How did you originally start Home Leasing? 
To begin, I have a twin brother, Norm, and it is a good thing because as twins, we were each given only one-half a brain. Just kidding! We have been 50/50 partners from 1967 through 2005. We have shared almost everything and I admit that some years he was more productive than I.

In 1969 at age 35, Norm was the treasurer of a manufacturing company and I was in the computer business. We had accumulated 27 rental units on the side and this was such a big business, I decided to go full time. At first our two families shared Norm's salary. However after two years, the business could support both of us so Norm started full time.

During the next 25 years we did just about everything in real estate, mostly in Rochester. This included publishing the Rochester Home and Apartment Guide; being homebuilders; having a real estate brokerage company; and building and operating retail centers, office buildings, and medical buildings. Our largest project is the master-planned community of Gananda that now has about 2,000 homes, and includes Blue Heron Hills Country Club and the Gananda public school system.

We had very little money, so most projects were funded by limited partnerships where Home Leasing was the general partner and usually about 30 limited partners provided the equity funding for each property. Or partners generally did very well so we were able to continually attract new partners and grow. We owe so much to these investors that Norm and I knew personally and trusted us.

In 1992 we had about 400 partners and most lived in Rochester. We were seeking a way to provide for their liquidity and decided to pursue the possibility of becoming a public company. We had no idea of the difficulty, but after a couple of years we were accepted by a group of Wall Street firms headed by Salomon Brothers. Salomon Brothers required us to limit our public company to apartments, which was very wise but difficult for us at the time. I will never forget July 28, 1994 when the first shares of Home Properties were traded on the New York Stock Exchange and our offering price of $19 per share held. In about a week we received a check for $100 million. Approximately $30 million went to our limited partners and the balance was available to build our apartment business.
 

"Our largest project is the master-planned community of Gananda that now has about 2,000 homes, and includes Blue Heron Hills Country Club and the Gananda public school system."

You took a family-run business public. Now you answer to shareholders. Talk about changes, advantages, and challenges.
Of course the biggest change for us was access to capital. If we had excellent investment opportunities we could sell more stock. However, we only did this when the new investment opportunities would lift all boats. By this I mean improving the financial results for the existing shareholders as opportunities for new shareholders.

At first the issue of answering to shareholders was not that big a shock because before we answered to our limited partners. One big difference it that it was less personal as about 70% of Home Properties stock was held by institutions and we did not know most of the individual shareholders. As we have grown, investor relations has become a major activity.

Today, with Sarbanes Oxley, operating a public company is quite different. With the expense of Sarbanes Oxley, it would have been impossible to start out with such a small company as we formed in 1994.

One of the challenges of being a public company is to figure out how to take risks and grow while still having acceptable quarterly reports. I think we have always done well in this area and our current stock price in the $60s demonstrates that Home Properties is doing very well today with Ed Pettinella's leadership.
 
Hiring family members has its benefits and downsides as well. Could you share some advice from the experience?
It is hard to imagine anything more rewarding than to have a family member achieve great success in a business that you started and we have several examples. During the past almost 30 years, Norm and I have had 16 immediate family members in our business. Many have chosen to go on to greener pastures. Today three remain in Home Properties and six are in our private businesses that are discussed elsewhere.

During the first several years we held annual family business meetings, which all family members attended. This was boring to some but I think it was a good idea. However, probably the best decision was that we tried very hard to treat family and non-family members equally. This might seem like an obvious idea but it is hard to execute as it resulted in rewarding some family member more than other family members and this is tough for parents.

Home Properties has grown quickly. Would you share some strategies for managing growth?
We sure did grow quickly especially in the late nineties when we grew as much as 50% annually. We started Home Properties in 1994 with a market capitalization of about $130 million and today that has grown to almost $5 billion. We started as a public company with less than 4,000 apartment units and today we have 39,000.

I managed the property management while Norm's primary focus was on acquisitions.

For me the strategy that helped the most was "Servant Leadership." By that I mean "seeking first to serve and then to be served." This is the opposite of "self serving" and applies very well to our decentralized and service-oriented apartment management business. For me this means thinking first about how to help those reporting to me to become more effective before thinking about my own tasks. Of course this also requires a high level of trust.

Obviously for everyone, this means putting our customers first. One of the primary elements of the Home Properties mission statement is to "enhance the quality of life of our residents."

Your company has assets in many states, yet you choose to live in Rochester. What keeps you here?
Home Properties recently announced that it is selling all apartment communities in Rochester, Buffalo and Syracuse. Many of these are original properties that Norm and I have known very well for over ten years so it was a bit difficult for us. However, it was the best decision for our company as our company strategy is to invest primarily in higher growth areas in larger cities along the east coast.

What keeps us here? There is a lot that keeps us here. First, our family lives here and for me that includes five children and 13 grandchildren. Secondly, the headquarters of Home Properties is here and the plan is to stay at its current location at Clinton Square. Home Properties has about 170 employees here and it is hard to imagine moving and losing all that experience and leadership. Thirdly, both Norm and I have personal real estate businesses here. Finally, I love living in Rochester for more reasons than I can begin to mention.

What is the best advice you were ever given?
Clearly we owe a lot to our mother. We lived on a farm in the town of Ontario. My father died when we were eight years old. Our mother sold the farm and with three small children she built a dairy where farmers brought their milk. She pasteurized and bottled the milk and delivered it to homes in the surrounding area. She was very successful and some of her teachings have been a big help. Here are some examples:
● Make your work a pleasure
● Nothing ventured, nothing gained
● Think positively
● Every dark cloud has a silver lining
● Say your prayers every night before you go to sleep

Even though you serve on the board of directors as co-chair, what more will you do in retirement after Dec 2006?
Norm and I plan to continue as co-chairmen of Home Properties for some time and I am working hard on new development activity for the company. Also, at the beginning of this year Norm and I split up our private real estate business. This was also emotional but best for estate planning purposes. Norm's business, named Broadstone Properties, owns and manages retail, office and medical properties. My company got the Home Leasing name and is focused on affordable rental housing and subdivision development. Our families are active in both of these businesses, which we hope will grow.

As you can see, at age 71, Norm and I expect to remain active for a long time.

BSM