HME Home Properties Sept 2010 Presentation Slides Deck

Welcome
Charis Warshof
Vice President, Investor Relations
Disclosure Statement
This presentation was created as of the specific date indicated and reflects
management views as of that date. Such information may include certain
forward-looking statements that are subject to risks and uncertainties that may
cause results to differ materially
y and are described in our filings
g with the
Securities and Exchange Commission. The presentation may include statements
that may not be accurate after the date indicated. The Company disclaims any
duty to update such information.
Any reference to guidance relates to guidance previously provided publicly
by the Company, which it typically updates on a quarterly basis. Nothing in this
presentation should be construed as confirmation of any guidance previously
given. Any third party information and/or analyst estimates are provided for
informational purposes only
only. By policy
policy, Home Properties does not endorse
analysts' projections. Non-GAAP financial measures in this presentation are
reconciled to the most directly comparable financial measures calculated in
accordance with GAAP in the Company’s public filings, news releases and
supplemental information for the specific fiscal period, all of which are available
on the Home Properties website at homeproperties.com.
1
Introduction
Ed Pettinella
President and
Chief Executive Officer
The Right Focus
Presentation Agenda
• Introduction Ed Pettinella
• Financial commentary David Gardner
• Acquisitions John Smith
• Property management and operations Scott Doyle
Rosemarie Cook-Manley
Les Eisenberg
Keith Knight
• Development Don Hague
• Summary Ed Pettinella
• Q&A
• Property tour at 10:30 AM
2
Financial Commentary
David Gardner
Executive Vice President
and Chief Financial Officer
We’re Prepared
Future Guidance
2010 Guidance Update
3
Improving Spreads on New/Renewed Leases
4Q 2009 1Q 2010 2Q 2010 August 2010

Region New Renewal New Renewal New Renewal New Renewal
Washington, D
Washington D.C.
C (6 0%)
(6.0%) 2 0%
2.0% (4 1%)
(4.1%) 1 9%
1.9% (0.7%)
(0 7%) 2 3%
2.3% 3 2%
3.2% 3 5%
3.5%
Baltimore (6.0%) 1.8% (3.4%) 2.2% 0.8% 3.4% 3.4% 4.3%
New Jersey,
Long Island (5.0%) 1.8% (4.1%) 1.6% (0.1%) 2.6% 4.6% 3.4%
Philadelphia (9.0%) 1.0% (5.0%) 0.6% 0.8% 1.5% 4.6% 3.1%
Boston (7.4%) 0.7% (5.4%) 1.2% (1.4%) 1.5% 3.4% 2.6%
Chicago (8.0%) 0.2% (4.7%) 0.8% (2.7%) 1.1% (0.9%) 2.5%
Florida (5.4%) 0.7% (4.6%) 0.5% (0.7%) 0.5% 2.0% 2.4%
Maine (7.4%) 1.5% (0.7%) 1.0% 1.3% 1.1% 6.3% 2.0%
Total Core (6 0%)
(6.0%) 1 6%
1.6% (4 2%)
(4.2%) 1 6%
1.6% (0 2%)
(0.2%) 2 3%
2.3% 3.2% 3.5%
Spread 7.6% 5.8% 2.5% 0.3%
Strong Capital Structure
Equity 53% Debt 47%

Common Stock (76%) Fixed (89%)
Operating Partnership Interests (24%) Floating (11%)
Fixed Rate Debt

Common Stock
Operating Partnership
Interests Floating Rate Debt
$4.9 BILLION TOTAL MARKET CAPITALIZATION
Balance sheet as of 6/30/2010 based on recent stock price of $52.79 on 9/3/2010
4
Well-Managed Mortgage Debt Maturities
We’re Prepared
$
600 Total Debt Maturities

500
00
400
353
299
300 271
205 190 202
200 233 184
153
126
94
100
60
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Thereafter
As of 6/30/2010
10
Acquisition Strategy
Seizing Only the Right Opportunities
John S
Jo Smith
t
Senior Vice President
and Chief Investment Officer
We Buy Right
11
5
Acquisition Strategy
Right Focus + Integrity = Proven Success
• High barrier-to-entry, high growth, close-in suburban markets of

major selected MSAs
• East
E tC Coastt ffocus: B
Boston
t tto Mid
Mid-Atlantic
Atl ti
• High average home prices
• Favorable supply/demand equation
• Positive demographic trends: immigrants, echo boomers, seniors
• UPREIT transactions
• Additional development potential
• Acquire
A i B-B and dCC-class
l properties
ti with
ith solid
lid construction,
t ti flfloor plans
l and
d
upgradeable to B+ and C+-class
12
How We Buy Right

Measure Twice, Cut Once
• Acquisition team
– Combined experience of 180 years
• Thorough due diligence

– Comprehensive market studies
– Measure real estate tax reassessment risk
– Property Management input
– Environmental research
– Construction and cap ex projections
13
6
Apartment Units Acquisition History
Discriminating Buyer, Only Buy the Best Fit
• 2000 through 2010 YTD

– Units submitted for review 1,543,272
– Units actually reviewed 866 153
866,153
– Offers issued 176,599 (20% of units reviewed)
– Units closed 24,780 (13% of offers issued)
• Closed 90 properties
– $2.3 billion
– Average price per unit $92,000
• Average annual acquisitions $230mm
14
Home Properties is the Go-to Buyer

Partner of Choice
• Major East Coast buyer of older properties

• Largest OP Unit player in industry
• Build long-term relationships
• Home Properties name and reputation
• Employee-friendly approach
15
7
Inventory in Target Markets
Tremendous Acquisition Growth Potential
Estimated Current HME

B/C-Class Market
Target Region Apartments* HME Owned Penetration
D.C. Metro 434,000 9,911 2.3%

Baltimore 166,000 8,582 5.2%
Philadelphia 267,000 5,603 2.1%
Northern New Jersey 229,000 3,578 1.6%
Long Island 435,000 3,390 0.8%
Boston 399,000 2,382 0.6%
Chicago 628,000 2,242 0.4%
Totals 3 044 000
3,044,000 35 688
35,688 1 2%
1.2%
* Source: Witten Advisors
16
Recent Example: Westbrooke and Middlebrooke

Buy Right – Rehab – Enhance Value
Acquired 4/1/2010
Occupancy at acquisition 88.0%
p
Occupancy y 9/1/2010 94.0%
Westbrooke Apartments
Westminster MD
Westminster,
110 Units
Middlebrooke Apartments
Westminster, MD
208 Units
17
8
2010E Net Acquisitions as % of Market Cap
Among the Growth Leaders
Market Cap2
10E Acq1 10E Disp1 Net Acq/Disp 6/30/2010 Net Acq/Disp as
($ mil) ($ mil) ($ mil) ($ mil) % Market Cap
HME 330 0 330 4,709 7.01%
AIV 120 -250 -130 8,117 -1.60%

AVB 70 -190 -120 12,837 -0.93%
BRE 80 -120 -40 4,410 -0.91%
CPT 130 -100 30 6,100 0.49%
CLP 50 -10 40 3,354 1.19%
EQR 1,250 -850 400 23,222 1.72%
ESS 150 -30
30 120 5 365
5,365 2 24%
2.24%
MAA 250 -30 220 3,355 6.56%
PPS 0 0 0 2,376 0.00%
UDR 80 0 80 6,929 1.15%
Source:
(1) Green Street Advisors “Residential REITs August ‘10 Update” August 20, 2010 – net acquisitions 2010E
(2) Citigroup Global Markets “Weekly REIT and Lodging Strategy” August 20, 2010 – market cap
18
2010E Net Acquisitions as % of Market Cap(1)

Among the Growth Leaders
% 7.0
7 6.6
6
5
4
3
2.2
2 1.7
1.2 1.2 (2)
0.9
1 0.5
0.0
0
-11
-0.9 -0.9
-2 -1.6
HME MAA ESS EQR CLP UDR Average CPT PPS BRE AVB AIV
(1)
Apartment REITs with market cap >$1B
(2)
Average excluding HME
Source: Green Street Advisors “Residential REITs August ‘10 Update” August 20, 2010 – net acquisitions 2010E;
Citigroup Global Markets “Weekly REIT and Lodging Strategy” August 20, 2010 – market cap
19
9
Street Level Observation
The Right Focus on B/C-Class Opportunities
• Cap rates
– Dropping recently, but steady now
– Very property and submarket specific
– General differential of 25-75 bps between A- and B/C-class
– Cap rate range in our markets of 5.75% up to 6.5%
• Portfolio average of approximately 6%
• Deal flow
– Strong B/C-class opportunities
– Still plenty of capital chasing deals
• A-class: 30 to 40 bidders
• B/C-class: fewer bidders
20
Acquisitions Strategy
Seizing Only the Right Opportunities
• Excellent reputation for closing, which generates transaction network

• B/C-class acquisition and repositioning strategy generates positive results
• Acquisition engine roaring and driving NOI growth
21
10
Property Management
Scott Doyle
Senior Vice President
Strategic Property Management
W ’ Raised
We’ve R i d th
the B
Bar
22
Road to NOI Growth
Real
Estate
Marketing
Technology
Operations
NOI
23
11
Property Repositioning
• Reposition strategy tailored to each community based on

– Current physical condition
– Submarket opportunities
– Future target demographic
– Maximization of return
• Target a minimum of 10% initial unlevered yield on revenue-enhancing

interior renovations
24
24
Property Repositioning - Before
25
12
26
27
13
28
Example of Property Repositioning
$
ent
Monthly Apartment Re
Apartment Quality
29
14
Braddock Lee Apartments, Alexandria, VA
$ Renovated vs. Unrenovated Rent
30
Future Potential from Unit Upgrades
Property Age # Units* % Not Upgraded

20+ years 35,290 42%
10-20 years 1,826 97%
<10 years 1,367 0%
Total 38,483 43%
* Includes 1,222 units scheduled to close by 9/30/2010

31
15
Varying Demographics
Virginia Village
• Primarily 30s & 40s Alexandria, VA submarket
• Families with children
• g school education
High
• English is 2nd language
• Blue collar workers
• Pay rent with money order
• Renter by necessity; can’t
afford a house
Braddock Lee
• Wide variety of ages
• Very few children
• Highly educated
• Professional jobs
• Pay rent online and with
checks
• Renter by choice; highly
mobile due to career
32
Road to NOI Growth
Real • Flexible approach allows us to

Estate
capitalize on each unique
Marketing repositioning opportunity
• Over 40% of current portfolio
available for interior upgrade
Technology
Operations
NOI
33
16
Vice President
Marketing
Les Eisenberg
Vice President
Strategic Business Systems
Keith Knight
Vice President
Capital Improvements and
National Accounts
34
Customer Lifecycle
Personalized Communication & Technology
Reach Acquisition Conversion Retention Loyalty
• Advertising
• Search
engines
• Social media
• Mobile
DRIVING NOI RESULTS
35
17
Mobile
Available Whenever, Wherever
www.MtVernonSquareVA.com
36
Advertising
Driving Down Costs
O
Over $750K S
Saved!
d!
37
18
Customer Lifecycle
• Advertising • Contact
• Search Center
engines • Web 2.0
• Social media • Prospect
• Mobile program
DRIVING NOI RESULTS
38
Web 2.0
Enhancing Interactive Communication
39
19
Prospect Program
Making a Difficult Decision Easier
40
Customer Lifecycle
• Advertising • Contact • Consultative

Center sales
• Search
engines • Web 2.0 • Online
• Prospect reservations
• Social media
program
• Mobile
DRIVING NOI RESULTS
41
20
Online Reservations
Streamlining the Process for the Prospect
VaultWare Reservations per Property
35
30
25
20
15
10
Sep‐09 Oct‐09 Nov‐09 Dec‐09 Jan‐10 Feb‐10 Mar‐10 Apr‐10 May‐10 Jun‐10 Jul‐10 Aug‐10
Home Properties Major ILS Aggregate
Market Index Public REIT Index
42
Customer Lifecycle
• Advertising • Contact • Consultative • Customer

Center sales service
i
• Search
engines • Web 2.0 • Online • Social media
• Social media • Prospect reservations
• Customer
program Relationship
• Mobile
Management
• Resident
portals
DRIVING NOI RESULTS
43
21
Customer Relationship Management
Welcome Home!
44
Resident Portals
Building a Sense of Community
45
22
Customer Lifecycle
• Advertising • Contact • Consultative • Customer • Choice

C t
Center sales
l service
i
• Search • Our Pledge
engines • Web 2.0 • Online • Social media • Referrals
reservations
• Social media • Prospect • Customer
• Mobile
Management
• Resident
portals
DRIVING NOI RESULTS
46
Customer Lifecycle
• Advertising • Contact • Consultative • Customer • Choice

C t
Center sales
l service
i
• Search • Our Pledge
engines • Web 2.0 • Online • Social media • Referrals
reservations
• Mobile program Relationship
Management
• Resident
portals
Over 3x Lowest 27% of

16% Cost Personalized Reservations Turnover Leases from
Reduction Interaction vs. Peers in Sector Referrals
47
23
Vice President
Marketing
Les Eisenberg
Vice President
Keith Knight
Vice President
National Accounts
48
Customer Lifecycle
Understanding the Pricing Puzzle

• Choice
i
• Search
• Our Pledge
reservations • Referrals
• Mobile
Management
• Resident
• LRO portals
• Analytics
FORWARD-LOOKING STRATEGY
Maximizing NOI
49
24
Customer Lifecycle
Custom Alerts LRO
50
Customer Lifecycle
Custom Pricing Snapshots
51
25
Customer Lifecycle
Custom Upgrade Pricing Analysis
723 Saddle Brooke Apartments
2A11 256 Units

Rented Units
H/(L)
# Avg. Base
Rented Days Units in Avg. Rental $ H/(L) Rent Target
Amenity Code Units Avail Days Rate Units Premium
BASE UNIT 53 45 --- $918 --- $0
BATH 2 37 -8 $952 $34 $30
NUPK 16 48 3 $1,003 $85 $80
PREM 7 30 -15 $1,068 $150 $136
Total Upgraded Units 25 42 -3 $1,017 $99 ---
Total All Units 78 44 --- $950 --- ---
52
Customer Lifecycle
Understanding the Pricing Puzzle

• Choice
i
• Search
• Our Pledge
reservations • Referrals
• Mobile
Management
• Resident
• LRO • Lease terms portals
teg ated
• Integrated
• Analytics • Price
Pi
renewals
exceptions
FORWARD-LOOKING STRATEGY
Maximizing NOI
53
26
Customer Lifecycle
2010 Price Improvements
%
3.5
4 3.1
2.6
3 2.3
2.0
1.6 1.5 1.6 3.2
2
1 1.7
1.3
0
-1 -0.3
-2
-3 -1.9
-2.7
-44
-5
-5.0 -4.8
-6
Jan Feb Mar Apr May Jun Jul Aug
2010 Renewal Increases 2010 New Lease vs. Old Lease
54
Vice President
Marketing
Les Eisenberg
Vice President
Keith Knight
Vice President
National Accounts
55
27
Execution
• Design team
– Exterior finishes
– Landscape design
– Interior Design/decorating
– “3D” color renderings
– Finish and design standards
• Regional construction teams

– Depth of understanding of property management
– Experience in new apartment construction and renovations
– Established pool of local trades
56
Property Repositioning – Before

Curb Appeal
57
28
Property Repositioning – After
Enhancing Curb Appeal Increases Traffic
58

Property Lost to Landscaping
59
29
Curb Appeal & Reduced Maintenance
60

Asphalt Parking Jungle
61
30
Reducing Hardscape
62

Existing Community Room
63
31
Creating Competitive Advantage
64

Negative Impact of Neglected Amenities
65
32
Enhancing Selling Features
66

Prohibitive Environment
67
33
Enabling Ancillary Revenue
68

Lack of Visual Appeal
69
34
Elegant Entrance Features
70

Common Area Hallway
71
35
Property Repositioning – Design
Plan - Design - Execute
72

Welcome Home!
73
36
Closed-in Kitchen
74

10.4% ROI
75
37
Night and Day
76

End of Life Cycle
77
38
End of Life Cycle
78

12.2 % ROI
79
39
Outdated Kitchen
80

11.5% ROI
81
40
Traditional Upgrade
82
Transitional I Upgrade
83
41
Transitional II Upgrade
84
Contemporary Upgrade
85
42
Property Repositioning Execution
86
Property Repositioning – C.A.D. / C.G.I.

Build It Right The First Time
87
43
Financial Improvement Initiatives
Revenue Expense CapEx
•Revenue sharing •Supplies agreement • Supplies agreement

•Advertising fees •Utility conservation • Appliances
•Utility billing fee •Trash • Cabinets
•Renter’s insurance • Carpeting
•Automation
$1.6mm $1.1mm $1.9mm

NOI $2.7mm
88
Development
Don Hague
Senior Vice President, Development
Development Strategy – It
It’ss Working
89
44
Development Strategy
It’s Working
• Focus on Mid-Atlantic Region
• Low-risk approach with limited pre-construction investment

– Emphasis on transit-oriented developments close to shopping,
entertainment, education and work opportunities
– Density/adjacent opportunities on existing properties
– Acquisition of entitled land
• Target average unlevered stabilized yield of 7.00% and minimum

12 0% IRR
12.0%
90
Track Record Since 2004
• Began ground-up development in 2004

• To date, 885 units delivered
• Current pipeline of 2,861 new units
• Potential to grow to 4,355 new units
• Assembled experienced go-to team with key capabilities
• Delivered first A-class units in 2010
91
45
The Courts at Huntington Station
Location Alexandria, VA
Region Washington, D.C.
Units 421
Start date 1Q 2008
Initial occupancy 2Q 2010
Completion 2Q 2011
Total cost $127mm
Cost per unit $302K
92
1200 East West Highway
Location Silver Spring, MD

Units 247
Retail square footage 8 900
8,900
Start date 2Q 2007
Initial occupancy 1Q 2010
Total cost $87mm
Cost per apartment $332K
93
46
Ripley Street
Entitled Land
94
Ripley Street
Entitled Land

Units 368
Retail square footage 5,100
Possible start Summer 2011
Features - 800 feet to new Transit Center
- 3 blocks to pedestrian shopping mall,
Whole Foods, American Film Institute
- Tallest building in central business district
95
47
Cobblestone
Entitled Land
96
Cobblestone
Entitled Land
Location Fredericksburg, VA
Units 312
Possible start 1Q 2011
Features - 3 blocks to Virginia Railway Express/
Amtrak Station
- 5 blocks to historic Main Street/Old Town
- Only true A-class in market at only slightly
higher price point than existing apartments
97
48
Falkland North Update
Unlocking Land Value
Ripley
1200
East West
98
Falkland North Update


Units Up to 1,200 apartments, 65,000 square feet retail
Possible start 2 to 3 years
99
49
Seminary Hill / Towers
100
Our Strategy is Working
• Strong, experienced development team

• Leveraging expertise in Mid-Atlantic markets
• Low-risk development strategy
– Density/adjacent opportunities
– Entitled land
– Limited pre-construction capital commitment
• Proven successes
– Liberty Commons
– Trexler Park West
– 1200 East
E t West
W t Highway
Hi h
– The Courts at Huntington Station
• Strong pipeline potential of 4,355 new units
101
50
Concluding Remarks
Ed Pettinella
President and
Chief Executive Officer
The Right Focus
102
The Right Focus

Higher Earnings Growth
2011 Projected
FFO Impact
• Refinancing
g opportunities
pp p
produce lower borrowing
g costs ……10 cents
• B/C-class acquisition deal flow is strong ………………….……. 5 cents
• Marketing, technology, property operations drive NOI growth

– Tailored approach
– Pricing optimization
– Ancillary revenue/cost reduction ………………….……….... 3 cents
The amounts above represent the 2011 impact the Company expects solely from these three specific items. This information is not intended to
be construed as guidance for 2011, which may include offsetting factors that may affect 2011 earnings results. The Company expects to
provide 2011 guidance in its earnings release for the fourth quarter and full year 2010.
103
51
The Right Focus
• Strong capital structure – We’re prepared

• Seizing accretive acquisitions in prime apartment markets – We buy right
• Maximizing repositioning business model – We’ve raised the bar
– Tailored approach to resident communications & value enhancements
– Strategic use of technology
– Pricing power + insightful analytics = optimized revenue
– Increased ancillary revenue and reduced costs
• Development strategy – It’s working
104
52

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Welcome

The Right Focus

2010 Guidance Update

4Q 2009 1Q 2010 2Q 2010 August 2010

Spread 7.6% 5.8% 2.5% 0.3%

Strong Capital Structure

Equity 53% Debt 47%

Fixed Rate Debt

$4.9 BILLION TOTAL MARKET CAPITALIZATION

Balance sheet as of 6/30/2010 based on recent stock price of $52.79 on 9/3/2010

600 Total Debt Maturities

• High barrier-to-entry, high growth, close-in suburban markets of

How We Buy Right

• Thorough due diligence

• 2000 through 2010 YTD

• Average annual acquisitions $230mm

Home Properties is the Go-to Buyer

• Major East Coast buyer of older properties

Estimated Current HME

D.C. Metro 434,000 9,911 2.3%

* Source: Witten Advisors

Recent Example: Westbrooke and Middlebrooke

HME 330 0 330 4,709 7.01%

AIV 120 -250 -130 8,117 -1.60%

2010E Net Acquisitions as % of Market Cap(1)

• Excellent reputation for closing, which generates transaction network

Road to NOI Growth

• Reposition strategy tailored to each community based on

• Target a minimum of 10% initial unlevered yield on revenue-enhancing

Property Repositioning - Before

Property Repositioning - Before

Example of Property Repositioning

$ Renovated vs. Unrenovated Rent

Future Potential from Unit Upgrades

Property Age # Units* % Not Upgraded

* Includes 1,222 units scheduled to close by 9/30/2010

Road to NOI Growth

Real • Flexible approach allows us to

Reach Acquisition Conversion Retention Loyalty

DRIVING NOI RESULTS

Reach Acquisition Conversion Retention Loyalty

DRIVING NOI RESULTS

Reach Acquisition Conversion Retention Loyalty

• Advertising • Contact • Consultative

DRIVING NOI RESULTS

Reach Acquisition Conversion Retention Loyalty

• Advertising • Contact • Consultative • Customer

DRIVING NOI RESULTS

Reach Acquisition Conversion Retention Loyalty

• Advertising • Contact • Consultative • Customer • Choice

DRIVING NOI RESULTS

Reach Acquisition Conversion Retention Loyalty

• Advertising • Contact • Consultative • Customer • Choice

Over 3x Lowest 27% of

Reach Acquisition Conversion Retention Loyalty

• Advertising • Contact • Consultative • Customer

2A11 256 Units

Reach Acquisition Conversion Retention Loyalty

• Advertising • Contact • Consultative • Customer

• Regional construction teams

Property Repositioning – Before

Property Repositioning – Before

Property Repositioning – Before