Zacks_Analysts' Blog : Home Properties to Raise Funds - Analyst Blog

Home Properties Inc. (HME), a multifamily real estate investment trust (REIT), has recently announced its decision to offer 5.25 million common shares to raise cash and increase liquidity. The company will also grant the underwriters an option to purchase an additional 0.8 million shares to cover any over-allotments.

BofA Merrill Lynch, the investment banking and wealth management division of Bank of America Corporation (BAC) is acting as the sole book-running manager for the offering.

Home Properties intends to utilize the proceeds from the secondary offering to fund both its organic and inorganic growth, as well as general corporate purposes, including repayment of debt. The company typically invests $200 million - $300 million annually to acquire multifamily communities and fuel its growth engine.

Home Properties primarily operates along the East Coast of the U.S. The key target markets of the company include New York-Long Island/New Jersey, Boston, Washington D.C./Northern Virginia, Baltimore, Philadelphia, and Chicago.

The company largely focuses on the relatively stable markets in the suburban region of major metropolitan areas that have significant barriers to new construction, a favorable supply/demand relationship, high single-family home prices, stable job growth, and reduced vulnerability to economic downturns.

We presently have a ‘Neutral’ recommendation on Home Properties, which currently has a Zacks #3 Rank that translates into a short-term ‘Hold’ rating and indicates that the stock is expected to perform in line with the overall U.S. equity market for the next 1–3 months.