SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event
reported):
March 1, 2002
HOME PROPERTIES OF NEW YORK, INC.
(Exact name of Registrant as specified in its Charter)
MARYLAND 1-13136 16-1455126
(State or other jurisdiction (Commission file number) (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: (585) 546-4900
Not applicable
(Former name or former address, if changed since last report)
HOME PROPERTIES OF NEW YORK, INC.
CURRENT REPORT
ON FORM 8-K
Item 5. Other Events
Home Properties of New York, Inc. (the "Company") conducts its business through
Home Properties of New York, L.P., a New York limited partnership (the
"Operating Partnership"). During 2002, the Operating Partnership purchased the
following 14 apartment communities (referred to herein as the "Acquisition
Properties") in 4 unrelated transactions. None of these four acquisition
transactions constitute a "significant subsidiary" and the communities were not
acquired from a related party.
Community Acquisition Date
--------- ----------------
Cambridge Village* March 1, 2002
Stratford Greens* March 1, 2002
Westwood Village* March 1, 2002
Woodmont Village* March 1, 2002
Yorkshire Village* March 1, 2002
Green Acres* March 1, 2002
Hawthorne Court* (formally Concord Village) April 4, 2002
Hawthorne Estates* (formally Concord Estates) April 4, 2002
Heritage Square * April 4, 2002
Muncy Apartments* May 31, 2002
Holiday Square Apartments* May 31, 2002
Gardencrest Apartments June 28, 2002
Brittany Place Apartments August 22, 2002
Cider Mill Apartments* September 27, 2002
Holiday Properties. On March 1, 2002, April 4, 2002 and May 31, 2002, the
Operating Partnership acquired 11 apartment communities totaling 1,688 units
primarily in Long Island, New York (noted with an * above) from one seller
pursuant to a single purchase agreement (referred to herein as the "Holiday
Properties"). The combined purchase price of the portfolio of $149.5 million was
funded by $66.7 million of assumed mortgage debt, $61.0 million of available
cash, and $21.8 million in proceeds received from common equity offerings. The
mortgages have effective interest rates ranging between 5.21% -6.45% and mature
on dates ranging from 2005 to 2009.
Gardencrest Apartments. On June 28, 2002, the Operating Partnership acquired
Gardencrest Apartments with a total of 696 units located in Waltham,
Massachusetts. Consideration for the $85.8 million purchase price was funded by
$6 million of assumed mortgage debt, $21.8 million in cash, and $58 million from
the Company's line of credit. The mortgage has an effective interest rate of
6.00% and matures in 2007.
Brittany Place Apartments. On August 22, 2002, the Operating Partnership
acquired Brittany Place Apartments with a total of 591 units located in
Greenbelt, Maryland. Consideration for the $44.9 million purchase price included
$20.9 of assumed mortgage debt and $24 from the Company's line of credit. The
mortgage has an effective interest rate of 4.78% and matures in 2007.
Cider Mill Apartments. On September 27, 2002, the Operating Partnership acquired
Cider Mill Apartments, an 864-unit community located in Gaithersburg, Maryland.
The purchase price of $81.3 million was funded by the assumption of $48.8
million in mortgage debt, the issuance of $11.5 million in Operating Partnership
Units ("OP Units") in the Operating Partnership, and $21 million in cash from
available funds. The OP Units are exchangeable for shares of the Company's
common stock on a one-for-one basis. The mortgage has an effective interest rate
of 4.72% and matures in 2010.
The Holiday Properties along with Cider Mill Apartments are collectively
referred to herein as the "Selected Acquisition Properties".
In determining the price paid for the Acquisition Properties, the Company
considered the historical and expected cash flow from the properties, the nature
of the occupancy trends and terms of the leases in place, current operating
costs and taxes, the physical condition of the properties, the potential to
increase their cash flow and other factors. The Company also considered the
capitalization rates at which it believes apartment properties have recently
sold, but determined the prices it was willing to pay for the properties
primarily based on the factors discussed above. No independent appraisals were
performed in connection with the acquisitions. The Company, after investigation
of the properties, is not aware of any material factors, other than those
enumerated above, that would cause the financial information reported to not be
necessarily indicative of future expected operating results.
In addition, the Company sold the following eight apartment communities during
2002 (referred to herein as the "Sale Properties"). These dispositions were not
deemed to be "significant" and are reported herein for informational purposes
only. In addition, all of the Sale Properties, excluding Carriage Hill
Apartments, were classified as discontinued operations as of and for the
six-month period ended June 30, 2002. Carriage Hill Apartments will be
classified as discontinued operations for the ninth-month period ended September
30, 2002.
Community Disposition Date
------------------ ----------------
Lansdowne Apartments January 23, 2002
Ridgeway Court Apartments January 23, 2002
Old Friends Apartments January 24, 2002
Finger Lakes Manor April 4, 2002
Conifer Village April 4, 2002
Rolling Park Apartments May 31, 2002
Cloverleaf Village June 28, 2002
Carriage Hill Apartments August 9, 2002
Lansdowne Apartments - On January 23, 2002, the Company completed the sale of
Lansdowne Apartments. The 222-unit community located in Philadelphia,
Pennsylvania was sold for $8.8 million.
Ridgeway Court Apartments - On January 23, 2002, the Company also sold Ridgeway
Court, located in Philadelphia, Pennsylvania. Total consideration received for
the 66-unit apartment community was $2.6 million.
Old Friends Apartments - On January 24, 2002, Old Friends Apartments in
Baltimore, Maryland was sold. The total sales price for the 51-unit apartment
community was $2.5 million.
Finger Lakes Manor - On April 4, 2002, the Company completed the sale of Finger
Lakes Manor Apartments. The 199-unit community in Syracuse, New York was sold
for $7.1 million.
Conifer Village - On April 4, 2002, the Company also sold Conifer Village,
located in Rochester, New York. Total consideration paid for the 153-unit
apartment community was $7.9 million.
Rolling Park Apartments - On May 31, 2002, the Company sold Rolling Park, a
144-unit apartment community in Rolling Park, Maryland. The total sales price
was $8.3 million.
Cloverleaf Village - On June 28, 2002, Cloverleaf Village Apartments in Pleasant
Hills, Pennsylvania was sold. The sales price for the 148-unit apartment
community was $5.3 million.
Carriage Hill Apartments - On August 9, 2002, the Company sold Carriage Hill
Apartments in Richmond, Virginia. The 664-unit apartment community was sold for
$41.6 million.
Item 7. Financial Statements and Exhibits.
a. Financial Statements of the Selected Acquisition Properties:
Item 7 of this report includes (i) unaudited statements of
revenues and certain expenses for each of the Selected Acquisition
Properties for the period January 1, 2002 through the date of
acquisition, or June 30, 2002, the Company's last fiscal quarter
prior to the acquisition date, as appropriate, and (ii) audited
statements of revenues and certain expenses for the year ended
December 31, 2001 for each of the Selected Acquisition Properties.
See pages F-1 to F-7.
None of the Acquisition Properties constitute a "significant
subsidiary" pursuant to the Regulation S-X rules. Audited
statements of revenues and certain expenses for the year ended
December 31, 2001 and related unaudited financial information for
the period through the acquisition date or the Company's
appropriate quarterly reporting period are presented herein only
for the Selected Acquisition Properties, which represent a
majority of the Acquisition Properties. An audited statement of
revenues and certain expenses for the year ended December 31, 2001
and related unaudited financial information for the period through
the acquisition date or the Company's appropriate quarterly
reporting period of Gardencrest Apartments and Brittany Place
Apartments have not been presented as these apartment communities
were individually below the 5% materiality threshold to require
presentation under Regulation S-X Rule 3-14.
b. Pro Forma Financial Information:
Pro forma condensed consolidated balance sheet of the Company as
of June 30, 2002 and related notes (unaudited). See pages F-8 to
F-9.
Pro forma condensed consolidated statement of operations of the
Company for the six-month period ended June 30, 2002 and for the
year ended December 31, 2001 (unaudited). See pages F-10 to F-12.
Notes to the pro forma consolidated statement of operations of the
Company for the six-month period ended June 30, 2002 and for the
year ended December 31, 2001 (unaudited). See pages F-13 to F-16.
c. Estimated twelve-month pro forma statement of taxable net
operating income and operating funds available. See pages F-17 to
F-18.
d. Exhibit 23.0 - Consent of PricewaterhouseCoopers LLP
Report of Independent Accountants
To the Board of Directors and Shareholders of
Home Properties of New York, Inc.:
We have audited the accompanying Combined Statement of Revenues and Certain
Expenses of the Holiday Properties for the year ended December 31, 2001. This
historical statement is the responsibility of Holiday Properties' management.
Our responsibility is to express an opinion on this historical statement based
on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the historical
statement is free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the historical
statement. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
presentation of the historical statement. We believe that our audit provides a
reasonable basis for our opinion.
The accompanying historical statement was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission (for
inclusion in the Form 8-K of Home Properties of New York, Inc.) as described in
Note 2 and is not intended to be a complete presentation of the Holiday
Properties' revenues and expenses.
In our opinion, the combined historical statement referred to above presents
fairly, in all material respects, the combined revenues and certain expenses
described in Note 2 of the Holiday Properties for the year ended December 31,
2001 in conformity with accounting principles generally accepted in the United
States of America.
/s/ PricewaterhouseCoopers LLP
Cleveland, Ohio
October 23, 2002
F-1
Holiday Properties
Combined Statements of Revenues and Certain
Expenses For the Period
(In thousands) For the Year January 1,
---------------------------------------------- Ended through
December 31, Acquisition Dates
2001 in 2002 (Note 1)
----------------- ---------------------
Revenues:
Minimum rent $ 20,512 $ 4,525
Other income 883 55
----------------- ---------------------
21,395 4,580
----------------- ---------------------
Certain expenses:
Operating and maintenance 5,529 1,043
Real estate taxes 4,246 888
----------------- ---------------------
9,775 1,931
----------------- ---------------------
Revenues in excess of certain expenses $ 11,620 $ 2,649
================= =====================
The accompanying notes are an integral part of these financial statements.
F-2
Holiday Properties
Notes to Combined Statements of Revenues and Certain Expenses
For the Year Ended December 31, 2001 and the Period January 1, 2002 through the
Acquisition Dates in 2002 (Unaudited)
--------------------------------------------------------------------------------
1. OPERATIONS OF PROPERTIES
The accompanying combined statements of revenues and certain expenses
include the operations (see Note 2) of Concord Village, Heritage Square
Apartments, Holiday Square Apartments, Muncy Apartments, Cambridge
Village, Stratford Greens, Westwood Village, Woodmont Village, Yorkshire
Village, Concord Estates, and Green Acres (the "Holiday Properties")
residential properties formerly owned and managed by an entity not
related to Home Properties of New York, Inc. (the "Company").
On March 1, 2002, the Company, through its subsidiary Home Properties of
New York, L.P., acquired Cambridge Village, Stratford Greens, Westwood
Village, Woodmont Village, Yorkshire Village and Green Acres (the
"Initial Acquisition"), comprised of 1,031 apartment units located in
five communities in New York and Pennsylvania. Total consideration for
the Initial Acquisition was $100.3 million, which was funded through
$47 million in assumed debt and $53.3 million in cash. The mortgages
carry stated interest rates of 6.875% to 8.50% and mature at various
dates through November 1, 2009.
On April 4, 2002, the Company, through its subsidiary Home Properties of
New York, L.P., acquired Concord Village, Heritage Square Apartments, and
Concord Estates (the "Second Acquisition"), comprised of 514 apartment
units located in two communities in New York. Total consideration for the
Second Acquisition was $37.3 million, which was funded through $13.4
million in assumed debt and $23.9 million in cash. The mortgages carry
stated interest rates of 8.25% to 8.775% and mature at various dates
through November 1, 2006.
On May 31, 2002, the Company, through its subsidiary Home Properties of
New York, L.P., acquired Muncy Apartments and Holiday Square Apartments
(the "Third Acquisition"), comprised of 143 apartment units located in
two communities in New York. Total consideration for the Third
Acquisition was $9.5 million, which was funded through $3.9 million in
assumed debt and $5.6 million in cash. The mortgage carries a stated
interest rate of 10.85% through September 1, 2003 and 6.125% through its
maturity on March 1, 2024.
The Initial Acquisition, Second Acquisition and Third Acquisition were
made pursuant to a single purchase agreement between the Company and the
seller and contained multiple closing dates. As a result, a combined
presentation of the historical statements is considered to be the most
meaningful.
2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying combined financial statements have been prepared on the
accrual basis of accounting.
The accompanying combined financial statements are not representative of
the actual operations of the Holiday Properties for the periods
presented. As required by the Securities and Exchange Commission,
Regulation S-X, Rule 3-14, certain expenses, which may not be comparable
to the proposed future operations of the Holiday Properties have been
excluded. Expenses excluded relate to property management fees, interest
expense, depreciation and amortization expense, and other expenses
unrelated to the future operations of the Holiday Properties. The Company
is not aware of any material factors relating to the Holiday Properties
that would cause the reported financial information not to be necessarily
indicative of future operating results.
F-3
Holiday Properties
Notes to Combined Statements of Revenues and Certain Expenses
For the Year Ended December 31, 2001 and the Period January 1, 2002 through the
Acquisition Dates in 2002 (Unaudited)
--------------------------------------------------------------------------------
Real Estate
Expenditures for repairs and maintenance items are expensed as incurred.
Costs related to the acquisition and improvement of the Holiday
Properties and related assets are capitalized.
Revenue Recognition
Rental income attributable to residential leases is recorded when due
from residents. Leases are generally for terms of one year.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Interim Unaudited Combined Financial Statements
The accompanying interim combined statement of revenues and certain
expenses for the period from January 1, 2002 through the acquisition
dates of each of the properties comprising the Holiday Properties (Note
1), is unaudited. However, in the opinion of the Company, the interim
statements include all adjustments, consisting only of normal recurring
adjustments, necessary for a fair statement of the results for the
interim period. The results for the period presented are not necessarily
indicative of the results for the full year.
F-4
Report of Independent Accountants
To the Board of Directors and Shareholders of
Home Properties of New York, Inc.:
We have audited the accompanying Statement of Revenues and Certain Expenses of
Cider Mill Apartments, Gaithersburg, Maryland (the "Property") for the year
ended December 31, 2001. This historical statement is the responsibility of the
Property's management. Our responsibility is to express an opinion on this
historical statement based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the historical
statement is free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the historical
statement. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
presentation of the historical statement. We believe that our audit provides a
reasonable basis for our opinion.
The accompanying historical statement was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission (for
inclusion in the Form 8-K of Home Properties of New York, Inc.) as described in
Note 1 and is not intended to be a complete presentation of Cider Mill
Apartments' revenues and expenses.
In our opinion, the historical statement referred to above presents fairly, in
all material respects, the revenues and certain expenses described in Note 1 of
Cider Mill Apartments for the year December 31, 2001 in conformity with
accounting principles generally accepted in the United States of America.
/s/ PricewaterhouseCoopers LLP
Cleveland, Ohio
October 15, 2002
F-5
Cider Mill Apartments
Statements of Revenues and Certain Expenses
(In thousands)
--------------------------------------------------------------------------------
For the Year For the Six-Month
Ended Period Ended
December 31, June 30, 2002
2001 (unaudited)
--------------------- ---------------------
Revenues:
Minimum rent $ 9,106 $ 4,651
Other income 543 199
--------------------- ---------------------
9,649 4,850
--------------------- ---------------------
Certain expenses:
Operating and maintenance 3,302 1,748
Real estate taxes 494 253
--------------------- ---------------------
3,796 2,001
--------------------- ---------------------
Revenues in excess of certain expenses $ 5,853 $ 2,849
===================== =====================
The accompanying note is an integral part of these financial statements.
F-6
Cider Mill Apartments
Note to Statements of Revenues and Certain Expenses
For the Year Ended December 31, 2001 and the Six-Month Period Ended June 30,
2002 (unaudited)
--------------------------------------------------------------------------------
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Operations
The accompanying statement of revenues and certain expenses includes the
operations (see "Basis of Presentation" below) of Cider Mill Apartments,
a residential property ("the Property") owned and managed by parties not
related to Home Properties of New York, Inc. (the "Company").
On September 27, 2002, the Company, through its subsidiary Home
Properties of New York, L.P., acquired the Property. The Property is a
residential development located in Gaithersburg, Maryland.
Total consideration for the acquisition was $73.7 million, which was
funded through $40.9 million in assumed debt, $11.8 million of Operating
Partnership Units in Home Properties of New York, L.P., and $21 million
of cash. The mortgage carries an interest rate of 7.7% and matures in
October 2010.
Basis of Presentation
The accompanying financial statement has been prepared on the accrual
basis of accounting.
The accompanying financial statement is not representative of the actual
operations of the Property for the periods presented. As required by the
Securities and Exchange Commission, Regulation S-X, Rule 3-14, certain
expenses, which may not be comparable to the expenses expected to be
incurred by the Company in the future operation of the Property, have
been excluded. Expenses excluded relate to property management fees,
audit fees, interest expense, depreciation and amortization expense. The
Company is not aware of any material factors relating to the Property
that would cause the reported financial information not to be necessarily
indicative of future operating results.
Real Estate
Expenditures for repairs and maintenance items are expensed as incurred.
Costs related to the acquisition and improvement of property and related
equipment are capitalized.
Revenue Recognition
Rental income attributable to residential leases is recorded when due
from residents. Leases are generally for terms of one year.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Interim Unaudited Financial Statement
The accompanying interim statement of revenues and certain expenses for
the six-month period ended June 30, 2002 is unaudited; however, in the
opinion of the Company, the interim statement includes all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
statement for the interim period. The results of such interim period are
not necessarily indicative of the results for the full year.
F-7
--------------------------------------------------------------------------------
HOME PROPERTIES OF NEW YORK, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 2002
(Unaudited, In Thousands)
This unaudited Pro forma Condensed Consolidated Balance Sheet is presented as if
the acquisition of Cider Mill Apartments and Brittany Place Apartments and the
sale of Carriage Hill Apartments which occurred subsequent to June 30, 2002, had
occurred as of June 30, 2002.
Such pro forma information is based upon the historical consolidated balance
sheet of the Company as of that date, giving effect to the transactions
described above. In management's opinion, all adjustments necessary to reflect
the above transactions have been made. This unaudited Pro Forma Condensed
Consolidated Balance Sheet should be read in conjunction with the unaudited Pro
Forma Consolidated Statement of Operations of the Company presented herein and
the historical financial statements and notes thereto of the Company included in
the Home Properties of New York, Inc. Form 10-Q and 8-K dated January 23, 2002
(which financial statements reflect the impact of property sales as discontinued
operations pursuant to the provisions of SFAS 144 - "Accounting for the
Impairment or Disposal of Long-Lived Assets") for the six-month period ended
June 30, 2002 and the year ended December 31, 2001, respectively.
This unaudited Pro forma Condensed Consolidated Balance Sheet is not necessarily
indicative of what the actual financial position of the Company would have been
at June 30, 2002, nor does it purport to represent the future financial position
of the Company.
As of June 30, 2002
Home
Properties
of New York, Pro Forma Company
Inc. (A) Adjustments (B) Pro Forma
ASSETS
Real estate, net $2,155,221 $ 89,534 (C) $2,244,755
Cash and cash equivalents 12,739 690 (D) 13,429
Other assets 118,765 (33) 118,732
------------ ------------ ------------
(D)
Total Assets $2,286,725 $ 90,191 $2,376,916
========== ========= ==========
LIABILITIES
Mortgage notes payable $1,105,041 $ 69,653 (E) $1,174,694
Line of credit 58,000 9,288 (F) 67,288
Other liabilities 60,097 (276) (D) 59,821
------------- ------------- -------------
Total Liabilities 1,223,138 78,665 1,301,803
----------- --------- -----------
Minority interest 338,381 8,688 (G) 347,069
------------ --------- ------------
STOCKHOLDERS' EQUITY
Convertible Preferred Stock 114,000 114,000
Redeemable Preferred Stock 60,000 60,000
Common stock 262 262
Additional paid-in capital 623,473 2,838 (G) 626,311
Accumulated other comprehensive
loss (620) (620)
Accumulated deficit (66,228) (66,228)
Officer and Director notes for stock
Purchases (5,681) - (5,681)
-------------- ------------- --------------
Total stockholders' equity 725,206 - 728,044
------------ ------------- ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $2,286,725 ($ 90,191) $2,376,916
========== ========= ==========
F-8
HOME PROPERTIES OF NEW YORK, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 2002
(Unaudited, in Thousands)
(A) Reflects the Company's historical consolidated balance sheet as of June
30, 2002, as reported in the Form 10-Q as of June 30, 2002.
(B) The Company's historical consolidated balance sheet is adjusted to give
effect to the acquisition of Cider Mill Apartments on September 27,
2002 and Brittany Place Apartments on August 22, 2002 and the sale of
Carriage Hill Apartments on August 22, 2002.
(C) The acquisitions and disposition in (B) were recorded as follows:
Appliances & Total Mortgages
Land Building Equipment Real Estate Assumed Total (1)
---- -------- --------- ----------- ------- ---------
Cider Mill Apartments $15,552 $ 65,023 $ 864 $81,439 ($48,795) $32,644(2)
Brittany Place Apartments 4,728 38,869 591 44,188 (20,858) 23,330
----- --------- --- ------ -------- ------
$20,280 $103,892 $1,455 $125,627 ($69,653) $55,974
======= ======== ====== ======== ========= =======
Carriage Hill ($ 3,984) ($31,279) ($ 830) (36,093)
========= ========= ========= --------
$89,534
The appliances and equipment have an estimated useful life of ten years
and the building has an estimated useful life of 40 years.
(1) Funded with the Company's line of credit, except as indicated in
(2) below
(2) Includes the issuance of 326,517 OP Units recorded at
$11,526 and funds from the line of credit of $21,118.
(D) The pro forma adjustments reflect the other assets and liabilities of
Cider Mill Apartments and Brittany Place Apartments net of the sale of
Carriage Hill Apartments as follows:
Other Other
Cash Assets Liabilities
Cider Mill Apartments $ 93 $ - $ -
Brittany Place Apartments 710 - -
--- ------- --------
803 - -
Carriage Hill (113) (33) (276)
----- ------ -------
$690 ($33) ($276)
==== ===== ======
(E) Represents the assumption of mortgages recorded at the approximate fair
values in connection with the acquisition of Cider Mill Apartments and
Brittany Place Apartments, which occurred subsequent to June 30, 2002.
(F) Represents the increase in the Company's line of credit of $45,251 to
fund the cash portion of the purchase price of Cider Mill Apartments
and Brittany Place Apartments net of the repayment of $35,963 from the
proceeds from the sale of Carriage Hill Apartments subsequent to June
30, 2002.
(G) Reflects the adjustment to minority interest for the issuance of OP
Units as described in (C) above of $11,526 and the subsequent
rebalancing of minority interest and additional paid in capital of
$2,838.
F-9
HOME PROPERTIES OF NEW YORK, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2002
AND FOR THE YEAR ENDED DECEMBER 31, 2001
(Unaudited, in Thousands, Except Share and Per Share Data)
The unaudited Pro forma Consolidated Statement of Operations for the six-month
period ended June 30, 2002 is presented as if the following had occurred on
January 1, 2002: (i) the acquisition by the Company of the Acquisition
Properties, (ii) the disposition by the Company of Carriage Hill Apartments,
(iii) the sale by the Company of 2,400,000 shares of its 9.00% Series F
Cumulative Redeemable Preferred Stock in March 2002 and (iv) the sale by the
Company of an aggregate of 704,602 common shares in February 2002 in two
separate offerings.
The unaudited Pro forma Consolidated Statement of Operations for the year ended
December 31, 2001 is presented as if the following had occurred on January 1,
2001: (i) the acquisition by the Company of the Acquisition Properties, (ii) the
disposition by the Company of Carriage Hill Apartments, (iii) the acquisition of
ten apartment communities in nine separate transactions in 2001 (the "2001
Acquisitions"), (iv) the disposition of 14 apartment communities in six separate
transactions in 2001 (the "2001 Sale Properties"), (v) the sale by the Company
of 2,400,000 shares of its 9.00% Series F Cumulative Redeemable Preferred Stock
in March 2002 and (vi) the sale by the Company of an aggregate of 704,602 common
shares in February 2002 in two separate offerings.
Such pro forma information is based upon the historical consolidated results of
operations of the Company for the six-month period ended June 30, 2002 and for
the year ended December 31, 2001, giving effect to the transactions described
above. In management's opinion, all adjustments necessary to reflect the above
transactions have been made. The Pro forma Consolidated Statements of Operations
should be read in conjunction with the Pro forma Condensed Consolidated Balance
Sheet of the Company presented herein and the historical financial statements
and notes thereto of the Company included in the Home Properties of New York,
Inc. Form 10-Q and 8-K dated January 23, 2002 (which financial statements
reflect the impact of property sales as discontinued operations pursuant to the
provisions of SFAS 144 - "Accounting for the Impairment or Disposal of
Long-Lived Assets") for the six-month period ended June 30, 2002 and the year
ended December 31, 2001, respectively.
The unaudited Pro Forma Consolidated Statements of Operations for the six-month
period ended June 30, 2002 and for the year ended December 31, 2001 are not
necessarily indicative of what the actual results of operations would have been
assuming the transactions had occurred as of the beginning of the period
presented, nor does it purport to represent the results of operations for future
periods.
F-10
HOME PROPERTIES OF NEW YORK, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2002
(Unaudited, in Thousands, Except Share and Per Share Data)
For the Six-Month Period Ended June 30, 2002
--------------------------------------------
Home
Properties of Company
New York, Inc. Pro Forma Pro
Historical (A) Adjustments (B) Forma
Revenues:
Rental Income $182,949 $ 12,921 $195,870
Property other income 6,146 314 6,460
Interest and Dividend Income 795 - 795
Other income 581 - 581
------------ ------------ ------------
Total revenues 190,471 13,235 203,706
--------- ------- ---------
Expenses:
Operating and Maintenance 81,653 6,395 88,048
General and Administrative 5,921 397 (C) 6,318
Interest 37,042 1,886 (D) 38,928
Depreciation and Amortization 31,672 2,254 (E) 33,926
-------- ---------- ----------
Total Expenses 156,288 10,932 167,220
-------- -------- ---------
Income before loss on disposition of property, minority interest
and discontinued operations 34,183 2,303 36,486
Loss on disposition of property (402) - (402)
----------- ------------- ------------
Income before minority interest and discontinued operations 33,781 2,303 36,084
Minority interest 8,299 468 (F) 8,767
--------- ----------- ----------
Income from continuing operations 25,482 1,835 27,317
Preferred dividends 7,234 1,245 (G) 8,479
Premium on Series B Preferred Stock Repurchase 5,025 - 5,025
----- ----------- ----------
Income applicable to common shareholders from continuing $13,223 $ 590 $ 13,813
operations ======= ========= ========
Basic earnings per share data:
Income applicable to common shareholders from continuing
Operations $.52 $.54 (H)
Diluted earnings per share data:
Income applicable to common shareholders from continuing
Operations $.52 $.53 (H)
Weighted average number of shares outstanding
Basic 25,451,169 225,784 25,676,953
========== ==========
Diluted 25,773,934 225,784 25,999,718
========== ==========
F-11
HOME PROPERTIES OF NEW YORK, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2001
(Unaudited, in Thousands, Except Share and Per Share Data)
For the Year Ended December 31, 2001
Home
Properties of Company
New York, Inc. Pro Forma Pro
Historical (A) Adjustments (B) Forma
Revenues:
Rental Income $341,653 $40,141 $381,606
Property other income 13,090 1,846 14,936
Interest and Dividends 3,011 3,011
Other income 2,273 - 2,273
---------- ------------- ---------
Total revenues 360,027 41,987 402,014
-------- -------- -------
Expenses:
Operating and maintenance 142,281 18,036 160,317
General and administrative 18,614 1,260 (C) 19,874
Interest 65,742 9,077 (D) 74,819
Depreciation and amortization 63,379 6,649 (E) 70,028
--------- ---------- --------
Total Expenses 290,016 35,022 325,038
-------- -------- -------
Income before gain on disposition of property and
business, minority interest, discontinued
operations and extraordinary item 70,011 6,965 76,976
Gain on disposition of property and business 26,241 (29,802) (3,561)
--------- --------- ---------
Income before minority interest, discontinued
operations and extraordinary item 96,252 (22,837) 73,415
Minority interest 32,844 (11,743)(F) 21,101
--------- -------- --------
Income from continuing operations 63,408 (11,094) 52,314
Preferred dividends 17,681 5,400(G) 23,081
--------- --------- --------
Income applicable to common shareholders from $ 45,727 ($16,494) $29,233
continuing operations ======== =========== =======
Basic earnings per share data:
Income applicable to common shareholders from $2.07 $1.28 (H)
continuing operations
Diluted earnings per share data:
Income applicable to common shareholders from
continuing operations $2.06 $1.27 (H)
Weighted average number of shares outstanding
Basic 22,101,027 704,602 22,805,629
========== ==========
Diluted 22,227,521 704,602 22,932,123
========== ==========
F-12
HOME PROPERTIES OF NEW YORK, INC.
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2002 AND
FOR THE YEAR ENDED DECEMBER 31, 2000
(Unaudited, in Thousands)
(A) Reflects the historical unaudited consolidated statement of operations for
the Company for the six-month period ended June 30, 2002 and the historical
consolidated statement of operations for the Company for the year ended
December 31, 2001, as appropriate.
(B) Reflects the historical revenues and certain expenses of each of the
Acquisition Properties for the period January 1, 2002 through the earlier
of the date of acquisition or June 30, 2002, the sale of Carriage Hill
Apartments, which is included in income from continuing operations for the
period January 1, 2002 through June 30, 2002, and the offering of common
and preferred shares that occurred in the first quarter of 2002, as
follows. Note that all other Sale Properties, as defined herein, are
excluded from this adjustment as they are included in income from
discontinued operations in the historical presentation which is not
required in this pro forma presentation. In addition to those adjustments
previously described, the table reflects other adjustments related to the
acquisition or disposition of the properties as denoted by (C), (D), (E)
and (F) below.
For the Six-Month Period Ended June 30, 2002
Preferred/
Acquisition Carriage Hill Common Pro Forma
Properties Apartments Offerings Adjustments, net
Revenues:
Rental Income $15,840 $ (2,919) - $12,921
Property other income 342 (28) - 314
Interest and Dividends - - - -
Other income - - - -
------------ ------------- ------------- ------------
Total revenues 16,182 (2,947) - 13,235
------- --------- ------------- -------
Expenses:
Operating and maintenance 7,186 (791) - 6,395
General and administrative 397 - - 397 (C)
Interest 2,617 - (731) 1,886 (D)
Depreciation and amortization 2,750 (496) - 2,254 (E)
--------- ---------- ------------- --------
Total Expenses 12,950 (1,287) (731) 10,932
-------- --------- ----------- -------
Income before minority interest and
discontinued operations 3,232 (1,660) 731 2,303
Minority interest 1,312 644 200 468 (F)
--------- ---------- ---------- --------
Income from continuing operations 1,920 (1,016) 931 1,835
Preferred dividends - - 1,245 1,245 (G)
------------- ------------- -------- -------
Income applicable to common
shareholders from continuing
operations $ 1,920 ($ 1,016) ($ 314) $ 590
========= ========= ========== =======
F-13
HOME PROPERTIES OF NEW YORK, INC.
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX-MONTH PERIOD ENDEDJUNE 30, 2002 AND
FOR THE YEAR ENDED DECEMBER 31, 2001
(Unaudited, in Thousands)
Reflects the historical revenues and certain expenses of each of the 2001
Acquisitions, the Acquisition Properties, the 2001 Sale Properties and
Carriage Hill Apartments, which is included in income from continuing
operations, for the period January 1, 2001 through the earlier of the date
of acquisition or disposition or December 31, 2001, as appropriate and the
offering of common and preferred shares that occurred in the first quarter
of 2002. Note that all other Sale Properties, as defined herein, are
excluded from this adjustment as they are included in income from
discontinued operations, which is not required in this pro forma
presentation. In addition to those adjustments previously described, the
table reflects other adjustments related to the acquisition or disposition
of the properties as denoted by (C), (D), (E) and (F) below.
For the Year Ended December 31, 2001
-------------------------------------
Carriage Preferred/
2001 Acquisition 2001 Sale Hill Common Pro Forma
Acquisitions Properties Properties Apartments Offerings Adjustments, net
Revenues:
Rental Income $15,697 $42,954 ($12,662) ($5,848) - $40,141
Property other income 750 1,599 (443) (60) - 1,846
Interest and Dividends - - - - - -
Other income - - - - - -
---------- --------- -------- --------- --------- ---------
Total revenues 16,447 44,553 (13,105) (5,908) 41,987
-------- -------- --------- --------- --------- --------
-
Expenses:
Operating and maintenance 6,497 20,120 (6,351) (2,230) - 18,036
General and administrative 493 1,337 (393) (177) - 1,260 (C)
Interest 4,188 7,578 (495) - (2,194) 9,077 (D)
Depreciation and amortization 2,381 7,115 (1,892) (955) 6,649 (E)
--------- --------- ---------- ---------- --------- --------
Total Expenses 13,559 36,150 (9,131) (3,362) (2,194) 35,022
-------- ---------- -------- --------- ---------- --------
Income before gain on disposition
of property minority interest and
and discontinued operations 2,888 8,403 (3,974) (2,546) 2,194 6,965
Gain on disposition of property - - (29,802) - - (29,802)
-------- ---------- -------- --------- -------- --------
and discontinued operations 2,888 8,403 (33,776) (2,546) 2,194 (22,837)
Minority interest 1,207 3,572 14,118 1,064 1,340 (11,743)(F)
--------- ---------- -------- ------- --------- --------
Income from continuing operations 1,681 4,831 (19,658) (1,482) 3,534 (11,094)
Preferred dividends - - - - 5,400 5,400 (G)
--------- ---------- --------- --------- -------- --------
Income applicable to common
shareholders from continuing
operations $ 1,681 $ 4,831 ($19,658) ($1,482 ($1,866) ($ 16,494)
========= ========= ========= ======= ======== ===========
(C) Reflects additional general and administrative expenses calculated as 3% of
total revenues.
(D) Reflects the increase in interest expense related to the fair value of the
debt assumed from the seller or obtained in order to finance each of the
2001 Acquisitions and the Acquisition Properties, offset by the decrease in
interest expense related to the Sale Properties and the reduction in
interest cost related to variable rate indebtedness, effectively repaid
with the proceeds from the sale of 704,602 common shares completed in
February 2002.
The approximated fair market value of debt assumed in acquisition and the
carrying amount of debt retired upon disposition along with the respective
effective interest rates is summarized as follows:
F-14
Fair Market Value
2001 Acquisitions of Debt Assumed Interest rate
----------------- --------------- -------------
Virginia Village $ 9,600,000 6.91%
Sandalwood $17,500,000 5.78%
Southern Meadows $20,600,000 7.25%
Windsor at Hauppauge $20,200,000 7.10%
Windsor at Hauppauge $ 5,000,000 6.70%
Fenland Field $14,500,000 5.78%
Courtyard Village $ 5,400,000 6.67%
The Manor $36,400,000 5.78%
Wellington $ 7,900,000 6.98%
Fair Market Value
Acquisition Properties of Debt Assumed Interest rate
---------------------- --------------- -------------
Green Acres $ 5,800,000 6.30%
Cambridge Village $ 2,800,000 5.96%
Cambridge Village $ 600,000 5.21%
Stratford Green $ 14,100,000 5.69%
Stratford Green $ 2,100,000 5.69%
Westwood Village $ 16,500,000 5.94%
Westwood Village $ 1,000,000 5.94%
Woodmont Village $ 2,700,000 5.41%
Woodmont Village $ 1,200,000 5.38%
Yorkshire Village $ 1,600,000 5.81%
Hawthorne Court
(formally Concord Village) $ 11,100,000 5.83%
Heritage Square $ 3,200,000 5.88%
Holiday Square $ 4,000,000 6.45%
Gardencrest $ 6,000,000 6.00%
Brittany Place $ 20,900,000 4.78%
Cider Mill $ 48,800,000 4.72%
Carrying Value of
2001 Sale Properties Debt Retired Interest rate
-------------------- ------------ -------------
Garden Village $4,600,000 7.75%
Hamlet Court $1,700,000 7.11%
Doub Meadows $2,800,000 7.50%
Strawberry Hill $2,300,000 8.26%
(E) Reflects depreciation and amortization related to each of the 2001
Acquisitions, the Acquisition Properties, 2001 Sale Properties and Carriage
Hill Apartments, as appropriate. The appliances and equipment have an
estimated useful life of ten years and the building has an estimated useful
life of forty years.
(F) Reflects the adjustment to minority interest expense based upon the impact
of the above pro forma adjustments on income before minority interest and
discontinued operations and the issuance of OP Units as of January 1, 2001.
(G) Reflects the issuance of 2,400,000 million shares of the 9% Series F
Cumulative Redeemable Preferred Stock outstanding as of January 1, 2002 or
January 1, 2001, as appropriate, with an average annual dividend rate of
$2.25 per share.
(H) Pro forma income per common share is based upon the weighted average number
of common shares assumed to be outstanding during 2001 and 2002, as
appropriate, and includes all shares issued in conjunction with the
February 2002 common share offering.
F-15
In accordance with SFAS 128, earnings per share from income applicable
to common shareholders from continuing operations is calculated as
follows (in thousands):
December 31,
June 30, 2002 2001
------------- ------------
Income from continuing operations $27,317 $52,314
Less: Preferred dividends 8,479 23,081
Premium on Series B Preferred Stock repurchase 5,025 -
--------- ---------
Basic and Diluted - Income from continuing operations applicable to
common shareholders $13,813 $29,233
======= =======
Basic weighted average number of shares outstanding 25,676,953 22,805,629
Effect of dilutive stock options 322,765 126,494
---------- ----------
Diluted weighted average number of shares outstanding 25,999,718 22,932,123
========== ==========
Basic earnings per share data:
Income applicable to common shareholders from continuing
operations $0.54 $1.28
Diluted earnings per share data:
Income applicable to common shareholders from continuing
operations $0.53 $1.27
F-16
HOME PROPERTIES OF NEW YORK, INC.
ESTIMATED TWELVE-MONTH PRO FORMA STATEMENT
OF TAXABLE NET OPERATING INCOME AND OPERATING FUNDS AVAILABLE
(UNAUDITED)
The following unaudited statement is a proforma estimate for a twelve-month
period of taxable income and funds available from operations of the Company. The
unaudited pro forma statement is based on the Company's historical operating
results for the year ended December 31, 2001 adjusted as if the following
transactions had occurred on January 1, 2001: (i) the acquisition by the Company
of the Acquisition Properties, (ii) the disposition by the Company of the Sale
Properties, (iii) the acquisition by the Company of the 2001 Acquisitions, (iv)
the disposition by the Company of the 2001 Sale Properties, (v) the sale by the
Company of 2,400,000 shares of its 9.00% Series F Cumulative Redeemable
Preferred Stock in March 2002 and (vi) the sale by the Company of an aggregate
of 704,602 common shares in February 2002 in two separate offerings.
This statement should be read in conjunction with (i) the historical financial
statements and notes thereto of the Company included in the Home Properties of
New York, Inc. Form 8-K dated January 23, 2002 (which financial statements
reflect the impact of property sales as discontinued operations pursuant to the
provisions of SFAS 144 - "Accounting for the Impairment or Disposal of
Long-Lived Assets") for the year ended December 31, 2001 and (ii) the pro forma
consolidated financial statements of the Company included herein.
ESTIMATE OF TAXABLE NET OPERATING INCOME (IN THOUSANDS):
Historical earnings from operations, exclusive of depreciation and amortization (Note 1) $ 126,787
Acquisition Properties net of sale properties historical earnings from operations,
as adjusted, exclusive of depreciation (Note 2) (2,879)
-----------
123,908
Estimated tax basis depreciation and amortization (Note 3)
HPNY (63,075)
Acquisition Properties, net of Sale Properties (8,514)
------
Pro Forma taxable operating income before dividends deduction 52,319
Estimated dividends deduction (Note 4) 67,025
----------
($14,706)
Pro Forma taxable operating income $ -
============
ESTIMATE OF PRO FORMA OPERATING FUNDS AVAILABLE (NOTE 5)
(IN THOUSANDS):
Pro Forma taxable operating income before dividends deduction $ 52,319
Add pro forma tax basis depreciation and amortization 71,589
---------
Estimate of pro forma operating funds available $123,908
========
Note 1 - The historical earnings from operations represents the Company's net
income applicable to common shares as adjusted for depreciation and
amortization for the year ended December 31, 2001, as reflected in the
historical financial statements.
Note 2 - The historical earnings from operations represents the pro forma
results of the properties acquired since January 1, 2001, for the year
ended December 31, 2001, net of Sale Properties.
Note 3 - The tax basis depreciation of the Company is based upon the original
purchase price allocated to the buildings, equipment and personal property,
depreciated on a straight-line basis over a 27.5- and 5-year life,
respectively. Such amount is presented net of the amounts associated with
the Sale Properties.
Note 4 - Estimated dividends deduction includes the Series F preferred dividend
of $5,400 plus the estimated dividend rate of $2.40 per common share.
Common shares outstanding, on a pro forma basis, are 25,676,953.
F-17
Note 5 - Operating funds available does not represent cash generated from
operating activities in accordance with generally accepted accounting
principles and is not necessarily indicative of cash available to fund cash
needs.
F-18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HOME PROPERTIES OF NEW YORK, INC.
---------------------------------
(Registrant)
Date: October 25, 2002
-----------------------------------
By: /s/ David P. Gardner
-----------------------------------
David P. Gardner
Sr. Vice President and
Chief Financial Officer