998 and 1997, respectively. Finally, $294,000 of
unamortized fees related to a standby loan facility, which allowed the
Company to enter into a non-contingent contract for a 17 property
portfolio acquisition, were written off during the third quarter, as the
facility was only partially used and quickly repaid.
The December 31, 1998 balance sheet reflects an unrealized loss on
available-for-sale securities of $1,607,000. This reduction to
Other Assets and Stockholders Equity represents a markdown from
$11,649,000 to $10,042,000 relative to a strategic investment in the
common stock of Associated Estates Realty Corporation (NYSE:AEC) of
850,000 shares, representing approximately 4% of the outstanding
shares of AEC.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal liquidity demands are expected to be distributions
to the common and preferred stockholders and Operating Partnership
unitholders, capital improvements and repairs and maintenance for
the properties, acquisition of additional properties, property development
and debt repayments. The Company may also engage in transactions whereby
it acquires equity ownership in other public or private companies that
own portfolios of apartment communities.
The Company intends to meet its short-term liquidity requirements through
net cash flows provided by operating activities and the line of credit.
The Company considers its ability to generate cash to be adequate to meet
all operating requirements and make distributions to its stockholders in
accordance with the provisions of the Internal Revenue Code, as amended,
applicable to REITs.
To the extent that the Company does not satisfy its long-term liquidity
requirements through net cash flows provided by operating activities and
the line of credit described below, it intends to satisfy such
requirements through the issuance of UPREIT Units, proceeds from the
Dividend Reinvestment Plan, property debt financing, or issuing additional
common shares or shares of the Company's preferred stock. As of December
31, 1999, the Company owned thirty-two properties, with 6,233 apartment
units, which were unencumbered by debt.
In May, 1998, the Company's Form S-3 Registration Statement was declared
effective relating to the issuance of up to $413.8 million of shares of
common stock or other securities. The available balance on the shelf at
December 31, 1998 was $333,650,000. There has been no activity on the
shelf during 1999.
On September 30, 1999, the Company completed the sale of $50 million of
Series B Preferred stock in a private transaction with GE Capital. The
Series B Preferred stock carries an annual dividend rate equal to the
greater of 8.36% or the actual dividend paid on the Company's common
shares into which the preferred shares can be converted. The stock has
a liquidation preference of $25.00 per share, a conversion price of
$29.77 per share, and a five-year, non-call provision.
On December 22, 1999, the Class A limited partnership interests held by
the State of Michigan Retirement Systems (originally issued in December,
1996 for $35 million) were converted to Series A Convertible Cumulative
Preferred shares ("Series A Preferred") which retain the same material
rights and preferences that were associated with the limited partnership
interests. The conversion had no effect on reported results of
operations and permits the Company to continue to use favorable tax
depreciation methods.
The issuance of UPREIT Units for property acquisitions continues to be a
significant source of capital. During 1999, 8,147 apartment units in
four separate transactions were acquired for a total cost of $389,000,000,
using UPREIT Units valued at approximately $149,000,000 with the balance
paid in cash or assumed debt. During 1998, 4,512 apartment units in eight
separate transactions were acquired for a total cost of $176,000,000,
using UPREIT Units valued at approximately $71,000,000 with the balance
paid in cash or assumed debt.
In 1997, the Company's Board of Directors approved a stock repurchase
program under which the Company may repurchase up to one million shares of
its outstanding common stock. The Board's action did not establish
a target price or a specific timetable for repurchase. In 1998, the
Company repurchased 59,600 shares at a cost of $1,437,000, reflecting a
stock price which Company management felt was an attractive investment
opportunity. During 1999, the Company repurchased an additional 125,300
shares at a cost of $2,974,000. Approval to repurchase 795,100 shares of
common stock remains at December 31, 1999.
In November, 1995, the Company established a Dividend Reinvestment Plan.
The Plan provides the stockholders of the Company an opportunity to
automatically invest their cash dividends at a discount of 3% from the
market price. In addition, eligible participants may make monthly
payments or other voluntary cash investments in shares of common stock,
typically purchased at discounts, which have varied between 2% and
3%. During 1998, over $72,000,000 of common stock was issued under
this plan, with an additional $49,000,000 of common stock issued in 1999.
As of December 31, 1999, the Company had an unsecured line of credit
from M&T Bank of $100,000,000 with $50,800,000 outstanding. Borrowings
under the facilities bear interest, at the Company's option, at either
1.25% over the one-month LIBOR rate or at a money market rate as quoted
on a daily basis by the lending institution. The line of credit expires
on September 4, 2000.
As of December 31, 1999, the weighted average rate of interest on the
Company's mortgage debt is 7.4% and the weighted average maturity of such
indebtedness is approximately twelve years. Mortgage debt of $619
million was outstanding with 99% at fixed rates of interest with staggered
maturities. This limits the exposure to changes in interest rates,
minimizing the effect of interest rate fluctuations on results of
operations and financial condition.
The Company's net cash provided by operating activities increased from
$60,548,000 for the year ended December 31, 1998 to $90,571,000 for
the year ended December 31, 1999. The increase was principally due to
the acquisition of the 1998 and 1999 Acquisition Communities.
Net cash used in investing activities decreased from $297,788,000 in
1998 to $190,937,000 in 1999. The level of properties purchased increased
in 1999 to $487 million from $383 million, while the amount of mortgages
assumed and UPREIT units issued increased by $194 million, such that
the net cash invested in properties decreased, accounting for most of the
year over year decrease.
The Company's net cash provided by financing activities decreased from
$266,877,000 in 1998 to $71,662,000 in 1999. The major source of
financing in 1999 was $99,130,000 of proceeds from sales of preferred and
common stock and net debt proceeds of $46,857,000, both used to fund
property acquisitions and additions. In 1998, proceeds from the sale of
common stock and net debt proceeds totaling $316,045,000 were used to
fund property acquisitions and additions.
CAPITAL IMPROVEMENTS
Total capital improvement expenditures increased from $42,896,000 in 1998
to $61,034,000 in 1999. Of the $61,034,000 in total expenditures,
$5,742,000 is attributable to the 1999 Acquisition Communities and
$24,870,000 is attributable to the 1998 Acquisition Communities. The
balance of $30,422,000 is allocated between the 1999 Core Properties of
$29,920,000 and $502,000 for corporate office expenditures.
Recurring, non-revenue enhancing capital replacements typically include
carpeting and tile, appliances, HVAC equipment, new roofs, site
improvements and various exterior building improvements. Funding for
these capital replacements are provided by cash flows from operating
activities. The Company estimates that during 1999, approximately $375
per unit was spent on capital replacements to maintain the condition of
its properties.
The schedule below summarizes the breakdown of capital improvements:
Non-recurring
Recurring Revenue Combined
Capital Enhancing Capital
Replacements Upgrades Improvements
1999 Core Properties $5,262,000 $24,658,000 $29,920,000
1998 Acquisition Communities 3,512,000 21,358,000 24,870,000
1999 Acquisition Communities 1,648,000 4,094,000 5,742,000
Corporate office expenditures* N/A N/A 502,000
$10,422,000 $50,110,000 $61,034,000
*No distinction is attempted between recurring or non-recurring
expenditures for the corporate office.
The $50,110,000 incurred to fund non-recurring, revenue enhancing
upgrades included, among other items, the following: construction of
ten new community centers; the installation of nearly 10,000 new windows
and other energy conservation measures; and the modernization of over
3,300 kitchens. Management believes that these upgrades contributed
significantly towards achieving 9.0% average growth in net operating
income at the 1999 Core Properties. For the combined Acquisition
Communities, substantial rehabilitations were incurred as part of
management's acquisition and repositioning strategies. The pace of
capital replacements was accelerated to improve the overall competitive
condition of the properties. Funding for these capital improvements was
provided by the line of credit and equity proceeds.
During 2000, management expects that the communities will benefit further
from improvements completed in 1999 and plans to continue to fund
similar non-recurring, revenue enhancing upgrades in addition to
normal capital replacements.
IMPACT OF THE YEAR-2000 ON SYSTEM PROCESSING
The year 2000 ("Y2K") problem concerned the inability of information
systems to property recognize and process date-sensitive information
beyond January 1, 2000. As a result, the Y2K problem could have affected
any system that uses date data, including mainframes, PCs, and embedded
microprocessors that control security systems, call-processing systems,
building climate systems, elevators, office equipment and even fire
alarms.
Since January 1, 2000, the Company has not experienced any disruption
to its business operations as a result of Y2K compliance problems. One
software application displayed the wrong date in a non-critical field.
The date display is purely cosmetic and an updated version will be
installed during the first quarter of 2000.
The Company's State of Readiness
The Company began addressing the Y2K issue in September 1997. As such
it divided its review into two segments: business critical and mission
critical systems. Business critical systems are those with the potential
to affect the financial and operational infrastructure of the Company.
Mission critical are those systems with a potential to affect the delivery
of electricity and natural gas to our residents, commercial tenants
and employees and the safety of residents, commercial tenants and
employees.
Recognizing that the mission critical systems rely heavily on public
service vendors, the Company's focus was on business critical systems
under the assumption that market forces and regulatory agencies would
encourage and monitor the compliance of the telecommunications, utilities
and emergency service industries. The Company set up systems to monitor
the progress of mission critical service providers and developed
contingency plans to minimize the possibility that the Y2K problem would
disrupt the lives of its residents, commercial tenants and employees.
The Company relies exclusively on micro computers (PC's). PC's exist in
the corporate office, regional offices and at the communities. The
Company completed its review and modification of corporate, regional and
community office systems towards Y2K compliance in November, 1999. The
Company had one and one-half full-time employees dedicated to upgrading
regional offices and community based systems. Additional information
systems employees assisted as needed.
Throughout 2000, the Company plans to periodically match its systems'
inventory against hardware and software component manufacturer upgrade
releases to assure that its systems have the most current Y2K upgrades
(including any properties acquired).
To insure delivery of goods and services (i.e., building and elevator
access, security systems, HVAC, life safety, etc.) to the Company's
communities and without interruption, the Company mailed surveys to
all critical suppliers in July, 1999. All critical suppliers indicated
their expected compliance.
COSTS
The cost of the Company's Y2K activities, which was budgeted at
$675,000 totaled approximately $700,000.
ENVIRONMENTAL ISSUES
Phase I environmental audits have been completed on substantially all of
the Owned Properties. There are no recorded amounts resulting from
environmental liabilities as there are no known contingencies with
respect thereto. Furthermore, no condition is known to exist that would
give rise to a material liability for site restoration or other costs
that may be incurred with respect to the sale or disposal of a property.
RECENT ACCOUNTING PRONOUNCEMENTS
The Company is not aware of any pronouncements which would have a
material adverse effect on the Company's liquidity, financial position
or results of operations.
INFLATION
Substantially all of the leases at the communities are for a term of one
year or less, which enables the Company to seek increased rents upon
renewal of existing leases or commencement of new leases. These
short-term leases minimize the potential adverse effect of inflation on
rental income, although residents may leave without penalty at the end of
their lease terms and may do so if rents are increased significantly.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
See Note 4 - Mortgage Notes Payable in the Consolidated Financial
Statements of the Company concerning interest rate risk.
Item 8. Financial Statements and Supplemental Data
The financial statements and supplementary data are listed under Item
14(a) and filed as part of this report on the pages indicated.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
Directors
The Board of Directors (the "Board") currently consists of twelve members.
The terms for all of the directors of Home Properties expire at the 2000
Shareholders' Meeting.
The information sets forth, as of March 23, 2000, for each director of the
Company such director's name, experience during the last five years,
other directorships held, age and the year such director was first
elected as director of the Company.
Year First
Name of Director Age Elected Director
Burton S. August, Sr. 84 1994
William Balderston, III 72 1994
Richard J. Crossed 60 1996
Alan L. Gosule 59 1996
Leonard F. Helbig, III 54 1994
Roger W. Kober 66 1994
Nelson B. Leenhouts 64 1993
Norman Leenhouts 64 1993
Albert H. Small 74 1999
Clifford W. Smith, Jr. 53 1994
Paul L. Smith 64 1994
Amy L. Tait 41 1993
BURTON S. AUGUST, SR. has been a director of the Company since August,
1994. Mr. August is currently a director of Monro Muffler Brake, Inc., a
publicly traded company where Mr. August served as Vice President from
1969 until he retired in 1980. Mr. August is Honorary Vice Chairman of
the Board of Trustees of Rochester Institute of Technology, on the Board
of Directors of Park Ridge Health Systems and Hillside Children's Center
Foundation, on the cabinet of the Al Sigl Center and on the Finance
Committee of the United Way of Greater Rochester.
WILLIAM BALDERSTON, III has been a director of the Company since August,
1994. From 1991 to the end of 1992, he was an Executive Vice President
of The Chase Manhattan Bank, N.A. From 1986 to 1991, he was President
and Chief Executive Officer of Chase Lincoln First Bank, N.A., which
was merged into The Chase Manhattan Bank, N.A. He is a Trustee of the
University of Rochester and a member of the Board of Governors
of the University of Rochester Medical Center. Mr. Balderston is also a
Trustee of the Genesee Country Village Museum, as well as a member of the
Board of the Genesee Valley Conservancy. Mr. Balderston is a graduate of
Dartmouth College.
RICHARD J. CROSSED has served as an Executive Vice President and as a
director of the Company and as a director, President and Chief Executive
Officer of Conifer Realty since January 1, 1996. He is also Executive
Vice President of HP Management. He served as President and Chief
Executive Officer of Conifer from 1985. Prior to becoming President of
Conifer, he served as Director of Development for Conifer. Mr. Crossed
is a director of St. Joseph's Villa and is active in many housing
organizations. He has served on the New York State Housing Turnkey Task
Force and New York State Low-Income Housing Tax Credit Task Force. Mr.
Crossed is a graduate of Bellarmine College.
ALAN L. GOSULE, has been a director of the Company since December, 1996.
Mr. Gosule has been a partner in the law firm of Clifford Chance Rogers
& Wells LLP, New York, New York, since August, 1991 and prior to that
time was a partner in the law firm of Gaston & Snow. He serves as
Chairman of the Clifford Chance Rogers & Wells LLP Tax Department and
Real Estate Securities practice group. Mr. Gosule is a graduate of
Boston University and its Law School and received a LL.M. from Georgetown
University. Mr. Gosule also serves on the Boards of Directors of 32
funds of the Pilgrim Capital Corporation, the Simpson Housing Limited
Partnership, F.L. Putnam Investment Management Company, CORE Cap, Inc.
and Colonnade Partners. Clifford Chance Rogers & Wells LLP acted as
counsel to Coopers & Lybrand, LLP in its capacity as advisor to the
State Treasurer of the State of Michigan in connection with its
investment of retirement funds in the Operating Partnership and Mr.
Gosule was the nominee of the State Treasurer under the terms of the
investment agreements relating to the transaction.
LEONARD F. HELBIG, III has been a director of the Company since August,
1994. Since 1999 Mr. Helbig has served as President, Financial Services
for Cushman & Wakefield. Prior to that, Mr. Helbig was the Executive
Managing Director of the Asset Services and Financial Services Groups
since 1984. He joined Cushman & Wakefield in 1980 and is also a member
of that firm's Board of Directors and Executive Committee. Mr. Helbig
is a member of the Urban Land Institute, the Pension Real Estate
Association and the International Council of Shopping Centers. Mr. Helbig
is a graduate of LaSalle University and holds the MAI designation of the
American Institute of Real Estate Appraisers.
ROGER W. KOBER has been a director of the Company since August, 1994. Mr.
Kober is currently a director of RGS Energy Corporation and its wholly
owned subsidiary, Rochester Gas and Electric Corporation. He was employed
by Rochester Gas and Electric Corporation from 1965 until his retirement
on January 1, 1998. From March, 1996 until January 1, 1998 Mr. Kober
served as Chairman and Chief Executive Officer of Rochester Gas and
Electric Corporation. He is also a member of the Board of Trustees of
Rochester Institute of Technology. Mr. Kober is a graduate of Clarkson
College and holds a Masters Degree in Engineering from Rochester Institute
of Technology.
NELSON B. LEENHOUTS has served as President, Co-Chief Executive Officer
and a director of the Company since its inception in 1993. He has also
served as President and Chief Executive Officer of HP Management since its
formation and has been a director of Conifer Realty since its formation.
He has been a Vice President of Conifer Realty since 1998. Nelson
Leenhouts was the founder, and a co-owner, together with Norman
Leenhouts, of Home Leasing, and served as President of Home Leasing from
1967. He is a director of Hauser Corporation and a member of the Board
of Directors of the National Multi Housing Council. Nelson Leenhouts is
a graduate of the University of Rochester. He is the twin brother of
Norman Leenhouts.
NORMAN P. LEENHOUTS has served as Chairman of the Board of Directors, Co-
Chief Executive Officer and a director of the Company since its inception
in 1993. He has also served as Chairman of the Board of HP Management
and as a director of Conifer Realty since their formation. Norman
Leenhouts is a co-owner, together with Nelson Leenhouts, of Home Leasing
and served as Chairman of Home Leasing from 1971. He is a director of
Hauser Corporation and Rochester Downtown Development Corporation and is
a member of the Board of Trustees of Roberts Wesleyan College. He is a
graduate of the University of Rochester and is a certified public
accountant. He is the twin brother of Nelson Leenhouts.
ALBERT H. SMALL has been a director of the Company since July, 1999. Mr.
Small, who has been active in the construction industry for 50 years, is
President of Southern Engineering Corporation. Mr. Small is a member of
the Urban Land Institute, National Association of Home Builders and
currently serves on the Board of Directors of the National Symphony
Orchestra, National Advisory Board Music Associates of Aspen, Department
of State Diplomatic Rooms Endowment Fund, James Madison Council of the
Library of Congress, Tudor Place Foundation, The Life Guard of Mount
Vernon, Historical Society of Washington, DC and the National Archives
Foundation. Mr. Small is a graduate of the University of Virginia. In
connection with the acquisition of a portfolio of properties located in
the suburban markets surrounding Washington, D.C., Mr. Small and others
received approximately 4,086,000 of operating partnership units
in Home Properties of New York, L.P. Mr. Small is the nominee of the
former owners of that portfolio under the terms of the acquisition
documents.
CLIFFORD W. SMITH, JR. has been a director of the Company since August,
1994. Mr. Smith is the Epstein Professor of Finance of the William E.
Simon Graduate School of Business Administration of the University of
Rochester, where he has been on the faculty since 1974. He has written
numerous books and articles on a variety of financial, capital markets
and risk management topics and has held editorial positions for a variety
of journals. Mr. Smith is a graduate of Emory University and has a PhD
from the University of North Carolina at Chapel Hill.
PAUL L. SMITH has been a director of the Company since August, 1994.
Mr. Smith was a director, Senior Vice President and the Chief Financial
Officer of the Eastman Kodak Company from 1983 until he retired in 1993.
He is currently a director of Performance Technologies, Inc. and
Canandaigua Brands, Inc. He is also a member of the Board of Trustees
of the George Eastman House and Ohio Wesleyan University. Mr. Smith is
a graduate of Ohio Wesleyan University and holds an MBA Degree in finance
from Northwestern University.
AMY L. TAIT has served as Executive Vice President and a director of the
Company since its inception in 1993. She has also served as a director
of HP Management since its formation. Mrs. Tait joined Home Leasing in
1983 and has had several positions, including Senior and Executive Vice
President and Chief Operating Officer. She currently serves on the M & T
Bank Advisory Board and the boards of the United Way of Rochester, Geva
Theatre and The Commission Project. Mrs. Tait is also a member of the
Board of Directors of the National Multi Housing Council. Mrs. Tait is a
graduate of Princeton University and holds an MBA from the William E.
Simon Graduate School of Business Administration of the University of
Rochester. She is the daughter of Norman Leenhouts.
See Item X in Part I hereof for information regarding executive officers
of the Company.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES ACT OF 1934.
Section 16(a) of the Securities Exchange Act of 1934, as amended,
(the "Exchange Act") requires the Company's executive officers and
directors, and persons who own more than 10% of a registered class
of the Company's equity securities, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission and
the New York Stock Exchange. Officers, directors and greater than
10% shareholders are required to furnish the Company with copies of
all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company and written representations that
no other reports were required during the fiscal year ended December 31,
1999, all Section 16(a) filing requirements applicable to its executive
officers, directors and greater than 10% beneficial owners were
satisfied with the following exceptions. Director Roger Kober filed
his statement of beneficial ownership on Form 4 reporting a May, 1999
exercise of stock options subsequent to the due date for such filing.
The State of Michigan Retirement Systems, the holder of in excess of 10%
of a registered class of the Company's equity securities filed its
required Form 4 subsequent to the due date for such filing.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated herein by
reference to the Company's proxy statement to be issued in
connection with the Annual Meeting of the Stockholders of the
Company to be held on May 2, 2000 under "Executive Compensation",
which proxy statement will be filed within 120 days after the end
of the Company's fiscal year.
ITEM 12. SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is incorporated herein by
reference to the Company's proxy statement to be issued in
connection with the Annual Meeting of Stockholders of the Company
to be held on May 2, 2000 under "Security Ownership of Certain
Beneficial Owners and Management", which proxy statement will be
filed within 120 days after the end of the Company's fiscal year.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by this Item is incorporated herein by
reference to the Company's proxy statement to be issued in
connection with the Annual Meeting of Stockholders of the Company
to be held on May 2, 2000 under "Certain Relationships and
Transactions", which proxy statement will be filed within 120
days after the end of the Company's fiscal year.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1 and 2. Financial Statements and Schedules
The financial statements and schedules listed below are filed as
part of this annual report on the pages indicated.
HOME PROPERTIES OF NEW YORK, INC.
CONSOLIDATED FINANCIAL STATEMENTS
PAGE
Report of Independent Accountants F-2
Consolidated Balance Sheets
as of December 31, 1999 and 1998 F-3
Consolidated Statements of Operations
for the Years Ended December 31, 1999, 1998 and
1997 F-4
Consolidated Statements of Stockholders' Equity
for the Years Ended December 31, 1999, 1998 and
1997 F-5
Consolidated Statements of Comprehensive Income
for the Years Ended December 31, 1999, 1998 and
1997 F-6
Consolidated Statements of Cash Flows
for the Years Ended December 31, 1999, 1998 and
1997 F-7
Notes to Consolidated Financial Statements F-8
Report of Independent Accountants on Financial
Statement Schedule F-28
Schedule III:
Real Estate and Accumulated Depreciation F-29
(a) 3. Exhibits
2.1 Agreement among Home Properties of New York, Inc. and Philip J.
Solondz, Daniel Solondz and Julia Weinstein relating to Royal
Gardens I, together with Amendment No. 1.
2.2 Agreement among Home Properties of New York, Inc. and Philip
Solondz and Daniel Solondz relating to Royal Gardens II, together
with Amendment No. 1.
2.3 Purchase and Sale Agreement dated July 25, 1997 by and between Home
Properties of New York, L.P. and Louis S. and Molly S. Wolk
Foundation.
2.4 Purchase and Sale Agreement dated April 30, 1997 between Home
Properties of New York, L.P. and Briggs Wedgewood Associates, L.P.
2.5 Agreement and Plan of Merger, dated July 31, 1997 between Home
Properties of New York, L.P. and Chesfield Partnership.
2.6 Agreement and Plan of Merger dated July 31, 1997 between Home
Properties of New York, L.P. and Valspring Partnership.
2.7 Agreement and Plan of Merger, dated July 31, 1997 between Home
Properties of New York, L.P. and Exmark Partnership.
2.8 Agreement and Plan of Merger, dated July 31, 1997 between Home
Properties of New York, L.P. and New Orleans East Limited Partnership.
2.9 Agreement and Plan of Merger, dated July 31, 1997 between Home
Properties of New York, L.P. and Glenvwk Partnership.
2.10 Agreement and Plan of Merger, dated July 31, 1997 between Home
Properties of New York, L.P. and PK Partnership.
2.11 First Amendment to Agreement and Plan of Merger, dated September 1,
1997 between Home Properties of New York, L.P. and PK Partnership and
its partners.
2.12 First Amendment to Agreement and Plan of Merger, dated September 1,
1997 between Home Properties of New York, L.P. and NOP Corp. and
Norpark Partnership.
2.13 Contribution Agreement dated July 31, 1997 between Home Properties
of New York, L.P. and Lamar Partnership.
2.14 Agreement and Plan of Merger, dated July 31, 1997 between Home
Properties of New York, L.P. and Curren Partnership.
2.15 Contribution Agreement, dated October __, 1997 between Home Properties
of New York, L.P. and Berger/Lewiston Associates Limited Partnership;
Stephenson-Madison Heights Company Limited Partnership; Kingsley-Moravian
Company Limited Partnership; Woodland Garden Apartments Limited
Partnership; B&L Realty Investments Limited Partnership; Southpointe
Square Apartments Limited Partnership; Greentrees Apartments limited
Partnership; Big Beaver-Rochester Properties Limited Partnership; Century
Realty Investment Company Limited Partnership.
2.16 Agreement among Home Properties of New York, L.P. and Erie Partners,
L.L.C. relating to Woodgate Place Apartments, together with Amendment
No. 1.
2.17 Agreement among Home Properties of New York, L.P. and Mid-Island
Limited Partnership relating to Mid-Island Estates, together with
Amendment No. 1.
2.18 Purchase and Sale Agreement among Home Properties of New York, L.P. and
Anthony M. Palumbo and Daniel Palumbo.
2.19 Purchase and Sale Agreements dated June 17, 1997 among Home Properties
of New York, L.P. and various individuals relating to Hill Court
Apartments South and Hudson Arms Apartments, together with a letter
amendment dated September 24, 1997.
2.20 Contract of Sale, dated October 20,1997 between Home Properties of New
York, L.P. and Hudson Palisades Associates relating to Cloverleaf
Apartments.
2.21 Contribution Agreement, dated November 17, 1997 among Home Properties
of New York, L.P. and various trusts relating to Scotsdale Apartments.
2.22 Contribution Agreement, dated November 7, 1997 among Home Properties
of New York, L.P. and Donald Schefmeyer and Stephen W. Hall relating
to Candlewood Apartments, together with Amendment No. One dated
December 3, 1997.
2.23 Purchase and Sale Agreement dated November 26, 1997 among Home Properties
of New York, L.P. and Cedar Glen Associates.
2.24 Contribution Agreement dated March 2, 1998 among Home Properties of New
York, L.P., Braddock Lee Limited Partnership and Tower Construction
Group, LLC.
2.25 Contribution Agreement dated March 2, 1998 among Home Properties of New
York, L.P., Park Shirlington Limited Partnership and Tower Construction
Group, LLC.
2.26 Contract of Sale between Lake Grove Associates Corp. and Home Properties
of New York, L.P., dated December 12, 1996, relating to the Lake Grove
Apartments.
2.27 Form of Contribution Agreement among Home Properties of New York, L.P.
and Strawberry Hill Apartment Company LLLP, Country Village Limited
Partnership, Morningside Six, LLLP, Morningside North Limited
Partnership and Morningside Heights Apartment Company Limited Partnership
with schedule setting forth material details in which documents differ
from form.
2.28 Form of Purchase and Sale Agreement relating to the Kaplan Portfolio
with schedule setting forth material details in which documents differ
from form.
2.29 Form of Contribution Agreement relating to the CRC Portfolio with
schedule setting forth material details in which documents differ
from form.
2.30 Form of Contribution Agreement relating to the Mid-Atlantic Portfolio
with Schedule setting forth material details in which documents differ
from form.
2.31 Contribution Agreement among Home Properties of New York, L.P., Leonard
Klorfine, Ridley Brook Associates and Greenacres Associates.
2.32 Purchase and Sale Agreement among Home Properties of New York, L.P. and
Chicago Colony Apartments Associates.
3.1 Articles of Amendment and Restatement of the Articles of Incorporation
of Home Properties of New York, Inc.
3.2 Articles of Amendment of the Articles of Incorporation of Home Properties
of New York, Inc.
3.3 Articles of Amendment of the Articles of Incorporation of Home Properties
of New York, Inc.
3.4 Amended and Restated Articles Supplementary of Series A Senior
Convertible Preferred Stock of Home Properties of New York, Inc.
3.5 Series B Convertible Preferred Stock Articles Supplementary of Home
Properties of New York, Inc.
3.6 Amended and Restated By-Laws of Home Properties of New York, Inc.
(Revised 12/30/96).
4.1 Form of certificate representing Shares of Common Stock.
4.2 Agreement of Home Properties of New York, Inc. to file instruments
defining the rights of holders of long-term debt of it or its
subsidiaries with the Commission upon request.
4.3 Credit Agreement between Manufacturers and Traders Trust Company, Home
Properties of New York, L.P. and Home Properties of New York, Inc.
4.4 Amendment Agreement between Manufacturers and Traders Trust
Company, Home Properties of New York, L.P. and Home Properties of New
York, Inc. amending the Credit Agreement.
4.5 Mortgage Spreader, Consolidation and Modification Agreement between
Manufacturers and Traders Trust Company and Home Properties of New
York, L.P., together with form of Mortgage, Assignment of Leases and
Rents and Security Agreement incorporated therein by reference.
4.6 Mortgage Note made by Home Properties of New York, L.P. payable to
Manufacturers and Traders Trust Company in the principal amount of
$12,298,000.
4.7 Spreader, Consolidation, Modification and Extension Agreement between
Home Properties of New York, L.P. and John Hancock Mutual Life
Insurance Company, dated as of October 26, 1995, relating to
indebtedness in the principal amount of $20,500,000.
4.8 Amended and Restated Stock Benefit Plan of Home Properties of New
York, Inc.
4.9 Amended and Restated Dividend Reinvestment, Stock Purchase, Resident
Stock Purchase and Employee Stock Purchase Plan.
4.10 Amendment No. One to Amended and Restated Dividend Reinvestment, Stock
Purchase, Resident Stock Purchase and Employee Stock Purchase Plan.
4.11 Amendment No. Two to Amended and Restated Dividend Reinvestment, Stock
Purchase, Resident Stock Purchase and Employee Stock Purchase Plan.
4.12 Amended and Restated Dividend Reinvestment, Stock Purchase, Resident
Stock Purchase and Employee Stock Purchase Plan.
4.13 Amendment No. Three to Amended and Restated Dividend Reinvestment,
Stock Purchase, Resident Stock Purchase and Employee Stock Purchase Plan.
4.14 Directors' Stock Grant Plan.
4.15 Director, Officer and Employee Stock Purchase and Loan Program.
4.16 Home Properties of New York, Inc., Home Properties of New York, L.P.
Executive Retention Plan.
4.17 Home Properties of New York, Inc. Deferred Bonus Plan.
4.18 Fourth Amended and Restated Dividend Reinvestment, Stock Purchase,
Resident Stock Purchase and Employee Stock Purchase Plan.
4.19 Directors Deferred Compensation Plan.
10.1 Second Amended and Restated Agreement of Limited Partnership of Home
Properties of New York, L.P.
10.2 Amendments No. One through Eight to the Second Amended and Restated
Agreement of Limited Partnership of Home Properties of New York, L.P.
10.3 Articles of Incorporation of Home Properties Management, Inc.
10.4 By-Laws of Home Properties Management, Inc.
10.5 Articles of Incorporation of Conifer Realty Corporation.
10.6 By-Laws of Conifer Realty Corporation.
10.7 Home Properties Trust Declaration of Trust, dated September 19, 1997.
10.8 Employment Agreement between Home Properties of New York, L.P. and
Norman P. Leenhouts.
10.9 Amendments No. One, Two and Three to the Employment Agreement between
Home Properties of New York, L.P. and Norman P. Leenhouts.
10.10 Employment Agreement between Home Properties of New York, L.P. and
Nelson B. Leenhouts.
10.11 Amendments No. One, Two and Three to the Employment Agreement between
Home Properties of New York, L.P. and Nelson B. Leenhouts.
10.12 Employment Agreement between Home Properties of New York, L.P. and
Richard J. Crossed.
10.13 Amendments No. One and Two to the Employment Agreement between Home
Properties of New York, L.P. and Richard J. Crossed.
10.14 Indemnification Agreement between Home Properties of New York, Inc. and
certain officers and directors.
10.15 Indemnification Agreement between Home Properties of New York, Inc. and
Richard J. Crossed.
10.16 Indemnification Agreement between Home Properties of New York, Inc. and
Alan L. Gosule.
10.17 Registration Rights Agreement among Home Properties of New York, Inc.,
Home Leasing Corporation, Leenhouts Ventures, Norman P. Leenhouts, Nelson
B. Leenhouts, Amy L. Tait, David P. Gardner, Ann M. McCormick, William E.
Beach, Paul O'Leary, Richard J. Struzzi, Robert C. Tait, Timothy A.
Florczak and Laurie Tones.
10.18 Lockup Agreements by Home Properties of New York, Inc. and Conifer
Realty, Inc., Conifer Development, Inc., Richard J. Crossed, Peter J.
Obourn and John F. Fennessey.
10.19 Contribution Agreement between Home Properties of New York, L.P. and
Conifer Realty, Inc., Conifer Development, Inc., .Richard J. Crossed,
Peter J. Obourn and John H. Fennessey.
10.20 Amendment to Contribution Agreement between Home Properties of New York,
L.P. and Conifer Realty, Inc., Conifer Development, Inc., Richard J.
Crossed, Peter J. Obourn and John H. Fennessey.
10.21 Agreement of Operating Sublease, dated October 1, 1986, among KAM, Inc.,
Morris Massry and Raintree Island Associates, as amended by Letter
Agreement Supplementing Operating Sublease dated October 1, 1986.
10.22 Indemnification and Pledge Agreement between Home Properties of New York,
L.P. and Conifer Realty, Inc., Conifer Development, Inc., Richard J.
Crossed, Peter J. Obourn and John H. Fennessey.
10.23 Form of Term Promissory Note payable to Home Properties of New York, Inc.
by officers and directors in association with the Executive and
Director Stock Purchase and Loan Program.
10.24 Form of Pledge Security Agreement executed by officers and directors in
connection with Executive and Director Stock Purchase and Loan Program.
10.25 Schedule of Participants, loan amounts and shares issued in connection
with the Executive and Director Stock Purchase and Loan Program.
10.26 Subordination Agreement between Home Properties of New York, Inc. and
The Chase Manhattan Bank relating to the Executive and Director Stock
Purchase and Loan Program.
10.27 Partnership Interest Purchase Agreement, dated as of December 23,
1996 among Home Properties of New York, Inc., Home Properties of New
York, L.P. and State of Michigan Retirement Systems.
10.28 Registration Rights Agreement, dated as of December 23, 1996 between
Home Properties of New York, Inc. and State of Michigan Retirement
Systems.
10.29 Lock-Up Agreement, dated December 23, 1996 between Home Properties of
New York, Inc. and State of Michigan Retirement Systems.
10.30 Agreement, dated as of April 13, 1998, between Home Properties of New
York, Inc. and the Treasurer of the State of Michigan.
10.31 Amendment No. Nine to the Second Amended and Restated Agreement of
Limited Partnership to the Operating Partnership.
10.32 Master Credit Facility Agreement by and among Home Properties of New
York, Inc., Home Properties of New York, L.P., Home Properties WMF I
LLC and Home Properties of New York, L.P. and P-K Partnership doing
business as Patricia Court and Karen Court and WMF Washington Mortgage
Corp., dated as of August 28, 1998.
10.33 First Amendment to Master Credit Facility Agreement, dated as of
December 11, 1998 among Home Properties of New York, Inc., Home
Properties of New York, L.P., Home Properties WMF I LLC and Home
Properties of New York, L.P. and P-K Partnership doing business
as Patricia Court and Karen Court and WMF Washington Mortgage Corp.
and Fannie Mae.
10.34 Second Amendment to Master Credit Facility Agreement, dated as of
August 30, 1999 among Home Properties of New York, Inc., Home
Properties of New York, L.P., Home Properties WMF I LLC and Home
Properties of New York, L.P. and P-K Partnership doing business as
Patricia Court and Karen Court and WMF Washington Mortgage Corp. and
Fannie Mae.
10.35 Amendments No. Ten through Seventeen to the Second Amended and Restated
Limited Partnership Agreement.
10.36 Amendments No. Eighteen through Twenty-Five to the Second Amended and
Restated Limited Partnership Agreement.
10.37 Credit Agreement, dated 8/23/99 between Home Properties of New York,
L.P., the Lenders Party hereto and Manufacturers and Traders Trust
Company, as Administrative Agent.
10.38 Amendment No. Twenty-Seven to the Second Amended and Restated Limited
Partnership Agreement.
10.39 Amendments Nos. Twenty-Six, Twenty-Eight through Thirty to the Second
Amended and Restated Limited Partnership Agreement.
10.40 Registration Rights Agreement between Home Properties of New York, Inc.
and GE Capital Equity Investments, Inc., dated September 29, 1999.
10.41 Amendment to Partnership Interest Purchase Agreement and Exchange
Agreement.
10.42 2000 Stock Benefit Plan.
11 Computation of Per Share Earnings Schedule.
21 List of Subsidiaries of Home Properties of New York, Inc.
23 Consent of PricewaterhouseCoopers LLP.
27 Financial Data Schedule
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, Home Properties of New York, Inc. certifies that it has duly
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
HOME PROPERTIES OF NEW YORK, INC.
By: /S/ NORMAN P. LEENHOUTS
Norman P. Leenhouts
Chairman of the Board, Co-Chief
Executive Officer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of Home Properties
of New York, Inc. and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/S/ NORMAN P. LEENHOUTS Director, Chairman of the March 23, 2000
Norman P. Leenhouts Board of Directors
and
Co-Chief Executive
Officer (Co-Principal
Executive Officer)
/S/ NELSON B. LEENHOUTS Director, President March 23, 2000
Nelson B. Leenhouts and Co-Chief
Executive
Officer (Co-Principal
Executive Officer)
/S/ RICHARD J. CROSSED Director, Executive Vice March 23, 2000
Richard J. Crossed President
/S/ AMY L. TAIT Director, Executive Vice March 23, 2000
Amy L. Tait President
/S/ DAVID P. GARDNER Vice President, Chief March 23, 2000
David P. Gardner Financial Officer and
Treasurer
(Principal Financial and
Accounting Officer)
/S/ BURTON S. AUGUST, SR Director March 23, 2000
Burton S. August, Sr.
/S/ WILLIAM BALDERSTON, III Director March 23, 2000
William Balderston, III
/S/ ALAN L. GOSULE Director March 23, 2000
Alan L. Gosule
/S/ LEONARD F. HELBIG, III Director March 23, 2000
Leonard F. Helbig, III
/S/ ROGER W. KOBER Director March 23, 2000
Roger W. Kober
/S/ ALBERT H. SMALL Director March 23, 2000
Albert H. Small
/S/ CLIFFORD W. SMITH, JR. Director March 23, 2000
Clifford W. Smith, Jr.
/S/ PAUL L. SMITH Director March 23, 2000
Paul L. Smith
HOME PROPERTIES OF NEW YORK, INC.
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL
STATEMENT SCHEDULE
PAGE
Report of Independent Accountants F-2
Consolidated Balance Sheets
as of December 31, 1999 and 1998 F-3
Consolidated Statements of Operations
for the Years Ended December 31, 1999, 1998 and 1997 F-4
Consolidated Statements of Stockholders' Equity
for the Years Ended December 31, 1999, 1998 and 1997 F-5
Consolidated Statements of Comprehensive Income
for the Years Ended December 31, 1999, 1998 and 1997 F-6
Consolidated Statements of Cash Flows
for the Years Ended December 31, 1999, 1998 and 1997 F-7
Notes to Consolidated Financial Statements F-8
Report of Independent Accountants on
Financial Statement Schedule F-28
Schedule III:
Real Estate and Accumulated Depreciation F-29
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Home Properties of New York, Inc.
In our opinion, the accompanying consolidated financial statements listed in
item 14(a)(1) and (2) of this Form 10-K present fairly, in all material
respects, the financial position of Home Properties of New York, Inc. (the
"Company") at December 31, 1999 and 1998, and the results of its operations
and its cash flows for each of the three years in the period ended December 31,
1999, in conformity with accounting principles generally accepted in the
United States. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion
on these financial statements based on our audits. We conducted our audits
of these statements in accordance with auditing standards generally accepted
in the United States, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion
expressed above.
/S/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Rochester, New York
January 31, 2000, except for Note 17, as to
which the date is March 15, 2000.
HOME PROPERTIES OF NEW YORK, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 and 1998
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
1999 1998
ASSETS
Real estate:
Land $194,468 $119,221
Buildings, improvements and equipment 1,286,285 821,567
1,480,753 940,788
Less: accumulated depreciation ( 101,904) ( 65,627)
Real estate, net 1,378,849 875,161
Cash and cash equivalents 4,742 33,446
Cash in escrows 28,281 17,431
Accounts receivable 6,842 6,269
Prepaid expenses 9,423 6,155
Deposits 897 175
Investment in and advances to affiliates 63,450 54,229
Deferred charges 2,610 2,749
Other assets 8,523 16,620
Total assets $1,503,617 $1,012,235
LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgage notes payable $618,901 $418,942
Line of Credit 50,800 -
Accounts payable 11,765 8,300
Accrued interest payable 3,839 1,962
Accrued expenses and other liabilities 6,391 4,962
Security deposits 14,918 11,404
Total liabilities 706,614 445,570
Minority interest 299,880 204,709
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value; 10,000,000 shares authorized:
9.0% Series A convertible cumulative preferred stock,
liquidation preference of $21.00 per share; 1,666,667
shares issued and outstanding 35,000 -
8.36% Series B convertible cumulative preferred stock,
liquidation preference of $25.00 per share; 2,000,000 shares
issued and outstanding 50,000 -
Common stock, $.01 par value; 80,000,000
shares authorized; 19,598,464 and 17,635,000 shares
issued and outstanding at December 31, 1999 and
1998, respectively 196 177
Excess stock, $.01 par value; 10,000,000
shares authorized; no shares issued - -
Additional paid-in capital 460,078 401,814
Distributions in excess of accumulated earnings ( 38,294) ( 26,622)
Unrealized loss on available-for-sale securities - ( 1,607)
Treasury stock, at cost, 0 and 79,600 shares at December
31, 1999 and 1998, respectively - ( 1,863)
Officer and director notes for stock purchases ( 9,857) ( 9,943)
Total stockholders' equity 497,123 361,956
Total liabilities and stockholders' equity $1,503,617 $1,012,235
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
HOME PROPERTIES OF NEW YORK, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
1999 1998 1997
Revenues:
Rental income $217,591 $137,557 $64,002
Property other income 6,878 3,614 2,222
Interest and dividend income 7,092 5,102 2,196
Other income 2,902 2,970 1,277
Total Revenues 234,463 149,243 69,697
Expenses:
Operating and maintenance 95,200 63,136 31,317
General and administrative 10,696 6,685 2,255
Interest 39,558 23,980 11,967
Depreciation and amortization 37,350 23,191 11,200
Loss on available-for-sale securities 2,123 - -
Non-recurring acquisition expense 6,225 - -
Total Expenses 191,152 116,992 56,739
Income before gain (loss) on disposition of
property, minority interest and
extraordinary item 43,311 32,251 12,958
Gain (loss) on disposition of property 457 - ( 1,283)
Income before minority interest and
extraordinary item 43,768 32,251 11,675
Minority interest 17,390 12,603 4,248
Income before extraordinary item 26,378 19,648 7,427
Extraordinary item, prepayment
penalties, net of $78 in 1999, $595 in 1998 and
$737 in 1997 allocated to minority interest (96) (960) (1,037)
Net income before preferred dividends 26,282 18,688 6,390
Preferred dividends (1,153) - -
Net income available to common shareholders $25,129 $18,688 $6,390
Basic earnings per share data:
Income before extraordinary item $ 1.35 $ 1.41 $ 1.00
Extraordinary item ($ .01) ($ .07) ($ .14)
Net income available to common shareholders $ 1.34 $ 1.34 $ .86
Diluted earnings per share data:
Income before extraordinary item $ 1.35 $ 1.40 $ .98
Extraordinary item ($ .01) ($ .07) ($ .14)
Net income available to common shareholders $ 1.34 $ 1.33 $ .84
Weighted average number of shares outstanding:
Basic 18,697,731 13,898,221 7,415,888
Diluted 18,800,907 14,022,329 7,558,167
The accompanying notes are an integral part of these consolidated financial
statements.
HOME PROPERTIES OF NEW YORK, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
Officer/
Preferred Distributions Director
Stock at Common Stock Additional in Excess of Accumulated Notes
Liquidation ------------- Paid-In Accumulated Comprehensive Treasury for Stock
Preference Shares Amount Capital Earnings Income Stock Purchase
Balance, January 1, 1997 $ - 6,144,498 $61 $98,092 ($13,062) $ - $ - ($2,061)
Issuance of common stock, net 3,148,750 31 77,087 ( 2,272)
Interest on notes for stock
Purchase ( 223)
Net income 6,390
Conversion of UPREIT Units
for stock 44,308 1 842
Purchase of treasury stock (20,000) ( 426)
Dividends paid ($1.74 per share) (13,028)
Balance, December 31, 1997 - 9,317,556 93 176,021 (19,700) - ( 426) ( 4,556)
Issuance of common stock, net 8,301,072 83 205,483 ( 5,236)
Interest on notes for stock
Purchase ( 151)
Net income 18,688
Unrealized loss on
available-for-sale securities (1,607)
Conversion of UPREIT Units for
Stock 75,972 1 800
Purchase of treasury stock (59,600) (1,437)
Adjustment of minority interest 19,510
Dividends paid ($1.83 per share) (25,610)
Balance, December 31, 1998 - 17,635,000 177 401,814 (26,622) (1,607) (1,863) ( 9,943)
Issuance of common stock, net 2,025,288 20 50,290
Issuance of 2,000,000 shares Series B
Preferred stock, net 50,000 (1,267)
Conversion of partnership interest for
1,666,667 shares of Series A Preferred
stock 35,000 448
Payments on notes for stock purchase 226
Interest on notes for stock purchase (140)
Net income 26,282
Change in unrealized loss on available-
for-sale securities 1,607
Conversion of UPREIT Units for stock 63,476 1 1,322
Purchase and retirement of treasury stock (125,300) (2) (4,835) 1,863
Adjustment of minority interest 12,306
Preferred dividends ( 1,057)
Dividends paid ($1.97 per share) ( 36,897)
Balance, December 31, 1999 $85,000 19,598,464 $196 $460,078 ($38,294) - - ($9,857)
The accompanying notes are an integral part of these consolidated financial
statements.
HOME PROPERTIES OF NEW YORK, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS)
1999 1998 1997
Net income available to common $25,129 $18,688 $6,390
shareholders
Comprehensive income:
Change in unrealized loss on available-
for-sale securities 1,607 (1,607) -
Net comprehensive income $26,736 $17,081 $6,390
The accompanying notes are an integral part of these consolidated financial
statements.
HOME PROPERTIES OF NEW YORK, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND
1997
(IN THOUSANDS)
1999 1998 1997
Cash flows from operating activities:
Net income before preferred dividends $26,282 $18,688 $ 6,390
Adjustments to reconcile net income before
preferred
dividends to net cash provided by operating
activities:
Equity in income of affiliates ( 156) 146 ( 285)
Income allocated to minority interest 17,390 12,603 4,248
Extraordinary item allocated to minority ( 78) ( 595) ( 737)
interest
Depreciation and amortization 38,066 24,405 11,938
Unrealized loss on available-for-sale securities - 1,607 -
Loss on available-for-sale securities 2,123 - -
(Gain) Loss on disposition of property ( 457) - 1,283
Changes in assets and liabilities:
Other assets (2,884) ( 6,236) ( 4,555)
Accounts payable and accrued liabilities 10,285 9,930 9,003
Total adjustments 64,289 41,860 20,895
Net cash provided by operating activities 90,571 60,548 27,285
Cash flows used in investing activities:
Purchase of properties and other assets, net of
mortgage (130,789) (225,490) ( 71,876)
notes assumed and UPREIT Units issued
Additions to properties ( 61,034) ( 42,896) ( 15,962)
Deposits on property ( 722) 430 ( 605)
Advances to affiliates ( 48,888) ( 54,105) ( 41,121)
Payments on advances to affiliates 39,871 35,922 13,791
Proceeds from sale of properties 1,099 - 13,313
Sale (Purchase) of available-for-sale securities 9,526 ( 11,649) -
Net cash used in investing activities (190,937) (297,788) (102,460)
Cash flows from financing activities:
Proceeds from sale of preferred stock, net 48,733 - -
Proceeds from sale of common stock, net 50,397 200,179 74,625
Purchase of treasury stock ( 2,974) ( 1,437) ( 426)
Proceeds from mortgage notes payable 32,978 187,481 72,175
Payments of mortgage notes payable ( 36,345) ( 60,536) ( 54,388)
Proceeds from line of credit 104,700 156,800 153,650
Payments on line of credit ( 53,900) (165,550) (144,900)
Additions to deferred loan costs ( 576) ( 2,329) ( 762)
Additions to cash escrows, net ( 10,850) ( 7,220) ( 4,574)
Dividends and distributions paid ( 60,501) ( 40,511) ( 17,939)
Net cash provided by financing activities 71,662 266,877 77,461
Net increase (decrease) in cash and cash equivalents ( 28,704) 29,637 2,286
Cash and cash equivalents:
Beginning of year 33,446 3,809 1,523
End of year $ 4,742 $33,446 $ 3,809
The accompanying notes are an integral part of these consolidated financial
statements.
HOME PROPERTIES OF NEW YORK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
1 ORGANIZATION AND BASIS OF PRESENTATION
ORGANIZATION
Home Properties of New York, Inc. (the "Company " ) was formed in
November 1993, as a Maryland corporation and is engaged
primarily in the ownership, management, acquisition, rehabilitation and
development of apartment communities in the Northeastern, Mid-Atlantic
and Midwestern United States. The Company conducts its business through
Home Properties of New York, L.P. (the "Operating Partnership"), a
New York limited partnership. As of December 31, 1999, the Company
operated 291 apartment communities with 44,982 apartments. Of this
total, the Company owned 126 communities, consisting of 33,807
apartments, managed as general partner 125 partnerships that owned 7,710
apartments and fee managed 3,465 apartments for affiliates
and third parties. The Company also fee managed 1.7 million square feet
of office and retail properties.
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts
of the Company and its 62.4% (64.0% at December 31, 1998) partnership
interest in the Operating Partnership. The remaining 37.6% (36.0% at
December 31, 1998) is reflected as Minority Interest in these
consolidated financial statements. Investments in which the
Company does not have control are presented on the equity method. All
significant intercompany balances and transactions have
been eliminated in these consolidated financial statements.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REAL ESTATE
Real estate is recorded at the lower of cost or net realizable value.
Costs related to the acquisition, development, construction
and improvement of properties are capitalized. Interest costs are
capitalized until construction is substantially complete. When retired or
otherwise disposed of, the related cost and accumulated depreciation are
cleared from the respective accounts and the net difference, less any
amount realized from disposition, is reflected in income. There
was $263, $189 and $0 of interest capitalized in 1999, 1998 and 1997,
respectively. Ordinary repairs and maintenance are expensed as incurred.
The Company quarterly reviews its properties to determine if its
carrying costs will be recovered from future operating cash flows.
In cases where the Company does not expect to recover its carrying
costs, the Company recognizes an impairment loss. No such
losses have been recognized to date.
HOME PROPERTIES OF NEW YORK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
DEPRECIATION
Properties are depreciated using a straight-line method over the
estimated useful lives of the assets as follows: buildings,
improvements and equipment - 5-40 years; and tenant improvements - life
of related lease. Depreciation expense charged to operations
was $37,176, $23,067 and $11,104 for the years ended December 31, 1999,
1998 and 1997, respectively.
CASH AND CASH EQUIVALENTS
For purposes of the consolidated statements of cash flows, cash and cash
equivalents include all cash and highly liquid investments purchased
with original maturities of three months or less. The Company estimates
that the fair value of cash equivalents approximates the carrying
value due to the relatively short maturity of these instruments.
CASH IN ESCROWS
Cash in escrows consists of cash restricted under the terms of various
loan agreements to be used for the payment of property taxes
and insurance as well as required replacement reserves and tenant security
deposits for residential properties.
DEFERRED CHARGES
Costs relating to the financing of properties and interest rate reduction
agreements are deferred and amortized over the life of the related
agreement. The straight-line method, which approximates the
effective interest method, is used to amortize all financing costs. The
range of the terms of the agreements are from 1-23 years. Accumulated
amortization was $1,165, $2,592 and $1,791 as of December 31, 1999,
1998 and 1997, respectively.
AVAILABLE-FOR-SALE SECURITIES
Available-for-sale securities were recorded at fair market value based
upon quoted prices, with the unrealized gain (loss) recorded as a
component of stockholders' equity.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities
and disclosures of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
ADVERTISING
Advertising expenses are charged to operations during the year in which
they were incurred. Advertising expenses incurred and charged to
operations were approximately $3,966, $2,891 and $1,291 for the years
ended December 31, 1999, 1998 and 1997, respectively.
HOME PROPERTIES OF NEW YORK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
REVENUE RECOGNITION
The Operating Partnership leases its residential properties under leases
with terms generally one year or less. Rental income is recognized when
earned. Property other income, which consists primarily of income from
operation of laundry facilities, administrative fees, garage and carport
rentals and miscellaneous charges to residents, is recognized when earned.
The Operating Partnership earns development and other fee income from
properties in the development phase. This fee income is recognized on the
percentage of completion method.
INCOME TAXES
The Company has elected to be taxed as a real estate investment trust
( " REIT " ) under the Internal Revenue Code of 1986, as amended,
commencing with the taxable year ended December 31, 1994. As a result,
the Company generally will not be subject to Federal or State income
taxation at the corporate level to the extent it distributes annually at
least 95% of its REIT taxable income to its shareholders and satisfies
certain other requirements. Accordingly, no provision has been made for
federal income taxes in the accompanying consolidated financial
statements for the years ended December 31, 1999, 1998 and 1997.
Stockholders are taxed on dividends and must report such dividends as
either ordinary income, capital gains, or as return of capital.
EARNINGS PER SHARE
Basic Earnings Per Share ("EPS") is computed as net income available to
common shareholders divided by the weighted average number of common
shares outstanding for the period. Diluted EPS reflects the potential
dilution that could occur from common shares issuable through stock-
based compensation including stock options and the conversion
of any cumulative convertible preferred stock. The exchange of an
Operating Partnership Unit for common stock will have no effect on
diluted EPS as unitholders and stockholders effectively share equally in
the net income of the Operating Partnership.
HOME PROPERTIES OF NEW YORK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
EARNINGS PER SHARE (CONTINUED)
Income before extraordinary item, extraordinary item and net income
available to common shareholders are the same for both the basic and
diluted calculation. The reconciliation of the basic and diluted
earnings per share for the years ended December 31, 1999, 1998 and 1997
is as follows:
1999 1998 1997
Net Income before preferred dividends $26,282 $18,688 $6,390
Less: Preferred dividends (1,153) - -
Net income available to common shareholders $25,129 $18,688 $6,390
Basic weighted average number of
shares outstanding 18,697,731 13,898,221 7,415,888
Effect of dilutive stock options 103,176 124,108 142,279
Diluted weighted average number of
shares outstanding 18,800,907 14,022,329 7,558,167
Basic earnings per share $1.34 $1.34 $0.86
Diluted earnings per share $1.34 $1.33 $0.84
Unexercised stock options to purchase 713,600, 138,500,
116,500 shares of the Company's common stock were not included in the
computations of diluted EPS because the options' exercise prices were
greater than the average market price of the Company's stock during the
years ended December 31, 1999, 1998 and 1997, respectively. For the year
ended December 31, 1999, the 1,666,667 shares of the 9% Series A
Convertible Cumulative Preferred Stock ("Series A Preferred") and the
2,000,000 shares of 8.36% Series B Convertible Cumulative Preferred Stock
("Series B Preferred") on an as-converted basis has an antidilutive
effect and is not included in the computation of diluted EPS.
HOME PROPERTIES OF NEW YORK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
3 INVESTMENT IN AND ADVANCES TO AFFILIATES
The Company has investments in and advances to approximately 150 limited
partnerships where the Company acts as managing general partner. In
addition, there are investments in other affiliated entities. The
following is summarized financial information for the investment in and
advances to affiliates carried under the equity method of accounting as of
December 31, 1999 and 1998 and for each of the three years ended
December 31, 1999.
1999 1998
Balance Sheets:
Real estate, net $269,088 $225,128
Other assets 36,228 29,796
Total assets $305,316 $254,924
Mortgage notes payable $224,760 $165,838
Advances from general partner 39,717 39,437
Other liabilities 12,379 32,324
Partners' equity 28,460 17,325
Total liabilities and partners' equity
$305,316 $254,924
1999 1998 1997
Operations:
Gross revenues $42,059 $38,958 $26,536
Operating expenses ( 26,683) ( 21,078) ( 13,817)
Mortgage interest expense ( 10,398) ( 8,036) ( 6,699)
Depreciation and amortization ( 11,257) ( 10,725) ( 7,359)
Net loss ($ 6,279) ($ 881) ($ 1,339)
Company's share (included in
property other income) $ 45 ($ 259) $ 193
Reconciliation of interests in the underlying net assets to the Company's
carrying value of property investments in and advances to affiliates:
1999 1998
Partners' equity, as above $28,460 $17,325
Equity of other partners 24,784 12,383
Company's share of investments in limited
partnerships 3,676 4,942
Advances to limited partnerships, as above 39,717 39,437
Company's investment in and advances to
limited partnerships 43,393 44,379
Company's investment in Management Companies
(see Note 9) 275 388
Company's advances to Management Companies 19,782 9,462
Carrying value of investments in and advances
to affiliates $63,450 $54,229
HOME PROPERTIES OF NEW YORK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
4 MORTGAGE NOTES PAYABLE
Mortgage notes, collateralized by certain properties and listed in order
of their maturity dates, are as follows:
Current
Fixed
December 31 Interest Maturity
1999 1998 Rate Date
Various $ - $11,875 N/A N/A
Philadelphia (2 properties) 4,719 4,839 8.50 2001
The Colony 16,175 - 7.60 2002
New York (4 properties) 19,211 19,537 7.75 2002
Royal Gardens 11,384 11,649 7.66 2002
Racquet Club 11,966 12,136 7.63 2003
Rolling Park 2,804 2,866 7.88 2003
Curren Terrace 9,450 9,597 8.36 2003
Sherry Lake 6,451 6,623 7.88 2004
Glen Manor 3,646 3,701 8.13 2004
Colonies 12,307 12,535 8.88 2004
Springcreek & Meadows 3,097 3,162 7.63 * 2004
Idylwood 9,221 9,305 8.63 2005
Carriage Hill - MI 3,840 3,914 7.36 2006
Carriage Park 5,533 5,637 7.48 2006
Cherry Hill 4,478 4,527 7.99 2006
Mid-Island Estates 6,675 6,675 7.50 * 2006
Newcastle 6,000 6,150 7.90 * 2006
Country Village 6,601 6,670 8.39 2006
Raintree Island 6,296 6,400 8.50 2006
Seminary Towers 5,201 - 8.31 2007
Maple Lane 6,335 - N/A 2007
Woodgate Place 3,405 3,440 7.87 2007
Strawberry Hill 2,052 2,073 8.26 2007
Pavilion 3,926 - 7.45 2008
Maple Lane 5,962 - 7.21 2008
Canterbury 2,204 - 7.67 2008
Sherwood Gardens 3,060 - 6.98 2008
Detroit Portfolio (10 48,531 49,293 7.51 2008
properties)
Hamlet Court 1,765 1,792 7.11 2008
Candlewood - IN 7,781 7,909 7.02 2008
Valley Park South 9,968 10,079 6.93 2008
Philadelphia (4 properties) 15,750 - 8.00 2009
Conifer Village 2,610 2,765 7.20 2010
Ridgeway 1,172 - 8.38 2010
Multi-Property (3) 32,978 - 7.25 2011
Timbercroft 950 - 8.50 2011
Multi-Property (7) 58,881 58,881 6.16 2011
Timbercroft 1,274 - 8.00 2012
Village Square 1,053 - 7.00 2012
Baltimore (2 properties) 20,090 20,419 6.99 2013
Multi-Property (22) 100,000 100,000 6.48 2013
Springwells 11,576 - 8.00 2015
Pines of Perinton 8,682 8,875 8.50 2018
Canterbury 6,820 - 8.25 2018
Pavilion 8,925 - 8.00 2018
Bonnie Ridge 19,502 - 6.60 2018
Fairways at Village Green 4,352 4,436 8.23 2019
Timbercroft 5,836 - 8.38 2019
Canterbury 3,724 - 7.50 2019
HOME PROPERTIES OF NEW YORK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
4 MORTGAGE NOTES PAYABLE (CONTINUED)
Current
Fixed
December 31 Interest Maturity
1999 1998 Rate Date
Raintree Island 1,161 1,182 8.50 2020
Chestnut Crossing 9,977 - 9.34 2020
Village Square 6,605 - 8.13 2021
Doub Meadow 2,918 - 7.50 2021
Canterbury 2,588 - 7.50 2021
Shakespeare Park 2,633 - 7.50 2024
Gateway Village 6,408 - 8.00 2030
Owings Run 17,669 - 8.00 2035
Owings Run 14,723 - 8.00 2036
Total/Weighted Average $618,901 $418,942 7.17
*The interest rate on these mortgages will convert to a variable rate
on various dates between 2000 and 2003 and continue until maturity.
Principal payments on the mortgage notes payable for years subsequent to
December 31, 1999 are as follows:
2000 $ 7,478
2001 12,535
2002 52,008
2003 30,359
2004 30,307
Thereafter 486,214
$618,901
The Company determines the fair value of the mortgage notes payable
based on the discounted future cash flows at a discount rate that
approximates the Company's current effective borrowing rate for
comparable loans. Based on this analysis, the Company has determined
that the fair value of the mortgage notes payable approximates
$601,983 at December 31, 1999.
The Company has incurred prepayment penalties on debt restructurings which
are accounted for as extraordinary items in the statement of operations.
Prepayment penalties were approximately $174, $1,555 and $1,774 for the
years ended December 31, 1999, 1998 and 1997, respectively. The 1999
paydowns totaled $13,669 from four debt instruments which were paid off
from available cash on hand. The 1998 paydowns totaled $54,879 from 14
debt instruments which were financed by three new borrowings in excess
of $179,000. The 1997 paydowns totaled $34,626 from one debt instrument
which was financed by one new borrowing of $50,000.
5 LINE OF CREDIT
As of December 31, 1999, the Company had an unsecured line of credit from
M&T Bank of $100,000 with $50,800 outstanding. The facility expires on
September 4, 2000. Borrowings bear interest at 1.25% over the one-month
LIBOR rate or at a money market rate as quoted on a daily basis by the
lending institution. The money market interest rate (the rate used by
the Company) was 6.75% at December 31, 1999.
HOME PROPERTIES OF NEW YORK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
6 MINORITY INTEREST
Minority interest in the Company relates to the interest in the
Operating Partnership not owned by Home Properties of New York, Inc.
Units in the Operating Partnership ("UPREIT Units") are exchangeable on
a one-for-one basis into common shares. On December 30, 1996, $35
million was raised in a private placement through the sale of a Class A
Limited Partnership Interest to a state pension fund. The interest,
which can be converted into 1,666,667 shares of common stock, will
receive a preferred return equal to the greater of: (a) 9.25% on the
original investment during the first two years ending on December
30, 1998, declining to 9.0% up to and including December 30, 2003; or
(b) the actual dividends paid to common shareholders on 1,666,667 shares.
On December 22, 1999, the holder of the Class A Limited Partnership
Interest converted its ownership to Series A Preferred stock.
The changes in minority interest for the two years ended December 31 are
as follows:
1999 1998
Balance, beginning of year $204,709 $156,847
Issuance of UPREIT Units associated with
property acquisitions 149,483 71,067
Adjustment from minority interest to stockholders' ( 12,306) (19,510)
equity
Exchange of UPREIT Units for Shares ( 1,323) ( 801)
Exchange of partnership interests for Series A ( 35,448) -
Preferred stock
Net income 17,312 12,008
Distributions ( 22,547) (14,902)
Balance, end of year $299,880 $204,709
7 STOCKHOLDERS' EQUITY
DIVIDEND REINVESTMENT PLAN
The Company has adopted the Dividend
Reinvestment, Stock Purchase, Resident
Stock Purchase and Employee Stock
Purchase Plan (the "DRIP" ). The DRIP
provides the stockholders of the
Company an opportunity to automatically
invest their cash dividends at a
discount of 3% from the market price.
In addition, eligible participants may
make monthly or other voluntary cash
investments, also typically at a
discount, which has varied between 2%
and 3% from the market price, in shares
of common stock. A total of $49
million, $72 million and $34 million,
net of officer and director notes, was
raised through this program during
1999, 1998 and 1997, respectively.
PREFERRED SHARES
On September 30, 1999, the Company
privately placed 2,000,000 of its 8.36%
Series B Preferred shares, $25
liquidation preference per share. This
offering generated net proceeds of
approximately $48.7 million after
offering costs of $1.3 million. The net
proceeds were used to pay down Company
borrowings. The Series B Preferred
shares are convertible at any time by
the holder into Common Shares at a
conversion price of $29.77 per Common
Share, equivalent to a conversion ratio
of .8398 Common Shares for each Series
B Preferred Share (equivalent to
1,679,543 Common Shares assuming 100%
converted). The Series B Preferred
Shares are non-callable for five years.
Each Series B Preferred Share will
receive the greater of a quarterly
distribution of $0.5225 per share or
the dividend paid on a share of common
stock on an as converted basis.
HOME PROPERTIES OF NEW YORK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
7 STOCKHOLDERS' EQUITY (CONTINUED)
PREFERRED SHARES (CONTINUED)
On December 22, 1999, the holder of the
Class A limited partnership interests
converted its ownership to 9% Series A
Preferred stock, liquidation preference
of $21.00 per Common Share, total
shares outstanding of 1,666,667. The
conversion to preferred stock occurred
at the Company's request and permits
the Operating Partnership to continue
to use favorable tax depreciation
methods. The Series A Preferred shares
are convertible at any time by the
holder on a one-for-one basis into
Common Shares. Each Series A Preferred
share will receive a quarterly
distribution equal to the greater of 9%
per annum multiplied by the liquidation
preference or the dividend paid on a
share of common stock. The current
dividend of $.53 per quarter (effective
with the November, 1999 dividend) is
equivalent to an annualized rate of
$2.12 per share, which exceeds the 9%
preferred return. On and after
December 30, 2003, each preferred share
will receive the dividend paid on a
share of common stock as long as the
actual distributions paid in each of
the prior eight consecutive quarters
equaled or exceeded a 9.25% annual
return. Any unconverted interest can
be redeemed without premium by the
Company after December 30, 2006.
OFFICER AND DIRECTOR NOTES FOR STOCK PURCHASES
On August 12, 1996, eighteen officers
and the six independent directors
purchased an aggregate of 208,543
shares of Common Stock through the DRIP
at the price of $19.79. The purchases
were financed 50% from a bank loan and
50% by a recourse loan from the
Company. The Company loans bear
interest at 7% per annum and mature in
August, 2016. The Company loans are
subordinate to the above-referenced
bank loans, and are collateralized by
pledges of the 208,543 common shares.
The loans are expected to be repaid
from the regular quarterly dividends
paid on the shares of common stock
pledged, after the corresponding bank
loans are paid in full.
On November 10, 1997, twenty-one
officers and five of the independent
directors purchased an aggregate of
169,682 shares of common stock through
the DRIP at the price of $26.66. The
purchases were financed 50% from a bank
loan and 50% by a recourse loan from
the Company. The Company loans bear
interest at 6.7% per annum and mature
in November, 2017. The Company loans
are subordinate to the above-referenced
bank loans, and are collateralized by
pledges of the 169,682 common shares.
The loans are expected to be repaid
from the regular quarterly dividends
paid on the shares of common stock
pledged, after the corresponding bank
loans are paid in full.
STOCK PURCHASE AND LOAN PLAN
In May, 1998, the Company adopted the
Director, Officer and Employee Stock
Purchase and Loan Plan (the "Stock
Purchase Plan"). The program provides
for the sale and issuance, from time to
time as determined by the Board of
Directors, of up to 500,000 shares of
the Company's Common Stock to the
directors, officers and key employees
of the Company for consideration of not
less than 97% of the market price of
the Common Stock. The Stock Purchase
Plan also allows the Company to loan
the participants up to 100% of the
purchase price (50% for non-employee
directors).
HOME PROPERTIES OF NEW YORK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
7 STOCKHOLDERS' EQUITY (CONTINUED)
STOCK PURCHASE AND LOAN PLAN (CONTINUED)
On August 12, 1998, thirty officers/key
employees and the six independent
directors purchased an aggregate of
238,239 shares of common stock through
the Stock Purchase Plan at the price of
$24.11. The purchases for the
officers/key employees were financed
100% by a recourse loan from the
Company (50% for non-employee
directors). The loans bear interest at
7.13% per annum and mature on the
earlier of the maturity of the 1996 and
1997 phases of the loan program or
August, 2018. The loans are
collateralized by pledges of the common
stock and are expected to be repaid
from the regular quarterly dividends
paid on the shares.
DIVIDENDS
Stockholders are taxed on dividends and
must report such dividends as either
ordinary income, capital gains, or as
return of capital. The appropriate
amount of each per common share is as
follows:
ORDINARY INCOME RETURN OF CAPITAL
1997 50.1% 49.9%
1998 79.4% 20.6%
1999 85.6% 14.4%
TOTAL SHARES/UNITS OUTSTANDING
At December 31, 1999, 19,598,464 common
shares, 3,346,210 convertible preferred
shares (on a diluted basis) and
14,034,301 UPREIT Units were
outstanding for a total of 36,978,975.
8 SEGMENT REPORTING
The Company is engaged in one primary
business segment - the ownership and
management of market rate apartment
communities (segregated as Core and
Non-core properties). Company
management views each apartment
community as a separate component of
the operating segment.
Non-segment revenue to reconcile total
revenue consists of unconsolidated
management and development fees and
interest income. Non-segment assets to
reconcile to total assets include cash,
cash in escrows, accounts receivable,
prepaid expenses, deposits, investments
in and advances to affiliates, deferred
charges and other assets.
Core properties consist of all
apartment communities which have been
owned more than one full calendar year.
Therefore, the 1999 Core represents
communities owned as of December 31,
1997. Non-core properties consist of
apartment communities acquired during
1998 and 1999, such that full year
comparable operating results are not
available.
HOME PROPERTIES OF NEW YORK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
8 SEGMENT REPORTING (CONTINUED)
The accounting policies of the segments
are the same as those described in Note 1.
The Company assesses and measures
segment operating results based on a
performance measure referred to as
Funds from Operations ("FFO"). The
National Association of Real Estate
Investment Trusts defines FFO as net
income (loss), before gains (losses)
from the sale of property,
extraordinary items, plus real estate
depreciation including adjustments for
unconsolidated partnerships and joint
ventures. FFO is not a measure of
operating results or cash flows from
operating activities as measured by
generally accepted accounting
principles and it is not indicative of
cash available to fund cash needs and
should not be considered an alternative
to cash flows as a measure of
liquidity.
THE REVENUES, PROFIT (LOSS), AND ASSETS FOR
EACH OF THE REPORTABLE SEGMENTS ARE
SUMMARIZED AS FOLLOWS FOR THE YEARS
ENDED DECEMBER 31, 1999, 1998, AND
1997.
1999 1998 1997
REVENUES
Apartments owned
Core properties $108,643 $102,864 $66,224
Non-core properties 115,826 38,307 -
Reconciling items 9,994 8,072 3,473
Total Revenue $234,463 $149,243 $69,697
PROFIT (LOSS)
Funds from operations:
Apartments owned
Core properties 59,990 55,024 34,907
Non-core properties 69,279 23,011 -
Reconciling items 9,994 8,072 3,473
Segment contribution to FFO 139,263 86,107 38,380
General & administrative expenses ( 10,696) ( 6,685) ( 2,255)
Interest expense ( 39,558) (23,980) (11,967)
Unconsolidated depreciation 458 733 324
Non-recurring amortization - 294 -
Non-real estate depreciation/amort. ( 335) ( 209) ( 137)
Funds from Operations 89,132 56,260 24,345
Depreciation - apartments owned (37,015) (22,982) (11,063)
Unconsolidated depreciation ( 458) ( 733) ( 324)
Non-recurring amortization - ( 294) -
Non-recurring acquisition expense ( 6,225) - -
Loss on available-for-sale securities ( 2,123) - -
Gain (loss) on disposition of 457 - ( 1,283)
properties
Minority interest in earnings (17,390) (12,603) ( 4,248)
Extraordinary items, net of minority ( 96) ( 960) ( 1,037)
interest
Net Income before preferred dividends $26,282 $18,688 $6,390
ASSETS
Apartments owned $1,378,849 $875,161 $478,597
Reconciling items 124,768 137,074 65,226
Total Assets $1,503,617 $1,012,235 $543,823
REAL ESTATE CAPITAL EXPENDITURES
New property acquisitions $480,564 $376,735 $266,799
Apartment improvements 61,034 42,896 15,962
Total Real Estate Capital $541,598 $419,631 $282,761
Expenditures
HOME PROPERTIES OF NEW YORK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
9 MANAGEMENT COMPANIES
Certain property management, leasing
and development activities are
performed by Home Properties
Management, Inc. and Conifer Realty
Corp. (the "Management Companies").
The Management Companies issued non-
voting common stock to the Operating
Partnership in exchange for management
contracts for residential, commercial,
and development managed properties and
certain other assets. This exchange
entitles the Operating Partnership to
receive 99% of the economic interest of
each Management Company. The remaining
1% economic interest and voting stock
were issued to certain inside directors
of the Company. On December 31, 1998,
additional shares representing a 4%
economic interest were sold and issued
to the same inside directors.
Therefore, effective January 1, 1999,
the Operating Partnership is entitled
to receive 95% of the economic interest
of each Management Company.
The Management Companies receive
development, construction and other fee
income from properties in the
development phase. This fee income is
recognized on the percentage of
completion method. The Management
Companies are accounted for under the
equity method.
The Management Companies provide
property management and administrative
services to certain real estate and
other entities. In consideration for
these services, the Management
Companies receive monthly management
fees generally based on a percentage of
revenues or costs incurred. Management
fees are recognized as revenue when
they are earned.
The Company's share of income from the
Management Companies was $156, $113 and
$92 for the years ended December 31,
1999, 1998 and 1997, respectively.
Summarized combined financial
information of the Management Companies
at and for the years ended December 31,
1999, 1998 and 1997 is as follows:
1999 1998 1997
Management fees $ 3,778 $ 3,471 $3,141
Development and construction
management fees 5,567 4,581 3,010
General and administrative (7,449) (6,953) ( 5,561)
Interest expense (1,242) ( 681) ( 329)
Other expenses ( 490) ( 304) ( 168)
Net income $ 164 $ 114 $ 93
Total assets $21,699 $11,288 $6,037
Total liabilities $21,375 $10,848 $5,428
HOME PROPERTIES OF NEW YORK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
10 TRANSACTIONS WITH AFFILIATES
The Company and the Management
Companies recognized management and
development fee revenue, interest
income and other miscellaneous income
from affiliated entities of $15,199,
$13,492 and $8,427 for the years ended
December 31, 1999, 1998 and 1997,
respectively.
The Company leases its corporate office
space from an affiliate. The lease
requires an annual base rent of $336
through June, 2000 and $335 from July,
2000 through the August, 2003 lease
expiration. The lease also requires
the Company to pay a pro rata portion
of property improvements, real estate
taxes and common area maintenance.
Rental expense was $698, $619 and $387
for the years ended December 31, 1999,
1998 and 1997, respectively.
From time to time, the Company advances
funds as needed to the Management
Companies which total $19,782 and
$9,462 at December 31, 1999 and 1998,
respectively, and bear interest at 1%
over prime.
11 COMMITMENTS AND CONTINGENCIES
GROUND LEASE
The Company has a non-cancelable
operating ground lease for one of its properties. The
lease expires May 1, 2020, with options
to extend the term of the lease for two
successive terms of twenty-five years
each. The lease provides for
contingent rental payments based on
certain variable factors. The lease
also requires the lessee to pay real
estate taxes, insurance and certain
other operating expenses applicable to
the leased property. Ground lease
expense was $194, $186 and $180
including contingent rents of $124,
$116 and $110 for the years ended
December 31, 1999, 1998 and 1997,
respectively. At December 31, 1999,
future minimum rental payments required
under the lease are $70 per year until
the lease expires.
401(K) SAVINGS PLAN
The Company participates in a
contributory savings plan. Under the
plan, the Company will match 75% of the
first 4% of participant contributions.
The matching expense under this plan
was $398, $208 and $161 for the years
ended December 31, 1999, 1998 and 1997,
respectively.
HOME PROPERTIES OF NEW YORK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
11 COMMITMENTS AND CONTINGENCIES(CONTINUED)
INCENTIVE COMPENSATION PLAN
The Incentive Compensation Plan
provides that eligible officers
and key employees
may earn a cash bonus based on
increases in funds from operations
("FFO") per share/unit (computed based
on the basic shares/units outstanding).
No cash bonuses were payable under the
Incentive Compensation Plan unless the
increase in FFO per share, after giving
effect to the bonuses, was equal to or
greater than 2%. The Incentive
Compensation Plan was amended in 1998
by establishing a floor of 5% in per
share/unit FFO growth. The bonus
expense charged to operations
(including Management Companies) was
$2,190, $1,997 and $1,193 for the years
ended December 31, 1999, 1998 and 1997,
respectively.
CONTINGENCIES
The Company is party to certain legal
proceedings. All such proceedings,
taken together, are not expected to
have a material adverse effect on the
Company. The Company is also subject
to a variety of legal actions for
personal injury or property damage
arising in the ordinary course of its
business, most of which are covered by
liability insurance. While the
resolution of these matters cannot be
predicted with certainty, management
believes that the final outcome of such
legal proceedings and claims will not
have a material adverse effect on the
Company's liquidity, financial position
or results of operations.
In connection with a 1996 transaction,
the Company is obligated to pay
additional consideration in UPREIT
Units if development fee income exceeds
target levels over the first five
years. The Company has issued
approximately 78,000 UPREIT Units as of
December 31, 1999. Management does not
anticipate the issuance of these UPREIT
Units nor additional issuance to have a
material adverse effect on the
Company's liquidity, financial position
or results of operations.
In connection with various UPREIT
transactions, the Company has agreed to
maintain certain levels of nonrecourse
debt associated with the contributed
properties acquired. In addition, the
Company is restricted in its ability to
sell certain contributed properties
(49% of the owned portfolio) for a
period of time except through a tax
deferred Internal Revenue Code Section
1031 like-kind exchange.
DEBT COVENANTS
The line of credit loan agreements
contain restrictions which, among other
things, require maintenance of certain
financial ratios and limit the payment
of dividends. At December 31, 1999,
the Company was in compliance with
these covenants.
HOME PROPERTIES OF NEW YORK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
11 COMMITMENTS AND CONTINGENCIES (CONTINUED)
GUARANTEES
The Company has guaranteed a total of
$3,729 of debt associated with four
entities where the Company is the
general partner or managing agent. In
addition, the Company has guaranteed
the Low Income Housing Tax Credit to
limited partners in thirty-five
partnerships totaling approximately
$35,000. The Company also guarantees
the successful construction of
properties developed under the federal
government's Low Income Housing Tax
Credit Program. The outstanding
guarantee at December 31, 1999 is
approximately $54,900. As of December
31, 1999, there were no known
conditions that would make such
payments necessary.
In addition, the Company, acting as
general partner in certain
partnerships, is obligated to advance
funds to meet partnership operating
deficits.
EXECUTIVE RETENTION PLAN
Effective February 2, 1999, the
Executive Retention Plan provides for
severance benefits and other
compensation to be received by certain
employees in the event of a change in
control of the Company and a subsequent
termination of their employment without
cause or voluntarily with good cause.
12 STOCK BENEFIT PLAN
The Company has adopted the 1994 Stock
Benefit Plan as Amended (the " Plan "
). Plan participants include officers,
non-employee directors, and key
employees of the Company. The Company
has reserved 1,596,000 shares for
issuance to officers and employees and
154,000 shares for issuance to non-
employee directors. Options granted to
officers and employees of the Company
vest 20% for each year of service until
100% vested on the fifth anniversary.
Certain officers' options (264,000) and
directors' options (127,500) vest
immediately upon grant. The exercise
price per share for stock options may
not be less than 100% of the fair
market value of a share of common stock
on the date the stock option is granted
(110% of the fair market value in the
case of incentive stock options granted
to employees who hold more than 10% of
the voting power of the Company's
common stock). Options granted to
directors and employees who hold more
than 10% of the voting power of the
Company expire after five years from
the date of grant. All other options
expire after ten years from the date of
grant. The Plan also allows for the
grant of stock appreciation rights and
restricted stock awards, however, there
were none granted at December 31, 1999.
At December 31, 1999, 119,140 and
21,946 common shares were available for
future grant of options or awards under
the Plan for officers and employees and
non-employee directors, respectively.
On February 1, 2000, the Company
adopted the 2000 Stock Benefit Plan
(the "2000 Plan"). Plan participants
have been expanded to include
directors, officers, regional managers
and on-site property managers. It is
expected that all future awards of
stock options will be granted under the
2000 Plan. The 2000 Plan limits the
number of shares issuable under the
plan to 2.2 million, of which 200,000
are to be available for issuance to the
non-employee directors.
HOME PROPERTIES OF NEW YORK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
12 STOCK BENEFIT PLAN (CONTINUED)
Details of stock option activity during 1999, 1998 and 1997 are as
follows:
Number Option Price
Of Shares Per Share
Options outstanding at January 1, 1997 697,778 $17.875-$20.50
(411,053 shares exercisable)
Granted, 1997 141,823 22.75-26.50
Exercised, 1997 ( 3,499) 19.00
Cancelled, 1997 ( 600) 19.00
Options outstanding at December 31, 1997 835,502 17.875-26.50
(507,809 shares exercisable)
Granted, 1998 217,100 25.125-27.06
Exercised, 1998 (240,739) 17.875-20.50
Cancelled, 1998 ( 11,000) 19.00-26.50
Options outstanding at December 31, 1998 800,863 17.875-27.06
(395,441 shares exercisable)
Granted, 1999 610,400 25.688-27.125
Exercised, 1999 ( 96,643) 17.875-26.50
Cancelled, 1999 ( 49,187) 19.00-27.125
Options outstanding at December 31, 1999 1,265,433 $17.875-$27.125
(448,820 shares exercisable)
The following table summarizes information about options outstanding
at December 31, 1999:
Weighted
Average Weighted Weighted
Remaining Average Average
Year Number Contractual Fair Value Number Exercise
Granted Outstanding Life Of Options Exercisable Price
1994 219,943 5 N/A 219,943 $19.000
1995 9,000 1 $1.39 9,000 17.875
1996 121,567 6 $1.01 69,008 19.732
1997 135,323 7 $1.59 69,029 25.156
1998 188,700 8 $1.39 57,340 25.952
1999 590,900 9 $1.60 24,500 25.688
Totals 1,265,433 7 448,820 $21.290
HOME PROPERTIES OF NEW YORK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
12 STOCK BENEFIT PLAN (CONTINUED)
The Company has adopted the disclosure
only provisions of Financial Accounting
Standards No. 123, "Accounting for
Stock-Based Compensation."
Accordingly, no compensation cost has
been recognized for the stock option
plan. Had compensation for the
Company's stock option plan been
determined based on the fair value at
the date of grant for awards in 1999,
1998 and 1997, the Company's proforma
net income before preferred dividends
and proforma basic earnings per common
share would have been $26,063, $18,563
and $6,299 and $1.33, $1.34 and $.85,
respectively. The fair value of each
option grant is estimated on the date
of grant using the Black-Scholes
option-pricing model with the following
assumptions used for grants in 1999,
1998 and 1997: dividend yield of
9.315%; expected volatility of 18.97%;
forfeiture rate of 5%; and expected
lives of 7.5 years for options with a
lifetime of ten years, and five years
for options with a lifetime of five
years. The interest rate used in the
option-pricing model is based on a risk
free interest rate ranging from 5.25%
to 6.87%.
13 PROPERTY ACQUISITIONS
For the years ended December 31, 1999, 1998 and 1997, the Company has
acquired the communities listed below:
Cost of
Market Date Year Number Cost of Acquisition
Community Area Acquired Constructed Of Units Acquis. Per Unit
Lake Grove Long Island 2/3/97 1969 368 19,312 53
Royal Gardens Northern NJ 5/28/97 1967 550 19,567 34
Woodgate Place Rochester 6/30/97 1972 120 4,277 36
Mid-Island Estates Long Island 7/1/97 1961-66 232 10,756 46
1600 East Avenue Rochester 9/18/97 1958 164 9,520 58
11 Property Portfolio Philadelphia 9/23/97 1928-82 1,750 63,714 36
3 Property Portfolio Buffalo 10/15/97 1960-72 452 11,307 25
12 Property Portfolio Detroit 10/29/97 1953-75 3,106 105,055 34
Hill Court South/Ivy Ridge Rochester 10/31/97 1963 230 6,647 29
Cloverleaf Pittsburgh 11/4/97 1957 148 3,038 21
Scotsdale Detroit 11/26/97 1974 376 13,606 36
Candlewood South Bend 2/9/98 1986 310 13,506 44
Cedar Glen Philadelphia 3/2/98 1966 110 2,733 25
2 Property Portfolio Northern, VA 3/13/98 1954 548 26,848 49
Apple Hill Hamden, CN 3/27/98 1971 498 23,833 48
4 Property Portfolio Baltimore 4/30/98 1964-80 1,589 53,363 34
Colonies Chicago 6/24/98 1973 672 23,027 34
Racquet Club Philadelphia 7/7/98 1971 467 24,975 53
16 Property Portfolio Various 7/8/98 1943-80 3,746 148,509 40
Sherry Lake Philadelphia 7/23/98 1965 298 18,000 60
Coventry Village Long Island 7/31/98 1974 94 3,112 33
Rolling Park Baltimore 9/15/98 1972 144 5,753 40
3 Property Portfolio Detroit 9/29/98 1965-66 648 24,213 37
Pines of Perinton Rochester 9/30/98 1976 508 8,863 17
The Manor Northern, VA 2/19/99 1973 198 7,119 36
Ridgeway Court Philadelphia 2/26/99 1972 66 2,156 33
Springwells Park Detroit 4/8/99 1940-66 303 18,355 61
Sherwood Gardens Philadelphia 5/27/99 1968 103 4,198 41
7 Property Portfolio Various 7/1/99 1959-82 3,722 176,607 47
Maple Lane South Bend 7/9/99 1982-89 396 17,542 44
12 Property Portfolio Various 7/15/99 1964-96 3,297 154,168 47
4 Property Portfolio Philadelphia 7/28/99 1962-68 825 32,534 39
The Colony Chicago 9/1/99 1972-78 783 41,887 53
The Lakes Detroit 11/5/99 1986 434 25,907 60
HOME PROPERTIES OF NEW YORK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
14 PROFORMA CONDENSED FINANCIAL INFORMATION (UNAUDITED)
The following unaudited proforma
information was prepared as if the 1999
transactions related to the
acquisitions of 30 apartment
communities in ten separate
transactions and the $50 million Series
B Preferred stock offering had occurred
on January 1, 1998. The proforma
financial information is based upon the
historical consolidated financial
statements and is not necessarily
indicative of the consolidated results
which actually would have occurred if
the transactions had been consummated
at the beginning of 1998, nor does it
purport to represent the results of
operations for future periods.
For the years ended
December 31,
1999 1998
Total revenues $279,070 $231,925
Income before extraordinary item 33,492 23,795
Net income available to common shareholders 29,116 18,807
Per common share data:
Income before extraordinary item:
Basic $1.56 $1.41
Diluted $1.55 $1.40
Net income:
Basic $1.56 $1.35
Diluted $1.55 $1.34
Weighted average numbers of shares outstanding:
Basic 18,697,731 13,898,221
Diluted 18,800,907 14,022,329
15 SUPPLEMENTAL CASH FLOW DISCLOSURES
For the years ended December 31, 1999, 1998 and 1997 are as follows:
1999 1998 1997
Cash paid for interest $36,967 $23,284 $10,880
Mortgage loans assumed associated with
property acquisitions 203,326 81,094 87,134
Issuance of UPREIT Units associated
with property and other acquisitions 149,488 77,425 106,359
Notes issued in exchange for officer
and director stock purchases - 5,444 2,495
Exchange of UPREIT Units/partnership
interest for common/preferred shares 36,771 801 843
HOME PROPERTIES OF NEW YORK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
16 QUARTERLY FINANCIAL STATEMENT INFORMATION (UNAUDITED)
Quarterly financial information for the years ended December 31,
1999 and 1998 are as follows:
1999
----------------------------------------------------
FIRST SECOND THIRD FOURTH
Revenues $47,766 $49,640 $66,178 $70,879
Income before minority interest
and extraordinary item 9,354 9,577 9,243 15,594
Minority interest 3,343 3,386 4,137 6,524
Extraordinary item, net of minority
interest N/A N/A (96) N/A
Net income available to common
shareholders 6,011 6,191 4,998 7,929
Basic earnings per common share:
Income before extraordinary item .34 .34 .27 .41
Extraordinary item N/A N/A (.01) N/A
Net income .34 .34 .26 .41
Diluted earnings per common share:
Income before extraordinary item .33 .33 .27 .41
Extraordinary item N/A N/A (.01) N/A
Net income .33 .33 .26 .41
1998
---------------------------------------------------
FIRST SECOND THIRD FOURTH
Revenues $26,773 $32,312 $43,158 $47,000
Income before minority interest
and extraordinary item 4,947 7,971 10,023 9,310
Minority interest 2,172 3,297 3,726 3,408
Extraordinary item, net of minority
interest N/A (290) (156) (514)
Net income available to common
shareholders 2,775 4,384 6,141 5,388
Basic earnings per common share:
Income before extraordinary item .29 .37 .39 .34
Extraordinary item N/A (.02) (.01) (.03)
Net income .29 .35 .38 .31
Diluted earnings per common share:
Income before extraordinary item .28 .37 .39 .34
Extraordinary item N/A (.02) (.01) (.03)
Net income .28 .35 .38 .31
Full year per share data does not equal
the sum of the quarterly data due to
the combination of seasonality and a
growing number of shares outstanding.
HOME PROPERTIES OF NEW YORK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
17 SUBSEQUENT EVENT
On March 15, 2000, the Operating
Partnership acquired a portfolio of six
communities, with a total of 2,113
units, and two parcels of vacant land,
in the suburbs of Philadelphia,
Pennsylvania for $135,900. The
purchase price was funded by $73,100 of
assumed debt, $32,800 in UPREIT Units
and $30,000 in cash from a short-term
credit facility.
Report of Independent Accountants
To the Board of Directors and Stockholders of
Home Properties of New York, Inc.
In our opinion, the accompanying financial statement schedule is fairly
stated in all material respects in relation to the basic financial statements,
taken as a whole, of Home Properties of New York, Inc. as of and
for the three years ended December 31, 1999, which are covered by our report
dated January 31, 2000, except for note 17, as to which the date is March 15,
2000, presented previously in this document. Our audit was made for the
purpose of forming an opinion on the basic financial statements taken as a
whole. This information is presented for purposes of additional analysis
and is not a required part of the basic financial statements. Such
information has been subjected to the auditing procedures applied
in the audit of the basic financial statements.
/S/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Rochester, New York
January 31, 2000
HOME PROPERTIES OF NEW YORK, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999
(IN THOUSANDS)
Total
Initial Costs Cost
Cost Capital- Build- Total
Build- ized ings, Cost,
ings, Subse- Improve- Net of
Improve- quent ments Accumu- Year
ments to & lated of
Encum- & Equip- Adjust- Acqui- Equip- Accum. Depre- Acqui-
brances Land ment ments(A) sition Land ment Total(B) Deprec. ciation sition
Apple Hill 13,935 3,486 20,347 2,099 3,486 22,446 25,932 1,218 24,714 1998
Arbor Crossing 2,546 1,072 4,329 30 1,072 4,359 5,431 76 5,355 1999
Beechwood Gardens 560 3,442 326 560 3,768 4,328 209 4,119 1998
Bonnie Ridge 19,502 4,830 42,769 686 4,830 43,455 48,285 589 47,696 1999
Braddock Lee 7,000 3,810 8,657 1,067 3,810 9,724 13,534 655 12,879 1998
Brook Hill 4,779 330 7,920 2,153 330 10,073 10,403 1,700 8,703 1994
Candlewood - NY 387 2,592 396 387 2,988 3,375 379 2,996 1996
Candlewood - IN 7,781 1,550 11,956 506 1,550 12,462 14,012 660 13,352 1998
Canterbury - MD 15,336 4,944 21,368 80 4,944 21,448 26,392 292 26,100 1999
Canterbury Square 6,595 2,352 10,790 1,148 2,352 11,938 14,290 917 13,373 1997
Carriage Hill - NY 570 3,826 1,452 570 5,278 5,848 588 5,260 1996
Carriage Hill - MI 3,840 840 5,975 386 840 6,361 7,201 281 6,920 1998
Carriage Hill - VA 19,500 3,984 33,138 211 3,984 33,349 37,333 445 36,888 1999
Carriage House 683 250 860 157 250 1,017 1,267 55 1,212 1998
Carriage Park 5,533 1,280 8,184 1,413 1,280 9,597 10,877 423 10,454 1998
Cedar Glen 715 2,018 334 715 2,352 3,067 159 2,908 1998
Charter Square 11,148 3,952 18,245 1,509 3,952 19,754 23,706 1,497 22,209 1997
Cherry Hill Club 2,375 492 4,096 992 492 5,088 5,580 260 5,320 1998
Cherry Hill Village 4,478 1,120 6,835 353 1,120 7,188 8,308 318 7,990 1998
Chesterfield 5,327 1,482 8,206 1,707 1,482 9,913 11,395 654 10,741 1997
Chestnut Crossing 9,977 2,592 12,699 163 2,592 12,862 15,454 178 15,276 1999
Cloverleaf Village 370 2,668 1,021 370 3,689 4,059 294 3,765 1997
Colonies 12,307 1,680 21,350 4,125 1,680 25,475 27,155 1,200 25,955 1998
The Colony 16,175 7,830 34,075 134 7,830 34,209 42,039 307 41,732 1999
Conifer Village 2,610 358 8,555 299 358 8,854 9,212 1,439 7,773 1994
Cornwall Park Townhouses 439 2,947 2,519 439 5,466 5,905 577 5,328 1996
Country Club 1,050 3,980 161 1,050 4,141 5,191 59 5,132 1999
Country Village 6,601 2,236 11,149 1,087 2,236 12,236 14,472 617 13,855 1998
Coventry Village 784 2,328 808 784 3,136 3,920 140 3,780 1998
Curren Terrace 9,450 1,908 10,956 2,229 1,908 13,185 15,093 901 14,192 1997
Doub Meadow 2,918 760 3,062 8 760 3,070 3,830 42 3,788 1999
East Hill 231 1,560 154 231 1,714 1,945 92 1,853 1998
HOME PROPERTIES OF NEW YORK, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999
(IN THOUSANDS)
Initial Total
Cost Costs Cost Total
Build- Capital- Build- Cost,
ings, ized ings, Net
Improve- Subse- Improve- of
ments quent ments Accum- Year
& to & ulated of
Encum- Equip- Adjust- Acqui- Equip- Accum. Depre- Acqui-
brances Land ment ments(A) sition Land ment Total(B) Deprec. ciation sition
Emerson Square 384 2,018 865 384 2,883 3,267 260 3,007 1997
Executive House 2,034 600 3,420 1,651 600 5,071 5,671 333 5,338 1997
Fairview Heights & Manor 4,585 580 5,305 2,828 1,358 580 9,491 10,071 3,622 6,449 1985
Fairway 128 675 485 128 1,160 1,288 107 1,181 1997
Falcon Crest 2,772 11,115 881 2,772 11,996 14,768 174 14,594 1999
Finger Lakes Manor 3,430 200 4,536 1,882 1,084 200 7,502 7,702 2,461 5,241 1983
Fordham Green 3,091 876 5,280 516 802 5,870 6,672 394 6,278 1997
Garden Village 4,498 354 8,546 1,609 354 10,155 10,509 2,013 8,496 1994
Gateway Village 6,408 1,320 6,616 28 1,320 6,644 7,964 88 7,876 1999
Glen Brook 3,363 1,414 4,807 303 1,414 5,110 6,524 69 6,455 1999
Glen Manor 3,646 1,044 4,494 524 1,044 5,018 6,062 313 5,749 1997
Golfview Manor 325 110 541 56 110 597 707 51 656 1997
Greentrees 4,902 1,152 8,607 754 1,152 9,361 10,513 635 9,878 1997
Hamlet Court 1,765 351 2,351 494 351 2,845 3,196 358 2,838 1996
Harborside Manor 4,068 250 6,113 2,296 250 8,409 8,659 1,431 7,228 1995
Hill Brook Place 5,206 2,192 9,116 138 2,192 9,254 11,446 127 11,319 1999
Hill Court South 333 2,428 326 333 2,754 3,087 213 2,874 1997
Idylwood 9,221 700 16,927 4,923 700 21,850 22,550 3,448 19,102 1995
Ivy Ridge 438 3,449 437 434 3,890 4,324 300 4,024 1997
Kingsley 6,683 1,640 11,670 1,142 1,640 12,812 14,452 945 13,507 1997
Lake Grove 7,360 11,952 5,278 7,360 17,230 24,590 1,502 23,088 1997
Lakeshore Villa 573 3,848 1,790 573 5,638 6,211 564 5,647 1996
Lakeview 2,940 636 4,552 466 636 5,018 5,654 264 5,390 1998
Lansdowne 4,335 1,332 6,944 697 1,332 7,641 8,973 603 8,370 1997
Laurel Pines 944 6,675 84 944 6,759 7,703 95 7,608 1999
The Manor 1,386 5,733 336 1,386 6,069 7,455 200 7,255 1999
Maple Lane 12,297 2,547 14,995 95 2,547 15,090 17,637 206 17,431 1999
Meadows 1,920 208 2,776 1,216 1,011 208 5,003 5,211 1,749 3,462 1984
Mid-Island Estates 6,675 4,176 6,580 1,166 4,160 7,762 11,922 677 11,245 1997
Mill Company 1,210 384 1,671 207 384 1,878 2,262 101 2,161 1982
Morningside 19,407 6,750 28,699 4,406 6,750 33,105 39,855 1,708 38,147 1998
Mountainside 1,362 7,083 567 1,362 7,650 9,012 365 8,647 1998
New Orleans Park 6,165 1,848 8,886 2,187 1,848 11,073 12,921 773 12,148 1997
Newcastle 6,000 197 4,007 3,684 2,468 197 10,159 10,356 3,704 6,652 1982
Northgate Manor 4,500 290 6,987 2,419 289 9,407 9,696 1,690 8,006 1994
Oak Manor 2,900 616 4,111 685 616 4,796 5,412 251 5,161 1998
HOME PROPERTIES OF NEW YORK, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999
(IN THOUSANDS)
Initial Total
Cost Costs Cost
Build- Capital- Build- Total
ings, ized ings, Cost,
Improve- Subse- Improve- Net of
ments quent ments Accumu- Year
& to & lated of
Encum- Equip- Adjust- Acqui- Equip- Accum. Depre- Acqui-
brances Land ment ments(A) sition Land ment Total(B) Deprec. ciation sition
Oak Park Manor 5,212 1,192 9,188 604 1,192 9,792 10,984 747 10,237 1997
Owings Run 32,392 5,537 32,611 26 5,537 32,637 38,174 427 37,747 1999
Paradise Lane at Raintree 972 7,134 2,978 972 10,112 11,084 883 10,201 1997
Park Shirlington 8,425 4,410 9,971 919 4,410 10,890 15,300 721 14,579 1998
Parkview Gardens 1,207 7,201 695 1,207 7,896 9,103 649 8,454 1997
Patricia 600 4,196 412 600 4,608 5,208 205 5,003 1998
Pavilion 12,851 5,184 25,314 91 5,184 25,405 30,589 335 30,254 1999
Payne Hill 525 4,085 836 525 4,921 5,446 215 5,231 1998
Pearl Street 49 1,189 242 49 1,431 1,480 216 1,264 1995
Perinton Manor 6,710 224 6,120 3,629 1,466 224 11,215 11,439 4,132 7,307 1982
Pines of Perinton 8,682 1,524 7,339 186 1,524 7,525 9,049 292 8,757 1998
Pleasant View 31,915 5,710 47,816 3,193 5,710 51,009 56,719 2,636 54,083 1998
Pleasure Bay 4,640 1,620 6,234 797 1,620 7,031 8,651 315 8,336 1998
Racquet Club 11,966 1,868 23,107 851 1,868 23,958 25,826 1,091 24,735 1998
Raintree Island 7,457 - 6,654 3,217 7,022 - 16,893 16,893 4,790 12,103 1985
Redbank Village 8,450 2,000 14,030 1,082 2,000 15,112 17,112 787 16,325 1998
Ridgeway Court 1,172 330 1,826 61 330 1,887 2,217 57 2,160 1999
Ridley Brook 4,636 1,952 7,719 78 1,952 7,797 9,749 107 9,642 1999
Riverdale 2,900 12,891 158 2,900 13,049 15,949 186 15,763 1999
Riverton Knolls 6,768 240 6,640 2,523 3,868 240 13,031 13,271 4,491 8,780 1983
Rolling Park 2,804 720 5,033 315 720 5,348 6,068 210 5,858 1998
Royal Gardens 11,384 5,500 14,067 6,014 5,500 20,081 25,581 1,547 24,034 1997
1600 East Avenue 1,000 8,527 3,281 1,000 11,808 12,808 830 11,978 1997
1600 Elmwood 5,248 303 5,698 3,339 1,735 299 10,776 11,075 4,537 6,538 1983
Scotsdale 7,875 1,692 11,920 972 1,692 12,892 14,584 830 13,754 1997
Selford Townhomes 1,224 4,200 41 1,224 4,241 5,465 57 5,408 1999
Seminary Hill 2,960 10,194 143 2,960 10,337 13,297 140 13,157 1999
Seminary Towers 5,201 5,480 19,348 882 5,480 20,230 25,710 272 25,438 1999
Shakespeare Park 2,633 492 3,428 3 492 3,431 3,923 46 3,877 1999
Sherry Lake 6,451 2,384 15,616 777 2,384 16,393 18,777 707 18,070 1998
Sherwood Gardens 3,060 309 3,891 305 309 4,196 4,505 86 4,419 1999
Southpointe Square 2,766 896 4,609 593 896 5,202 6,098 412 5,686 1997
Spanish Gardens 373 9,263 2,009 398 11,247 11,645 1,929 9,716 1994
Springcreek 1,177 128 1,702 745 490 128 2,937 3,065 1,057 2,008 1984
Springwells Park 11,576 1,515 16,840 371 1,515 17,211 18,726 347 18,379 1999
Springwood 1,444 462 1,770 406 462 2,176 2,638 169 2,469 1997
Stephenson House 1,529 640 2,407 318 640 2,725 3,365 215 3,150 1997
HOME PROPERTIES OF NEW YORK, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999
(IN THOUSANDS)
Initial Total
Cost Costs Cost
Build- Capital- Build- Total
ings, ized ings, Cost,
Improve- Subse- Improve- Net of
ments quent ments Accumu- Year
& to & lated of
Encum- Equip- Adjust- Acqui- Equip- Accum. Depre- Acqui-
brances Land ment ments(A) sition Land ment Total(B) Deprec. ciation sition
Strawberry Hill 2,052 725 2,694 560 725 3,254 3,979 178 3,801 1998
Sunset Gardens 696 4,663 1,225 696 5,888 6,584 672 5,912 1996
Tamarron 1,320 8,474 31 1,320 8,505 9,825 112 9,713 1999
The Lakes 2,821 23,086 55 2,821 23,141 25,962 103 25,859 1999
The Towers 3,990 685 6,088 654 685 6,742 7,427 342 7,085 1998
Timbercroft 8,060 1,704 7,015 26 1,704 7,041 8,745 99 8,646 1999
Valley Park South 9,968 2,459 16,461 849 2,459 17,310 19,769 1,675 18,094 1996
Valley View 3,274 1,056 4,959 1,788 1,056 6,747 7,803 452 7,351 1997
Village Green 9,038 1,043 13,283 3,320 1,103 16,543 17,646 2,502 15,144 1994-1996
Village Square - MD 7,658 2,590 13,295 133 2,590 13,428 16,018 183 15,835 1999
Village Square - PA 2,630 768 3,581 1,481 768 5,062 5,830 311 5,519 1997
Wayne Village 8,285 1,925 12,895 1,166 1,925 14,061 15,986 732 15,254 1998
Westminster 3,107 860 5,763 902 860 6,665 7,525 856 6,669 1996
Weston Gardens 2,960 847 4,736 1,496 847 6,232 7,079 305 6,774 1996
Williamstowne Village 9,800 390 9,748 5,115 3,432 390 18,295 18,685 5,733 12,952 1985
Windsor Realty 2,000 402 3,300 280 402 3,580 3,982 191 3,791 1998
Woodgate Place 3,405 480 3,797 874 480 4,671 5,151 376 4,775 1997
Woodland Gardens 6,280 2,022 10,479 1,711 2,022 12,190 14,212 872 13,340 1997
Other Assets - 907 - 125 2,799 1,876 1,955 3,831 522 3,309
618,901 193,513 1,118,490 28,303 140,447 194,468 1,286,285 1,480,753 101,904 1,378,849
(A) REPRESENTS THE EXCESS OF FAIR VALUE OVER THE HISTORICAL COST OF PARTNERSHIP
INTERESTS AS A RESULT OF THE APPLICATION OF PURCHASE ACCOUNTING FOR
THE ACQUISITION OF NON-CONTROLLED INTERESTS.
(B) THE AGGREGATE COST FOR FEDERAL INCOME TAX PURPOSES WAS APPROXIMATELY
$1,257,000.
HOME PROPERTIES OF NEW YORK, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999
(IN THOUSANDS)
Depreciation and amortization of the Company's investments in buildings and
improvements reflected in the consolidated statements of operations are
calculated over the estimated useful lives of the assets as follows:
Buildings and improvements 5-40 years
Tenant improvements Life of related lease
The changes in total real estate assets for the three years ended December 31,
1999, are as follows:
1999 1998 1997
Balance, beginning of year $940,788 $525,128 $261,773
New property acquisition 480,473 376,735 266,799
Additions 61,034 42,896 15,962
Disposals and retirements (1,542) (3,971) (19,406)
Balance, end of year $1,480,753 $940,788 $525,128
The changes in accumulated depreciation for the three years ended
December 31, 1999, are as follows:
1999 1998 1997
Balance, beginning of year $65,627 $46,531 $40,237
Depreciation for the year 37,177 23,067 11,104
Disposals and retirements (900) (3,971) (4,810)
Balance, end of year $101,904 $65,627 $46,531
HOME PROPERTIES OF NEW YORK, INC.
FORM 10-K
For Fiscal Year Ended December 31, 1999
Exhibit Index
Exhibit Exhibit Location
Number
2.1 Agreement among Home Properties of New Incorporated by reference to the Form 8-
York, Inc. and Philip J. Solondz, Daniel K filed by Home Properties of New York,
Solondz and Julia Weinstein relating to Inc. dated 6/6/97 (the
Royal Gardens I, "6/6/97 8-K")
together with Amendment No. 1
2.2 Agreement among Home Properties of New Incorporated by reference to the 6/6/97
York, Inc. and Philip Solondz and Daniel 8-K
Solondz relating to Royal Gardens II,
together with Amendment No. 1
2.3 Purchase and Sale Agreement dated July 25, Incorporated by reference to the Form 8-
1997 by and between Home Properties of New K filed by Home Properties of New York,
York, L.P. and Louis S. and Molly S. Wolk Inc., dated 9/26/97 (the "9/26/97 8-K").
Foundation.
2.4 Purchase and Sale Agreement dated April 30, Incorporated by reference to the 9/26/97
1997between Home Properties of New York, 8-K.
L.P. and Briggs Wedgewood Associates, L.P.
2.5 Agreement and Plan of Merger, dated July Incorporated by reference to the 9/26/97
31, 1997 between Home Properties of New 8-K.
York, L.P. and Chesfield Partnerhsip.
2.6 Agreement and Plan of Merger dated July 31, Incorporated by reference to the 9/26/97
1997 between Home Properties of New York, 8-K.
L.P. and Valspring Partnership.
2.7 Agreement and Plan of Merger, dated July Incorporated by reference to the 9/26/97
31, 1997 between Home Properties of New 8-K
York, L.P. and Exmark Partnerhsip.
2.8 Agreement and Plan of Merger, dated July Incorporated by reference to the 9/26/97
31, 1997 between Home Properties of New 8-K.
York, L.P. and New Orleans East Limited
Partnership.
2.9 Agreement and Plan of Merger, dated July Incorporated by reference to the 9/26/97
31, 1997 between Home Properties of New 8-K.
York, L.P. Glenvwk Partnership.
2.10 Agreement and Plan of Merger, dated July Incorporated by reference to the 9/26/97
31, 1997 between Home Properties of 8-K.
New York, L.P. and PK Partnership.
2.11 First Amendment to Agreement and Plan of Incorporated by reference to the 9/26/97
Merger, dated September 1, 1997 between 8-K.
Home Properties of New York, L.P. and PK
Partnership and its partners.
2.12 First Amendment to Agreement and Plan of Incorporated by reference to the 9/26/97
Merger, dated September 1, 1997 between 8-K.
Home Properties of New York, L.P. and NOP
Corp. and Norpark Partnership.
2.13 Contribution Agreement dated July 31, 1997 Incorporated by reference to the 9/26/97
between Home Properties of New York, L.P. 8-K.
and Lamar Partnership.
2.14 Agreement and Plan of Merger, dated July Incorporated by reference to the Form 8-
31, 1997 between Home Properties of New K filed by Home Properties of New York,
York, L.P. and Curren Partnership. Inc., dated 10/3/97.
2.15 Contribution Agreement, dated October __, Incorporated by reference to the Form 8-
1997 between Home Properties of New York, K filed by Home Properties of New York,
L.P. andBerger/Lewiston Associates Limited Inc. dated 10/7/97.
Partnership; Stephenson-Madison Heights
Company LimitedPartnership; Kingsley-
Moravian Company Limited Partnership;
Woodland Garden Apartments Limited
Partnership; B&L Realty Investments Limited
Partnership; Southpointe Square Apartments
Limited Partnership; Greentrees Apartments
limited Partnership; Big Beaver-Rochester
Properties Limited Partnership; Century
Realty Investment Company Limited
Partnership.
2.16 Agreement among Home Properties of New Incorporated by reference to the the
York, L.P. and Erie Partners, L.L.C. Form 8-K filed by Home Properties of New
relating to Woodgate Place Apartments, York, Inc., dated 10/31/97 (the
together with Amendment No. 1 "10/31/97 8-K").
2.17 Agreement among Home Properties of New Incorporated by reference to the
York, L.P. and Mid-Island Limited 10/31/97 8-K.
Partnership relating to Mid-Island
Estates, together with Amendment No. 1.
2.18 Purchase and Sale Agreement among Home Incorporated by reference to the
Properties of New York, L.P. and Anthony M. 10/31/97 8-K.
Palumbo and Daniel Palumbo.
2.19 Purchase and Sale Agreements dated June 17, Incorporated by reference to the Form 8-
1997 among Home Properties of New York, K filed by Home Properties of New York,
L.P. and various individuals relating to Inc., dated 2/20/98 (the "2/20/98 8-K").
Hill Court Apartments South and Hudson Arms
Apartments, together with a letter
Amendment dated September 24, 1997.
2.20 Contract of Sale, dated October 20,1997 Incorporated by reference to the 2/20/98
between Home Properties of New York, L.P. 8-K.
and Hudson Palisades Associates relating to
Cloverleaf Apartments.
2.21 Contribution Agreement, dated November 17, Incorporated by reference to the 2/20/98
1997 among 8-K.
Home Properties of New York, L.P. and
various trusts relating to Scotsdale
Apartments.
2.22 Contribution Agreement, dated November 7, Incorporated by reference to the 2/20/98
1997among Home Properties of New York, L.P. 8-K
and Donald H. Schefmeyer and Stephen W.
Hall relating to Candlewood Apartments,
together with Amendment No. One dated
December 3, 1997.
2.23 Purchase and Sale Agreement dated November Incorporated by reference to the Form 8-
26, 1997 among Home Properties of New York, K filed by Home Properties of New York,
L.P. and Cedar Glen Associates. Inc. on 3/24/98 (the "3/24/98
8-K").
2.24 Contribution Agreement dated March 2, 1998 Incorporated by reference to the 3/24/98
among Home Properties of New York, L.P., 8-K.
Braddock Lee Limited Partnership and Tower
Construction Group, LLC
2.25 Contribution Agreement dated March 2, 1998 Incorporated by reference to the 3/24/98
among Home Properties of New York, L.P., 8-K.
Park Shirlington Limted Partnership and
Tower Construction Group, LLC
2.26 Contract of Sale between Lake Grove Incorporated by reference to the Form
Associates Corp. and Home Properties of New 10-K filed by Home Properties of New
York, L.P., dated December 17, 1996, York, Inc. for the year ended 12/31/96
relating to the Lake Grove Apartments. (the "12/31/96 10-K").
2.27 Form of Contribution Agreement among Home Incorporated by reference to the Form 8-
Properties of New York, L.P. and Strawberry K filed by Home Properties of New York,
Hill Apartment Company LLLP, Country Inc. on 5/22/98 (the "5/22/98
Village Limited Partnership, Morningside 8-K).
Six, LLLP, Morningside North Limited
Partnership and Morningside Heights
Apartment Company Limited Partnership with
schedule setting forth material details in
which documents differ from form.
2.28 Form of Purchase and Sale Agreement Incorporated by reference to the 5/22/98
relating to the Kaplan Portfolio with 8-K.
schedule setting forth material details in
which documents differ from form.
2.29 Form of Contribution Agreement dated June Incorporated by reference to the Form 8-
7, 1999, relating to the CRC Portfolio with K filed by Home Properties of New York,
schedule setting forth material details in Inc. on 7/2/99 (the "7/2/99 8-K").
which documents differ from form.
2.30 Form of Contribution Agreement relating to Incorporated by reference to the Form 8-
the Mid-Atlantic Portfolio with schedule K filed by Home Properties of New York,
setting forth material details in which Inc. on 7/30/99.
documents differ from form.
2.31 Contribution Agreement among Home Incorporated by reference to the Form 8-
Properties of New York, L.P., Leonard K filed by Home Properties of New York,
Klorfine, Ridley Brook Associates and Inc. on 10/5/99 (the "10/5/99 8-K").
Greenacres Associates
2.32 Purchase and Sale Agreement among Home Incorporated by reference to the 10/5/99
Properties of New York, L.P. and Chicago 8-K.
Colony Apartments Associates.
3.1 Articles of Amendment and Restatement of Incorporated by reference to Home
Articles of Incorporation of Home Properties of New York, Inc.
Properties of New York, Inc. Registration Statement on Form S-11,
File No. 33-78862 (the "S-11
Registration Statement").
3.2 Articles of Amendment of the Articles of Incorporated by reference to the Home
Incorporation of Home Properties of New Properties of New York, Inc.
York, Inc. Registration Statement on Form S-3, File
No. 333-52601 filed May 14, 1998 (the
"5/14/98 S-3").
3.3 Articles of Amendment of the Articles of Incorporated by reference to the 7/2/99
Incorporation of Home Properties of New 8-K
York, Inc.
3.4 Amended and Restated Articles Supplementary Incorporated by reference to the Home
of Series A Senior Convertible Preferred Properties of New York, Inc.
Stock of Home Properties of New York, Inc. Registration Statement on Form S-3, File
No. 333-93761, filed 12/29/99 (the
"12/29/99 S-3").
3.5 Series B Convertible Cumulative Preferred Incorporated by reference to the Home
Stock Articles Supplementary to the Amended Properties of New York, Inc.
and Restated Articles of Incorporation of Registration Statement on Form S-3, File
Home Properties of New York, Inc. No. 333-92023, filed 12/3/99.
3.6 Amended and Restated By-Laws of Home Incorporated by reference to the Form 8-
Properties of New York, Inc. (Revised K filed by Home Properties of New York,
12/30/96). Inc. dated December 23, 1996 (the
"12/23/96 8- K").
4.1 Form of certificate representing Shares of Incorporated by reference to the Form
Common Stock. 10- K filed by Home Properties of New
York, Inc. for the period ended 12/31/94
(the "12/31/94 10-K").
4.2 Agreement of Home Properties of New York, Incorporated by reference to the
Inc. to file instruments defining the 12/31/94 10-K.
rights of holders of long-term debt of it
or its subsidiaries with the Commission
upon request.
4.3 Credit Agreement between Manufacturers Incorporated by reference to the Form
Traders Trust Company, Home Properties of 10-Q filed by Home Properties of New
New York, L.P. and Home Properties of New York, Inc. for the quarterly period
York, Inc. ended 6/30/94 (the "6/30/94 10-Q").
4.4 Amendment Agreement between Manufacturers Incorporated by reference t the 12/31/94
and Traders Trust Company, Home Properties 10-K.
of New York, L.P. and Home Properties of
New York, Inc. amending the Credit
Agreement
4.5 Mortgage Spreader, Consolidation and Incorporated by reference to the 6/30/94
Modification Agreement between 10-Q.
Manufacturers and Traders Trust Company and
Home Properties of New York, L.P.,
together with form of Mortgage, Assignment
of Leases and Rents and Security Agreement
incorporated therein by reference.
4.6 Mortgage Note made by Home Properties Incorporated by reference to the 6/30/94
of New York, L.P. payable to Manufacturers 10-Q.
and Traders Trust Company in the principal
amount of $12,298,000.
4.7 Spreader, Consolidation, Modification and Incorporated by reference to the Form
Extension Agreement between Home Properties 10-K filed by Home Properties of New
of New YorkL.P. and John Hancock Mutual York, Inc. for the period ended 12/31/95
Life Insurance Company, (the "12/31/95 10-K").
dated as of October 26, 1995, relating to
indebtedness in the principal amount of
$20,500,000.
4.8 Amended and Restated Stock Benefit Plan of Incorporated by reference to the 6/6/97
Home Properties of New York, Inc. 8-K.
4.9 Amended and Restated Dividend Incorporated by reference to the Form 8-
Reinvestment, Stock Purchase, Resident K filed by Home Properties of New York,
Stock Purchase and Employee Inc., dated 12/23/97.
Stock Purchase Plan.
4.10 Amendment No. One to Amended and Restated Incorporated by reference to the Home
Dividend Reinvestment, Stock Purchase, Properties of New York, Inc.
Resident Stock Purchase and Employee Stock Registration Statement on Form S-3, File
Purchase Plan No. 333-49781, filed on 4/9/98 (the
"4/9/98 S-3").
4.11 Amendment No. Two to Amended and Restated Incorporated by reference to the Home
Dividend Reinvestment, Stock Purchase, Properties of New York, Inc.
Resident Stock Purchase and Employee Stock Registration Statement on Form S-3, File
Purchase Plan No. 333-58799, filed on 7/9/98 (the
"7/9/98 S-3").
4.12 Amended and Restated Dividend Reinvestment, Incorporated by reference to the Home
Stock Purchase, Resident Stock Purchase and Properties of New York, Inc. Form 10-Q
Employee Stock Purchase Plan for the Quarter ended 6/30/98 (the
"6/30/98 10-Q").
4.13 Amendment No. Three to Amended and Restated Incorporated by reference to the the
Dividend Reinvestment, Stock Purchase, Home Properties of New York, Inc.
Resident Stock Purchase and Employee Stock Registration Statement on Form S-3,
Purchase Plan Registration No. 333-67733, filed on
11/23/98(the "11/23/98 S-3").
4.14 Directors' Stock Grant Plan Incorporated by reference to the 5/22/98
8-K.
4.15 Director, Officer and Employee Stock Incorporated by reference to the 5/22/98
Purchase and Loan Plan 8-K.
4.16 Home Properties of New York, Inc., Home Incorporated by reference to the 7/2/99
Properties of New York, L.P. Executive 8-K.
Retention Plan
4.17 Home Properties of New York, Inc. Deferred Incorporated by reference to the 7/2/99
Bonus Plan 8-K.
4.18 Fourth Amended and Restated Dividend Incorporated by reference to the
Reinvestment, Stock Purchase, Resident Registration Statement on Form S-3, File
Stock Purchase and Employee Stock Purchase No. 333-94815, filed on 1/18/2000.
Plan
4.19 Directors Deferred Compensation Plan Filed herewith.
10.1 Second Amended and Restated Agreement of Incorporated by reference to the 9/26/97
Limited Partnership of Home Properties of 8-K.
New York, L.P.
10.2 Amendments No. One through Eight to the Incorporated by reference to the Form
Second Amended and Restated Agreement of 10-K of Home Properties of New York,
LimitedPartnership of Home Properties of Inc. for the period ended 12/31/97 (the
New York, L.P. "12/31/97 10-K").
10.3 Articles of Incorporation of Home Incorporated by reference to . to S-11
Properties Management, Inc Registration Statement.
10.4 By-Laws of Home Properties Management, Inc Incorporated by reference to S-11 .
Registration Statement.
10.5 Articles of Incorporation of Conifer Realty Incorporated by reference to the
Corporation 12/31/95 10-K.
10.6 By-Laws of Conifer Realty Corporation. Incorporated by reference to 12/31/95
10-K.
10.7 Home Properties Trust Declaration of Trust, Incorporated by reference to the 9/26/97
dated September 19, 1997 8-K.
10.8 Employment Agreement between Home Incorporated by reference to 6/30/94 10-
Properties of New York, L.P. and Norman Q.
P.Leenhouts.
10.9 Amendments No. One, Two and Three to the Incorporated by reference to the Form
Employment Agreement between Home 10-K filed by Home Properties of New
Properties of New York, L.P. and Norman P. York, Inc. for the year ended 12/31/98
Leenhouts (the "12/31/98 10-K").
10.10 Employment Agreement between Home Incorporated by reference to the 6/30/94
Properties of New York, L.P. and Nelson B. 10-Q.
Leenhouts
10.11 Amendments No. One, Two and Three to the Incorporated by reference to the
Employment Agreement between Home 12/31/98 10-K.
Properties of New York, L.P. and Nelson B.
Leenhouts.
10.12 Employment Agreement between Home Incorporated by reference to 12/31/95
Properties of New York, L.P. and Richard J. 10-K.
Crossed.
10.13 Amendments No. One and Two to the Incorporated by reference to the
Employment Agreement between Home 12/31/98 10-K.
Properties of New York, L.P. and Richard J.
Crossed
10.14 Indemnification Agreement between Home Incorporated by reference to the 6/30/94
Properties of New York, Inc. and certain 10-Q.
officers and directors.
10.15 Indemnification Agreement between Home Incorporated by reference to 12/31/95
Properties of New York, Inc. and Richard 10-K.
J. Crossed.
10.l6 Indemnification Agreement between Home Incorporated by reference to 12/31/96
Properties of New York, Inc. and Alan L. 10-K.
Gosule.
10.17 Registration Rights Agreement among Home Incorporated by reference to the 6/30/94
Properties of New York, Inc., Home Leasing 10-Q.
Corporation, Leenhouts Ventures, Norman P.
Leenhouts, Nelson B. Leenhouts, Amy L.
Tait, David P. Gardner, Ann M. McCormick,
William Beach, Paul O'Leary, Richard J.
Struzzi, Robert C. Tait, Timothy A.
Florczak and Laurie Tones.
10.18 Lockup Agreements by Home Properties of New Incorporated by reference to 12/31/95
York, Inc. and Conifer Realty, Inc., 10- K.
Conifer Development, Inc., Richard J.
Crossed, Peter J. Obourn and John F.
Fennessey.
10.19 Contribution Agreement between Home Incorporated by reference to the Form 8-
Properties of New York, L.P. and Conifer K filed by Home Properties ofNew York,
Realty, Inc., Conifer Development, Inc., dated September 14, 1995.
Inc.,.Richard J. Crossed, Peter J. Obourn
and John H. Fennessey.
10.20 Amendment to Contribution Agreement between Incorporated by reference to the Form 8-
Home Properties of New York, L.P. and K filed by Home Properties of New York,
Conifer Realty, Inc., Conifer Development, Inc., dated January 9, 1996.
Inc., Richard J. Crossed, Peter J. Obourn
and John H. Fennessey
10.21 Agreement of Operating Sublease, dated Incorporated by reference to S-11
October1, 1986, among KAM, Inc., Morris Registration Statement.
Massry and Raintree Island Associates, as
amended by Letter Agreement Supplementing
Operating Sublease dated October 1, 1986.
10.22 Indemnification and Pledge Agreement Incorporated by reference to 12/31/95
between Home Properties of New York, L.P. 10- K.
and Conifer Realty, Inc., Conifer
Development, Inc., Richard J. Crossed,
Peter J. Obourn and John H. Fennessey.
10.23 Form of Term Promissory Note payable to Incorporated by reference to 12/31/96
Home Properties of New York, Inc. by 10-K.
officers and directors in association with
the Executive and Director Stock Purchase
and Loan Program.
10.24 Form of Pledge Security Agreement executed Incorporated by reference to 12/31/96
by officers and directors in connection 10-K.
with Executive and Director Stock Purchase
and Loan Program.
10.25 Schedule of Participants, loan amounts and Incorporated by reference to 12/31/96
shares issued in connection with the 10-K.
Executive and Director Stock Purchase and
Loan Program.
10.26 Subordination Agreement between Home Incorporated by reference to 12/31/96
Properties of New York, Inc. and The Chase 10-K.
Manhattan Bank relating to the Executive
and Director Stock Purchase and Loan
Program.
10.27 Partnership Interest Purchase Agreement, Incorporated by reference to 12/23/96 8-
dated as of December 23, 1996 among Home K.
Properties of New York, Inc., Home
Properties of New York, L.P. and State
of Michigan Retirement Systems.
10.28 Registration Rights Agreement, dated as of Incorporated by reference to 12/23/96
December 23, 1996 between Home Properties 8-K.
of New York, Inc. and State of Michigan
Retirement Systems.
10.29 Lock-Up Agreement, dated December 23, 1996 Incorporated by reference to 12/23/96 8-
between Home Properties of New York, Inc. K.
and State of Michigan
Retirement Systems.
10.30 Agreement dated as of April 13, 1998 Incorporated by reference to the Home
between Home Properties of New York, Inc. Properties of New York, Inc. Form 8-K
and the Treasurer of the State of Michigan filed 4/15/98 (the "4/15/98 8-K")
10.31 Amendment No. Nine to the Second Amended Incorporated by reference to the 5/14/98
and Restated Agreement of Limited S-3.
Partnership of the Operating Partnership
10.32 Master Credit Facility Agreement by and Incorporated by reference to the Home
among Home Properties of New York, Inc., Properties of New York, Inc. Form 10-Q
Home Properties of New York, L.P., Home for the quarter ended 9/30/98 (the
Properties WMF I LLC and Home Properties of "9/30/98 Form 10-Q").
New York, L. P. and P-K Partnership doing
business as Patricia Court and Karen Court
and WMF Washington Mortgage Corp., dated as
of August 28, 1998.
10.33 First Amendment to Master Credit Facility Incorporated by reference to the
Agreement, dated as of December 11, 1998 12/31/98 10-K.
among Home Properties of New York, Inc.,
Home Properties of New York, L.P., Home
Properties WMF I LLC and Home Properties of
New York, L.P. and P-K Partnership doing
business as Patricia Court and Karen Court
and WMF Washington Mortgage Corp. and
Fannie Mae.
10.34 Second Amendment to Master Credit Facility Filed herewith.
Agreement, dated as of August 30, 1999
among Home Properties of New York, Inc.,
Home Properties of New York, L.P., Home
Properties WMF I LLC and Home Properties of
New York, L.P. and P-K Partnership doing
business as Patricia Court and Karen Court
and WMF Washington Mortgage Corp. and
Fannie Mae
10.35 Amendments Nos. Ten through Seventeen to Incorporated by reference to the
the Second Amended and Restated Limited 12/31/98 10-K.
Partnership Agreement.
10.36 Amendments Nos. Eighteen through Twenty- Incorporated by reference to the Home
Five to the Second Amended and Restated Properties of New York, Inc. Form 10-Q
Limited Partnership Agreement for the quarter ended 9/30/99 (the
"9/30/99 10-Q").
10.37 Credit Agreement, dated 8/23/99 between Incorporated by reference to the 9/30/99
Home Properties of New York, L.P., the 10-Q.
Lenders, Party hereto and Manufacturers and
Traders Trust Company as Administrative
Agent
10.38 Amendment No. Twenty-Seven to the Second Incorporated by reference to the
Amended and Restated Limited Partnership 12/29/99 S-3.
Agreement
10.39 Amendments Nos. Twenty-Six and Twenty-Eight Filed herewith.
through Thirty to the Second Amended and
Restated Limited Partnership Agreement
10.40 Registration Rights Agreement between Home Filed herewith
Properties of New York, Inc. and GE Capital
Equity Investment, Inc., dated 9/29/99
10.41 Amendment to Partnership Interest Purchase Incorporated by reference to the
Agreement and Exchange Agreement 12/29/99 S-3.
10.42 2000 Stock Benefit Plan Filed herewith.
11 Computation of Per Share Earnings Schedule Filed herewith.
21 List of Subsidiaries of Home Properties of Filed herewith.
New York, Inc.
23 Consent of PricewaterhouseCoopers LLP Filed herewith.
27 Financial Data Schedule Filed herewith.
EXHIBIT 4.19
HOME PROPERTIES OF NEW YORK, INC.
DIRECTOR DEFERRED COMPENSATION PLAN
1. PURPOSE
Home Properties of New York, Inc. (the "Company") has adopted this Home
Properties of New York, Inc. Director Deferred Compensation Plan (the "Plan")
to assist its independent directors with their individual tax and financial
planning and to permit the Company to remain competitive in attracting and
retaining its independent directors. The Plan permits eligible directors to
defer the receipt of annual compensation which they may be entitled to receive
from the Company and the Company to contribute matching contributions on their
behalf.
2. ELIGIBILITY
Any member of the Board of Directors of the Company who is not otherwise an
employee of the Company or any subsidiary is eligible to participate in this
Plan.
3. CONTRIBUTIONS
(a) Participant Contributions.
(1) AMOUNT OF DEFERRAL. A participant may elect to defer receipt
of any whole percent (100 percent maximum) of his or her
annual cash compensation otherwise payable to the participant
by the Company during a calendar year.
(1) TIME FOR ELECTING DEFERRAL. An initial election to make a
deferral shall be made
within 30 days of the time the participant first becomes
eligible to participate. All other deferral elections shall be
made prior to the time that such compensation is to be earned
by the participant but, in any event, prior to the December 31
of the year prior to the year in which the annual cash
compensation is otherwise payable. Any election to defer shall
be made in accordance with subsection 3 below.
(2) MANNER OF ELECTING DEFERRAL. A participant shall elect a
deferral by giving written notice to the Company in a form
prescribed by the Committee established pursuant to Section
9 (the "Committee"). The notice shall include (1) the year
to which the deferral relates; (2) the percentage and type
of compensation to be deferred; (3) the period with respect
to which the deferral relates; and (4) the length of the
deferral period. A participant may designate a deferral
period of three, five or ten years in which case payment
will be made within 30 days following the applicable
anniversary date of the latest date any compensation is
deferred in any applicable year. For example, a participant
may elect in December 1999 to defer for three years
compensation payable in 2000 with respect to 2000 services.
If a portion of the compensation is otherwise payable in
cash in April 2000, it will be deferred and actually paid in
2003 within 30 days after the anniversary date of the latest
compensation deferred in 2000. Notwithstanding the
foregoing, in the event the participant retires or otherwise
ceases to be a member of the Board of Directors, vested
benefits payments shall be paid within 60 days of retirement
or such cessation notwithstanding any later date specified
in the participant's election form.
(b) Company Matching Contributions.
The Company shall contribute 10 percent of the amount each participant
defers. The Company's contribution shall be made as of the same date as
the participant's deferral to which it relates and shall be deferred to
the same payment date as the related participant deferral.
4. PARTICIPANT ACCOUNTS
For each participant there shall be established a Participant Account. A
participant's Account shall be valued as of each day there occurs a transaction
affecting the Account. Each deferral or Company contribution shall be reflected
by crediting the Participant Account with the number of shares of Company
Common Stock that could be purchased at the Common Stock's then fair market
value with the amounts deferred by the participant, or contributed by the
Company on behalf of a participant. For purposes of making these credits, the
participant's quarterly compensation will be deemed to have been made on the
first business day of the month following the end of each calendar quarter and
the participants' meetings fees shall be deemed paid on the applicable meeting
date. In addition, each Participant Account will be credited with the number
of shares of Company Common Stock that could be purchased with hypothetical
dividends that would be paid with respect to all shares previously allocated to
the Account on the same date and at the same price that shares are purchased
for participants in the dividend reinvestment feature of the Company's Dividend
Reinvestment and Direct Stock Purchase Plan. Distributions from, or
forfeiture of, the Participant Account shall be recorded as of the day of such
distributions or forfeitures. The Account shall also be adjusted as of the date
of any transaction requiring additions to or distributions from the Account to
reflect any gains (or losses) in the fair market value of Company Common Stock
held in the Account. Two subaccounts shall be established within the Account to
track separately participant and Company contributions and the earnings and
distributions on each. The Common Stock's fair market value shall be the
closing price for a share of the Company's Common Stock as listed on the New
York Stock Exchange on the date that the transaction occurs.
All amounts credited to participant contribution subaccounts shall be
fully vested at all times. Except for the possible claims of the Company's
general creditors, they shall not be subject to forfeiture on account of any
action by a participant or by the Company, including termination of the
participant's directorship. Amounts credited to a participant's Company
contribution subaccount shall become fully vested on the third anniversary of
the date first credited to the subaccount if the participant has continuously
been a director of the Company through the third anniversary of the
contribution date, or if the participant ceases to be a director on account of
disability, death or retirement or upon a change in control as hereinafter
provided. For this purpose, "disability" shall mean the participant's inability
to perform his or her usual duties as a director of the Company on account of
illness or injury. Amounts payable under this Plan shall be paid only to the
participant provided that in the event of his or her death payments shall be
made to his or her estate.
If a participant's Company subaccount becomes forfeitable, he or she shall
forfeit both Company contributions and the earnings thereon.
The maintenance of individual Participant Accounts is for bookkeeping
purposes only. The Company is not obligated to make actual contributions to
fund this Plan or to acquire or set aside any particular assets for the
discharge of its obligations, nor is any participant to have any property
rights in any particular assets held by the Company, whether or not held for
the purpose of funding the Company's obligations hereunder.
5. PAYMENT OF DEFERRED AMOUNTS
No withdrawal may be made from a Participant Account except as provided in
this section 5. Payments of vested amounts from an Account shall normally be
made in a lump sum amount within 30 days following the applicable anniversary
date of the latest date any compensation is deferred in any applicable year and
within 60 days of the participant's retirement or other termination as a
director of the Company. In the case of financial hardship, the Committee, in
its sole discretion may distribute all or a portion of the vested portion of an
Account before an elected anniversary date or termination as a director but the
amount of the, distribution shall not exceed the amount needed to relieve the
financial hardship
Payments for any reason other than a change in control shall be made only
in stock provided that any fractional shares from a Participant Account shall
be paid in cash. In the event of a change in control, all account balances
shall become fully and immediately vested and shall be paid, in cash or stock
as the Committee in its sole discretion may determine, within five days of the
change in control. For this purpose, the term "change in control" means a
change in control of the Company of a nature that would be required to be
reported in response to Item 5(f) of Schedule 14A of Regulation 14A or to Item
I of Form 8-K promulgated under the Securities Exchange Act of 1934, as
amended, provided that, without limitation, a change in control shall be deemed
to have occurred if (i) any "person" (as such term is used in Sections 13(d)
and 14(d)(2) of such Act) is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding securities; or (ii)
during any period of twenty-four (24) consecutive months, individuals who at
the beginning of such period constitute the Board of Directors of the Company
cease for any reason to constitute at least a majority thereof unless the
election, or the nomination for election by the Company's shareholders, of each
new director was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of the period.
An aggregate of 50,000 shares of Company Common Stock (subject to
substitution or adjustment as provided below) shall be available for stock
payments under this Plan. Such shares may be authorized and unissued shares or
may be treasury shares. In the event of any change in the Common Stock of the
Company by reason of any stock dividend, recapitalization, reorganization,
merger, consolidation, split-up, combination, or exchange of shares, or rights
offering to purchase Common Stock at a price substantially below fair market
value, or of any similar change affecting the Common Stock, the number and kind
of shares which thereafter are available for stock payments under the Plan
shall be appropriately adjusted consistent with such change in such manner as
the Committee may deem equitable to prevent substantial dilution or enlargement
of the rights granted to, or available for, participants in the Plan.
6. PARTICIPANT'S RIGHTS UNSECURED
The right of any participant or, if applicable, the participant's estate,
to receive benefits under the provisions of this Plan shall be an unsecured
claim against the general assets of the Company. Any amounts held in a
Participant Account, including amounts that may be set aside by the Company for
the purpose of meeting its obligations under this Plan, are a part of the
Company's general assets and shall be reachable by the general creditors of the
Company.
7. STATEMENT OF ACCOUNT
Statements will be sent to participants no less frequently than annually
setting forth the value of their Participant Accounts.
8. TRANSFERABILITY
The rights of a participant under this Plan shall not be transferable
other than by will or by the laws of descent and distribution and are
exercisable during the participant's lifetime only by the participant or by his
guardian or legal representative.
9. PLAN ADMINISTRATOR
The administrator of this Plan shall be a Committee of the Board of
Directors of the Company from time to time designated by the Board. The
Committee's members shall not be employees of the Company. The Committee shall
have the authority to adopt rules and regulations for carrying out the Plan and
to interpret, construe and implement the provisions of the Plan. The Committee
may delegate some or all of its functions to another person as it may deem
appropriate. The Board of Directors has designated the Management and
Directors Committee of the Board of Directors as administrator of the Plan
until further notice.
10. AMENDMENT
This Plan may at any time or from time to time be amended, modified or
terminated by the Company's Board of Directors. No amendment, modification or
termination shall, without the consent of a participant, adversely affect such
participant's accruals in his or her Participant Account.
11. GOVERNING LAW
This Plan and any participant elections hereunder shall be interpreted and
enforced in accordance with the laws of the State of New York.
12. EFFECTIVE DATE
The effective date of this Plan is January 1, 1999.
IN WITNESS WHEREOF, the Company has caused its duly authorized officer to
execute this Plan document on its behalf this ____ day of November, 1999.
HOME PROPERTIES OF NEW YORK, INC.
By: _____________________________________
Its: _____________________________________
HOME PROPERTIES OF NEW YORK, INC.
DIRECTOR DEFERRED COMPENSATION PLAN
Election Form
To: HOME PROPERTIES OF NEW YORK, INC.
In accordance with the provisions of the Plan, I hereby elect to defer
the annual compensation otherwise payable in (enter year) to me by the Company
as follows:
I . AMOUNT OF COMPENSATION DEFERRAL (fill in percentage):
_______ percentage of quarterly compensation*
_______ percentage of director meeting fees*
2. DEFERRAL PERIOD (subject to Plan's payment terms) (check one):
( three years
( five years
( ten years
In the event of my death before I have received all of the deferred
payments, the payments which would have been paid to me shall be paid to my
estate in the same manner I would have received them as noted above.
This election is subject to all of the terms of the Home Properties of New
York, Inc. Director Deferred Compensation Plan on file with the records of the
Company.
Dated: ___________
__________________________
Signature of Director
Accepted on the ___ day of ___________, 19___,
on behalf of Home Properties of New York, Inc.
By: ___________________________________
*If less than 100% is elected to be deferred, the specified percentage will be
deferred from each quarterly payment and/or meeting fee unless alternate
directions are provided by the participant.
FEDERAL TAX ASPECTS
The Plan is a non-qualified deferred compensation plan under the
provisions of the Internal Revenue Code. At the time a Company contribution or
a participant's deferral of compensation is made, it is intended that the
participants will not recognize income, for Federal income tax purposes. In
addition, assumed dividends will not be treated as income at the time they are
credited to the participant accounts.
Participants will recognize ordinary income at the time the Company
contributions and participant deferrals, together with the earnings credited to
these amounts, are actually paid out or made available to the participants. The
amount of such ordinary income will equal the amount of cash received plus the
fair market value, on the date of payment, of any shares paid or made
available.
The ultimate sale or exchange of any shares of common stock received under
the Plan will result in either long-term or short-term capital gain, or loss
depending on the holding period. A participant's basis in the shares will be
the amount of income he recognizes at the time the shares were actually paid or
made available to the participant.
The Company is not entitled to deduct the amount of contributions or
deferrals into the Plan or the assumed dividends credited to an account.
Instead, the Company is entitled to take a deduction at the time a participant
recognizes income. The amount of the deduction is the amount of income that a
participant must recognize.
For Social Security tax (F.I.C.A.) and Medicare tax purposes the Company
contributions and participant deferrals under the Plan are taxable as "wages"
at the time the amounts are paid.
The Plan is not a tax-qualified plan under Section 401 (a) of the Internal
Revenue Code and is not subject to ERISA. The Company has not received any
ruling from the Internal Revenue Service concerning the tax consequences of the
Plan.