American Land Lease (NYSE:ANL)
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American Land Lease, Inc. (NYSE: ANL) today released fourth quarter and
full year results for 2007.
Summary Financial Results
Fourth Quarter
Diluted Earnings Per Share (“Diluted EPS”)
were $0.03 for the three-month period ended December 31, 2007,
compared to $0.33 for the same period one year ago, a decrease of
90.9% on a per share basis.
Funds from Operations (“FFO”;
a non-GAAP financial measure defined on page 14 of this press release)
were $1.6 million, or $0.18 per diluted common share, for the quarter,
compared to $3.3 million, or $0.36 per diluted common share, for the
same period one year ago, a decrease of 50.0% on a per share basis.
Home sales volume was $4,508,000, a decline of 52.5% from the same
period one year ago, consisting of 38 new home closings, including 36
new homes sold on expansion home sites. This result compares with 71
new home closings in fourth quarter 2006.
“Same Store” (a
non-GAAP financial measure defined on page 14 of this release) results
provided a revenue increase of 6.1%, an expense increase of 3.8% and
an increase of 7.2% in Net Operating Income (“NOI”;
a non-GAAP financial measure defined on page 14 of this release).
“Same Site” (a
non-GAAP financial measure defined on page 14 of this release) results
provided a revenue increase of 3.5%, an expense increase of 1.5% and
an increase of 4.5% in NOI.
2007 Year
Diluted Earnings Per Share (“Diluted EPS”)
were $1.57 for the year ended December 31, 2007, compared to $1.24
from the same period one year ago, an increase of 26.6% on a per share
basis. Net income was impacted by a $1.15 gain recognized on the sale
of a community in 2007.
Funds from Operations (“FFO”;
a non-GAAP financial measure defined on page 14 of this press release)
were $9.0 million, or $1.01 per diluted common share, for the year,
compared to $14.7 million, or $1.66 per diluted common share, for the
same period one year ago, a decrease of 39.2% on a per share basis.
Home sales volume was $27,264,000, a decline of 42.3% from the same
period one year ago, consisting of 209 new home closings, including
198 new homes sold on expansion home sites. This result compares with
362 new home closings in 2006.
“Same Store” (a
non-GAAP financial measure defined on page 14 of this release) results
provided a revenue increase of 6.6%, an expense increase of 3.4% and
an increase of 8.2% in Net Operating Income (“NOI”;
a non-GAAP financial measure defined on page 14 of this press release).
“Same Site” (a
non-GAAP financial measure defined on page 14 of this release) results
provided a revenue increase of 3.3%, an expense increase of 1.6% and
an increase of 4.1% in NOI.
FFO, NOI, Same Store and Same Site are supplemental non-GAAP financial
measures that are defined in the glossary beginning on page 14. 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. Nether FFO or 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 beginning on page 19. A reconciliation of NOI, Same Store and
Same Site to the comparable GAAP financial measure is included beginning
on page 21.
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, “For
both this quarter and the entire 2007 year, our portfolio of land leases
produced 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 impacted our ability to add new
leases to the portfolio at the same rate we have enjoyed in prior years.
As a result, we have re-evaluated the contribution to NAV from our
unoccupied home sites, both developed and undeveloped, which has
resulted in a lowering of NAV. Although we sold fewer homes in 2007, our
home sales activity still supported a 2.2% increase in the number of
leased sites and a stable occupancy rate of 97.0% across the portfolio.
This increase in occupancy is one of the factors that results in
increased NAV for the Company. The deceleration in the rate of new
leases has reduced current land values, slowing the rate at which the
Company’s NAV grows.”
“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 1.5% over
2006 to 63.9%. 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. The unit volume of new homes sold was down by 33, or 47%
compared to the fourth quarter of 2006 and down by 153, or 42% for the
full year. In the midst of this challenging sales environment, we remain
focused on adding new leases to the portfolio. This is the same focus
that we have shown over the past five years as customers have purchased
1,812 quality new homes which represent an investment of approximately
$204 million in our communities.”
“We continue to believe that the value of the
ANL business and assets exceed the valuation expressed in the current
share price. As a result, we have continued to buy back stock at what we
believe to be very accretive values.”
“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 while maintaining our ability to
grow NAV. 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 11 of this press release.
Dividend Declaration
On January 30, 2008, the Board of Directors declared a fourth quarter
common stock dividend of $0.25 per share, payable on February 29, 2008,
to stockholders of record on February 15, 2008.
On January 30, 2008, the Board of Directors also declared a cash
dividend of $0.4844 per share of Class A Preferred Stock for the quarter
ended December 31, 2008, payable on February 29, 2008, to shareholders
of record on February 15, 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 20, the Company’s
common dividend was greater than Adjusted Funds from Operations (“AFFO”)
for 2007. 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 –
Fourth Quarter
Fourth Quarter Property Operations
Fourth quarter revenue from property operations was $9,528,000, as
compared to $9,002,000 in the same period one year ago, a 5.8% increase.
Fourth quarter property operating expenses totaled $3,204,000, as
compared to $3,051,000 in the same period one year ago, a 5.0% increase.
The Company realized increases in rental income as the result of three
acquisitions of communities in 2006, annual rental rate increases, rent
yield management, and the leasing of new home sites through its home
sales efforts.
Fourth quarter property operating expenses increased primarily due to
increases in utility costs, property taxes, insurance premiums and the
aforementioned acquisition of communities. 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.
Fourth quarter property-operating margins before depreciation expense
increased to 63.8% from 63.6% in the prior year’s
fourth quarter.
Fourth Quarter “Same
Store”
Results
Fourth quarter “same store”
results reflect the results of operations for properties and golf
courses owned during the fourth quarters of both 2007 and 2006. Same
store properties accounted for 100.0% of property operating revenues for
fourth quarter 2007. “Same store”
results are defined on page 14, and reconciled to GAAP on page 21, 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:
4Q07
Revenue
6.1
%
Expense
3.8
%
Net Operating Income
7.2
%
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.
4Q07
Revenues
6.1
%
Less: Net Reimbursements
(0.8
%)
Revenue growth net of reimbursements
5.3
%
Expenses
3.8
%
Less: Net Reimbursements
(3.6
%)
Expense growth net of reimbursements
0.2
%
Same Store NOI Growth
7.2
%
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 14, and
reconciled to GAAP on page 22, 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 fourth quarter are as follows based upon
increases from prior year results.
Same Site Rental
Absorption
Same Site Golf
Same Store
Revenue
3.5
%
2.6
%
0.0
%
6.1
%
Expense
1.5
%
1.5
%
0.8
%
3.8
%
NOI
4.5
%
3.1
%
(0.4
)%
7.2
%
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 December 31, 2007
and 2006 can be found on page 21 of this earnings release.
Fourth Quarter Home Sales Operations
Fourth quarter 2007 new home sales were $4,508,0000, a 52.5% decrease
from the same period in the prior year. There were 38 closings, a 46.5%
decrease from the 71 closings during the same period in 2006. Average
selling price per home was $128,000, compared to $131,000 in the same
period in 2006, a 2.3% decrease. Eleven communities reported average
selling prices in excess of $100,000. Selling gross margins, excluding
brokerage activities, decreased to 28.9% in the quarter, compared to
33.4% in the same period in 2006. The year-to-year decrease was driven
primarily by decreased manufacturer rebates associated with lower
purchasing volumes, increases in costs of homes purchased, and lower
relative selling prices. Selling costs as a percentage of sales revenue
increased from 25.5% in the fourth quarter of 2006 to 45.8% in the
fourth quarter of 2007, reflecting lower operating leverage against
fixed costs. Selling costs, including overhead, marketing and
advertising expenses, were down by 14.7% compared to the same period in
2006. However, when allocated against the lower sales volumes, such
costs resulted in a higher per home expense than in the same period in
2006.
The Company’s backlog of contracts to close
stood at 23, a decrease of 11, or 32.4%, from the same period in 2006.
The Company remains committed to generating revenue growth through new
lease originations in its existing portfolio. Even though new home sales
slowed from 2006 to 2007, our home sales business continues to provide
the Company with additional earning home sites.
Summary of home sales activity:
Quarter endedDecember 31, 2007
Quarter endedDecember 31, 2006
New home closings
38
71
New home contracts
37
73
Home resales
2
1
Brokered home sales
26
27
New home contract backlog
23
34
Operational Results –
2007 Year
2007 Property Operations
2007 revenue from property operations was $37,587,000 compared to
$33,756,000 in the same period one year ago, an 11.3% increase. 2007
property operating expenses totaled $12,596,000, compared to $11,769,000
in the same period one year ago, a 7.0% increase. The Company realized
increases in rental income as the result of three community acquisitions
in 2006, annual rental rate increases, rent yield management and the
absorption of new home sites through its home sales efforts.
2007 property operating expenses increased primarily due to increases in
utility costs, , personnel costs, insurance premiums and the
aforementioned acquisitions of communities. 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.
2007 property-operating margins before depreciation expense increased to
63.9% from 62.4% in the prior year.
2007 “Same
Store”
Results
2007 “same store”
results reflect the results of operations for properties and golf
courses owned during both 2007 and 2006. Same store properties accounted
for 91.1% of property operating revenues for 2007. “Same
store” results are defined on page 14, and
reconciled to GAAP on page 22, 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:
2007
Revenue
6.6
%
Expense
3.4
%
Net Operating Income
8.2
%
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.
2007
Revenues
6.6
%
Less: Net Reimbursements
0.1
%
Revenue growth net of reimbursements
6.7
%
Expenses
3.4
%
Less: Net Reimbursements
(0.8
%)
Expense growth net of reimbursements
2.6
%
Same Store NOI Growth
8.2
%
In addition to focusing on controlling operating expenses, our leases
also provide some insulation from increased expenses.
Our same site rental, absorption and golf operations contributions to
total same store results for 2007 are as follows based upon increases
from prior year results:
Same Site Rental
Absorption
Same Site Golf
Same Store
Revenue
3.3
%
3.4
%
(0.1
)%
6.6
%
Expense
1.6
%
1.6
%
0.2
%
3.4
%
NOI
4.1
%
4.3
%
(0.2
)%
8.2
%
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 2007 and 2006 can be found on page 22 of
this earnings release.
2007 Home Sales Operations
2007 new home sales were $27,264,000, a 42.3% decrease from the same
period in the prior year. There were 209 closings, a 42.3% decrease from
the 362 closings in 2006. Average selling price per home was $130,000,
as compared to $129,000 in the same period in 2006, a 0.8% increase.
Sixteen communities reported average selling prices in excess of
$100,000. Selling gross margins, excluding brokerage activities,
decreased to 28.3% in 2007 as compared to 33.3% in the same period in
2006. The year-to-year decrease was driven primarily by decreased
manufacturer rebates associated with lower purchasing volumes, increases
in costs of homes purchased, and lower relative selling prices. Selling
costs as a percentage of sales revenue increased from 22.4% in 2006 to
33.5% in 2007 reflecting lower operating leverage against fixed costs.
Selling costs, including overhead, marketing and advertising expenses,
were down by 13.6%. However, when allocated against still lower sales
volumes, such costs resulted in a higher per home expense than in 2006.
Summary of home sales activity:
YE December 31,
2007
YE December 31,2006
New home closings – Same Store
183
323
New home closings – Acquisitions
26
39
Total new home closings
209
362
New home contracts – Same Store
198
341
New home contracts – Acquisitions
35
55
Total new home contracts
233
396
Home resales
10
6
Brokered home sales
97
163
New home contract backlog – Same Store
20
29
New home contract backlog - Acquisitions
3
5
Total new home contract backlog
23
34
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 16,000 shares of outstanding
common stock at an average price of $20.75 for the three months ended
December 31, 2007. The Company has repurchased approximately 783,000
shares as of December 31, 2007 pursuant to this authorization, including
a total of 206,000 shares repurchased in 2007 at an average price of
$22.09.
We believe that the current share price reflects a discount from the
Company’s Net Asset Value. Therefore, we have
repurchased, and expect to continue repurchasing, additional shares of
our common stock in the first quarter of 2008.
Financing Activity
During the first quarter of 2008, the Company closed three loan
transactions which served to refinance the loans on three properties.
Proceeds to the Company, net of transaction costs including a prepayment
penalty, reflect an effective interest cost of approximately 5.6%. The
three loans each have a maturity date of ten-years. In conjunction with
this refinancing, the Company expects to record a prepayment penalty
charge of $2.0M which will reduce earnings per share during first
quarter of 2008 by approximately $0.23 per share.
Development Activity
The Company ended the year with an inventory of 1,370 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 March 2008. During the
quarter, we began construction of the clubhouse amenity for the
community.
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:
2007 ActualResults
Full Year 2008Projected
FFO before prepayment penalties
$1.01
$0.86 to $1.15
Prepayment penalties on debt refinancing transactions
--
$0.22
FFO
$1.01
$0.64 to $0.93
AFFO before prepayment penalties
$0.87
$0.72 to $1.04
Prepayment penalties on debt refinancing transactions
--
$0.22
AFFO
$0.87
$0.50 to $0.82
Diluted EPS from continuing operations
$0.39
$0.01 to $0.22
Diluted EPS from discontinued operations
$1.18
--
Diluted EPS
$1.57
$0.01 to $0.22
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%
New Home Sales Volume
209
160 to 225
New Home Sales Gross Margin
28.4%
27% to 28%
Home Sales Operating Income(Loss)
($1.3M)
($2.1M) to $0.5M
Home Sales Net Contribution
($2.8M)
($3.6M) to ($0.8M)
General and Administrative Expenses
$4.3M
$4.5M to $4.8M
Capital Replacements (per site)
$126
$130 to $160
Depreciation
$5.0M
$5.5M to $5.9M
The Company’s land lease business continues
to perform consistently. 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.
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.
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 7,984 operational home sites, 1,370
developed expansion sites, 1,191 undeveloped expansion sites and 129
recreational vehicle sites as of December 31, 2007.
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, results of operations, 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, but
are not limited to: 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. 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,
Wednesday, February 13, 2008 at 9:30 a.m. Eastern Standard Time to
discuss fourth quarter and full year 2007 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
fourth quarter 2007 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 Standard Time, February
13, 2008 until midnight on February 20, 2008. To access the replay, dial
toll free, (800) 642-1687 and request information from conference ID
33455999.
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.
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)
December 31,2007
September 30,2007
As ofJune 30,2007
March 31,2007
December 31,2006
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(audited)
ASSETS
Real Estate
$
309,033
$
304,280
$
306,824
$
304,484
$
301,392
Less accumulated depreciation
(31,842
)
(30,735
)
(31,191
)
(30,120
)
(29,068
)
Real estate under development
122,326
121,056
119,602
115,798
110,682
Total Real Estate
399,517
394,601
395,235
390,162
383,006
Cash and cash equivalents
541
296
308
293
253
Inventory
20,084
20,012
21,031
20,705
22,827
Other assets
16,391
15,362
16,085
15,662
15,969
Total Assets
$
436,533
$
430,271
$
432,659
$
426,822
$
422,055
LIABILITIES AND EQUITY
Liabilities
Secured long-term notes payable
$
239,970
$
240,769
$
238,676
$
234,826
$
235,567
Secured short-term financing
30,932
18,963
30,013
25,012
20,059
Accounts payable and accrued liabilities
9,288
12,260
11,545
13,239
13,216
Total Liabilities
280,190
271,992
280,234
273,077
268,842
Minority Interest in Operating Partnership
17,339
17,522
16,421
16,475
16,502
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
94
Additional paid-in capital
293,821
293,510
293,113
292,757
291,460
Dividends in excess of accumulated earnings
(148,749
)
(147,013
)
(154,920
)
(153,970
)
(153,231
)
Treasury stock at cost
(31,163
)
(30,835
)
(27,284
)
(26,612
)
(26,612
)
Total Stockholders Equity
139,004
140,757
136,004
137,270
136,711
Total Liabilities and Stockholders’
Equity
$
436,533
$
430,271
$
432,659
$
426,822
$
422,055
AMERICAN LAND LEASE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
Three Months Ended
December 31,
2007
September 30,
2007
June 30,
2007
March 31,
2007
RENTAL PROPERTY OPERATIONS
Rental and other property revenues
$
9,528
$
9,389
$
9,334
$
9,336
Golf course operating revenues
250
165
219
430
Total property operating revenues
9,778
9,554
9,553
9,766
Property operating expenses
(3,204
)
(3,092
)
(3,111
)
(3,189
)
Golf course operating expenses
(336
)
(341
)
(357
)
(335
)
Total property operating expenses
(3,540
)
(3,433
)
(3,468
)
(3,524
)
Depreciation
(1,286
)
(1,239
)
(1,227
)
(1,205
)
Income from rental property operations
4,952
4,882
4,858
5,037
SALES OPERATIONS
Home sales revenue
4,508
7,162
7,929
7,665
Cost of home sales
(3,205
)
(5,055
)
(5,658
)
(5,633
)
Gross profit on home sales
1,303
2,107
2,271
2,032
Commissions earned on brokered sales
69
60
44
75
Commissions paid on brokered sales
(27
)
(24
)
(19
)
(35
)
Gross profit on brokered sales
42
36
25
40
Selling and marketing expenses
(2,064
)
(2,345
)
(2,375
)
(2,337
)
Income (loss) from sales operations
(719
)
(202
)
(79
)
(265
)
General and administrative expenses
(1,230
)
(1,105
)
(993
)
(964
)
Interest and other income
22
7
8
170
Interest expense
(2,251
)
(2,197
)
(2,142
)
(2,109
)
Income before minority interest in Operating Partnership
774
1,385
1,652
1,869
Minority interest in Operating Partnership
(88
)
(164
)
(188
)
(211
)
Income from continuing operations
686
1,221
1,464
1,658
DISCONTINUED OPERATIONS
Income (loss) from discontinued operations, net of
Minority Interest
21
9,154
75
77
Net Income
707
10,375
1,539
1,735
Cumulative preferred stock dividends
(485
)
(484
)
(485
)
(484
)
Net Income Attributable to common shareholders
$
222
$
9,891
$
1,054
$
1,251
Basic earnings from continuing operations (net of cumulative unpaid
preferred dividends)
$
0.03
$
0.09
$
0.14
$
0.16
Basic earnings (loss) from discontinued operations
--
1.20
--
--
Basic earnings per common share
$
0.03
$
1.29
$
0.14
$
0.16
Diluted earnings from continuing operations
$
0.03
$
0.10
$
0.13
$
0.16
Diluted earnings (loss) from discontinued operations
0.00
1.16
--
--
Diluted earnings per common share
$
0.03
$
1.26
$
0.13
$
0.16
Weighted average common shares outstanding
7,560
7,659
7,745
7,688
Weighted average common shares and common share equivalents
outstanding
7,754
7,871
8,029
8,054
Common dividends paid per share
$
0.25
$
0.25
$
0.25
$
0.25
AMERICAN LAND LEASE INC. AND SUBSIDIARIES
DEBT ANALYSIS
(in thousands)
(unaudited)
Dec. 31,2007
Sept. 30,2007
As ofJune 30,2007
March 31,2007
Dec. 31,2006
DEBT OUTSTANDING
Mortgage Loans Payable – Fixed
$
217,864
$
218,663
$
227,320
$
223,470
$
224,211
Mortgage Loans Payable – Floating
22,106
22,106
11,356
11,356
11,356
Floor Plan Facility
23,086
13,337
20,508
19,636
14,754
Line of Credit
7,846
5,626
9,505
5,376
5,305
Total Debts
$
270,902
$
259,732
$
268,689
$
259,838
$
255,626
% FIXED FLOATING
Fixed
80.4
%
84.2
%
84.6
%
86.0
%
87.7
%
Floating
19.6
%
15.8
%
15.4
%
14.0
%
12.3
%
Total
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
AVERAGE INTEREST RATES
Mortgage Loans Payable – Fixed
6.3
%
6.3
%
6.3
%
6.4
%
6.4
%
Mortgage Loans Payable – Floating
6.7
%
6.9
%
7.1
%
7.1
%
7.1
%
Floor Plan Facility
7.5
%
8.5
%
8.5
%
8.5
%
8.5
%
Line of Credit
6.6
%
7.2
%
6.9
%
6.9
%
7.3
%
Total Weighted Average
6.4
%
6.5
%
6.5
%
6.6
%
6.6
%
DEBT RATIOS
Debt/Total Market Cap(1)
57.7
%
53.7
%
51.7
%
50.8
%
49.4
%
Debt/Gross Assets
62.0
%
60.4
%
62.1
%
60.9
%
60.6
%
MATURITIES
Dec. 31,2008
Dec. 31,2009
Dec. 31,2010
Dec. 31,2011
Dec. 31,2012
Mortgage Loan Scheduled Principal Payments
3,145
3,625
3,869
4,018
4,202
Mortgage Loan Balloon Maturities
2,661
--
--
21,740
10,750
Total
$
5,806
$
3,625
$
3,869
$
25,758
$
14,952
(1) Computed based upon closing price as reported on NYSE as of the
period ended.
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
December 31,
2007
2006
Net Income
$
222
$
2,641
Adjustments
Cumulative unpaid preferred stock dividends
485
485
Minority interest in operating partnership
88
290
Gain on sale of assets
3
(1,006
)
Real estate depreciation
1,286
1,175
Discontinued operations:
Real estate depreciation
--
37
Minority interest in operating partnership attributed discontinued
operations
(24
)
127
Funds From Operations (FFO)
$
2,060
$
3,749
Cumulative unpaid preferred stock dividends
(485
)
(485
)
Funds From Operations attributable to common
Stockholders
1,575
3,264
Capital Replacements
(295
)
(289
)
Adjusted Funds from Operations (AFFO)
$
1,280
$
2,975
Weighted Average Common Shares/OP Units Outstanding
8,747
8,946
Per Common Share and OP Unit:
FFO:
$
0.18
$
0.36
AFFO:
$
0.15
$
0.33
Payout Ratio Per Common Share and OP Unit:
Gross Distribution Payout
FFO:
138.9
%
69.4
%
AFFO:
166.7
%
75.8
%
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)
Twelve Months Ended
December 31,
2007
2006
Net Income
$
12,418
$
9,753
Adjustment
Cumulative unpaid preferred stock dividends
1,938
1,938
Minority interest in operating partnership
651
1,380
Gain on sale of assets
(10,302
)
(1,006
)
Real estate depreciation
4,957
4,248
Discontinued operations:
Real estate depreciation
64
165
Minority interest in operating partnership attributed discontinued
operations
1,181
170
Funds From Operations (FFO)
$
10,907
$
16,648
Cumulative unpaid preferred stock dividends
(1,938
)
(1,938
)
Funds From Operations attributable to common
Stockholders
8,969
14,710
Capital Replacements
(1,174
)
(1,662
)
Adjusted Funds from Operations (AFFO)
$
7,795
$
13,048
Weighted Average Common Shares/OP Units Outstanding
8,916
8,876
Per Common Share and OP Unit:
FFO:
$
1.01
$
1.66
AFFO:
$
0.87
$
1.47
Payout Ratio Per Common Share and OP Unit:
Gross Distribution Payout
FFO:
99.0
%
60.2
%
AFFO:
114.9
%
68.0
%
AMERICAN LAND LEASE INC. AND SUBSIDIARIES
RECONCILIATION OF SAME SITE AND SAME STORE OPERATING RESULTS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2007 AND DECEMBER 31,
2006
(in thousands)
(unaudited)
ThreeMonthsEndedDec. 31,2007
ThreeMonthsEndedDec. 31,2006
Change
% Change
Contribution to Same Store
% Change(1)
Same site rental revenues
$
9,034
$
8,707
$
327
3.8
%
3.5
%
Absorption rental revenues
531
290
241
83.1
%
2.6
%
Same store golf revenues
250
249
1
0.4
%
0.0
%
Same store revenues
A
9,815
9,246
569
6.1
%
6.1
%
Property revenues other then from land leases
9
5
4
80.0
%
Intercompany revenues
(46
)
--
(46
)
(100.0
%)
Total property revenues
C
$
9,778
$
9,251
$
527
5.7
%
Same site rental expenses
$
2,647
$
2,603
$
44
1.7
%
1.5
%
Absorption rental expenses
44
-
44
100.0
%
1.5
%
Same store golf expenses
336
313
23
7.3
%
0.8
%
Same store expenses
B
3,027
2,916
111
3.8
%
3.8
%
Newly acquired property expenses
7
5
2
40.0
%
Expenses related to offsite management(2)
506
443
63
14.2
%
Total property operating expenses
D
$
3,540
$
3,364
$
176
5.2
%
Same store net operating income
A-B
$
6,788
$
6,330
458
7.2
%
Total net operating income
C-D
$
6,238
$
5,887
$
351
6.0
%
(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 2006 period. For example same store
rental revenue increase of $327 as compared to the total same store
revenues in 2006 of $9,246 is a 3.5% increase ($327/$9,246=3.5%).
(2) Expenses related to offsite management reflect portfolio
property management costs not attributable to a specific property.
AMERICAN LAND LEASE INC. AND SUBSIDIARIES
RECONCILIATION OF SAME SITE AND SAME STORE OPERATING RESULTS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2007 AND DECEMBER 31,
2006
(in thousands)
(unaudited)
TwelveMonthsEndedDec. 31,2007
TwelveMonthsEndedDec. 31,2007
Change
% Change
Contribution to Same Store
% Change(1)
Same site rental revenues
$
32,367
$
31,277
$
1,090
3.5
%
3.3
%
Absorption rental revenues
1,763
645
1,118
173.3
%
3.4
%
Same store golf revenues
1,064
1,086
(22
)
(2.0
%)
(0.1
%)
Same store revenues
A
35,194
33,008
2,186
6.6
%
6.6
%
Newly acquired property revenues
3,599
1,834
1,765
96.2
%
Intercompany revenues
(142
)
--
(142
)
(100
%)
Total property revenues
C
$
38,651
$
34,842
$
3,809
10.9
%
Same site rental expenses
$
9,558
$
9,388
$
170
1.8
%
1.6
%
Absorption rental expenses
170
-
170
100.0
%
1.6
%
Same store golf expenses
1,369
1,347
22
1.6
%
0.2
%
Same store expenses
B
11,097
10,735
362
3.4
%
3.4
%
Newly acquired property expenses
1,025
617
408
66.1
%
Expenses related to offsite management2
1,843
1,764
79
4.5
%
Total property operating expenses
D
$
13,965
$
13,116
$
849
6.5
%
Same store net operating income
A-B
$
24,097
$
22,273
1,824
8.2
%
Total net operating income
C-D
$
24,686
$
21,726
$
2,960
13.6
%
(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 2006 period. For example same store
rental revenue increase of $1,090 as compared to the total same
store revenues in 2006 of $33,008 is a 3.3% increase
($1,090/$33,008=3.3%).
(2) 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 DECEMBER 31, 2007
Community
Location
Operational Home Sites
(1)
Occupancy
Average Monthly Rent
RV
Sites
Undeveloped Home Sites
Developed Home Sites
Owned Communities
Blue Heron Pines
Punta Gorda, FL
345
100%
$351
--
--
44
Brentwood Estates
Hudson, FL
143
98%
280
--
--
48
Sebastian Beach & Tennis Club
Micco, FL
--
0%
--
--
533
--
Serendipity
Ft. Myers, FL
338
96%
365
--
--
--
Stonebrook
Homosassa, FL
198
100%
312
--
--
3
Sunlake Estates
Grand Island, FL
366
100%
362
--
--
35
Forest View
Homosassa, FL
273
100%
328
--
--
31
Gulfstream Harbor
Orlando, FL
382
98%
424
--
50
--
Gulfstream Harbor II
Orlando, FL
306
100%
428
--
37
1
Gulfstream Harbor III
Orlando, FL
176
97%
394
--
--
108
Lakeshore Villas
Tampa, FL
281
96%
440
--
--
--
Park Place
Sebastian, FL
374
100%
325
--
--
93
Park Royale
Pinellas Park, FL
297
93%
441
--
--
12
Pleasant Living
Riverview, FL
245
95%
387
--
--
--
Riverside GCC
Ruskin, FL
472
100%
535
--
311
158
Royal Palm Village
Haines City, FL
288
96%
355
--
--
99
Cypress Greens
Lakeland, FL
230
100%
260
--
--
28
Savanna Club
Port St Lucie, FL
1003
100%
300
--
--
64
Woodlands
Groveland, FL
168
99%
290
-
--
124
Subtotal—Florida
5,885
99%
$368
--
931
848
Blue Star
Apache Junction AZ
22
50%
320
129
--
--
Brentwood West
Mesa, AZ
350
94%
471
--
--
--
The Villages(a)
Mesa, AZ
--
0%
--
--
--
375
Desert Harbor
Apache Junction AZ
205
100%
376
--
--
--
Fiesta Village
Mesa, AZ
172
86%
402
--
--
--
La Casa Blanca
Apache Junction AZ
197
100%
400
--
--
--
Lost Dutchman
Apache Junction AZ
215
77%
315
--
--
27
Rancho Mirage
Apache Junction AZ
312
96%
434
--
--
--
Reserve at Fox Creek
Bull Head City, AZ
256
100%
331
--
--
57
Sun Valley
Apache Junction AZ
268
91%
364
--
--
--
Subtotal—Arizona
1,997
93%
$393
129
--
459
Foley Grove
Foley, AL
102
100%
278
--
260
63
Total Communities
30
7,984
97%
$373
129
1,191
1,370
(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 82.8% across the
entire portfolio. Including sites not yet developed, occupancy was
at 73.5% at December 31, 2007.
(a) FKA - Casa Encanta
Portfolio Summary
Operational
Home sites
Developed Home sites
Undeveloped Home sites
RV Sites
Total
As of December 31, 2006
8,044
1,192
1,566
129
10,931
Properties developed
--
375
(375
) (2)
--
--
New lots purchased / (Sold) Sun Valley Estates FL
(261
)
6
--
--
(255
)
New leases originated
199
(199
)
--
--
--
Adjust for site plan changes
2
(4
)
--
--
(2
)
As of December 31, 2007
7,984 (1
)
1,370
1,191
129
10,674
(1) As of December 31, 2007, 7,748 of these operational home sites
were occupied.
(2) The Villages, Arizona completion of development of site work,
375 sites
Occupancy Roll Forward
Occupied
Home sites
Operational
Home sites
Occupancy
As of December 31, 2006
7,833
8,044
97.3
%
New home sales
209
198
Used home sales
10
2
Used homes acquired
(25
)
--
Lots acquired (sold)
(255
)
(261
)
Homes constructed by others
5
1
Homes removed from previously leased sites
(29
)
--
As of December 31, 2007
7,748
7,984
97.0
%
AMERICAN LAND LEASE, INC. AND SUBSIDIARIES
RETURN ON INVESTMENT FROM HOME SALES
(unaudited)
Three Months Ended
December 31, 2007
Three Months Ended
December 31, 2006
Expansion sites leased during the period
36
56
Estimated stabilized first year profit on leases originated during
the period
A
$
124
$
201
Allocated costs, including development costs of sites leased
$
1,420
$
2,392
Home sales (loss) income attributable to sites leased
(772
)
740
Total costs incurred to originate ground leases
B
$
2,192
$
1,652
Estimated stabilized first year returns from the leases originated
on expansion home sites during the period
A/B
5.7
%
12.2
%
For the three months ended December 31, 2007 and 2006, we estimate our
profit or loss attributable to the sale of homes situated on expansion
home sites as follows (in thousands):
Three Months EndedDecember 31, 2007
Three Months EndedDecember 31, 2006
Reported (loss)/income from sales operations
$
(719
)
$
797
Brokerage business income
(41
)
(47
)
Used home sales
(12
)
(10
)
Adjusted ( loss) income for projection analysis
$
(772
)
$
740
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 3.4% instead of 5.7%.
AMERICAN LAND LEASE, INC. AND SUBSIDIARIES
RETURN ON INVESTMENT FROM HOME SALES
(unaudited)
Twelve Months Ended
December 31, 2007
Twelve Months Ended
December 31, 2006
Expansion sites leased during the period
198
300
Estimated stabilized first year profit on leases originated during
the period
A
$
668
$
1,107
Allocated costs, including development costs of sites leased
$
8,664
$
13,042
Home sales (loss) income attributable to sites leased
(1,538
)
5,133
Total costs incurred to originate ground leases
B
$
10,202
$
7,909
Estimated stabilized first year returns from the leases originated
on expansion home sites during the period
A/B
6.6
%
14.0
%
For the year ended December 31, 2007 and 2006, we estimate our profit or
loss attributable to the sale of homes situated on expansion home sites
as follows (in thousands):
Twelve Months EndedDecember 31, 2007
Twelve Months EndedDecember 31, 2006
Reported (loss)/income from sales operations
$
(1,265
)
$
5,387
Brokerage business income
(143
)
(234
)
Used home sales
(130
)
(20
)
Adjusted income for projection analysis
$
(1,538
)
$
5,133
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 4.5% instead of 6.6%.
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 forYear EndedDecember
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
ThreeMonthsended
Dec. 31,2006
ThreeMonthsended
March 31,2007
ThreeMonths
ended
June 30,
2007
ThreeMonthsended
Sept. 30,2007
ThreeMonthsended
Dec. 31,2007
4Q07 over 3Q07 Increase/ Decrease
4Q07 over 3Q07 % Change
4Q07 over 4Q06 Increase/ Decrease
4Q07 over 4Q06 % Change
New home contracts
73
96
56
44
37
(7
)
(15.9
%)
(36
)
(49.3
%)
New home closings
71
55
65
51
38
(13
)
(25.5
%)
(33
)
(46.5
%)
Home resales
1
3
1
4
2
(2
)
(50
%)
1
100
%
Brokered home sales
27
31
18
22
26
4
18.2
%
(1
)
(3.7
%)
New home contract backlog
34
58
48
32
23
(9
)
(28.1
%)
(11
)
(32.4
%)
Average Selling Price
$
131,000
$
135,000
$
122,000
$
137,000
$
128,000
($9,000
)
(6.6
%)
($3,000
)
(2.3
%)
Average Gross Margin Percentage
33.4
%
26.5
%
28.6
%
29.4
%
29.8
%