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Home Properties tops Street expectations for Q3

Home Properties Inc. beat Street expectations by 3 cents a share in the third quarter. Shares of Home Properties stock (NYSE: HME) were up 1.5 percent midday at 41 cents.

The real estate investment trust reported its results Thursday, after the markets closed.

For the quarter ended Sept. 30, funds from operations totaled $37 million, or 81 cents a share—4 pennies above the midpoint of management’s guidance.
 
FFO, the main metric used for REITs such as Home Properties, was down 3.2 percent in the third quarter from a year ago. For the first nine months, FFO was $2.45 a share, compared with $2.50 a year ago.
 
Net income for the third quarter totaled $7.2 million, down from almost $9.7 million a year ago; while net income for the first three quarters, totaled $30.6 million, down from almost $58 million.
 
Core properties, for the first nine months, showed a 0.4 percent in revenues and a 1.5 percent increase in expenses, due primarily to repairs, maintenance, personnel and real estate taxes. The company, as it stated at the beginning of the year, has made no acquisitions in 2009. While the velocity of deals is returning, CEO Edward Pettinella said in a conference call, none have shown sufficient returns for the risk, given the still unpredictable nature of the environment.
 
Home Properties owns, operates and rehabilitates acquired apartment communities primarily in selected Northeast, Mid-Atlantic and Southeast Florida markets. Home Properties operates 108 apartment communities.
 
The average occupancy for those properties was 94.9 percent for the first nine months, down from 95 percent a year ago.
 
The results, Pettinella said, reflect the stability of the company’s geographic markets and middle-market apartment properties despite a challenging operating environment.
 
“Our number one ranking in same-unit net operating income growth in the apartment sector results from a continued focus on managing rents to optimize occupancy and revenue, while also controlling costs and refining operations to ensure excellent future results despite continued weakness in the economy,” Pettinella said in a statement.
 
Based on the higher than expected third-quarter results, Home Properties increased its guidance to $3.18 to $3.24 a share, up from the previous range of $3.10 to $3.22 a share.
 
The guidance for the balance of 2009 is reaffirmed without change, with the fourth-quarter range at 73 cents to 79 cents a share.
 
(c) 2009 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail rbj@rbj.net.

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