American Land Lease Announces Second Quarter 2007 Results 
CLEARWATER, FL (REIT Media) August 9, 2007 - 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 Quarter ended
June 30, 2007 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 $2.4M to $2.8M
and Redevelopment
----------------------------------------------------------
Growth in Income from Property 9.5% to 12.5%
Operations Before Depreciation Expense
----------------------------------------------------------
----------------------------------------------------------
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, March 31,
2007 2007
------------ -------------
(unaudited) (unaudited)
ASSETS
Real Estate $ 308,671 $ 304,484
Less accumulated depreciation (31,191) (30,120)
Real estate under development 117,755 115,798
------------ -------------
Total Real Estate 395,235 390,162
Cash and cash equivalents 308 293
Inventory 21,031 20,705
Other assets 16,085 15,662
Assets Held for Sale -- --
------------ -------------
Total Assets $ 432,659 $ 426,822
============ =============
LIABILITIES AND EQUITY
Liabilities
Secured long-term notes payable $ 238,676 $ 234,826
Secured short-term financing 30,013 25,012
Accounts payable and accrued
liabilities 11,545 13,239
Liabilities related to assets
held for sale -- --
------------ -------------
Total Liabilities 280,234 273,077
Minority Interest in Operating
Partnership 16,421 16,475
STOCKHOLDERS' EQUITY
Preferred Stock, par value $.01
per share; 3,000 shares
authorized, 1,000 shares issued
and outstanding 25,000 25,000
Common Stock, par value $.01 per
share; 12,000 shares authorized 95 95
Additional paid-in capital 293,113 292,757
Dividends in excess of accumulated
earnings (154,920) (153,970)
Treasury stock at cost (27,284) (26,612)
------------ -------------
Total Stockholders Equity 136,004 137,270
------------ -------------
Total Liabilities and
Stockholders' Equity $ 432,659 $ 426,822
============ =============
As of
------------------------------------
December September June 30,
31, 2006 30, 2006 2006
---------- ----------- -----------
(unaudited) (unaudited)
ASSETS
Real Estate $ 311,392 $ 298,293 $ 264,947
Less accumulated depreciation (29,068) (28,041) (27,836)
Real estate under development 100,682 103,940 95,195
---------- ----------- -----------
Total Real Estate 383,006 374,192 332,306
Cash and cash equivalents 253 311 8,497
Inventory 22,827 23,731 23,588
Other assets 15,969 14,845 14,488
Assets Held for Sale -- 3,874 3,897
---------- ----------- -----------
Total Assets $ 422,055 $ 416,953 $ 382,776
========== =========== ===========
LIABILITIES AND EQUITY
Liabilities
Secured long-term notes payable $ 235,567 $ 203,428 $ 199,746
Secured short-term financing 20,059 43,783 19,462
Accounts payable and accrued
liabilities 13,216 17,359 12,036
Liabilities related to assets
held for sale -- 2,261 2,273
---------- ----------- -----------
Total Liabilities 268,842 266,831 233,517
Minority Interest in Operating
Partnership 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
Common Stock, par value $.01 per
share; 12,000 shares authorized 94 92 92
Additional paid-in capital 291,460 289,223 288,581
Dividends in excess of accumulated
earnings (153,231) (153,914) (154,047)
Treasury stock at cost (26,612) (26,612) (26,612)
---------- ----------- -----------
Total Stockholders Equity 136,711 133,789 133,014
---------- ----------- -----------
Total Liabilities and
Stockholders' Equity $ 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
------------------------------------
March December September
June 30, 31, 31, 30,
2007 2007 2006 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, March 31, December September June 30,
2007 2007 31, 2006 30, 2006 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%
-------------------------------------------------
December December December December December
MATURITIES 31, 2007 31, 2008 31, 2009 31, 2010 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 Three
Months Months
Ended Ended Contribution
June June to Same
30, 30, Store
2007 2006 Change % Change % 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 management(2) 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
Operational Average RV
Community Location Home Sites Occupancy Monthly Sites
(1) Rent
---------------------- ---------- ----------- --------- -------- -----
Owned Communities
---------------------- ---------- ----------- --------- -------- -----
Blue Heron Pines Punta
Gorda, FL 344 100% $350 --
---------------------- ---------- ----------- --------- -------- -----
Brentwood Estates Hudson, FL 141 98% 279 --
---------------------- ---------- ----------- --------- -------- -----
Sebastian Beach & Micco, FL
Tennis Club -- 0% -- --
---------------------- ---------- ----------- --------- -------- -----
Serendipity Ft. Myers,
FL 338 96% 365 --
---------------------- ---------- ----------- --------- -------- -----
Stonebrook Homosassa,
FL 196 100% 303 --
---------------------- ---------- ----------- --------- -------- -----
Sunlake Estates Grand
Island,
FL 358 100% 365 --
---------------------- ---------- ----------- --------- -------- -----
Sun Valley Tarpon
Springs,
FL 261 97% 406 --
---------------------- ---------- ----------- --------- -------- -----
Forest View Homosassa,
FL 271 100% 328 --
---------------------- ---------- ----------- --------- -------- -----
Gulfstream Harbor Orlando,
FL 382 98% 424 --
---------------------- ---------- ----------- --------- -------- -----
Gulfstream Harbor II Orlando,
FL 306 100% 422 --
---------------------- ---------- ----------- --------- -------- -----
Gulfstream Harbor III Orlando,
FL 172 99% 397 --
---------------------- ---------- ----------- --------- -------- -----
Lakeshore Villas Tampa, FL 281 98% 437 --
---------------------- ---------- ----------- --------- -------- -----
Park Place Sebastian,
FL 370 100% 331 --
---------------------- ---------- ----------- --------- -------- -----
Park Royale Pinellas
Park, FL 296 94% 440 --
---------------------- ---------- ----------- --------- -------- -----
Pleasant Living Riverview,
FL 245 95% 364 --
---------------------- ---------- ----------- --------- -------- -----
Riverside GCC Ruskin, FL 460 100% 531 --
---------------------- ---------- ----------- --------- -------- -----
Royal Palm Village Haines
City, FL 283 97% 358 --
---------------------- ---------- ----------- --------- -------- -----
Cypress Greens Lakeland,
FL 221 100% 263 --
---------------------- ---------- ----------- --------- -------- -----
Savanna Club Port St
Lucie, FL 993 100% 299 --
---------------------- ---------- ----------- --------- -------- -----
Woodlands Groveland,
FL 161 99% 291 --
---------------------- ---------- ----------- --------- -------- -----
Subtotal--
Florida 6,079
---------------------- ---------- ----------- --------- -------- -----
---------------------- ---------- ----------- --------- -------- -----
---------------------- ---------- ----------- --------- -------- -----
Blue Star Apache
Junction
AZ 22 50% 320 129
---------------------- ---------- ----------- --------- -------- -----
Brentwood West Mesa, AZ 350 94% 470 --
---------------------- ---------- ----------- --------- -------- -----
Casa Encanta Mesa, AZ -- 0% -- --
---------------------- ---------- ----------- --------- -------- -----
Desert Harbor Apache
Junction
AZ 205 100% 378 --
---------------------- ---------- ----------- --------- -------- -----
Fiesta Village Mesa, AZ 172 86% 405 --
---------------------- ---------- ----------- --------- -------- -----
La Casa Blanca Apache
Junction
AZ 197 100% 400 --
---------------------- ---------- ----------- --------- -------- -----
Lost Dutchman Apache
Junction
AZ 205 77% 327 --
---------------------- ---------- ----------- --------- -------- -----
Rancho Mirage Apache
Junction
AZ 312 96% 434 --
---------------------- ---------- ----------- --------- -------- -----
Reserve at Fox Creek Bull Head
City, AZ 251 100% 326 --
---------------------- ---------- ----------- --------- -------- -----
Sun Valley Apache
Junction
AZ 268 91% 365 --
---------------------- ---------- ----------- --------- -------- -----
Subtotal--
Arizona 1,982 129
---------------------- ---------- ----------- --------- -------- -----
---------------------- ---------- ----------- --------- -------- -----
Foley Grove Foley, AL 99 100% 290 --
---------------------- ---------- ----------- --------- -------- -----
---------------------- ---------- ----------- --------- -------- -----
---------------------- ---------- ----------- --------- -------- -----
Total Communities 31 8,160 97% $373 129
---------------------- ---------- ----------- --------- -------- -----
Undeveloped Developed
Community Location Home Sites Home
Sites
------------------------------------- ---------- ----------- ---------
Owned Communities
------------------------------------- ---------- ----------- ---------
Blue Heron Pines Punta
Gorda, FL -- 45
------------------------------------- ---------- ----------- ---------
Brentwood Estates Hudson, FL -- 50
------------------------------------- ---------- ----------- ---------
Sebastian Beach & Tennis Club Micco, FL 533 --
------------------------------------- ---------- ----------- ---------
Serendipity Ft. Myers,
FL -- --
------------------------------------- ---------- ----------- ---------
Stonebrook Homosassa,
FL -- 6
------------------------------------- ---------- ----------- ---------
Sunlake Estates Grand
Island,
FL -- 42
------------------------------------- ---------- ----------- ---------
Sun Valley Tarpon
Springs,
FL -- --
------------------------------------- ---------- ----------- ---------
Forest View Homosassa,
FL -- 33
------------------------------------- ---------- ----------- ---------
Gulfstream Harbor Orlando,
FL 50 --
------------------------------------- ---------- ----------- ---------
Gulfstream Harbor II Orlando,
FL 37 1
------------------------------------- ---------- ----------- ---------
Gulfstream Harbor III Orlando,
FL -- 112
------------------------------------- ---------- ----------- ---------
Lakeshore Villas Tampa, FL -- --
------------------------------------- ---------- ----------- ---------
Park Place Sebastian,
FL -- 96
------------------------------------- ---------- ----------- ---------
Park Royale Pinellas
Park, FL -- 13
------------------------------------- ---------- ----------- ---------
Pleasant Living Riverview,
FL -- --
------------------------------------- ---------- ----------- ---------
Riverside GCC Ruskin, FL 311 169
------------------------------------- ---------- ----------- ---------
Royal Palm Village Haines
City, FL -- 104
------------------------------------- ---------- ----------- ---------
Cypress Greens Lakeland,
FL -- 37
------------------------------------- ---------- ----------- ---------
Savanna Club Port St
Lucie, FL -- 74
------------------------------------- ---------- ----------- ---------
Woodlands Groveland,
FL -- 131
------------------------------------- ---------- ----------- ---------
Subtotal--
Florida 931 913
------------------------------------- ---------- ----------- ---------
------------------------------------- ---------- ----------- ---------
------------------------------------- ---------- ----------- ---------
Blue Star Apache
Junction
AZ -- --
------------------------------------- ---------- ----------- ---------
Brentwood West Mesa, AZ -- --
------------------------------------- ---------- ----------- ---------
Casa Encanta Mesa, AZ 375 --
------------------------------------- ---------- ----------- ---------
Desert Harbor Apache
Junction
AZ -- 1
------------------------------------- ---------- ----------- ---------
Fiesta Village Mesa, AZ -- --
------------------------------------- ---------- ----------- ---------
La Casa Blanca Apache
Junction
AZ -- --
------------------------------------- ---------- ----------- ---------
Lost Dutchman Apache
Junction
AZ -- 37
------------------------------------- ---------- ----------- ---------
Rancho Mirage Apache
Junction
AZ -- --
------------------------------------- ---------- ----------- ---------
Reserve at Fox Creek Bull Head
City, AZ -- 62
------------------------------------- ---------- ----------- ---------
Sun Valley Apache
Junction
AZ -- --
------------------------------------- ---------- ----------- ---------
Subtotal--
Arizona 375 100
------------------------------------- ---------- ----------- ---------
------------------------------------- ---------- ----------- ---------
Foley Grove Foley, AL 260 66
------------------------------------- ---------- ----------- ---------
------------------------------------- ---------- ----------- ---------
------------------------------------- ---------- ----------- ---------
Total Communities 31 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
Developed
Operational Home Undeveloped RV
Home sites sites Home sites 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 Operational
Home sites 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 Three
Months Months
Ended Ended
June 30, June 30,
2007 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 Three Months Ended
30, 2007 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, September December March 31, June 30,
2006 30, 2006 31, 2006 2007 2007
--------------------------------------------------------
New home
contracts 125 81 73 96 56
New home
closings 95 92 71 55 65
Home resales 3 2 1 3 1
Brokered home
sales 54 20 27 31 18
New home
contract
backlog 86 51 34 58 48
Average
Selling Price $125,000 $129,000 $131,000 $135,000 $122,000
Average Gross
Margin
Percentage 34.3% 32.4% 33.4% 26.5% 28.6%
---------------------------------------------------------------------
2Q07 over 2Q07 over
1Q07 2Q07 over 2Q06 2Q07 over
Increase/ 1Q07 % Increase/ 2Q06 %
Decrease Change Decrease Change
------------------------------------------------
New home
contracts (40) (41.7%) (69) (55.2%)
New home
closings 10 18.2% (30) (31.6%)
Home resales (2) (66.7%) (2) (66.7%)
Brokered home
sales (13) (41.9%) (36) (66.7%)
New home
contract
backlog (10) (17.2%) (38) (44.2%)
Average
Selling Price ($13,000) (9.6%) ($3,000) (2.4%)
Average Gross
Margin
Percentage
--------------------------------------------------------------
Source: American Land Lease, Inc.
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