American Land Lease (NYSE:ANL)
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American Land Lease, Inc. (NYSE:ANL)
today released second quarter 2007 results.
Summary Financial Results
Second Quarter
Diluted Earnings Per Share (“Diluted EPS”)
were $0.13 for the three-month period ended June 30, 2007 compared to
$0.28 for the same period one-year ago, a decrease of $.15 or 53.6% on
a per share basis.
Funds From Operations (“FFO”;
a non-GAAP financial measure defined on page 10 of this press release
and reconciled to net income on page 15 of this press release) were
$2.5 million, or $0.28 per diluted common share, for the quarter
compared to $3.6 million or $0.41 per diluted common share from the
same period one year ago, a decrease of 31.7% on a per share basis.
Home sales volume was $7,929,000 down by 34.2% from the same period
one year ago, with 65 new home closings, including 60 new homes sold
on expansion home sites. This compares with 95 new home closings in
second quarter 2006.
“Same Store”
results (a non-GAAP financial measure defined on page 10 of this press
release and reconciled on page 16 of this press release) provided a
revenue increase of 7.5%, an expense increase of 3.2% and an increase
of 9.6% in Net Operating Income (“NOI”).
“Same Site”
results (a non-GAAP financial measure defined on page 10 of this press
release and reconciled on page 16 of this press release) provided a
revenue increase of 4.0%, an expense increase of 1.9% and an increase
of 5.1% in NOI.
Supplemental Information
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, “We
continue to build Net Asset Value or ‘NAV’
through excellent same site and same store results. These results
reflect the continued stability and strength of our core residential
land lease business. The continued expansion of operating margins at the
property level speaks to the strength of our properties and personnel
who serve our customers well. Operating margins grew 3.0% over the same
quarter in 2006. This is a testament to both the quality of the core
portfolio and the 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. While we are pleased that
our operating loss from home sales narrowed from the prior quarter, new
home sales activity continues to be challenging as our buyers take
longer to sell their current homes. We continue to put our emphasis on
the excellent lifestyle enjoyed by our residents and the quality of
their communities and homes. We have maintained pricing…
which is reflected in the 2.1% increase in our second quarter operating
margins as compared to the first quarter. The important objective that
we did not achieve was the number of new contracts during the quarter.
The unit volume of New Home Sales was down by 30, or 32% compared to
second quarter of 2006. Still, we did see an increase in traffic and a
reduction in cancellations as compared to recent quarters. In sum, while
we are disappointed by unit sales, we are pleased we have been able to
expand our land lease business, even if at a slower rate.”
“Our core business, owning land lease
communities, is solid. Its 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. That said, we have solid locations,
attractive homes, a hardworking sales team, and we are still selling
excellent homes at good prices. I remain upbeat and optimistic about the
future of our company.”
Dividend Declaration
On August 7, 2007, the Board of Directors declared a second quarter
common stock dividend of $0.25 per share payable on August 31, 2007, to
stockholders of record on August 17, 2007.
On August 7, 2007, the Board of Directors also declared a cash dividend
of $0.4844 per share of Class A Preferred Stock for the quarter ended
June 30, 2007, payable on August 31, 2007 to shareholders of record on
August 17, 2007.
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,
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 in the context
of its quarterly review and dividend decision. 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 –
Second Quarter
Second Quarter Property Operations
Second quarter revenue from property operations was $9,715,000 as
compared to $8,508,000 in the same period one year ago, a 14.2%
increase. Second quarter property operating expenses totaled $3,247,000
as compared to $3,056,000 in the same period one year ago, a 6.3%
increase. The Company realized significant increases in rental income
due to the acquisition of three additional communities in 2006, annual
rental rate increases, rent yield management, and the absorption of new
home sites through its home sales efforts.
Second quarter property operating expenses increased primarily due to
increases in utility costs, tenant related legal costs, insurance
premiums and the aforementioned acquisition of three properties. 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 24 of the 31 communities we operate, the
individual homeowner’s water and sewer is
metered and changes in consumption are billed to the homeowner. We
completed our annual property insurance renewal during the quarter and
the increase in premiums was lower than anticipated.
Second quarter property operating margins before depreciation expense
increased to 63.7% from 60.7% in the prior year’s
second quarter.
Second Quarter “Same
Store”
Results
Second quarter “same store”
results reflect the results of operations for properties and golf
courses owned during the second quarters of both 2007 and 2006. Same
store properties accounted for 93.9% of property operating revenues for
second quarter 2007. “Same store”
results are defined on page 10, and reconciled to GAAP on page 16, 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 in periods where properties are
acquired. 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:
2Q07
Revenue
7.5%
Expense
3.2%
Net Operating Income
9.6%
Our same store revenues reflect reimbursements from our tenants for
certain expense items, principally utilities and real estate taxes. When
these revenues are associated with the expenses we incur, the change in
revenues and expenses for the quarter are shown below.
2Q07
Revenues
7.5
%
Less: Reimbursements
(10.1
%)
Revenue growth net of reimbursements
7.3
%
Expenses
3.2
%
Less: Reimbursements
(10.1
%)
Expense growth net of reimbursements
1.5
%
Same Store NOI Growth
9.6
%
While we are focused 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 10, and
reconciled to GAAP on page 16, 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, absorption and golf operations contributions to total
same store results for second quarter are as follows:
Same Site Rental
Absorption
Same Site Golf
Same Store
Revenue
4.0
%
3.4
%
0.1
%
7.5
%
Expense
1.9
%
1.9
%
(0.6
)%
3.2
%
NOI
5.1
%
4.1
%
0.4
%
9.6
%
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 June 30, 2007 and
2006 can be found on page 16 of this earnings release.
Second Quarter Home Sales Operations
Second quarter 2007 new home sales were $7,929,000, a 34.2% decrease
from the same period in the prior year. We had 65 closings, a 31.6%
decrease from the 95 closings in the same period in the prior year.
Average selling price per home was $122,000 as compared to $125,000 in
the same period in the prior year, a 2.4% decrease. Fourteen communities
reported average selling prices in excess of $100,000. Brokerage profits
were down 77.2% as compared with the same period in the prior year on
67% lower volume of closings. Selling gross margins, excluding brokerage
activities, decreased to 28.6% in the quarter as compared to 34.3% in
the same period in the prior year but increased from the 26.5% realized
in first quarter 2007. The year-to-year decrease was driven primarily by
decreased manufacturer rebates associated with lower purchasing volumes;
increases in costs of homes purchased; and decreases attributable to
decreased selling prices. Selling costs as a percentage of sales revenue
increased from 22.9% in the prior year’s
period to 29.9% in the second quarter of 2007. This increase reflects
overhead, together with marketing and advertising expenses, being
allocated against fewer sales even though total marketing and
advertising expenses were down by 20.5%. Selling costs as a percentage
of sales revenue also decreased from the first quarter result of 30.4%.
The backlog of contracts for closing stood at 48, a decrease of 38, or
44.2% from the same period in the prior year.
The Company remains committed to 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, though at a slower rate than in
2006.
Summary of home sales activity:
Quarter ended
June 30, 2007
Quarter ended
June 30, 2006
New home closings – Same Store
61
94
New home closings – Acquisitions
4
1
Total new home closings
65
95
New home contracts – Same Store
53
125
New home contracts – Acquisitions
3
--
Total new home contracts
56
125
Home resales
1
3
Brokered home sales
18
54
New home contract backlog – Same Store
47
86
New home contract backlog - Acquisitions
1
--
Total new home contract backlog
48
86
Outlook for 2007
The table below summarizes the Company’s
projected financial outlook for 2007 as of the date of this release and
is based on the estimates and assumptions disclosed in this and previous
press releases:
The Company’s land lease business continues
to perform predictably and consistently with the Company’s
prior guidance. A portion of the Company’s
earnings is from the sale of new homes on expansion home sites in its
developing communities and from the new leases originated coincident
with such new home sales. The earnings from new home sales 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 the national
averages. The traffic levels during the recent months, while increased,
have not generated the sales activity that had been anticipated. In this
home sales environment, the Company has limited visibility on future new
home sales volumes. As a result, the Company has lowered and widened its
earnings guidance to reflect the possible variations in new home sales
and the limited visibility on total volumes for the second half of 2007.
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. Home sales volume and gross margins are
dependent upon a number of factors, including consumer confidence, the
cost of homeowners’ insurance, and consumers’
access to financing sources for home purchases and the sale of their
current homes.
Revised Full Year 2007 Projected
FFO
$1.05 to $1.40
AFFO
$0.90 to $1.24
Diluted EPS
$0.47 to $0.85
Same Store
Revenue Growth
6.5% to 8.5%
Expense Growth
6.0% to 9.0%
NOI Growth
7.0% to 9.0%
Contribution from Acquired Properties and Redevelopment
$2.4M to $2.8M
Growth in Income from Property Operations Before Depreciation Expense
9.5% to 12.5%
Home Sales Operating Income(Loss)
($1.0M) to $1.5M
Home Sales Net Contribution
($1.85M) to $0.7M
General and Administrative Expenses
$4.2M to $4.7M
Capital Replacements (per site)
$140 to $170
Depreciation
$4.8M to $5.5M
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.
The Company's projected results for 2007 include a reduction in
regulatory compliance costs. Non-employee director compensation
continues to be paid in stock and all stock based compensation is
expensed within the 2007 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.
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.
Share Repurchase
The Board of Directors has authorized the Company to repurchase up to
2,000,000 shares of our outstanding common stock. Pursuant to this
authorization, the Company repurchased 27,000 shares of outstanding
common stock at an average price of $24.64 for the three months ended
June 30, 2007. The Company has repurchased approximately 604,000 shares
as of June 30, 2007 pursuant to this authorization, including the 27,000
shares repurchased in 2007.
We believe that the current share price reflects a discount from the
Company’s Net Asset Value. Therefore, we have
repurchased and continue repurchasing additional shares of our common
stock in the third quarter 2007.
Financing Activity
The Company closed a future advance associated with one property
mortgage for proceeds of $4.5 million bearing interest at 5.89% for a
term of 9 years. Proceeds were used to continue the development of the
Company’s inventory of home sites.
In conjunction with the decline in new home sales profitability, the
Company had lower earnings causing us not to comply with our cash flow
coverage debt covenant on our secured corporate line of credit which
non-compliance was waived by the lender. This $16 million facility is
secured by properties with a net book value of $35.5 million.
Development Activity
The Company ended the quarter with an inventory of 1,079 developed 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 1,566 home sites that are
partially developed or undeveloped. All of these sites are fully
entitled and zoned for a land lease community. With the exception of
Sebastian Beach and Tennis Village and the Villages at Country Club, all
are contiguous 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 the largest part of this site. We
are working with the Town and County to accomplish the platting of the
community under this unique set of circumstances. Pre-sales and
marketing activities for the community have already begun at an off
site sales office opened in January 2006 and we expect to begin home
and Village Centre construction in the second half of 2007.
At the Villages at Country Club project in Mesa, Arizona, site work
was completed. Our homebuilding partner began home sales activity in
July 2007 and we expect they will begin home building activity in
August 2007 with first closings in first quarter 2008.
American Land Lease, Inc. is a REIT that held interests in 31
manufactured home communities with 8,160 operational home sites, 1,079
developed expansion sites, 1,566 undeveloped expansion sites and 129
recreational vehicle sites as of June 30, 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,
Thursday, August 9, 2007 at 9:30 a.m. Eastern Daylight Time to discuss
second quarter 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 second 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 Daylight Time, August 9, 2007 until midnight on August 16, 2007.
To access the replay, dial toll free, 800-642-1687 and request
information from conference ID 11843847.
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.
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: represent 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 where 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
June 30, 2007
March 31, 2007
December 31, 2006
September 30, 2006
June 30, 2006
(unaudited)
(unaudited)
(unaudited)
(unaudited)
ASSETS
Real Estate
$
308,671
$
304,484
$
311,392
$
298,293
$
264,947
Less accumulated depreciation
(31,191
)
(30,120
)
(29,068
)
(28,041
)
(27,836
)
Real estate under development
117,755
115,798
100,682
103,940
95,195
Total Real Estate
395,235
390,162
383,006
374,192
332,306
Cash and cash equivalents
308
293
253
311
8,497
Inventory
21,031
20,705
22,827
23,731
23,588
Other assets
16,085
15,662
15,969
14,845
14,488
Assets Held for Sale
--
--
--
3,874
3,897
Total Assets
$
432,659
$
426,822
$
422,055
$
416,953
$
382,776
LIABILITIES AND EQUITY
Liabilities
Secured long-term notes payable
$
238,676
$
234,826
$
235,567
$
203,428
$
199,746
Secured short-term financing
30,013
25,012
20,059
43,783
19,462
Accounts payable and accrued liabilities
11,545
13,239
13,216
17,359
12,036
Liabilities related to assets held for sale
--
--
--
2,261
2,273
Total Liabilities
280,234
273,077
268,842
266,831
233,517
Minority Interest in Operating Partnership
16,421
16,475
16,502
16,333
16,245
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
94
92
92
Additional paid-in capital
293,113
292,757
291,460
289,223
288,581
Dividends in excess of accumulated earnings
(154,920
)
(153,970
)
(153,231
)
(153,914
)
(154,047
)
Treasury stock at cost
(27,284
)
(26,612
)
(26,612
)
(26,612
)
(26,612
)
Total Stockholders Equity
136,004
137,270
136,711
133,789
133,014
Total Liabilities and Stockholders’
Equity
$
432,659
$
426,822
$
422,055
$
416,953
$
382,776
AMERICAN LAND LEASE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
Three Months Ended
June 30,
2007
March 31,
2007
December 31,
2006
September 30,
2006
RENTAL PROPERTY OPERATIONS
Rental and other property revenues
$
9,715
$
9,721
$
9,347
$
9,121
Golf course operating revenues
219
430
249
154
Total property operating revenues
9,934
10,151
9,596
9,275
Property operating expenses
(3,247
)
(3,329
)
(3,193
)
(3,136
)
Golf course operating expenses
(357
)
(335
)
(313
)
(296
)
Total property operating expenses
(3,604
)
(3,664
)
(3,506
)
(3,432
)
Depreciation
(1,251
)
(1,229
)
(1,199
)
(1,136
)
Income from rental property operations
5,079
5,258
4,891
4,707
SALES OPERATIONS
Home sales revenue
7,929
7,665
9,493
12,197
Cost of home sales
(5,658
)
(5,633
)
(6,323
)
(8,244
)
Gross profit on home sales
2,271
2,032
3,170
3,953
Commissions earned on brokered sales
44
75
86
45
Commissions paid on brokered sales
(24
)
(44
)
(43
)
(27
)
Gross profit on brokered sales
20
31
43
18
Selling and marketing expenses
(2,370
)
(2,328
)
(2,416
)
(2,582
)
Income (loss) from sales operations
(79
)
(265
)
797
1,389
General and administrative expenses
(993
)
(964
)
(1,054
)
(1,055
)
Interest and other income
8
170
115
34
Interest expense
(2,278
)
(2,243
)
(2,251
)
(2,218
)
Income before minority interest in Operating Partnership
1,737
1,956
2,498
2,857
Minority interest in Operating Partnership
(198
)
(221
)
(295
)
(330
)
Income from continuing operations
1,539
1,735
2,203
2,527
DISCONTINUED OPERATIONS
Income (loss) from discontinued operations, net of
Minority Interest
--
--
923
40
Net Income
1,539
1,735
3,126
2,567
Cumulative preferred stock dividends
(485
)
(484
)
(485
)
(485
)
Net Income Attributable to common shareholders
$
1,054
$
1,251
$
2,641
$
2,082
Basic earnings from continuing operations (net of cumulative unpaid
preferred dividends)
$
0.14
$
0.16
$
0.23
$
0.27
Basic earnings (loss) from discontinued operations
--
--
0.12
0.01
Basic earnings per common share
$
0.14
$
0.16
$
0.35
$
0.28
Diluted earnings from continuing operations
$
0.13
$
0.16
$
0.22
$
0.26
Diluted earnings (loss) from discontinued operations
--
--
0.11
0.01
Diluted earnings per common share
$
0.13
$
0.16
$
0.33
$
0.27
Weighted average common shares outstanding
7,745
7,688
7,553
7,507
Weighted average common shares and common share equivalents
outstanding
8,029
8,054
7,953
7,808
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
June 30, 2007
March 31, 2007
December 31, 2006
September 30, 2006
June 30, 2006
DEBT OUTSTANDING
Mortgage Loans Payable – Fixed
$
227,320
$
223,470
$
224,211
$
192,072
$
188,975
Mortgage Loans Payable – Floating
11,356
11,356
11,356
11,356
10,771
Floor Plan Facility
20,508
19,636
14,754
23,813
19,462
Acquisition Bridge Loan
--
--
--
10,000
--
Line of Credit
9,505
5,376
5,305
9,970
--
Total Debts
$
268,689
$
259,838
$
255,626
$
247,211
$
219,208
% FIXED FLOATING
Fixed
84.6
%
86.0
%
87.7
%
77.7
%
86.2
%
Floating
15.4
%
14.0
%
12.3
%
22.3
%
13.8
%
Total
100.00
%
100.00
%
100.00
%
100.00
%
100.00
%
AVERAGE INTEREST RATES
Mortgage Loans Payable – Fixed
6.3
%
6.4
%
6.4
%
6.4
%
6.4
%
Mortgage Loans Payable – Floating
7.1
%
7.1
%
7.1
%
6.9
%
7.4
%
Floor Plan Facility
8.5
%
8.5
%
8.5
%
8.6
%
8.75
%
Acquisition Bridge Loan
--
--
--
7.3
%
--
Line of Credit
6.9
%
6.9
%
7.3
%
7.0
%
7.35
%
Total Weighted Average
6.5
%
6.6
%
6.6
%
6.7
%
6.7
%
DEBT RATIOS
Debt/Total Market Cap(1)
51.7
%
50.8
%
49.4
%
51.4
%
47.6
%
Debt/Gross Assets
62.1
%
60.9
%
60.6
%
59.3
%
57.3
%
MATURITIES
December 31, 2007
December 31, 2008
December 31, 2009
December 31, 2010
December 31, 2011
Mortgage Loan Scheduled Principal Payments
1,561(2
)
3,239
3,725
3,976
4,133
Mortgage Loan Balloon Maturities
2,665
-
-
-
21,740
Total
$
4,226
$
3,239
$
3,725
$
3,976
$
25,873
(1) Computed based upon closing price as reported on NYSE as of the
period ended.
(2) Computed based on the remaining payments to be made in 2007.
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
June 30,
2007
2006
Net Income
$
1,054
$
2,212
Adjustments
Cumulative unpaid preferred stock dividends
485
484
Minority interest in operating partnership
198
350
Real estate depreciation
1,251
1,032
Discontinued operations:
Real estate depreciation, net of minority interests
--
18
Minority interest in operating partnership attributed discontinued
operations
--
6
Funds From Operations (FFO)
$
2,988
$
4,102
Cumulative unpaid preferred stock dividends
(485
)
(484
)
Funds From Operations attributable to common Stockholders
2,503
3,618
Capital Replacements
(385
)
(436
)
Adjusted Funds from Operations (AFFO)
$
2,118
$
3,182
Weighted Average Common Shares/OP Units Outstanding
9,022
8,828
Per Common Share and OP Unit:
FFO:
$
0.28
$
0.41
AFFO:
$
0.23
$
0.36
Payout Ratio Per Common Share and OP Unit:
Gross Distribution Payout
FFO:
89.3
%
61.0
%
AFFO:
108.7
%
69.4
%
AMERICAN LAND LEASE INC. AND SUBSIDIARIES
RECONCILIATION OF SAME SITE AND SAME STORE OPERATING RESULTS
FOR THE QUARTER ENDED June 30, 2007 AND June 30, 2006
(in thousands)
(unaudited)
Three Months
Ended
June 30, 2007
Three Months
Ended
June 30, 2006
Change
% Change
Contribution to Same Store
% Change(1)
Same site rental revenues
$
8,699
$
8,350
$
349
4.2
%
4.0
%
Absorption rental revenues
412
120
292
243.3
%
3.4
%
Same store golf revenues
219
213
6
2.8
%
0.1
%
Same store revenues A
9,330
8,683
647
7.5
%
7.5
%
Newly acquired property revenues
604
38
566
1489.5
%
Total property revenues C
$
9,934
$
8,721
$
1,213
13.9
%
Same site rental expenses
$
2,632
$
2,577
$
55
2.1
%
1.9
%
Absorption rental expenses
55
-
55
100.0
%
1.9
%
Same store golf expenses
357
373
(16
)
(4.3
%)
(0. 6
%)
Same store expenses B
3,044
2,950
94
3.2
%
3.2
%
Newly acquired property expenses
149
33
116
351.5
%
Expenses related to offsite management2
411
446
(35
)
(7.8
%)
Total property operating expenses D
$
3,604
$
3,429
$
175
5.1
%
Same store net operating income A-B
$
6,286
$
5,733
553
9.6
%
Total net operating income C-D
$
6,330
$
5,292
$
1,038
19.6
%
(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 site rental revenues of $349 as compared to the total same
store revenues in 2006 of $8,683 is a 4.0% increase
($349/$8,683=4.0%).
(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 JUNE 30, 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
344
100%
$350
--
--
45
Brentwood Estates
Hudson, FL
141
98%
279
--
--
50
Sebastian Beach & Tennis Club
Micco, FL
--
0%
--
--
533
--
Serendipity
Ft. Myers, FL
338
96%
365
--
--
--
Stonebrook
Homosassa, FL
196
100%
303
--
--
6
Sunlake Estates
Grand Island, FL
358
100%
365
--
--
42
Sun Valley
Tarpon Springs, FL
261
97%
406
--
--
--
Forest View
Homosassa, FL
271
100%
328
--
--
33
Gulfstream Harbor
Orlando, FL
382
98%
424
--
50
--
Gulfstream Harbor II
Orlando, FL
306
100%
422
--
37
1
Gulfstream Harbor III
Orlando, FL
172
99%
397
--
--
112
Lakeshore Villas
Tampa, FL
281
98%
437
--
--
--
Park Place
Sebastian, FL
370
100%
331
--
--
96
Park Royale
Pinellas Park, FL
296
94%
440
--
--
13
Pleasant Living
Riverview, FL
245
95%
364
--
--
--
Riverside GCC
Ruskin, FL
460
100%
531
--
311
169
Royal Palm Village
Haines City, FL
283
97%
358
--
--
104
Cypress Greens
Lakeland, FL
221
100%
263
--
--
37
Savanna Club
Port St Lucie, FL
993
100%
299
--
--
74
Woodlands
Groveland, FL
161
99%
291
--
--
131
Subtotal—Florida
6,079
931
913
Blue Star
Apache Junction AZ
22
50%
320
129
--
--
Brentwood West
Mesa, AZ
350
94%
470
--
--
--
Casa Encanta
Mesa, AZ
--
0%
--
--
375
--
Desert Harbor
Apache Junction AZ
205
100%
378
--
--
1
Fiesta Village
Mesa, AZ
172
86%
405
--
--
--
La Casa Blanca
Apache Junction AZ
197
100%
400
--
--
--
Lost Dutchman
Apache Junction AZ
205
77%
327
--
--
37
Rancho Mirage
Apache Junction AZ
312
96%
434
--
--
--
Reserve at Fox Creek
Bull Head City, AZ
251
100%
326
--
--
62
Sun Valley
Apache Junction AZ
268
91%
365
--
--
--
Subtotal—Arizona
1,982
129
375
100
Foley Grove
Foley, AL
99
100%
290
--
260
66
Total Communities
31
8,160
97%
$373
129
1,566
1,079
(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 84.6%
across the entire portfolio. Including sites not yet developed,
occupancy was at 73% at June 30, 2007.
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
New lots purchased
--
4
--
--
4
New leases originated
114
(1)
(114
)
--
--
--
Adjust for site plan changes
2
(3
)
--
--
(1
)
As of June 30, 2007
8,160
(2)
1,079
1,566
129
10,934
(1) During 2007, a new lease was originated for a used home at one
community. The Company inadvertently reported the home site as
non-operational.
(2) As of June 30, 2007, 7,935 of these operational home sites were
occupied.
Occupancy Roll Forward
Occupied
Home sites
Operational
Home sites
Occupancy
As of December 31, 2006
7,833
8,044
97.4
%
New home sales
120
113
Used home sales
4
2
Used homes acquired
(4
)
--
Homes constructed by others
4
1
Homes removed from previously leased sites
(22
)(1)
--
As of June 30, 2007
7,935
8,160
97.2
%
(1) Of these 22 homes, 17 were as a result of vacation initiated
by the Company as a part of its continuing program of community
renewal.
AMERICAN LAND LEASE, INC. AND SUBSIDIARIES
RETURN ON INVESTMENT FROM HOME SALES
(unaudited)
Three Months Ended
June 30, 2007
Three Months Ended
June 30, 2006
Expansion sites leased during the period
60
83
Estimated first year annualized profit on leases originated during
the period
A
$
191
$
305
Costs, including development costs of sites leased
$
3,613
$
5,006
Home sales (loss) income attributable to sites leased
(105
)
1,369
Total costs incurred to originate ground leases
B
$
3,718
$
3,637
Estimated first year returns from the leases originated on expansion
home sites during the period
A/B
5.1
%
8.4
%
For the three months ended June 30, 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 Ended June 30, 2007
Three Months Ended June 30, 2006
Reported (loss)/income from sales operations
$
(79
)
$
1,472
Brokerage business income
(20
)
(88
)
Used home sales
(6
)
(15
)
Adjusted income for projection analysis
$
(105
)
$
1,369
The reconciliation of our estimated first year return on investment in
expansion home sites to our return on investment in operational home
sites for the year ended December 31, 2006 in accordance with GAAP is
shown below (in thousands):
Total Portfolio for Year Ended December 31, 2006
Property income before depreciation
A
$ 22,847
Total investment in operating home sites
B
$ 294,394
Return on investment from earning home sites(1)
A/B
7.8%
(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, 2006. 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, 2006 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
June 30, 2006
September 30, 2006
December 31, 2006
March 31, 2007
June 30, 2007
2Q07 over 1Q07 Increase/ Decrease
2Q07 over 1Q07 % Change
2Q07 over 2Q06 Increase/ Decrease
2Q07 over 2Q06 % Change
New home contracts
125
81
73
96
56
(40
)
(41.7
%)
(69
)
(55.2
%)
New home closings
95
92
71
55
65
10
18.2
%
(30
)
(31.6
%)
Home resales
3
2
1
3
1
(2
)
(66.7
%)
(2
)
(66.7
%)
Brokered home sales
54
20
27
31
18
(13
)
(41.9
%)
(36
)
(66.7
%)
New home contract backlog
86
51
34
58
48
(10
)
(17.2
%)
(38
)
(44.2
%)
Average Selling Price
$
125,000
$
129,000
$
131,000
$
135,000
$
122,000
($13,000
)
(9.6
%)
($3,000
)
(2.4
%)
Average Gross Margin Percentage
34.3
%
32.4
%
33.4
%
26.5
%
28.6
%