American Land Lease (NYSE:ANL)
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American Land Lease Announces First Quarter 2004 Financial
Results; 24% Increase in Funds From Operations per Share over 2003
CLEARWATER, Fla., April 29 /PRNewswire-FirstCall/ -- American Land Lease, Inc.
today released results for first quarter 2004.
Please refer to the Supplemental Information which the Company also released
today for definitions of measures of performance not determined in accordance
with generally accepted accounting principles ("non-GAAP") and reconciliation
of non-GAAP measures to measures determined in accordance with generally
accepted accounting principles ("GAAP").
Summary Financial Results
First Quarter
* Diluted Earnings Per Share ("Diluted EPS") were $0.33 for the three- month
period ended March 31, 2004 as compared to $0.26 from the same period one year
ago, an increase of 26.9% on a per share basis.
* Funds from Operations ("FFO"; a non-GAAP financial measure defined in the
Supplemental Information) were $3.4 million, or $0.41 per diluted common share,
for the quarter compared to $2.6 million, or $0.33 per diluted common share
from the same period one year ago, an increase of 24.2% on a per share basis.
* Unit volume in home sales was 91 new home closings, including 89 new homes
sold on expansion home sites. This compares with 98 new home closings in first
quarter 2003.
* "Same Store" results provided a revenue increase of 9.4%, an expense increase
of 5.3% and an increase of 11.6% in Net Operating Income ("NOI").
* "Same Site" results provided a revenue increase of 2.9%, an expense increase
of 2.5% and an increase of 3.1% in NOI.
Supplemental Information
The full text of this press release and Supplemental Information are available
upon request or through the Company's web site at
http://www.americanlandlease.com/.
Management Comments
Bob Blatz, President of American Land Lease, commented, "We are pleased to
report results for the first quarter 2004. The impact of newly leased sites
continues to drive the out performance of our same store growth rate while our
focus on senior communities continues to provide stable growth in our core
business.
"Our home sales unit volume dropped as compared to first quarter 2003 -- but
total revenue for home sales was above that of a year ago. As we look at our
long-term goals for our communities, we are encouraged that the average home
sales price reached $100,000. Our backlog is up over the prior year so we
continue to see growth in the volume and quality of our home sales as a driver
for improved results. Both our occupied communities and new homes offered for
sale performed well in the current market."
Dividend Declaration
On April 28, 2004, the Board of Directors declared a regular first quarter
dividend of $0.25 per share payable on May 27, 2004, to stockholders of record
on May 12, 2004. The Company has suspended its dividend reinvestment plan as
of the current quarter.
The Board of Directors reviews the dividend policy quarterly. The Company's
dividend is set quarterly and is 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 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, 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. 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
dividends and still maintain its REIT status.
Operational Results
First Quarter Property Operations
First quarter revenue from property operations was $7,436,000 as compared to
$6,719,000 in the same period one year ago, a 10.7% increase. First quarter
property operating expenses totaled $2,857,000 as compared to $2,650,000 in the
same period one year ago, a 7.8% increase. The Company realized significant
increases in rental income driven by annual rental rate increases, the
absorption of new home sites as a result of its home sales efforts and the
acquisition of one community during fourth quarter 2003. Property operating
expenses increased in the first quarter 2004 as compared to the same period in
the prior year driven primarily by increases in labor and benefit costs, the
acquisition of one community during the fourth quarter 2003, utility costs
including heating fuel and waste water treatment, and property management
overhead, offset by decreases in tenant related legal costs. The combination
of increased revenue and expenses resulted in an overall improvement in
property operating margins before depreciation expense from 60.6% in the prior
year's first quarter to 61.6% in the first quarter 2004.
First Quarter "Same Store" Results
First quarter "same store" results reflect the results of operations for
properties and golf courses owned for both the first quarter of 2004 and the
prior year periods. The same store properties account for 98% of the property
operating revenues for the first quarter of 2004. We believe that same store
information provides insights as to the changes in profitability for properties
owned during both reporting periods that could not be obtained from a review of
the consolidated income statement in periods where properties are acquired. A
reconciliation of "same store" operating results reported below to total
property revenues and property expenses, as determined under GAAP, can be found
in the Supplemental Information, page 29.
The same store increases are as follows:
1Q04
Revenue 9.4 %
Expense 5.3 %
Net Operating Income 11.6 %
We derive our increase in property revenue (i) from increases in rental rates
and other charges at our properties and (ii) 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. We believe that "same site" information provides the
ability to understand the changes in profitability without the growth 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, absorption, golf operations and total same store results for
first quarter are as follows:
Same Site Rental Absorption Same Site Golf Same Store
Revenue 2.9 % 5.5 % 1.0 % 9.4 %
Expense 2.5 % 2.5 % 0.3 % 5.3 %
NOI 3.1 % 7.0 % 1.5 % 11.6 %
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, 2004 and 2003 can
be found in the Supplemental Information, page 29.
First Quarter Home Sales Operations
First quarter 2004 new home sales unit volume was 91 closings, a 7.1% decrease
from the 98 closings in the same period in the prior year. Average selling
price per home was $100,000 as compared to $79,000 in the same period in the
prior year, a 26.6% increase. The decrease in closings compared to the same
period in the prior year was balanced across the Company's expansion
communities, with increases in six communities and decreases in six
communities. Brokerage profits were up 39.3% as compared with the same period
in the prior year driven by an increase in the number of transactions. Selling
gross margins, excluding brokerage activities, improved to 33.2% in the quarter
as compared to 26.7% in the same period in the prior year. This increase was
driven by increased selling prices, increased manufacturer rebates associated
with higher purchasing volumes, and sales of upgrades to base home models.
These increases in revenue and cost savings were offset by increases in cost of
homes purchased. Selling costs as a percentage of sales revenue increased from
23.2% in the prior year's period to 25.2% in the first quarter of 2004,
reflecting additional investments in personnel and advertising in support of a
higher operating level for the business. The backlog of contracts for closing
stood at 164 home sales, an increase of 15 contracts from the same period in
the prior year.
The Company remains committed to its program of generating revenue growth
through new lease originations in its existing portfolio. The home sales
business continues to provide the Company with additional earning home sites
that have a greater return on investment than is currently available through
the purchase of occupied communities.
Summary of home sales activity:
Quarter ended Quarter ended
March 31, 2004 March 31, 2003
New home closings 91 98
New home contracts 168 177
Home resales 12 14
Brokered home sales 79 45
New home contract backlog 164 149
Other Income
During the quarter, the Company realized the remaining value of a retained
residual interest in a bond securitization asset from its prior bond business.
This income was recorded as other income, totaled $0.03 per diluted common
share and OP unit for the quarter, and will not recur in future periods.
Outlook for 2004
The table below summarizes the Company's projected financial outlook for 2004
as of the date of this release and is based on the estimates and assumptions
disclosed in this and previous press releases:
Full Year 2004
Projected
FFO $1.40 to $1.60
AFFO $1.28 to $1.44
Diluted EPS $1.03 to $1.24
Same Store Sales
Revenue Growth 5.0% to 9.0%
Expense Growth 4.5% to 7.5%
NOI Growth 6.0% to 9.5%
Home Sales Operating Income $2,000,000 to
$3,250,000
General and Administrative Expenses $3,200,000 to
$3,700,000
Other Income $210,000 to
$280,000
Capital Replacements (per site) $115 to $135
Depreciation $2,900,000 to
$3,200,000
Based on the outlook provided above, the Company is projecting a reduction in
Diluted EPS from $1.24 for the year ended December 31, 2003. The reduction is
a result of the gains on sale of real estate in 2003 ($0.12) that are not
expected to recur in 2004.
A portion of the Company's earnings is from the sale of new homes on expansion
home sites in its developing communities. The earnings from the new home sales
are subject to greater volatility than the earnings from rental property
activities. The Company's earnings estimates would be impacted positively by
increases in the unit volume of new home sales or increases in the gross
margins from new home sales. Conversely, decreases in the unit volume of new
home sales or decreases in the gross margins from new home sales would
negatively impact the Company's earnings estimates. Home sales volume is
dependent upon a number of factors, including consumer confidence and consumer
access to financing sources for home purchases and the sale of their current
home.
The Company's projected results for 2004 include increased corporate governance
costs based upon current estimates of the cost of compliance. Non- employee
director compensation continues to be paid in stock and all stock based
compensation is expensed within the 2004 projections. The Company's earnings
estimates would be adversely impacted by the increased cost of compliance with
regulations and laws applicable to public companies and financial reporting.
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.
Development Activity
The Company completed development of its new subdivision at Savanna Club,
"Eagles Retreat," that provides an additional 216 developed home sites
available for immediate occupancy.
In addition, in response to increased activity at "The Bluffs," a new
subdivision within the Riverside Club Community, the Company accelerated
construction of the next phase that will provide 148 developed home sites
available for immediate occupancy.
Construction began for subdivisions at the Royal Palm and Brentwood communities
that will provide an additional 162 home sites for immediate occupancy in third
quarter 2004. Planning and permitting a subdivision at an additional community
continued during the quarter.
American Land Lease, Inc. is a REIT that holds interests in 29 manufactured
home communities with 6,663 operational home sites, 1,065 developed expansion
sites, 1,267 undeveloped expansion sites and 129 recreational vehicle sites.
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 projections of the Company's cash flow, dividends and anticipated
returns on real estate investments. 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: general economic and
business conditions; interest rate changes, financing and refinancing risks;
risks inherent in owning real estate; 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.
Management will hold a teleconference call, Monday, May 3, 2004 at 4:00 p.m.
Eastern Daylight Time to discuss first quarter 2004 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 2004
results conference call. If you are unable to participate at the scheduled
time, this information will be available for recorded playback from 5:30 p.m.
EDT, May 3, 2004 until midnight on May 10, 2004. To access the replay, dial
toll-free, (800) 642-1687 and request information from conference ID 7205266.
DATASOURCE: American Land Lease, Inc.
CONTACT: Robert G. Blatz, President, or Shannon E. Smith, Chief
Financial Officer, both of American Land Lease, +1-727-726-8868
Web site: http://www.americanlandlease.com/