American Land Lease Announces First Quarter 2008 Results
Strong Property Operating Results Impacted by Lower New Home Sales Results
Posted on Fri, May. 09, 2008
CLEARWATER, Fla. --
American Land Lease, Inc. (NYSE:ANL) today released first quarter
results for 2008.
Summary Financial Results
First Quarter
-- Diluted Earnings Per Share ("Diluted EPS") were ($0.19) for
the three-month period ended March 31, 2008, compared to $0.16
for the same period one year ago, a decrease of 218.8% on a
per share basis. The decrease includes previously announced
prepayment costs on debt of $0.23 per share.
-- Funds from Operations ("FFO"), a non-GAAP financial measure
defined on page 12 of this press release, were ($230,000) or
($0.03) per diluted common share, for the quarter, compared to
$2.7 million, or $0.30 per diluted common share, for the same
period one year ago, a decrease of 110.0% on a per share
basis. The decrease includes previously announced prepayment
costs on debt of $0.23 per share.
-- Home sales volume was $3,855,000, a decline of 49.7% from the
same period one year ago, consisting of 28 new home closings,
including 27 new homes sold on expansion home sites. This
result compares with 55 new home closings in first quarter
2007.
-- "Same Store" (a non-GAAP financial measure defined on page 12
of this release) results provided a revenue increase of 5.6%,
an expense decrease of 0.5% and an increase of 8.4% in Net
Operating Income ("NOI"; a non-GAAP financial measure defined
on page 12 of this release).
-- "Same Site" (a non-GAAP financial measure defined on page 12
of this release) results provided a revenue increase of 3.2%,
an expense decrease of 0.4% and an increase of 4.9% in NOI.
FFO, NOI, Same Store and Same Site are supplemental non-GAAP
financial measures that are defined in the glossary beginning on page
12. We use FFO in measuring our operating performance because we
believe that the items that result in a difference between FFO and net
income have a different impact to the ongoing operating performance of
a real estate company than to other businesses. We use NOI to evaluate
the operating performance of our properties and we believe that it is
relevant and useful information as a measure of property performance
on an unleveraged basis. We use NOI on a Same Store and Same Site
basis as useful information to measure property performance without
the impact of newly acquired or newly disposed properties. Neither FFO
nor NOI should not be considered an alternative to net income or net
cash flows from operating activities, as calculated in accordance with
GAAP, as an indication of our performance or as a measure of
liquidity. A reconciliation of FFO to the comparable GAAP financial
measure is included on page 17. A reconciliation of NOI, Same Store
and Same Site to the comparable GAAP financial measure is included on
page 18.
The full text of this press release is available upon request or
through the Company's web site at www.americanlandlease.com.
Management Comments
Bob Blatz, President of American Land Lease, commented, "Our
portfolio of land leases continue to produce strong same site and same
store results which have a positive impact on the Company's Net Asset
Value or "NAV". These results underscore the continued stability and
strength of our core residential land lease business. The severe and
continuing decline in the broader home sales markets has continued to
impact our ability to add new leases to the portfolio at the same rate
we have enjoyed in prior years. As a result, we have reevaluated the
contribution to NAV from our unoccupied home sites, both developed and
undeveloped, which has resulted in a lowering of NAV. The reduction in
the rate at which new leases are added to the portfolio has reduced
current land values, slowing the rate at which the Company's NAV
grows. Our absorption continues to slow. However, we believe that we
are in good markets, with a product - retirement communities - that
has a growing customer base and, once confidence returns to the
market, our absorption rates will be restored."
"The continued expansion of operating margins at the property
level reflects the strength of our properties and personnel who serve
our customers well. Operating margins grew 1.7% over 2007 to 65.6%.
This growth reflects both the quality of the core portfolio and the
positive impact of our 2006 acquisitions. We continue to view our core
business as owning and operating land leases - and in that core
business our performance was outstanding."
"We view the new home sales business as an activity that
complements our residential land lease business by creating new
revenue generating home sites. Home sales have continued to decline as
our customers are taking longer to sell their current homes and their
confidence has been impacted by negative news in the broader economy.
We view this as an industry issue and not one that can be solved or
completely mitigated by ANL. The unit volume of new homes sold was
down by 27, or 49% compared to the first quarter of 2007. In this
market, our average home value continues to increase, as the average
home sale price was $143,000; an increase of 5.9% over Q107. We have
taken numerous steps to lower our sales overhead and marketing costs
as we continue to look to decrease the drag that adding new leases to
the portfolio has on current earnings. We believe that the value of
the ANL business and assets exceed the valuation expressed in the
current share price. Therefore, we have and will continue to evaluate
repurchasing our common stock in the context of our primary financial
objective to maximize long term, risk adjusted returns on investment
for common stockholders.
"Our core business is solid. Land lease returns grow with
increased rents and expense control reflecting the outstanding work of
our operations team. Our second growth engine is new home sales, which
has been affected by the national decline in home sales. We are
focused on operating this business activity efficiently to minimize
the drag on current earnings and Net Asset Value. We are fortunate to
have solid locations, a growing base of potential customers,
attractive homes, and a hardworking sales team that is selling
excellent homes at good prices. While present conditions in the new
home sales market continue to be challenging, I remain upbeat and
optimistic about the future of our Company."
The term "NAV" is defined on page 12 of this press release.
Dividend Declaration
On April 30, 2008, the Board of Directors declared a first quarter
common stock dividend of $0.25 per share, payable on May 30, 2008, to
stockholders of record on May 16, 2008.
On April 30, 2008, the Board of Directors also declared a cash
dividend of $0.4844 per share of Series A Preferred Stock for the
quarter ended March 31, 2008, payable on May 30, 2008, to shareholders
of record on May 16, 2008.
The Board of Directors reviews the dividend policy quarterly. The
Company's dividends are set quarterly and are subject to change or
elimination at any time. The Company's primary financial objective is
to maximize long term, risk adjusted returns on investment for common
shareholders. While the dividend policy is considered within the
context of this objective, maintenance of past dividend levels is not
a primary investment objective of the Company and is subject to
numerous factors, including the Company's profitability, capital
expenditure plans, competing uses of capital, obligations related to
principal payments and capitalized interest, and the availability of
debt and equity capital at terms deemed attractive by the Company to
finance these expenditures. Further, the Board has and will continue
to consider the downturn in new home sales and the opportunity for
share repurchases in the context of its quarterly review and dividend
decision. As noted in the supplemental schedules to this release on
page 17, the Company's common dividend was greater than Adjusted Funds
from Operations ("AFFO") for 2007 and year to date 2008. The Company's
net operating loss may be used to offset all or a portion of its real
estate investment trust ("REIT") taxable income, which may allow the
Company to reduce or eliminate its common and preferred dividends and
still maintain its REIT status.
Operational Results - First Quarter
First Quarter Property Operations
First quarter revenue from property operations was $9,717,000, as
compared to $9,336,000 in the same period one year ago, a 4.1%
increase. First quarter property operating expenses totaled
$3,163,000, as compared to $3,189,000 in the same period one year ago,
a 0.8% decrease. The Company realized increases in rental income as
the result of annual rental rate increases, rent yield management, and
the leasing of new home sites through its home sales efforts.
First quarter property operating expenses decreased slightly with
the expenses of the prior year's first quarter. In a majority of the
communities we operate, the Company has previously implemented
contractual terms under its leases to pass on increases in property
taxes through billings to homeowners for their proportional share of
increased taxes. In 23 of the 30 communities we operate, the
individual homeowner's water and sewer is metered, and changes in
consumption are billed to the homeowner.
First quarter property-operating margins before depreciation
expense increased to 65.6% from 63.9% in the prior year's first
quarter.
First Quarter "Same Store" Results
First quarter "same store" results reflect the results of
operations for properties and golf courses owned during the first
quarters of both 2008 and 2007. Same store properties accounted for
100.0% of property operating revenues for first quarter 2008. "Same
store" results are defined on page 12, and reconciled to GAAP on page
18, of this press release. We believe that same store information
provides an opportunity to understand changes in profitability for
properties owned during both reporting periods that cannot be obtained
from a review of the consolidated income statement for periods in
which properties are acquired or sold. Our presentation of same store
results is a non-GAAP measure and should not be considered in
isolation from, and is not intended to represent an alternative
measure to, operating income or cash flow or any other measure of
performance as determined in accordance with GAAP.
The same store % change results are as follows: 1Q08
--------------
Revenue 5.6%
Expense (0.5%)
Net Operating Income 8.4%
Our same store revenues reflect reimbursements from our tenants
for certain expense items, principally utilities and real estate
taxes. During the current period, the property taxes associated with
certain Florida properties were reduced when compared to the prior
year, resulting in a corresponding reduction in billings to tenants.
When adjusted for these items, the change in revenues and expenses for
the quarter are shown below.
1Q08
---------------
Revenues 5.6%
Less: Net Reimbursements Reduction 0.6%
---------------
Revenue growth; net of reimbursements 6.2%Expenses (0.5%)
Less: Increase in Net Reimbursements 0.8%
---------------
Expense increase; net of reimbursements 0.3%
Same Store NOI Growth 8.4%
In addition to focusing on controlling operating expenses, our
leases also provide some insulation from increased expenses.
We derive our increase in property revenue (i) from increases in
rental rates and other charges at our properties, (ii) re-establishing
market rents at times of home transfers, and (iii) through the
origination of leases on expansion home sites ("absorption"). "Same
site" results reflect the results of operations excluding those sites
leased subsequent to the beginning of the prior year period. "Same
Site" results are defined on page 12, and reconciled to GAAP on page
18, of this press release. We believe that "same site" information
provides the ability to understand the changes in profitability
without the changes related to the newly leased sites. Our
presentation of same site results is a non-GAAP measure and should not
be considered in isolation from, and is not intended to represent an
alternative measure to, operating income or cash flow or any other
measure of performance as determined in accordance with GAAP.
We calculate absorption revenues as the rental revenue recognized
on sites leased subsequent to the beginning of the prior year period.
We estimate that 50% of the increase in expenses over the prior year
period is attributable to newly leased sites in our calculation of
same site results. We believe that the allocation of expenses between
same site and absorption is an appropriate allocation between fixed
and variable costs of operating our properties.
Our same site rental, absorption and golf operations contributions
to total same store results for first quarter are as follows based
upon increases from prior year results.
First Quarter Same Site Absorption Golf Same Store
-------------- ------------ ----------- ------- -----------
Revenue 3.2% 2.3% 0.1% 5.6%
Expense (0.4)% -- (0.1)% (0.5)%
NOI 4.9% 3.3% 0.2% 8.4%
A reconciliation of same site and same store operating results
used in the above calculations to total property revenues and property
expenses, as determined under GAAP, for the three months ended March
31, 2008 and 2007 can be found on page 18 of this earnings release.
First Quarter Home Sales Operations
First quarter 2008 new home sales were $3,855,000, a 49.7%
decrease from the same period in the prior year. There were 28
closings, a 49.1% decrease from the 55 closings during the same period
in 2007. Average selling price per home was $143,000, compared to
$135,000 in the same period in 2007, an increase of 5.9%. Eight
communities reported average selling prices in excess of $100,000.
Selling gross margins, excluding brokerage activities, were 26.4% in
the quarter, comparable to the same period in 2007. Selling costs as a
percentage of sales revenue increased from 30.5% in the first quarter
of 2007 to 52.9% in the first quarter of 2008, reflecting lower
operating leverage against fixed costs. Selling costs, including
overhead, marketing and advertising expenses, were down by 12.8%
compared to the same period in 2007. However, when allocated against
the lower sales volumes, such costs resulted in a higher per home
expense than in the same period in 2007.
The Company's backlog of contracts to close stood at 12, a
decrease of 46, or 79.3%, from the same period in 2007.
The Company remains committed to generating revenue growth through
new lease originations in its existing portfolio. Even though new home
sales slowed from 2007 to 2008, our home sales business continues to
provide the Company with additional earning home sites.
Summary of home sales activity:
Quarter ended Quarter ended
March 31, 2008 March 31, 2007
-------------- --------------
New home closings 28 55New home contracts 23 96
Home resales 2 3
Brokered home sales 22 31
New home contract backlog 12 58
Share Repurchase
The Board of Directors has authorized the Company to repurchase up
to 2,000,000 shares of its outstanding common stock. Pursuant to this
authorization, the Company repurchased 33,000 shares of outstanding
common stock at an average price of $19.95 for the three months ended
March 31, 2008. The Company has repurchased approximately 816,000
shares as of March 31, 2008 pursuant to this authorization.
We believe that the value of the ANL business and assets exceed
the valuation expressed in the current share price. Therefore, we have
and will continue to evaluate repurchasing our common stock in the
context of our primary financial objective to maximize long term, risk
adjusted returns on investment for common stockholders.
Financing Activity
During the quarter, the Company closed three loan transactions,
which served to refinance loans on three of our properties. Proceeds
to the Company of $15.4 million reflect an average interest rate of
approximately 5.91%. In conjunction with this refinancing, the Company
incurred prepayment costs of approximately $2.0 million, which reduced
earnings per share during the quarter by approximately $0.23 per
share. These loans mature in 2018.
Also during the quarter, the Company closed a $6.1 million loan on
one property at an interest rate of 6.88% for a term of 5 years.
Proceeds were used to continue the development of the Company's
inventory of home sites.
Development Activity
The Company ended the quarter with an inventory of 1,345 developed
and unleased home sites. We sell new homes to be located on these home
sites so that they will become revenue generating.
In addition, the Company has an inventory of 1,191 home sites that
are partially developed or undeveloped. All of these sites are fully
entitled and zoned for use as a land lease community. With the
exception of Sebastian Beach and Tennis Village and the Villages at
Country Club, all are contiguous to, and a part of, a current
community where there are ongoing property operations and a proven
customer base.
Significant development activity during the quarter included:
-- At Sebastian Beach and Tennis Village, construction and site
work continued. As reported in prior quarters, a new
municipality was formed in July of 2006, which impacts this
site. As previously announced, we have been working with the
town and county governments to accomplish the platting of the
community under this unique set of circumstances. During the
quarter, we completed a key step in this process as the entire
project site is now located within one governmental
jurisdiction through completion of an annexation process.
Pre-sales and marketing activities for the community have
already begun at an off-site sales office, and we expect to
begin home and Village Centre construction upon completion of
the platting process.
-- At the Villages at Country Club project in Mesa, Arizona, our
homebuilding partner began home-building activity in September
2007, and expects to complete the first models in May 2008.
Outlook for 2008
The table below summarizes the Company's projected financial
outlook for 2008 as of the date of this release and is based on the
estimates and assumptions disclosed in this and previous press
releases. Our core land lease operating business remains solid and
there have been no changes to our projections for this business
element. The rate of growth projected for 2008 as compared to 2007
actual results is lower due chiefly to three key factors:
1. The reduction in new home sales in 2007 and sales projections
for 2008. The reduced rate of new home sales will result in a lower
contribution from absorption to same store revenue growth than in
prior years.
2. Certain resident leases increase annually based upon the rate
of increase in the Consumer Price Index. The Consumer Price Index
applicable to certain leases was 2.0% for lease renewals in 2008
compared to 3.8% for lease renewals for 2007, a 1.8% decrease.
3. In addition, the lower rate of turnover within our communities
has slowed the rate at which rents are increased to higher market
rates at the time of home transfers.
Our outlook for our core land lease operating business is as
follows:
2007 Actual Full Year 2008
Results Projected
--------------------------
Same Store
Revenue Growth 6.6% 4.5% to 6.5%
Expense Growth 3.4% 3.5% to 5.0%
NOI Growth 8.2% 4.5% to 6.0%General and Administrative Expenses $4.3M $4.6M to $5.1M
Capital Replacements (per site) $126 $130 to $160
Depreciation $5.0M $5.5M to $5.9M
The earnings from the Company's new home sales business are
subject to greater volatility than are the earnings from land leases.
The Company's new home sales business has been impacted by the general
decline in new home sales nationwide. Certain local markets in which
the Company operates have been impacted to a greater extent than have
the national averages. In this home sales environment, the Company has
limited visibility on future new home sales volumes. The Company's
earnings estimates would be impacted positively or negatively by
changes in the volume of new home sales or in the gross margins from
new home sales. New home sales volume and gross margins are dependent
upon a number of factors, including but not limited to consumer
confidence, the cost of homeowners' insurance, consumer access to
financing sources for home purchases and the sale of their current
owned homes. We currently do not see a near term catalyst for
increased levels of new home sales in Florida and Arizona.
The table below reflects our forecast based upon our current
information and analysis:
2007 Actual Full Year 2008
Results Projected
--------------------------New Home Sales Volume 209 75 to 130
New Home Sales Gross Margin 28.4% 25% to 28%
Home Sales Operating Income(Loss) ($1.3M) ($3.5M) to
($1.6M)
Home Sales Net Contribution ($2.8M) ($4.9M) to
($2.9M)
In consideration of the above projections for our businesses, our
total company projections are as follows:
2007 Actual Full Year 2008
Results Projected
--------------------------Contribution to FFO from land lease
operations $1.31 $1.21 to $1.27
Contribution to FFO from Homes sales ($0.57) to
operations ($0.30) ($0.33)
Contribution to FFO from prepayment
penalties on debt refinancing transactions -- ($0.23)
--------------------------
FFO $1.01 $0.41 to $0.71
Contribution to AFFO from land lease
operations $1.17 $1.07 to $1.16
Contribution to AFFO from Homes sales ($0.57) to
operations ($0.30) ($0.33)
Contribution to AFFO from prepayment
penalties on debt refinancing transactions -- ($0.23)
--------------------------
AFFO $0.87 $0.27 to $0.60
Diluted EPS from continuing operations $0.39 ($0.22) to
$0.09
Diluted EPS from discontinued operations $1.18 --
--------------------------
Diluted EPS $1.57 ($0.22) to
$0.09
The Company's reported results are impacted by the amount of
interest capitalized on its development properties. The amount of
interest capitalized is dependent on the rate of completion of home
sites, the timing and amount of capital expenditures and continuing
development activities at each location. Changes in any of the
preceding factors, along with changes in applicable interest rates,
will result in either increases or decreases in the actual amount of
interest capitalized. Changes in the amount of interest capitalized
will increase or decrease the Company's earnings as compared to
historical financial results.
Non-employee director compensation continues to be paid in stock
and all stock based compensation is expensed within the 2008
projections. The Company's earnings estimates would be adversely
impacted by any increased cost of compliance with regulations and laws
applicable to public companies and financial reporting.
Additional factors that may impact our projected results include a
change in the mix of home sales across our communities, occupancy
changes, further changes in the residential housing markets, the
impact of hurricanes or other natural disasters, changes in interest
rates, and additional refinancing transactions.
The financial and operating projections provided in this release
are the result of management's consideration of past operating
performance, current and anticipated market conditions and other
factors that management considers relevant from its past experience.
However, no assurance can be provided as to the achievement of these
projections and actual results will vary, perhaps materially.
American Land Lease, Inc. is a REIT that held interests in 30
manufactured home communities with 8,011 operational home sites, 1,345
developed expansion sites, 1,191 undeveloped expansion sites and 129
recreational vehicle sites as of March 31, 2008.
Some of the statements in this press release, as well as oral
statements made by the Company's officials to analysts and
stockholders in the course of presentations about the Company and
conference calls following quarterly earnings releases, constitute
"forward looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements may include
statements regarding the Company's cash flow, results of operations,
dividends, anticipated returns on real estate investments, stock
repurchases and future absorption rates. Such forward-looking
statements involve known and unknown risks, uncertainties and other
factors that may cause actual results, performance or achievements of
the Company to be materially different from any future results,
performance or achievements expressed or implied by the
forward-looking statements. Such factors include, but are not limited
to: general economic and business conditions; interest rate changes,
financing and refinancing risks; risks inherent in owning real estate;
demand for new homes; future development rate of home sites;
competition; the availability of real estate assets at prices which
meet the Company's investment criteria; the Company's ability to
reduce expense levels, implement rent increases, use leverage and
other risks set forth in the Company's Securities and Exchange
Commission filings. We assume no obligation to update or revise any
forward-looking statements or to update the reasons why actual results
could differ from those projected in any forward-looking statements.
As previously announced, management will hold a teleconference
call, Friday, May 9, 2008 at 9:30 a.m. Eastern Daylight Time to
discuss first quarter 2008 results. You can participate in the
conference call by dialing, toll-free, 800-374-5458 approximately five
minutes before the conference call is scheduled to begin and
indicating that you wish to join the American Land Lease first quarter
2008 results conference call. If you are unable to participate at the
scheduled time, this information will be available for recorded
playback from 12:30 p.m. Eastern Daylight Time, May 9, 2008 until
midnight on May 16, 2008. To access the replay, dial toll free,
800-642-1687 and request information from conference ID 46621215.
GLOSSARY
GLOSSARY OF NON-GAAP FINANCIAL AND OPERATING MEASUREMENTS
Financial and operational measurements found in the Earnings Release
and Supplemental Information include certain non-GAAP financial
measurements used by American Land Lease management. Such measurements
include Funds from Operations ("FFO"), which is an industry-accepted
measurement based in part on the definition of the National
Association of Real Estate Investment Trusts (NAREIT) and "same store"
and same site" results. These terms are defined below and, where
appropriate, reconciled to the most comparable Generally Accepted
Accounting Principles (GAAP) measurements on the accompanying
supplement schedules.
FUNDS FROM OPERATIONS ("FFO"): is a commonly used term defined by
NAREIT as net income (loss), computed in accordance with GAAP,
excluding gains and losses from extraordinary items, dispositions of
depreciable real estate property, dispositions of discontinued
operations, net of related income taxes, plus real estate related
depreciation and amortization (excluding amortization of financing
costs), including depreciation for unconsolidated real estate
partnerships, joint ventures and discontinued operations. American
Land Lease calculates FFO based on the NAREIT definition, as further
adjusted for the minority interest in the American Land Lease's
operating partnership (Asset Investors Operating Partnership). This
supplemental measure captures real estate performance by recognizing
that real estate generally appreciates over time or maintains residual
value to a much greater extent than do other depreciable assets such
as machinery, computers or other personal property. There can be no
assurance that American Land Lease's method for computing FFO is
comparable with that of other real estate investments trusts.
ADJUSTED FUNDS FROM OPERATIONS ("AFFO"): is FFO less Capital
Replacement expenditures. Similar to FFO, AFFO captures real estate
performance by recognizing that real estate generally appreciates over
time or maintains residual value to a much greater extent than do
other depreciating assets such as machinery, computers or other
personal property while also reflecting that Capital Replacements are
necessary to maintain the associated real estate assets.
NET OPERATING INCOME ("NOI"): is the property's gross rental
income plus any other income, such as late fees or parking income,
less vacancies and rental expenses. Essentially, NOI is the net cash
generated before mortgage payments and taxes.
NET ASSET VALUE: As defined by NAREIT, the net "market value" of
all of a company's assets, including but not limited to its
properties, after subtracting all its liabilities and other
obligations.
CAPITALIZATION RATE: The capitalization rate ("cap rate") is the
rate at which net operating income is discounted to determine the
value of a property. It is one method that is utilized to estimate
property value.
SAME STORE RESULTS: represent an operating measure that is used to
compare the results of properties that have been in the portfolio for
both accounting periods being compared.
SAME SITE RESULTS: represent an operating measure that is used to
compare the results of home sites that have been in the portfolio for
both accounting periods being compared. Home sites that are leased or
"absorbed" during the accounting periods are not included in this
calculation.
OPERATIONAL HOME SITE: represents those sites within our portfolio
that are/or have been leased to a tenant. Operational Home Sites and
their relative occupancy provide a measure of stabilized portfolio
status.
DEVELOPED HOME SITE: represents those sites within our portfolio
that have not been occupied, but for which the greater part of their
infrastructure has been completed.
UNDEVELOPED HOME SITE: represents those sites within our portfolio
that have not been fully developed and that require construction of
substantial lateral improvements such as roads.
CAPITAL REPLACEMENT: represents capitalized spending which
maintains a property. American Land Lease generally capitalizes
spending for items that cost more than $250 and have a useful life of
more than one year. A common example is street repaving. This spending
is better considered a recurring cost of preserving an asset rather
than as an additional investment. It is a cash proxy for depreciation.
CAPITAL ENHANCEMENT: represents capitalized spending which adds a
revenue source or material feature that increases overall community
value. An example is the addition of a marina facility to an existing
community.
SELLING GROSS MARGIN: represents what remains from sales after
paying out the costs of goods sold. Gross Profit margin is expressed
as a percentage. To obtain a gross profit margin, divide gross profit
by sales.
USED HOME SALE: represents the sale of a home previously owned by
a third party and American Land Lease has acquired title through an
eviction proceeding or through purchase from the third party.
AMERICAN LAND LEASE INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data) As of
-------------------------------------------------------
March 31, Dec. 31, Sept. 30, June 30, March 31,
2008 2007 2007 2007 2007
-------------------------------------------------------
(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)
ASSETS
Real Estate $ 312,850 $ 308,956 $ 304,280 $ 306,824 $ 304,484
Less
accumulated
depreciation (32,989) (31,842) (30,735) (31,191) (30,120)
Real estate
under
development 123,542 122,403 121,056 119,602 115,798
-------------------------------------------------------
Total Real
Estate 403,403 399,517 394,601 395,235 390,162
Cash and cash
equivalents 255 541 296 308 293
Inventory 18,539 20,084 20,012 21,031 20,705
Other assets 17,062 16,391 15,362 16,085 15,662
-------------------------------------------------------
Total Assets $ 439,259 $ 436,533 $ 430,271 $ 432,659 $ 426,822
=======================================================
LIABILITIES AND
EQUITY
Liabilities
Secured long-
term notes
payable $ 258,140 $ 239,970 $ 240,769 $ 238,676 $ 234,826
Secured short-
term
financing 20,210 30,932 18,963 30,013 25,012
Accounts
payable and
accrued
liabilities 8,526 9,288 12,260 11,545 13,239
-------------------------------------------------------
Total
Liabilities 286,876 280,190 271,992 280,234 273,077
Minority
Interest in
Operating
Partnership 16,964 17,339 17,522 16,421 16,475
STOCKHOLDERS'
EQUITY
Preferred
Stock, par
value $.01 per
share; 3,000
shares
authorized,
1,000 shares
issued and
outstanding 25,000 25,000 25,000 25,000 25,000
Common Stock,
par value $.01
per share;
12,000 shares
authorized 95 95 95 95 95
Additional
paid-in
capital 294,295 293,821 293,510 293,113 292,757
Dividends in
excess of
accumulated
earnings (152,164) (148,749) (147,013) (154,920) (153,970)
Treasury stock
at cost (31,897) (31,163) (30,835) (27,284) (26,612)
-------------------------------------------------------
Total
Stockholders
Equity 135,419 139,004 140,757 136,004 137,270
-------------------------------------------------------
Total
Liabilities
and
Stockholders'
Equity
$ 439,259 $ 436,533 $ 430,271 $ 432,659 $ 426,822
=======================================================
AMERICAN LAND LEASE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited) Three Months Ended
--------------------------------------
March 31, Dec. 31, Sept. 30, June 30,
2008 2007 2007 2007
---------- -------- --------- --------
RENTAL PROPERTY OPERATIONS
Rental and other property
revenues $ 9,717 $ 9,528 $ 9,389 $ 9,334
Golf course operating revenues 439 250 165 219
---------- -------- --------- --------
Total property operating
revenues 10,156 9,778 9,554 9,553
Property operating expenses (3,163) (3,204) (3,092) (3,111)
Golf course operating expenses (332) (336) (341) (357)
---------- -------- --------- --------
Total property operating
expenses (3,495) (3,540) (3,433) (3,468)
Depreciation (1,348) (1,286) (1,239) (1,227)
---------- -------- --------- --------
Income from rental property
operations 5,313 4,952 4,882 4,858
SALES OPERATIONS
Home sales revenue 3,855 4,508 7,162 7,929
Cost of home sales (2,837) (3,205) (5,055) (5,658)
---------- -------- --------- --------
Gross profit on home sales 1,018 1,303 2,107 2,271
Commissions earned on brokered
sales 45 69 60 44
Commissions paid on brokered
sales (19) (27) (24) (19)
---------- -------- --------- --------
Gross profit on brokered
sales 26 42 36 25
Selling and marketing expenses (2,038) (2,064) (2,345) (2,375)
---------- -------- --------- --------
Income (loss) from sales
operations (994) (719) (202) (79)
General and administrative
expenses (1,222) (1,230) (1,105) (993)
Interest and other income 44 22 7 8
Loss on early debt retirement (1,987) -- -- --
Interest expense (2,248) (2,251) (2,197) (2,142)
---------- -------- --------- --------
Income before minority interest
in Operating Partnership (1,094) 774 1,385 1,652
Minority interest in Operating
Partnership 127 (88) (164) (188)
---------- -------- --------- --------
Income from continuing
operations (967) 686 1,221 1,464
DISCONTINUED OPERATIONS
Income (loss) from discontinued
operations, net of
Minority Interest -- 21 9,154 75
---------- -------- --------- --------
Net Income (967) 707 10,375 1,539
Cumulative preferred stock
dividends (484) (485) (484) (485)
---------- -------- --------- --------
Net Income Attributable to
common shareholders ($ 1,451) $ 222 $ 9,891 $ 1,054
========== ======== ========= ========
Basic earnings from continuing
operations (net of cumulative
unpaid preferred dividends) $ (0.19) $ 0.03 $ 0.09 $ 0.14
Basic earnings (loss) from
discontinued operations -- -- 1.20 --
---------- -------- --------- --------
Basic earnings per common
share $ ( 0.19) $ 0.03 $ 1.29 $ 0.14
========== ======== ========= ========
Diluted earnings from
continuing operations $ (0.19) $ 0.03 $ 0.10 $ 0.13
Diluted earnings (loss) from
discontinued operations -- -- 1.16 --
---------- -------- --------- --------
Diluted earnings per common
share $ ( 0.19) $ 0.03 $ 1.26 $ 0.13
========== ======== ========= ========
Weighted average common shares
outstanding 7,552 7,560 7,659 7,745
Weighted average common shares
and common share equivalents
outstanding 7,682 7,754 7,871 8,029
Common dividends paid per
share $ 0.25 $ 0.25 $ 0.25 $ 0.25
AMERICAN LAND LEASE INC. AND SUBSIDIARIES
DEBT ANALYSIS
(in thousands)
(unaudited) As of
-------------------------------------------------
March 31, Dec. 31, Sept. 30, June 30, March 31,
2008 2007 2007 2007 2007
--------- --------- --------- --------- ---------
DEBT OUTSTANDING
Mortgage Loans
Payable - Fixed $236,034 $217,864 $218,663 $227,320 $223,470
Mortgage Loans
Payable - Floating 22,106 22,106 22,106 11,356 11,356
Floor Plan Facility 20,210 23,086 13,337 20,508 19,636
Line of Credit -- 7,846 5,626 9,505 5,376
--------- --------- --------- --------- ---------
Total Debts $278,350 $270,902 $259,732 $268,689 $259,838
========= ========= ========= ========= =========
% FIXED FLOATING
Fixed 84.8% 80.4% 84.2% 84.6% 86.0%
Floating 15.2% 19.6% 15.8% 15.4% 14.0%
--------- --------- --------- --------- ---------
Total 100.0% 100.0% 100.0% 100.0% 100.0%
AVERAGE INTEREST
RATES
Mortgage Loans
Payable - Fixed 6.2% 6.3% 6.3% 6.3% 6.4%
Mortgage Loans
Payable - Floating 6.2% 6.7% 6.9% 7.1% 7.1%
Floor Plan Facility 6.1% 7.5% 8.5% 8.5% 8.5%
Line of Credit 5.6% 6.6% 7.2% 6.9% 6.9%
--------- --------- --------- --------- ---------
Total Weighted
Average 6.2% 6.4% 6.5% 6.5% 6.6%
========= ========= ========= ========= =========
DEBT RATIOS
Debt/Total Market
Cap(1) 57.8% 57.7% 53.7% 51.7% 50.8%
Debt/Gross Assets 63.4% 62.0% 60.4% 62.1% 60.9%
-------------------------------------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
MATURITIES 2008 2009 2010 2011 2012
--------- --------- --------- --------- ---------
Mortgage Loan
Scheduled Principal
Payments 2,095 3,229 3,723 4,026 4,364
Mortgage Loan
Balloon Maturities -- -- -- 11,356 10,750
--------- --------- --------- --------- ---------
Total $ 2,095 3,229 $ 3,723 $ 15,382 $ 15,114
========= ========= ========= ========= =========
(1) Computed based upon closing price as reported on NYSE as of the
last trading day of the period then ended and computed using all
shares outstanding at such date.
AMERICAN LAND LEASE INC. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO FFO/AFFO AND PAYOUT RATIOS
(Amounts in thousands, except per share/OP unit amounts)
(Unaudited) Three Months Ended
March 31,
--------------------
2008 2007
--------------------
Net Income $(1,451) $ 1,251
Adjustments
Cumulative unpaid preferred stock dividends 484 484
Minority interest in operating partnership (127) 211
Real estate depreciation 1,348 1,205
Discontinued Operations:
Real estate depreciation attributed to
discontinued operations -- 24
Minority interest in operating partnership
attributed to discontinued operations -- 10
Funds From Operations (FFO) $ 254 $ 3,185
Cumulative unpaid preferred stock dividends (484) (484)
Funds From Operations attributable to common
Stockholders (230) 2,701
Capital Replacements (273) (342)
Adjusted Funds from Operations (AFFO) $ (503) $ 2,359
Weighted Average Common Shares/OP Units
Outstanding 8,675 9,047
========= ==========
Per Common Share and OP Unit:
FFO: $ (0.03) $ 0.30
AFFO: $ (0.06) $ 0.26
Payout Ratio Per Common Share and OP Unit:
Gross Distribution Payout
FFO: (833.3%) 83.3%
AFFO: (416.7%) 96.2%
AMERICAN LAND LEASE INC. AND SUBSIDIARIES
RECONCILIATION OF SAME SITE AND SAME STORE OPERATING RESULTS
FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND MARCH 31, 2007
(in thousands)
(unaudited) Three Three
Months Months Contribution
Ended Ended to Same
March 31, March 31, % Store
2008 2007 Change Change % Change(1)
--------- --------- ------ -------- ------------
Same site rental
revenues C $ 9,498 $ 9,190 $ 308 3.4% 3.2%
Absorption rental
revenues 231 12 219 1825.0% 2.3%
Same store golf
revenues 439 430 9 2.1% 0.1%
--------- --------- ------ ------------
Same store
revenues A 10,168 9,632 536 5.6% 5.6%
============
Other ancillary
revenues(2) (12) 134 (146) (109.0%)
--------- --------- ------
Total property
revenues E $ 10,156 $ 9,766 $ 390 4.0%
========= ========= ======
Same site rental
expenses D $ 2,700 $ 2,711 $ (11) (0.4%) (0.4%)
Absorption rental
expenses -- - -- -- --
Same store golf
expenses 332 335 (3) (0.9%) (0.1%)
--------- --------- ------ ------------
Same store
expenses B 3,032 3,046 (14) (0.5%) (0.5%)
============
Expenses
related to
offsite
management(3) 463 478 (15) (3.1%)
--------- --------- ------
Total property
operating
expenses F $ 3,495 $ 3,524 $ (29) (0.8%)
========= ========= ======
Same store net
operating income A-B $ 7,136 $ 6,586 550 8.4%
========= ========= ======
========= ========= ======
Same site net
operating income C-D $ 6,798 $ 6,479 $ 319 4.9%
========= ========= ======
Total net
operating income E-F $ 6,661 $ 6,242 $ 419 6.7%
========= ========= ======
(1) Computed as the change in the individual component of same store
revenue or expense divided by the total applicable same store base
(revenue or expense) for the 2007 period. For example same store
rental revenue increase of $308 as compared to the total same store
revenues in 2007 of $9,632 is a 3.2% increase ($308/$9,632=3.2%).
(2) Other ancillary revenues consist of non-cash amortization of
deferred income recognized related to acquired lease obligations,
intercompany revenues and other miscellaneous income not attributable
to land leases.
(3) Expenses related to offsite management reflect portfolio property
management costs not attributable to a specific property.
AMERICAN LAND LEASE, INC. AND SUBSIDIARIES
NUMBER OF HOMESITES AND AVERAGE RENT BY COMMUNITY
AS OF March 31, 2008 Operational Average
Home Sites Monthly
Community Location (1) Occupancy Rent
----------------------------------------------------------------------
Owned Communities
----------------------------------------------------------------------
Blue Heron Pines Punta Gorda, FL 345 100% $364
----------------------------------------------------------------------
Brentwood Estates Hudson, FL 143 98% 295
----------------------------------------------------------------------
Sebastian Beach & Grant-Valkaria,
Tennis Club FL -- 0% --
----------------------------------------------------------------------
Serendipity Ft. Myers, FL 338 95% 377
----------------------------------------------------------------------
Stonebrook Homosassa, FL 198 100% 314
----------------------------------------------------------------------
Sunlake Estates Grand Island, FL 367 100% 372
----------------------------------------------------------------------
Forest View Homosassa, FL 273 100% 337
----------------------------------------------------------------------
Gulfstream Harbor Orlando, FL 382 98% 435
----------------------------------------------------------------------
Gulfstream Harbor II Orlando, FL 306 99% 431
----------------------------------------------------------------------
Gulfstream Harbor III Orlando, FL 181 95% 398
----------------------------------------------------------------------
Lakeshore Villas Tampa, FL 281 95% 459
----------------------------------------------------------------------
Park Place Sebastian, FL 379 100% 337
----------------------------------------------------------------------
Park Royale Pinellas Park, FL 298 93% 460
----------------------------------------------------------------------
Pleasant Living Riverview, FL 245 95% 387
----------------------------------------------------------------------
Riverside GCC Ruskin, FL 476 100% 544
----------------------------------------------------------------------
Royal Palm Village Haines City, FL 288 96% 367
----------------------------------------------------------------------
Cypress Greens Lakeland, FL 231 100% 270
----------------------------------------------------------------------
Savanna Club Port St Lucie, FL 1,006 100% 303
----------------------------------------------------------------------
Woodlands Groveland, FL 171 99% 306
----------------------------------------------------------------------
Subtotal--Florida 5,908 98% $377
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
Blue Star Apache Junction,
AZ 22 50% 320
----------------------------------------------------------------------
Brentwood West Mesa, AZ 350 94% 488
----------------------------------------------------------------------
The Villages Mesa, AZ -- 0% --
----------------------------------------------------------------------
Desert Harbor Apache Junction,
AZ 205 100% 384
----------------------------------------------------------------------
Fiesta Village Mesa, AZ 172 86% 405
----------------------------------------------------------------------
La Casa Blanca Apache Junction,
AZ 197 100% 414
----------------------------------------------------------------------
Lost Dutchman Apache Junction,
AZ 217 76% 318
----------------------------------------------------------------------
Rancho Mirage Apache Junction,
AZ 312 96% 447
----------------------------------------------------------------------
Reserve at Fox Creek Bull Head City,
AZ 257 100% 332
----------------------------------------------------------------------
Sun Valley Apache Junction,
AZ 268 91% 364
----------------------------------------------------------------------
Subtotal--Arizona 2,000 93% $401
----------------------------------------------------------------------
----------------------------------------------------------------------
Foley Grove Foley, AL 103 100% 293
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
Total Communities 30 8,011 97% $381
----------------------------------------------------------------------
RV Undeveloped Developed
Community Location Sites Home Sites Home Sites
----------------------------------------------------------------------
Owned Communities
----------------------------------------------------------------------
Blue Heron Pines Punta Gorda, FL -- -- 44
----------------------------------------------------------------------
Brentwood Estates Hudson, FL -- -- 48
----------------------------------------------------------------------
Sebastian Beach & Grant-Valkaria,
Tennis Club FL -- 533 --
----------------------------------------------------------------------
Serendipity Ft. Myers, FL -- -- --
----------------------------------------------------------------------
Stonebrook Homosassa, FL -- -- 3
----------------------------------------------------------------------
Sunlake Estates Grand Island, FL -- -- 35
----------------------------------------------------------------------
Forest View Homosassa, FL -- -- 31
----------------------------------------------------------------------
Gulfstream Harbor Orlando, FL -- 50 --
----------------------------------------------------------------------
Gulfstream Harbor II Orlando, FL -- 37 1
----------------------------------------------------------------------
Gulfstream Harbor III Orlando, FL -- -- 103
----------------------------------------------------------------------
Lakeshore Villas Tampa, FL -- -- --
----------------------------------------------------------------------
Park Place Sebastian, FL -- -- 89
----------------------------------------------------------------------
Park Royale Pinellas Park, FL -- -- 11
----------------------------------------------------------------------
Pleasant Living Riverview, FL -- -- --
----------------------------------------------------------------------
Riverside GCC Ruskin, FL -- 311 154
----------------------------------------------------------------------
Royal Palm Village Haines City, FL -- -- 99
----------------------------------------------------------------------
Cypress Greens Lakeland, FL -- -- 27
----------------------------------------------------------------------
Savanna Club Port St Lucie, FL -- -- 61
----------------------------------------------------------------------
Woodlands Groveland, FL - -- 121
----------------------------------------------------------------------
Subtotal--Florida -- 827 931
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
Blue Star Apache Junction,
AZ 129 -- --
----------------------------------------------------------------------
Brentwood West Mesa, AZ -- -- --
----------------------------------------------------------------------
The Villages Mesa, AZ -- -- 375
----------------------------------------------------------------------
Desert Harbor Apache Junction,
AZ -- -- --
----------------------------------------------------------------------
Fiesta Village Mesa, AZ -- -- --
----------------------------------------------------------------------
La Casa Blanca Apache Junction,
AZ -- -- --
----------------------------------------------------------------------
Lost Dutchman Apache Junction,
AZ -- -- 25
----------------------------------------------------------------------
Rancho Mirage Apache Junction,
AZ -- -- --
----------------------------------------------------------------------
Reserve at Fox Creek Bull Head City,
AZ -- -- 56
----------------------------------------------------------------------
Sun Valley Apache Junction,
AZ -- -- --
----------------------------------------------------------------------
Subtotal--Arizona 129 -- 456
----------------------------------------------------------------------
----------------------------------------------------------------------
Foley Grove Foley, AL -- 260 62
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
Total Communities 30 129 1,191 1,345
----------------------------------------------------------------------
(1) We define operational home sites as those sites within our
portfolio that have been leased to a tenant during our ownership of
the community. Since our portfolio contains a large inventory of
developed home sites that have not been occupied during our
ownership, we have expressed occupancy as the number of occupied
sites as a percentage of operational home sites. We believe this
measure most accurately describes the performance of an individual
property relative to prior periods and other properties without our
portfolio. The occupancy of all developed sites was 85.6% across the
entire portfolio. Including sites not yet developed, occupancy was at
76.0% at March 31, 2008.
Portfolio Summary
Operational Developed Undeveloped RV
Home sites Home sites Home sites Sites Total
------------------------------------------------As of December 31,
2007 7,984 1,370 1,191 129 10,674
New lots purchased -- 2 -- -- 2
New leases originated 27 (27) -- -- --
Adjust for site plan
changes -- --
------------------------------------------------
As of March 31, 2008 8,011 1,345 1,191 129 10,676
================================================
Occupancy Roll Forward
Occupied Operational
Home sites Home sites Occupancy
---------- ----------- ---------As of December 31, 2007 7,748 7,984 97.0%
New home sales 28 27
Used home sales 2
Used homes acquired (6) --
Homes constructed by others 1
Homes removed from previously leased
sites (9) --
---------- -----------
As of March 31, 2008 7,764 8,011 96.9%
========== ===========
AMERICAN LAND LEASE, INC. AND SUBSIDIARIES
RETURN ON INVESTMENT FROM HOME SALES
(unaudited) Three Months Ended Three Months Ended
March 31, 2008 March 31, 2007
------------------ ------------------
Expansion sites leased during
the period 27 53
================== ==================
Estimated stabilized first
year profit on leases
originated during the period A $120 $174
================== ==================
Allocated costs, including
development costs of sites
leased $1,451 $2,395
Home sales (loss) income
attributable to sites leased (1,033) (361)
------------------ ------------------
Total costs incurred to
originate ground leases B $2,484 $2,756
================== ==================
Estimated stabilized first
year returns from the leases
originated on expansion home
sites during the period A/B 4.8% 6.3%
================== ==================
For the three months ended March 31, 2008 and 2007, we estimate
our profit or loss attributable to the sale of homes situated on
expansion home sites as follows (in thousands):
Three Months Ended Three Months Ended
March 31, 2008 March 31, 2007
------------------ ------------------Reported (loss)/income from sales
operations $(994) $(265)
Brokerage business income (26) (40)
Used home sales (13) (56)
------------------ ------------------
Adjusted (loss) income for
projection analysis $(1,033) $(361)
================== ==================
We have changed the method of estimating costs attributable to
newly leased sites. Beginning with the third quarter, we revised our
estimate of home site costs with respect to indirect general community
expenditures. Previously such indirect costs were allocated to
remaining unleased lots; now such costs are allocated to all sites
within the community. For example, the Company has constructed
additional amenities such as an additional clubhouse at our Sunlake
Community, which will benefit all sites in the community, whether
leased or unleased. If calculated using the previous methodology, the
estimated return would have been 3.8% instead of 4.8%.
The reconciliation of our estimated stabilized first year return
on investment in expansion home sites to our return on investment in
operational home sites for the year ended December 31, 2007 in
accordance with GAAP is shown below (in thousands):
Total Portfolio for
Year Ended
December 31, 2007
-------------------Property income before depreciation A $24,686
Total investment in operating home sites B $295,898
Return on investment from earning home sites(1) A/B 8.3%
===================
(1) Our return on investment in operational sites reflects our income
from and investment in sites that were leased for the first time
during the year ended December 31, 2007. For these leases, the income
reported above includes less than a full twelve months of operating
results. Consequently, when compared to the investment we have made
in these home sites, the return on investment during the year ended
December 31, 2007 is less than the return when measured using a full
twelve months of operating results.
AMERICAN LAND LEASE INC. AND SUBSIDIARIES
KEY HOME SALES STATISTICS Three Three Three Three Three
Months Months Months Months Months
ended ended ended ended ended
March 31, June 30, Sept. 30, Dec. 31, March 31,
2007 2007 2007 2007 2008
--------- --------- --------- --------- ---------
New home contracts 96 56 44 37 23
New home closings 55 65 51 38 28
Home resales 3 1 4 2 2
Brokered home sales 31 18 22 26 22
New home contract
backlog 58 48 32 23 12
Average Selling
Price $135,000 $122,000 $137,000 $128,000 $143,000
Average Gross Margin
Percentage 26.5% 28.6% 29.4% 29.8% 26.4%
1Q08 over 1Q08 over
4Q07 1Q08 over 1Q07 1Q08 over
Increase/ 4Q07 % Increase/ 1Q07 %
Decrease Change Decrease Change
---------- ------------- ----------- ------------
New home contracts (14) (37.8%) (73) (76.0%)
New home closings (10) (26.3%) (27) (49.1%)
Home resales -- -- (1) (33.3%)
Brokered home sales (4) (15.4%) (9) (29.0%)
New home contract
backlog (11) (47.8%) (46) (79.3%)
Average Selling
Price $ 15,000 11.7% $ 8,000 5.9%
Average Gross Margin
Percentage
American Land Lease, Inc., Clearwater
Robert G. Blatz, President, 727-726-8868
Shannon E. Smith, Chief Financial Officer, 727-726-8868
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