Welcome to the Annual Shareholders' Meeting of. May 4, 2006

Transcription

1 Welcome to the Annual Shareholders' Meeting of May 4, 2006

2 Norman Leenhouts Co-Chair of the Board

3 Agenda Introduction of directors Shareholder vote: Ann McCormick Development update: Nelson Leenhouts Management commentary: David Gardner, Ed Pettinella Question and answer session Refreshments

4 Directors Norman Leenhouts Co-Chair of the Board Nelson Leenhouts Co-Chair of the Board Edward Pettinella President and Chief Executive Officer - William Balderston - Roger Kober - Josh Fidler - Clifford Smith - Alan Gosule - Paul Smith - Leonard Helbig - Thomas Summer - Amy Tait

5 Ann McCormick Executive Vice President, General Counsel and Secretary

6 Proxy Items Election of twelve directors Ratify appointment of PricewaterhouseCoopers LLP

7 Forward-looking Statements

8 Nelson Leenhouts Co-Chair of the Board

9 Property Development Update Liberty Commons: 120 units in South Portland, Maine Trexler Park West: 216 units in Allentown, Pennsylvania

10 Liberty Commons, Maine

11 Liberty Commons, Maine

12 Liberty Commons, Maine

13 Trexler Park West, Pennsylvania

14 Trexler Park West, Pennsylvania

15 Trexler Park West, Pennsylvania

16 David Gardner Executive Vice President and Chief Financial Officer

17 Introduction to Home Properties Apartment UPREIT 43,342 apartments owned in 151 communities as of 5/1/2006 Northeast, Midwest, Mid-Atlantic and Southeast Florida Stable, high barrier-to-entry markets Unique niche upgrading and repositioning C- to B properties Limited "new construction" risk Commitment to customer service results in lower turnover Target middle-income residents

18 Core Property Performance 1Q** 2005* 2006 Total Revenues + 3.3% + 6.0% Operating Expenses + 3.8% + 7.1% Net Operating Income + 2.9% + 5.0% Occupancy + 1.0% + 1.3% * Reflects 33,422 apartment units owned throughout 2004 and 2005, excluding Detroit. ** Reflects 35,817 apartment units owned throughout 2005 and 2006, excluding Detroit.

19 FFO Per Share* 3.00 $ ** * Excludes impairment and other unusual non-recurring charges. ** Company estimate midpoint.

20 Strong Capital Structure Equity 57% Common Stock (64%) Perpetual Preferred (2%) Operating Partnership Interests (34%) Debt 43% Fixed (95%) Floating (5%) Common Stock Fixed Rate Debt Perpetual Preferred Operating Partnership Interests Floating Rate Debt $51.10 per share at 3/31/2006 $4.4 BILLION TOTAL MARKET CAPITALIZATION

21 Ed Pettinella President and Chief Executive Officer

22 Management Team David Gardner, EVP and Chief Financial Officer Ann McCormick, EVP, General Counsel and Secretary Scott Doyle, SVP, Property Management Jodi Falk, SVP, Chief Administrative/Information Officer Robert Luken, SVP, Chief Accounting Officer and Treasurer Janine Schue, SVP, Human Resources John Smith, SVP, Chief Investment Officer

23 Property Management Team Scott Doyle, SVP, Property Management Bernie Quinn, VP, Property Management Regional Vice Presidents Cynthia Burrell, Boston, Chicago, Maine and Florida Donald Denny, Detroit and Upstate NY Kerri Haltom, Philadelphia and Delaware Brent Kohere, Suburban New York City Rick Leith, Washington, D.C.

24 Reflections on 2005

25 2005 Results $291 million acquisitions at 6% cap rate $143 million sales at 4% cap rate Completed affordable sale Repurchased 2.9 million shares for $116 million at $40.24 per share

26 2005 Results Began utility cost recovery programs Selected web-based property management software Redesigned training and marketing functions Initiated new incentive program Managed 404 Sarbanes Oxley compliance

27 Multifamily REIT Ten-Year Same-Store NOI Growth (CAGR ) % HME ESS BRE TCT UDR ASN CPT EQR Mean AVB AIV MAA AML PPS -0.3 AEC Source: Green Street Advisors 2/15/2006

28 Dividends Per Share $ (1) (1) Based on annualized fourth quarter 1994 dividend.

29 Dividend Yield 6 % Home Properties (1) Apartment Average (2) S&P 500 Average (3) (1) Based upon stock price of $ (2) As of 3/31/2006. Includes straight average of 11 apartment REITs in Citigroup coverage. (3) As of 3/31/2006. Includes average dividend yield of all S&P 500 stocks.

30 Return on $100 Invested at IPO /4/94 12/94 12/95 12/96 12/97 12/98 12/99 12/00 12/01 12/02 12/03 12/04 12/05 3/31/2006 $

31 Ten-Year Comparative Annual Total Returns % Home Properties Apartment REITs* Equity REITs* S&P 500 *NAREIT indices

32 Acquisition Strategy High barrier-to-entry suburban markets of major MSAs East coast focus: Boston to Mid-Atlantic and Southeast Florida High average home price Favorable supply/demand equation Positive demographic trends: immigrants, echo boomers, seniors UPREIT transactions

33 Acquisitions $ (millions) Acquisitions Cap Rate % % 7.3% 6.7% 6.0% $ $212 $248 $ $

34 2005 Acquisitions Hackensack Gardens Hackensack, NJ Barrington Gardens Matawan, NJ

35 2005 Acquisitions Sayville Commons Sayville, NY The Brooke at Peachtree Village Whitehall, PA

36 2005 Acquisitions Peppertree Farm Silver Spring, MD Ridgeview at Wakefield Valley Westminster, MD Cinnamon Run Silver Spring, MD

37 Disposition Strategy Sell in slower growth, lower barrier markets Sell less efficient properties location, potential, size Reinvest in higher growth, higher barrier target markets

38 Dispositions $ (millions) Dispositions Cap Rate % 9.2% 8.7% 8.2% % $123 $143 $87 $93 $

39 IPO Map (1994) 15 communities with 3,991 units

40 Current Owned Communities 2006 Core Properties Regional Offices Recent Acquisitions 151 communities with 43,342 units As of 5/1/2006

41 NOI from High Barrier Markets* % High Barrier % * Excluding Detroit 87% High Barrier NYC DC Phil. Balt. Boston

42 Market Breakdown Market # of Units % 2005 NOI* Suburban New York City 8, % Suburban Washington, D.C. 8, % Philadelphia, PA 5, % Baltimore, MD 5, % Detroit, MI 5, % Upstate NY 4, % Boston, MA 1, % All Others 4, % Total Units 43, % *Excluding Detroit

43 Repositioning Strategy New landscaping, signage for curb appeal Correct deferred maintenance Improve exteriors, apartment and common area interiors Interior renovations: upgrade kitchens, baths Replace appliances, floors, cabinets, counters Remove kitchen walls Replace tile work, tubs, fixtures Replace windows/doors Add washers/dryers Add community centers Property repositioning takes 5 to 7 years

44 Before and After Kitchens

45 Before and After Kitchens

46 Before and After Bathroom

47 Repositioning Example 1600 $ 1550 Monthly Apartment Rent C- C C+ B- B B+ Apartment Quality

48 Case Study Village Square, Baltimore, MD Units 370 Date acquired July, NOI growth 6.9% Compound annual rental growth rate 8.3%

49 Case Study Westwood Village, Westbury, Long Island Units 242 Date acquired March, NOI growth 4.0% Compound annual rental rate growth 8.5%

50 Case Study Pavilion, Washington, DC Units 432 Date acquired July, 1999 Date sold November, 2005 Purchase price per unit $71,000 Sale price per unit $271,000

51 2006: Stronger Multifamily Fundamentals Occupancy up Concessions down Rents up Home affordability down Net new rental supply lowest in a decade Demographic trends strong Condos continue to sap supply

52 2006 Key Strategic Initiatives Exit low barrier Detroit market Implement utility cost recovery programs (natural gas and water and sewer) at all properties Improve operating efficiency (web-based property management system, yield management, centralization opportunities)

53 2006 Expected Results Revenue growth of 4.9% NOI growth of 5.0% Price/FFO multiple moves closer to apartment average

54 Strategic Initiatives Move Price/FFO Multiple Company 10/31/2005 4/30/2006 Avalon Bay Essex Property Post Properties BRE Properties Archstone-Smith Camden Properties Equity Residential Mid-America Apartments United Dominion AIMCO Straight Avg. (including HME) Home Properties Multiple Discount (3.8) ( 2.6) Source: Citigroup "The HUNTER"

55 Questions & Answers

56 Thank you for attending the 2006 Shareholders' Meeting of Please join us for a reception in the Potter Peristyle.