As with the other REITs that reported first quarter earnings last week, Rochester, N.Y.-based Home Properties had yet another stellar financial performance to start out 2012. The company announced that first quarter results were the best for core property NOI growth that it has seen in the past five years. Improved occupancy and higher rental rates accounted for the increases in NOI and revenue by 5.1 percent and 4.6 percent, respectively. By the end of the quarter, new leases were up 1.8 percent and renewals grew by 3.8 percent.
As the company gets more aggressive with rent increases, it has seen an increase in turnover rate across its portfolio. “With job changes we’ve got people who are moving down from two bedrooms to one bedroom, downsizing their households,” said Scott Doyle, senior vice president of strategic property management. “They are downsizing their households to economize and save money as we get more aggressive with our rents,” he added.
Properties in Philadelphia, Boston, Washington, D.C. and Chicago were the strongest for Home Properties during the first quarter. There were no acquisitions or dispositions during the first three months of the year, but Home Properties did have some activity in their development pipeline. According to CEO Ed Pettinella, the company will once again resume some disposition activity during 2012, including exiting the Florida market.
Outlook for the remainder of this year for the company is positive as the spring leasing season gets underway. Currently, physical occupancy is listed at 95.5 percent, up 0.2 percent from the fourth quarter of 2011.