SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 24, 2006
HOME PROPERTIES, INC.
(Exact name of Registrant as specified in its Charter)
MARYLAND 1-13136 16-1455126
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification Number)
850 Clinton Square, Rochester, New York 14604
www.homeproperties.com
Address of principal executive offices and internet site)
(585) 546-4900
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On October 24, 2006, the Registrant and Home Properties, L.P., a New York
limited partnership of which the Registrant is the sole general partner (the
"Operating Partnership"), entered into an Indenture with Wells Fargo Bank, N.A.,
as trustee (the "Indenture") pursuant to which the Operating Partnership issued
$175,000,000 aggregate principal amount of 4.125% Exchangeable Senior Notes due
2026 (collectively the "Notes"). The Notes are fully and unconditionally
guaranteed by the Registrant. The Notes were sold, pursuant to a purchase
agreement, dated October 18, 2006, between the Operating Partnership, the
Registrant and Merrill Lynch & Co, Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Bear, Stearns & Co, Inc. (the "Initial Purchasers") in a
private placement to qualified institutional buyers pursuant to the exemption
from the registration requirements of the Securities Act of 1933, as amended
(the "Act"), afforded by Section 4(2) of the Act and Rule 144A under the Act.
The Initial Purchasers have notified the Registrant and the Operating
Partnership that they have exercised their option under the purchase agreement
to purchase an additional $25,000,000 principal amount of the Notes. The closing
of the sale of the additional notes is expected to occur on October 30, 2006.
Subject to the terms of the Indenture, holders may exchange Notes at
certain times and upon the occurrence of certain events for cash in the
principal amount and, at the option of the Operating Partnership, cash or shares
of the Registrant for the exchange value in excess of the principal amount of
the Notes. Notes initially may be exchanged at a rate of 13.6357 shares of the
Registrant's common stock per $1,000 principal amount of Notes (equivalent to an
initial exchange price of $73.34 per share of the Registrant's common stock).
Prior to November 6, 2011, the notes will not be redeemable at the option of the
Operating Partnership, except to preserve the status of the Registrant as a
REIT. On or after November 6, 2011, the Operating Partnership may redeem all or
a portion of the Notes at a redemption price equal to the principal amount plus
accrued and unpaid interest (including additional interest), if any.
Note holders may require the Operating Partnership to repurchase all or a
portion of the Notes at a purchase price equal to the principal amount plus
accrued and unpaid interest (including additional interest), if any, on the
notes on November 1, 2011, November 1, 2016 and November 1, 2021, or after the
occurrence of certain specified events. The Operating Partnership expects to use
approximately $58 million of net offering proceeds to fund the repurchase by the
Registrant, concurrently with the closing, of shares of the Registrant's common
stock. Approximately $70 million of net proceeds will be used to repay the
outstanding indebtedness under the Registrant's revolving credit facility and
the balance of proceeds (including the net proceeds of the sale of the
additional Notes) will be used for general corporate purposes.
A copy of the Indenture is filed herewith as Exhibit 1.
In addition, the Registrant and the Operating Partnership entered into a
Registration Rights Agreement, dated October 24, 2006 (the "Registration Rights
Agreement"), with the Initial Purchasers pursuant to which the Registrant has
agreed to file a registration statement with respect to the shares of common
stock which, at the option of the Operating Partnership, may be issued upon
exchange of the notes for all or a portion of the exchange value in excess of
the principal amount of the Notes. If the registration statement is not filed on
a timely basis, or does not become effective within the specified time periods,
and certain other circumstances, up to 0.50% per annum of additional interest
will accrue on the Notes until the failure is cured. A copy of the Registration
Rights Agreement is filed herewith as Exhibit 2.
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
As described under Item 1.01 above, on October 24, 2006, the Operating
Partnership issued $175,000,000 of its $4.125% Exchangeable Senior Notes due
2026. On October 24, 2006, the Registrant issued its full and unconditional
guarantee of the obligations of the Operating Partnership on the Notes.
Additional terms of the Notes are described under Item 1.01 above, and include
the rights of the holders to exchange the Notes on certain dates and upon the
occurrence of certain events for cash in the principal amount and, at the option
of the Operating Partnership, cash or shares of the Registrant for the exchange
value in excess of the principal amount of the Notes. In addition, as described
above, the holders may require the Operating Partnership to repurchase all or a
portion of the Notes at a purchase price equal to the principal amount plus
accrued and unpaid interest (including any additional interest), if any, on the
notes on certain dates and upon the occurrence of certain events. The Operating
Partnership may not redeem the Notes prior to November 6, 2011, except to
preserve the status of the Registrant as a REIT. On or after November 6, 2011,
the Operating Partnership may redeem all or a portion of the Notes at a
redemption price equal to the principal amount plus accrued and unpaid interest
(including additional interest), if any.
The other terms and conditions of the Notes are described in the Indenture
which is filed herewith and incorporated by reference herein.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits filed herewith.
Exhibit 1. Indenture, dated October 24, 2006, between Home Properties,
Inc., Home Properties, L.P. and Wells Fargo, Bank, N.A., as
trustee, including the form of 4.125% Exchangeable Senior Notes
due 2026 of Home Properties L.P. and the Guarantee of Home
Properties, Inc. with respect thereto.
Exhibit 2. Registration Rights Agreement, dated October 24, 2006,
between Home Properties, Inc., Home Properties, L.P. and Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated
and Bear, Stearns & Co. Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: October 25, 2006 HOME PROPERTIES, INC.
(Registrant)
By: /s/ David P. Gardner
---------------------------------------
David P. Gardner
Chief Financial Officer and
Executive Vice President
EXHIBIT INDEX
Exhibits filed herewith
Exhibit 1. Indenture, dated October 24, 2006, between Home Properties, Inc.,
Home Properties, L.P. and Wells Fargo, Bank, N.A., as trustee, including
the form of 4.125% Exchangeable Senior Notes due 2026 of Home Properties
L.P. and the Guarantee of Home Properties, Inc. with respect thereto.
Exhibit 2. Registration Rights Agreement, dated October 24, 2006, between Home
Properties, Inc., Home Properties, L.P. and Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated and Bear, Stearns & Co. Inc.