"Despite pressure on rental revenue, the Company's focus on cost cutting contributed to Funds From Operations that was four cents higher than both our own and analysts' expectations for the second quarter," said Edward J. Pettinella, Home Properties President and CEO. "Our ongoing focus on expenses will enable Home Properties to outperform the sector as we did in the last recession."

Earnings per share ("EPS") for the quarter ended June 30, 2009 was $0.18, compared to $0.26 for the quarter ended June 30, 2008. The $0.08 decrease in EPS is primarily attributable to a $2.9 million decrease in income from continuing operations combined with a $0.8 million decrease in income from discontinued operations. EPS for the six months ended June 30, 2009 was $0.52, compared to $1.05 for the six months ended June 30, 2008. The year-over-year decrease of $0.53 per share is primarily attributable to a $16.3 million decrease in gain on disposition of property. The sale of seven properties in the first quarter of 2008 produced a gain of $29.8 million. Three properties were sold in the first quarter of 2009 for a gain of $13.5 million.

For the quarter ended June 30, 2009, Funds From Operations ("FFO") was $37.9 million, or $0.84 per share, compared to $40.2 million, or $0.89 per share, for the quarter ended June 30, 2008. Second quarter 2009 FFO of $0.84 per share was $0.04 above both the midpoint of the guidance range provided by management and analysts' mean estimate, as reported by Thomson, and equates to a 5.4% decrease from the prior year. FFO for the six months ended June 30, 2009 was $1.63 per share, compared to $1.66 in the year-ago period. A reconciliation of GAAP net income to FFO is included in the financial data accompanying this news release.

Second Quarter Operating Results

For the second quarter of 2009, same-property comparisons (for 104 "Core" properties containing 35,360 apartment units owned since January 1, 2008) reflected a decrease in total revenues of 0.2% compared to the same quarter a year ago. Net operating income ("NOI") decreased by 1.4% from the second quarter of 2008. Property level operating expenses increased by 1.7% for the quarter, primarily due to increases in repairs and maintenance and personnel, which were partially offset by a reduction in insurance, natural gas heating costs and property management general and administrative costs.

Average physical occupancy for the Core properties was 95.1% during the second quarter of 2009, compared to 95.0% during the second quarter of 2008. Average monthly rental rates increased 0.6% compared to the year-ago period.

On a sequential basis, compared to the 2009 first quarter results for the Core properties, base rental revenue (excluding utility reimbursement) was up 0.7% in the second quarter of 2009, expenses were down 9.8%, and net operating income was up 3.8%. Average physical occupancy increased 0.7% to 95.1%, and total revenue, including utility reimbursements, was 2.1% lower. The total revenue decrease in the second quarter compared to the first quarter was due to the typical seasonality from lower heating cost reimbursements. The expense decrease represented typical seasonality from lower natural gas and snow removal costs realized between the first and second quarters.

Physical occupancy for the 1,029 net apartment units acquired/developed between January 1, 2008 and June 30, 2009 (the "Recently Acquired Communities") averaged 92.0% during the second quarter of 2009, at average monthly rents of $1,174.

Year-to-Date Operating Results

For the six months ended June 30, 2009, same-property comparisons for the Core properties reflected an increase in total revenue of 0.7% and expenses of 2.2%, resulting in a 0.4% decrease in net operating income compared to the first six months of 2008. Property level operating expenses increased primarily due to increases in repairs and maintenance, personnel and real estate taxes, which were partially offset by a reduction in advertising, property insurance and property management general and administrative costs.

Average physical occupancy for the Core properties was 94.7% during the first six months of 2009, down from 95.0% a year ago, with average monthly base rents rising 1.2%.

Acquisitions/Dispositions

There were no acquisitions during the second quarter of 2009, and there are currently no plans to acquire properties for the remainder of the year.

Capital Markets Activities

As of June 30, 2009, the Company's ratio of debt-to-total market capitalization was 59.9% (based on a June 30, 2009 stock price of $34.10 to determine equity value), with $104 million outstanding on its $140 million revolving credit facility and $6.5 million of unrestricted cash on hand. Based on yesterday's closing stock price of $40.76, the price level at which the Company's stock has been trading more recently, the debt-to-total market capitalization would be 55.6%. Total debt of $2.3 billion was outstanding, at rates of interest averaging 5.4% and with staggered maturities averaging approximately six years. Approximately 93% of total indebtedness is at fixed rates. Interest coverage averaged 2.3 times during the quarter, and the fixed charge ratio averaged 2.1 times for the quarter.

The Company did not repurchase any of its common shares during the second quarter. As of June 30, 2009, the Company has Board authorization to buy back up to approximately 2.3 million additional shares of its common stock or Operating Partnership Units, although it has no current plans to do so.

Outlook

For 2009, the Company has reconfirmed the $3.16 midpoint of its guidance while tightening the range to $3.10 to $3.22 per share from $3.07 and $3.25. This conservative guidance range reflects management's current assessment of economic and market conditions for the balance of the year.

The quarterly breakdown for the balance of 2009 guidance on FFO per share results is as follows: Third quarter $0.74 to $0.80; fourth quarter $0.73 to $0.79.

Dividend Declared

On August 5, 2009, Home Properties declared a regular cash dividend on the Company's common shares of $0.67 per share for the quarter ended June 30, 2009. The cash dividend is payable on August 26, 2009 to shareholders of record on August 17, 2009 and is equivalent to an annualized rate of $2.68 per share. The current annual dividend represents a 6.6% yield based on yesterday's closing price of $40.76. Home Properties' common stock will begin trading ex-dividend on August 13, 2009.

Supplemental Information

The Company produces supplemental information that includes details regarding property operations, other income, acquisitions, sales, market geographic breakdown, debt and new development. The supplemental information is available via the Company's Web site through the "Investor" section, e-mail or facsimile upon request.

Second Quarter 2009 Earnings Conference Call

The Company will conduct a conference call and simultaneous webcast tomorrow at 11:00 AM Eastern Time to review and comment on the information reported in this release. To listen to the call, please dial 800-954-0647 (International 212-231-2901).