American Land Lease, Inc. (NYSE: ANL) today released fourth quarter
and full year results for 2007. Summary Financial Results Fourth
Quarter Diluted Earnings Per Share (�Diluted EPS�) were $0.03 for
the three-month period ended December 31, 2007, compared to $0.33
for the same period one year ago, a decrease of 90.9% on a per
share basis. Funds from Operations (�FFO�; a non-GAAP financial
measure defined on page 14 of this press release) were $1.6
million, or $0.18 per diluted common share, for the quarter,
compared to $3.3 million, or $0.36 per diluted common share, for
the same period one year ago, a decrease of 50.0% on a per share
basis. Home sales volume was $4,508,000, a decline of 52.5% from
the same period one year ago, consisting of 38 new home closings,
including 36 new homes sold on expansion home sites. This result
compares with 71 new home closings in fourth quarter 2006. �Same
Store� (a non-GAAP financial measure defined on page 14 of this
release) results provided a revenue increase of 6.1%, an expense
increase of 3.8% and an increase of 7.2% in Net Operating Income
(�NOI�; a non-GAAP financial measure defined on page 14 of this
release). �Same Site� (a non-GAAP financial measure defined on page
14 of this release) results provided a revenue increase of 3.5%, an
expense increase of 1.5% and an increase of 4.5% in NOI. 2007 Year
Diluted Earnings Per Share (�Diluted EPS�) were $1.57 for the year
ended December 31, 2007, compared to $1.24 from the same period one
year ago, an increase of 26.6% on a per share basis. Net income was
impacted by a $1.15 gain recognized on the sale of a community in
2007. Funds from Operations (�FFO�; a non-GAAP financial measure
defined on page 14 of this press release) were $9.0 million, or
$1.01 per diluted common share, for the year, compared to $14.7
million, or $1.66 per diluted common share, for the same period one
year ago, a decrease of 39.2% on a per share basis. Home sales
volume was $27,264,000, a decline of 42.3% from the same period one
year ago, consisting of 209 new home closings, including 198 new
homes sold on expansion home sites. This result compares with 362
new home closings in 2006. �Same Store� (a non-GAAP financial
measure defined on page 14 of this release) results provided a
revenue increase of 6.6%, an expense increase of 3.4% and an
increase of 8.2% in Net Operating Income (�NOI�; a non-GAAP
financial measure defined on page 14 of this press release). �Same
Site� (a non-GAAP financial measure defined on page 14 of this
release) results provided a revenue increase of 3.3%, an expense
increase of 1.6% and an increase of 4.1% in NOI. FFO, NOI, Same
Store and Same Site are supplemental non-GAAP financial measures
that are defined in the glossary beginning on page 14. We use FFO
in measuring our operating performance because we believe that the
items that result in a difference between FFO and net income have a
different impact to the ongoing operating performance of a real
estate company than to other businesses. We use NOI to evaluate the
operating performance of our properties and we believe that it is
relevant and useful information as a measure of property
performance on an unleveraged basis. We use NOI on a Same Store and
Same Site basis as useful information to measure property
performance without the impact of newly acquired or newly disposed
properties. Nether FFO or NOI should not be considered an
alternative to net income or net cash flows from operating
activities, as calculated in accordance with GAAP, as an indication
of our performance or as a measure of liquidity. A reconciliation
of FFO to the comparable GAAP financial measure is included
beginning on page 19. A reconciliation of NOI, Same Store and Same
Site to the comparable GAAP financial measure is included beginning
on page 21. The full text of this press release is available upon
request or through the Company�s web site at
www.americanlandlease.com. Management Comments Bob Blatz, President
of American Land Lease, commented, �For both this quarter and the
entire 2007 year, our portfolio of land leases produced strong same
site and same store results which have a positive impact on the
Company�s Net Asset Value or �NAV�. These results underscore the
continued stability and strength of our core residential land lease
business. The severe and continuing decline in the broader home
sales markets has impacted our ability to add new leases to the
portfolio at the same rate we have enjoyed in prior years. As a
result, we have re-evaluated the contribution to NAV from our
unoccupied home sites, both developed and undeveloped, which has
resulted in a lowering of NAV. Although we sold fewer homes in
2007, our home sales activity still supported a 2.2% increase in
the number of leased sites and a stable occupancy rate of 97.0%
across the portfolio. This increase in occupancy is one of the
factors that results in increased NAV for the Company. The
deceleration in the rate of new leases has reduced current land
values, slowing the rate at which the Company�s NAV grows.� �The
continued expansion of operating margins at the property level
reflects the strength of our properties and personnel who serve our
customers well. Operating margins grew 1.5% over 2006 to 63.9%.
This growth reflects both the quality of the core portfolio and the
positive impact of our 2006 acquisitions. We continue to view our
core business as owning and operating land leases � and in that
core business our performance was outstanding.� �We view the new
home sales business as an activity that complements our residential
land lease business by creating new revenue generating home
sites.�Home sales have continued to decline as our customers are
taking longer to sell their current homes and their confidence has
been impacted by negative news in the broader economy. The unit
volume of new homes sold was down by 33, or 47% compared to the
fourth quarter of 2006 and down by 153, or 42% for the full year.
In the midst of this challenging sales environment, we remain
focused on adding new leases to the portfolio. This is the same
focus that we have shown over the past five years as customers have
purchased 1,812 quality new homes which represent an investment of
approximately $204 million in our communities.� �We continue to
believe that the value of the ANL business and assets exceed the
valuation expressed in the current share price. As a result, we
have continued to buy back stock at what we believe to be very
accretive values.� �Our core business is solid. Land lease returns
grow with increased rents and expense control reflecting the
outstanding work of our operations team. Our second growth engine
is new home sales, which has been affected by the national decline
in home sales. We are focused on operating this business activity
efficiently to minimize the drag on current earnings while
maintaining our ability to grow NAV. We are fortunate to have solid
locations, a growing base of potential customers, attractive homes,
and a hardworking sales team that is selling excellent homes at
good prices. While present conditions in the new home sales market
continue to be challenging, I remain upbeat and optimistic about
the future of our Company.� The term �NAV� is defined on page 11 of
this press release. Dividend Declaration On January 30, 2008, the
Board of Directors declared a fourth quarter common stock dividend
of $0.25 per share, payable on February 29, 2008, to stockholders
of record on February 15, 2008. On January 30, 2008, the Board of
Directors also declared a cash dividend of $0.4844 per share of
Class A Preferred Stock for the quarter ended December 31, 2008,
payable on February 29, 2008, to shareholders of record on February
15, 2008. The Board of Directors reviews the dividend policy
quarterly. The Company's dividends are set quarterly and are
subject to change or elimination at any time. The Company's primary
financial objective is to maximize long term, risk adjusted returns
on investment for common shareholders. While the dividend policy is
considered within the context of this objective, maintenance of
past dividend levels is not a primary investment objective of the
Company and is subject to numerous factors, including the Company's
profitability, capital expenditure plans, competing uses of
capital, obligations related to principal payments and capitalized
interest, and the availability of debt and equity capital at terms
deemed attractive by the Company to finance these expenditures.
Further, the Board has and will continue to consider the downturn
in new home sales and the opportunity for share repurchases in the
context of its quarterly review and dividend decision. As noted in
the supplemental schedules to this release on page 20, the
Company�s common dividend was greater than Adjusted Funds from
Operations (�AFFO�) for 2007. The Company's net operating loss may
be used to offset all or a portion of its real estate investment
trust (�REIT�) taxable income, which may allow the Company to
reduce or eliminate its dividends and still maintain its REIT
status. Operational Results � Fourth Quarter Fourth Quarter
Property Operations Fourth quarter revenue from property operations
was $9,528,000, as compared to $9,002,000 in the same period one
year ago, a 5.8% increase. Fourth quarter property operating
expenses totaled $3,204,000, as compared to $3,051,000 in the same
period one year ago, a 5.0% increase. The Company realized
increases in rental income as the result of three acquisitions of
communities in 2006, annual rental rate increases, rent yield
management, and the leasing of new home sites through its home
sales efforts. Fourth quarter property operating expenses increased
primarily due to increases in utility costs, property taxes,
insurance premiums and the aforementioned acquisition of
communities. In a majority of the communities we operate, the
Company has previously implemented contractual terms under its
leases to pass on increases in property taxes through billings to
homeowners for their proportional share of increased taxes. In 23
of the 30 communities we operate, the individual homeowner�s water
and sewer is metered and changes in consumption are billed to the
homeowner. Fourth quarter property-operating margins before
depreciation expense increased to 63.8% from 63.6% in the prior
year�s fourth quarter. Fourth Quarter �Same Store� Results Fourth
quarter �same store� results reflect the results of operations for
properties and golf courses owned during the fourth quarters of
both 2007 and 2006. Same store properties accounted for 100.0% of
property operating revenues for fourth quarter 2007. �Same store�
results are defined on page 14, and reconciled to GAAP on page 21,
of this press release. We believe that same store information
provides an opportunity to understand changes in profitability for
properties owned during both reporting periods that cannot be
obtained from a review of the consolidated income statement for
periods in which properties are acquired or sold. Our presentation
of same store results is a non-GAAP measure and should not be
considered in isolation from, and is not intended to represent an
alternative measure to, operating income or cash flow or any other
measure of performance as determined in accordance with GAAP. The
same store % change results are as follows: � 4Q07 Revenue 6.1 %
Expense 3.8 % Net Operating Income 7.2 % Our same store revenues
reflect reimbursements from our tenants for certain expense items,
principally utilities and real estate taxes. During the current
period, the property taxes associated with certain Florida
properties were reduced when compared to the prior year, resulting
in a corresponding reduction in billings to tenants. When adjusted
for these items, the change in revenues and expenses for the
quarter are shown below. � 4Q07 Revenues 6.1 % Less: Net
Reimbursements (0.8 %) Revenue growth net of reimbursements 5.3 % �
Expenses 3.8 % Less: Net Reimbursements (3.6 %) Expense growth net
of reimbursements 0.2 % � Same Store NOI Growth 7.2 % In addition
to focusing on controlling operating expenses, our leases also
provide some insulation from increased expenses. We derive our
increase in property revenue (i) from increases in rental rates and
other charges at our properties, (ii) re-establishing market rents
at times of home transfers, and (iii) through the origination of
leases on expansion home sites (�absorption�). �Same site� results
reflect the results of operations excluding those sites leased
subsequent to the beginning of the prior year period. �Same site�
results are defined on page 14, and reconciled to GAAP on page 22,
of this press release. We believe that �same site� information
provides the ability to understand the changes in profitability
without the changes related to the newly leased sites. Our
presentation of same site results is a non-GAAP measure and should
not be considered in isolation from, and is not intended to
represent an alternative measure to, operating income or cash flow
or any other measure of performance as determined in accordance
with GAAP. We calculate absorption revenues as the rental revenue
recognized on sites leased subsequent to the beginning of the prior
year period. We estimate that 50% of the increase in expenses over
the prior year period is attributable to newly leased sites in our
calculation of same site results. We believe that the allocation of
expenses between same site and absorption is an appropriate
allocation between fixed and variable costs of operating our
properties. Our same site rental, absorption and golf operations
contributions to total same store results for fourth quarter are as
follows based upon increases from prior year results. � Same Site
Rental � Absorption � Same Site Golf � Same Store Revenue 3.5 % 2.6
% 0.0 % 6.1 % Expense 1.5 % 1.5 % 0.8 % 3.8 % NOI 4.5 % 3.1 % (0.4
)% 7.2 % A reconciliation of same site and same store operating
results used in the above calculations to total property revenues
and property expenses, as determined under GAAP, for the three
months ended December 31, 2007 and 2006 can be found on page 21 of
this earnings release. Fourth Quarter Home Sales Operations Fourth
quarter 2007 new home sales were $4,508,0000, a 52.5% decrease from
the same period in the prior year. There were 38 closings, a 46.5%
decrease from the 71 closings during the same period in 2006.
Average selling price per home was $128,000, compared to $131,000
in the same period in 2006, a 2.3% decrease. Eleven communities
reported average selling prices in excess of $100,000. Selling
gross margins, excluding brokerage activities, decreased to 28.9%
in the quarter, compared to 33.4% in the same period in 2006. The
year-to-year decrease was driven primarily by decreased
manufacturer rebates associated with lower purchasing volumes,
increases in costs of homes purchased, and lower relative selling
prices. Selling costs as a percentage of sales revenue increased
from 25.5% in the fourth quarter of 2006 to 45.8% in the fourth
quarter of 2007, reflecting lower operating leverage against fixed
costs. Selling costs, including overhead, marketing and advertising
expenses, were down by 14.7% compared to the same period in 2006.
However, when allocated against the lower sales volumes, such costs
resulted in a higher per home expense than in the same period in
2006. The Company�s backlog of contracts to close stood at 23, a
decrease of 11, or 32.4%, from the same period in 2006. The Company
remains committed to generating revenue growth through new lease
originations in its existing portfolio. Even though new home sales
slowed from 2006 to 2007, our home sales business continues to
provide the Company with additional earning home sites. Summary of
home sales activity: � Quarter endedDecember 31, 2007 � � Quarter
endedDecember 31, 2006 � New home closings 38 71 � New home
contracts 37 73 � Home resales 2 1 � Brokered home sales 26 27 �
New home contract backlog 23 34 Operational Results � 2007 Year
2007 Property Operations 2007 revenue from property operations was
$37,587,000 compared to $33,756,000 in the same period one year
ago, an 11.3% increase. 2007 property operating expenses totaled
$12,596,000, compared to $11,769,000 in the same period one year
ago, a 7.0% increase. The Company realized increases in rental
income as the result of three community acquisitions in 2006,
annual rental rate increases, rent yield management and the
absorption of new home sites through its home sales efforts. 2007
property operating expenses increased primarily due to increases in
utility costs, , personnel costs, insurance premiums and the
aforementioned acquisitions of communities. In a majority of the
communities we operate, the Company has previously implemented
contractual terms under its leases to pass on increases in property
taxes through billings to homeowners for their proportional share
of increased taxes. In 23 of the 30 communities we operate, the
individual homeowner�s water and sewer is metered and changes in
consumption are billed to the homeowner. 2007 property-operating
margins before depreciation expense increased to 63.9% from 62.4%
in the prior year. 2007 �Same Store� Results 2007 �same store�
results reflect the results of operations for properties and golf
courses owned during both 2007 and 2006. Same store properties
accounted for 91.1% of property operating revenues for 2007. �Same
store� results are defined on page 14, and reconciled to GAAP on
page 22, of this press release. We believe that same store
information provides an opportunity to understand changes in
profitability for properties owned during both reporting periods
that cannot be obtained from a review of the consolidated income
statement for periods in which properties are acquired or sold. Our
presentation of same store results is a non-GAAP measure and should
not be considered in isolation from, and is not intended to
represent an alternative measure to, operating income or cash flow
or any other measure of performance as determined in accordance
with GAAP. The same store % change results are as follows: � 2007
Revenue 6.6 % Expense 3.4 % Net Operating Income 8.2 % Our same
store revenues reflect reimbursements from our tenants for certain
expense items, principally utilities and real estate taxes. During
the current period, the property taxes associated with certain
Florida properties were reduced when compared to the prior year
resulting in a corresponding reduction in billings to tenants. When
adjusted for these items, the change in revenues and expenses for
the quarter are shown below. � 2007 Revenues 6.6 % Less: Net
Reimbursements 0.1 % Revenue growth net of reimbursements 6.7 % �
Expenses 3.4 % Less: Net Reimbursements (0.8 %) Expense growth net
of reimbursements 2.6 % � Same Store NOI Growth 8.2 % In addition
to focusing on controlling operating expenses, our leases also
provide some insulation from increased expenses. Our same site
rental, absorption and golf operations contributions to total same
store results for 2007 are as follows based upon increases from
prior year results: � Same Site Rental � Absorption � Same Site
Golf � Same Store Revenue 3.3 % 3.4 % (0.1 )% 6.6 % Expense 1.6 %
1.6 % 0.2 % 3.4 % NOI 4.1 % 4.3 % (0.2 )% 8.2 % A reconciliation of
same site and same store operating results used in the above
calculations to total property revenues and property expenses, as
determined under GAAP, for 2007 and 2006 can be found on page 22 of
this earnings release. 2007 Home Sales Operations 2007 new home
sales were $27,264,000, a 42.3% decrease from the same period in
the prior year. There were 209 closings, a 42.3% decrease from the
362 closings in 2006. Average selling price per home was $130,000,
as compared to $129,000 in the same period in 2006, a 0.8%
increase. Sixteen communities reported average selling prices in
excess of $100,000. Selling gross margins, excluding brokerage
activities, decreased to 28.3% in 2007 as compared to 33.3% in the
same period in 2006. The year-to-year decrease was driven primarily
by decreased manufacturer rebates associated with lower purchasing
volumes, increases in costs of homes purchased, and lower relative
selling prices. Selling costs as a percentage of sales revenue
increased from 22.4% in 2006 to 33.5% in 2007 reflecting lower
operating leverage against fixed costs. Selling costs, including
overhead, marketing and advertising expenses, were down by 13.6%.
However, when allocated against still lower sales volumes, such
costs resulted in a higher per home expense than in 2006. Summary
of home sales activity: � YE December 31, 2007 � YE December
31,2006 New home closings � Same Store 183 323 New home closings �
Acquisitions 26 39 Total new home closings 209 362 � New home
contracts � Same Store 198 341 New home contracts � Acquisitions 35
55 Total new home contracts 233 396 � Home resales 10 6 � Brokered
home sales 97 163 � New home contract backlog � Same Store 20 29
New home contract backlog - Acquisitions 3 5 Total new home
contract backlog 23 34 Share Repurchase The Board of Directors has
authorized the Company to repurchase up to 2,000,000 shares of its
outstanding common stock. Pursuant to this authorization, the
Company repurchased 16,000 shares of outstanding common stock at an
average price of $20.75 for the three months ended December 31,
2007. The Company has repurchased approximately 783,000 shares as
of December 31, 2007 pursuant to this authorization, including a
total of 206,000 shares repurchased in 2007 at an average price of
$22.09. We believe that the current share price reflects a discount
from the Company�s Net Asset Value. Therefore, we have repurchased,
and expect to continue repurchasing, additional shares of our
common stock in the first quarter of 2008. Financing Activity
During the first quarter of 2008, the Company closed three loan
transactions which served to refinance the loans on three
properties. Proceeds to the Company, net of transaction costs
including a prepayment penalty, reflect an effective interest cost
of approximately 5.6%. The three loans each have a maturity date of
ten-years. In conjunction with this refinancing, the Company
expects to record a prepayment penalty charge of $2.0M which will
reduce earnings per share during first quarter of 2008 by
approximately $0.23 per share. Development Activity The Company
ended the year with an inventory of 1,370 developed and unleased
home sites. We sell new homes to be located on these home sites so
that they will become revenue generating. In addition, the Company
has an inventory of 1,191 home sites that are partially developed
or undeveloped. All of these sites are fully entitled and zoned for
use as a land lease community. With the exception of Sebastian
Beach and Tennis Village and the Villages at Country Club, all are
contiguous to, and a part of, a current community where there are
ongoing property operations and a proven customer base. Significant
development activity during the quarter included: At Sebastian
Beach and Tennis Village, construction and site work continued. As
reported in prior quarters, a new municipality was formed in July
of 2006 which impacts this site. As previously announced, we have
been working with the town and county governments to accomplish the
platting of the community under this unique set of circumstances.
During the quarter, we completed a key step in this process as the
entire project site is now located within one governmental
jurisdiction through completion of an annexation process. Pre-sales
and marketing activities for the community have already begun at an
off site sales office and we expect to begin home and Village
Centre construction upon completion of the platting process. At the
Villages at Country Club project in Mesa, Arizona, our homebuilding
partner began home building activity in September 2007 and expects
to complete the first models in March 2008. During the quarter, we
began construction of the clubhouse amenity for the community.
Outlook for 2008 The table below summarizes the Company�s projected
financial outlook for 2008 as of the date of this release and is
based on the estimates and assumptions disclosed in this and
previous press releases: � 2007 ActualResults � Full Year
2008Projected � FFO before prepayment penalties $1.01 $0.86 to
$1.15 Prepayment penalties on debt refinancing transactions --
$0.22 FFO $1.01 $0.64 to $0.93 � AFFO before prepayment penalties
$0.87 $0.72 to $1.04 Prepayment penalties on debt refinancing
transactions -- $0.22 AFFO $0.87 $0.50 to $0.82 � Diluted EPS from
continuing operations $0.39 $0.01 to $0.22 Diluted EPS from
discontinued operations $1.18 -- Diluted EPS $1.57 $0.01 to $0.22 �
Same Store Revenue Growth 6.6% 4.5% to 6.5% Expense Growth 3.4%
3.5% to 5.0% NOI Growth 8.2% 4.5% to 6.0% � New Home Sales Volume
209 160 to 225 New Home Sales Gross Margin 28.4% 27% to 28% Home
Sales Operating Income(Loss) ($1.3M) ($2.1M) to $0.5M Home Sales
Net Contribution ($2.8M) ($3.6M) to ($0.8M) � General and
Administrative Expenses $4.3M $4.5M to $4.8M � Capital Replacements
(per site) $126 $130 to $160 Depreciation $5.0M $5.5M to $5.9M The
Company�s land lease business continues to perform consistently.
The rate of growth projected for 2008 as compared to 2007 actual
results is lower due chiefly to three key factors: � � � 1. � The
reduction in new home sales in 2007 and sales projections for 2008.
The reduced rate of new home sales will result in a lower
contribution from absorption to same store revenue growth than in
prior years. 2. Certain resident leases increase annually based
upon the rate of increase in the Consumer Price Index. The Consumer
Price Index applicable to certain leases was 2.0% for lease
renewals in 2008 compared to 3.8% for lease renewals for 2007, a
1.8% decrease. 3. In addition, the lower rate of turnover within
our communities has slowed the rate at which rents are increased to
higher market rates at the time of home transfers. The earnings
from the Company�s new home sales business are subject to greater
volatility than are the earnings from land leases. The Company�s
new home sales business has been impacted by the general decline in
new home sales nationwide. Certain local markets in which the
Company operates have been impacted to a greater extent than have
the national averages. In this home sales environment, the Company
has limited visibility on future new home sales volumes. The
Company's earnings estimates would be impacted positively or
negatively by changes in the volume of new home sales or in the
gross margins from new home sales. New home sales volume and gross
margins are dependent upon a number of factors, including but not
limited to consumer confidence, the cost of homeowners� insurance,
consumer access to financing sources for home purchases and the
sale of their current owned homes. The Company�s reported results
are impacted by the amount of interest capitalized on its
development properties. The amount of interest capitalized is
dependent on the rate of completion of home sites, the timing and
amount of capital expenditures and continuing development
activities at each location. Changes in any of the preceding
factors, along with changes in applicable interest rates, will
result in either increases or decreases in the actual amount of
interest capitalized. Changes in the amount of interest capitalized
will increase or decrease the Company�s earnings as compared to
historical financial results. Non-employee director compensation
continues to be paid in stock and all stock based compensation is
expensed within the 2008 projections. The Company's earnings
estimates would be adversely impacted by any increased cost of
compliance with regulations and laws applicable to public companies
and financial reporting. Additional factors that may impact our
projected results include a change in the mix of home sales across
our communities, occupancy changes, further changes in the
residential housing markets, the impact of hurricanes or other
natural disasters, changes in interest rates, and additional
refinancing transactions. The financial and operating projections
provided in this release are the result of management's
consideration of past operating performance, current and
anticipated market conditions and other factors that management
considers relevant from its past experience. However, no assurance
can be provided as to the achievement of these projections and
actual results will vary, perhaps materially. American Land Lease,
Inc. is a REIT that held interests in 30 manufactured home
communities with 7,984 operational home sites, 1,370 developed
expansion sites, 1,191 undeveloped expansion sites and 129
recreational vehicle sites as of December 31, 2007. Some of the
statements in this press release, as well as oral statements made
by the Company�s officials to analysts and stockholders in the
course of presentations about the Company and conference calls
following quarterly earnings releases, constitute �forward looking
statements� within the meaning of the Private Securities Litigation
Reform Act of 1995. Such statements may include projections of the
Company�s cash flow, results of operations, dividends and
anticipated returns on real estate investments. Such
forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause actual results,
performance or achievements of the Company to be materially
different from any future results, performance or achievements
expressed or implied by the forward-looking statements. Such
factors include, but are not limited to: general economic and
business conditions; interest rate changes, financing and
refinancing risks; risks inherent in owning real estate; future
development rate of home sites; competition; the availability of
real estate assets at prices which meet the Company�s investment
criteria; the Company�s ability to reduce expense levels, implement
rent increases, use leverage and other risks set forth in the
Company�s Securities and Exchange Commission filings. We assume no
obligation to update or revise any forward-looking statements or to
update the reasons why actual results could differ from those
projected in any forward-looking statements. As previously
announced, management will hold a teleconference call, Wednesday,
February 13, 2008 at 9:30 a.m. Eastern Standard Time to discuss
fourth quarter and full year 2007 results. You can participate in
the conference call by dialing, toll-free, (800) 374-5458
approximately five minutes before the conference call is scheduled
to begin and indicating that you wish to join the American Land
Lease fourth quarter 2007 results conference call. If you are
unable to participate at the scheduled time, this information will
be available for recorded playback from 12:30 p.m. Eastern Standard
Time, February 13, 2008 until midnight on February 20, 2008. To
access the replay, dial toll free, (800) 642-1687 and request
information from conference ID 33455999. GLOSSARY GLOSSARY OF
NON-GAAP FINANCIAL AND OPERATING MEASUREMENTS Financial and
operational measurements found in the Earnings Release and
Supplemental Information include certain non-GAAP financial
measurements used by American Land Lease management. Such
measurements include Funds from Operations (�FFO�), which is an
industry-accepted measurement based in part on the definition of
the National Association of Real Estate Investment Trusts (NAREIT)
and �same store� and same site� results. These terms are defined
below and, where appropriate, reconciled to the most comparable
Generally Accepted Accounting Principles (GAAP) measurements on the
accompanying supplement schedules. FUNDS FROM OPERATIONS (�FFO�):
is a commonly used term defined by NAREIT as net income (loss),
computed in accordance with GAAP, excluding gains and losses from
extraordinary items, dispositions of depreciable real estate
property, dispositions of discontinued operations, net of related
income taxes, plus real estate related depreciation and
amortization (excluding amortization of financing costs), including
depreciation for unconsolidated real estate partnerships, joint
ventures and discontinued operations. American Land Lease
calculates FFO based on the NAREIT definition, as further adjusted
for the minority interest in the American Land Lease�s operating
partnership (Asset Investors Operating Partnership). This
supplemental measure captures real estate performance by
recognizing that real estate generally appreciates over time or
maintains residual value to a much greater extent than do other
depreciable assets such as machinery, computers or other personal
property. There can be no assurance that American Land Lease�s
method for computing FFO is comparable with that of other real
estate investments trusts. ADJUSTED FUNDS FROM OPERATIONS (�AFFO�):
is FFO less Capital Replacement expenditures. Similar to FFO, AFFO
captures real estate performance by recognizing that real estate
generally appreciates over time or maintains residual value to a
much greater extent than do other depreciating assets such as
machinery, computers or other personal property while also
reflecting that Capital Replacements are necessary to maintain the
associated real estate assets. NET OPERATING INCOME (�NOI�): is the
property's gross rental income plus any other income, such as late
fees or parking income, less vacancies and rental expenses.
Essentially, NOI is the net cash generated before mortgage payments
and taxes. NET ASSET VALUE: As defined by NAREIT, the net �market
value� of all of a company�s assets, including but not limited to
its properties, after subtracting all its liabilities and other
obligations. CAPITALIZATION RATE: The capitalization rate (�cap
rate�) is the rate at which net operating income is discounted to
determine the value of a property. It is one method that is
utilized to estimate property value. SAME STORE RESULTS: represent
an operating measure that is used to compare the results of
properties that have been in the portfolio for both accounting
periods being compared. SAME SITE RESULTS: represent an operating
measure that is used to compare the results of home sites that have
been in the portfolio for both accounting periods being compared.
Home sites that are leased or �absorbed� during the accounting
periods are not included in this calculation. OPERATIONAL HOME
SITE: represents those sites within our portfolio that are/or have
been leased to a tenant. Operational Home Sites and their relative
occupancy provide a measure of stabilized portfolio status.
DEVELOPED HOME SITE: represents those sites within our portfolio
that have not been occupied, but for which the greater part of
their infrastructure has been completed. UNDEVELOPED HOME SITE:
represents those sites within our portfolio that have not been
fully developed and that require construction of substantial
lateral improvements such as roads. CAPITAL REPLACEMENT: represents
capitalized spending which maintains a property. American Land
Lease generally capitalizes spending for items that cost more than
$250 and have a useful life of more than one year. A common example
is street repaving. This spending is better considered a recurring
cost of preserving an asset rather than as an additional
investment. It is a cash proxy for depreciation. CAPITAL
ENHANCEMENT: represents capitalized spending which adds a revenue
source or material feature that increases overall community value.
An example is the addition of a marina facility to an existing
community. USED HOME SALE: represents the sale of a home previously
owned by a third party and American Land Lease has acquired title
through an eviction proceeding or through purchase from the third
party. � � � � � � AMERICAN LAND LEASE INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (in thousands, except per share data) �
� December 31,2007 September 30,2007 As ofJune 30,2007 March
31,2007 December 31,2006 (unaudited) (unaudited) (unaudited)
(unaudited) (audited) � ASSETS Real Estate $ 309,033 $ 304,280 $
306,824 $ 304,484 $ 301,392 Less accumulated depreciation (31,842 )
(30,735 ) (31,191 ) (30,120 ) (29,068 ) Real estate under
development � 122,326 � � 121,056 � � 119,602 � � 115,798 � �
110,682 � Total Real Estate 399,517 394,601 395,235 390,162 383,006
Cash and cash equivalents 541 296 308 293 253 Inventory 20,084
20,012 21,031 20,705 22,827 Other assets � 16,391 � � 15,362 � �
16,085 � � 15,662 � � 15,969 � � Total Assets $ 436,533 � $ 430,271
� $ 432,659 � $ 426,822 � $ 422,055 � � LIABILITIES AND EQUITY
Liabilities Secured long-term notes payable $ 239,970 $ 240,769 $
238,676 $ 234,826 $ 235,567 Secured short-term financing 30,932
18,963 30,013 25,012 20,059 Accounts payable and accrued
liabilities � 9,288 � � 12,260 � � 11,545 � � 13,239 � � 13,216 � �
Total Liabilities 280,190 271,992 280,234 273,077 268,842 �
Minority Interest in Operating Partnership 17,339 17,522 16,421
16,475 16,502 � STOCKHOLDERS� EQUITY Preferred Stock, par value
$.01 per share; 3,000 shares authorized, 1,000 shares issued and
outstanding 25,000 25,000 25,000 25,000 25,000 Common Stock, par
value $.01 per share; 12,000 shares authorized 95 95 95 95 94
Additional paid-in capital 293,821 293,510 293,113 292,757 291,460
Dividends in excess of accumulated earnings (148,749 ) (147,013 )
(154,920 ) (153,970 ) (153,231 ) Treasury stock at cost � (31,163 )
� (30,835 ) � (27,284 ) � (26,612 ) � (26,612 ) � Total
Stockholders Equity � 139,004 � � 140,757 � � 136,004 � � 137,270 �
� 136,711 � � Total Liabilities and Stockholders� Equity � $
436,533 � $ 430,271 � $ 432,659 � $ 426,822 � $ 422,055 � � � � � �
AMERICAN LAND LEASE INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS
OF INCOME (in thousands, except per share data) (unaudited) � �
Three Months Ended December 31, 2007 September 30, 2007 June 30,
2007 March 31, 2007 � RENTAL PROPERTY OPERATIONS Rental and other
property revenues $ 9,528 $ 9,389 $ 9,334 $ 9,336 Golf course
operating revenues � 250 � � 165 � � 219 � � 430 � Total property
operating revenues 9,778 9,554 9,553 9,766 � Property operating
expenses (3,204 ) (3,092 ) (3,111 ) (3,189 ) Golf course operating
expenses � (336 ) � (341 ) � (357 ) � (335 ) Total property
operating expenses (3,540 ) (3,433 ) (3,468 ) (3,524 ) �
Depreciation � (1,286 ) � (1,239 ) � (1,227 ) � (1,205 ) � Income
from rental property operations 4,952 4,882 4,858 5,037 � SALES
OPERATIONS Home sales revenue 4,508 7,162 7,929 7,665 Cost of home
sales � (3,205 ) � (5,055 ) � (5,658 ) � (5,633 ) Gross profit on
home sales 1,303 2,107 2,271 2,032 � Commissions earned on brokered
sales 69 60 44 75 Commissions paid on brokered sales � (27 ) � (24
) � (19 ) � (35 ) Gross profit on brokered sales 42 36 25 40 �
Selling and marketing expenses � (2,064 ) � (2,345 ) � (2,375 ) �
(2,337 ) Income (loss) from sales operations (719 ) (202 ) (79 )
(265 ) � General and administrative expenses (1,230 ) (1,105 ) (993
) (964 ) Interest and other income 22 7 8 170 Interest expense �
(2,251 ) � (2,197 ) � (2,142 ) � (2,109 ) � Income before minority
interest in Operating Partnership 774 1,385 1,652 1,869 Minority
interest in Operating Partnership � (88 ) � (164 ) � (188 ) � (211
) Income from continuing operations 686 1,221 1,464 1,658
DISCONTINUED OPERATIONS Income (loss) from discontinued operations,
net of Minority Interest � 21 � � 9,154 � � 75 � � 77 � Net Income
707 10,375 1,539 1,735 Cumulative preferred stock dividends � (485
) � (484 ) � (485 ) � (484 ) Net Income Attributable to common
shareholders $ 222 � $ 9,891 � $ 1,054 � $ 1,251 � � Basic earnings
from continuing operations (net of cumulative unpaid preferred
dividends) $ 0.03 $ 0.09 $ 0.14 $ 0.16 Basic earnings (loss) from
discontinued operations � -- � � 1.20 � � -- � � -- � Basic
earnings per common share $ 0.03 � $ 1.29 � $ 0.14 � $ 0.16 � �
Diluted earnings from continuing operations $ 0.03 $ 0.10 $ 0.13 $
0.16 Diluted earnings (loss) from discontinued operations � 0.00 �
� 1.16 � � -- � � -- � Diluted earnings per common share $ 0.03 � $
1.26 � $ 0.13 � $ 0.16 � � Weighted average common shares
outstanding 7,560 7,659 7,745 7,688 Weighted average common shares
and common share equivalents outstanding � 7,754 7,871 8,029 8,054
� Common dividends paid per share $ 0.25 $ 0.25 $ 0.25 $ 0.25 � � �
� � � AMERICAN LAND LEASE INC. AND SUBSIDIARIES DEBT ANALYSIS (in
thousands) (unaudited) � � Dec. 31,2007 Sept. 30,2007 As ofJune
30,2007 March 31,2007 Dec. 31,2006 � DEBT OUTSTANDING Mortgage
Loans Payable � Fixed $ 217,864 $ 218,663 $ 227,320 $ 223,470 $
224,211 Mortgage Loans Payable � Floating 22,106 22,106 11,356
11,356 11,356 Floor Plan Facility 23,086 13,337 20,508 19,636
14,754 Line of Credit � 7,846 � � 5,626 � � 9,505 � � 5,376 � �
5,305 � � Total Debts $ 270,902 � $ 259,732 � $ 268,689 � $ 259,838
� $ 255,626 � � % FIXED FLOATING Fixed 80.4 % 84.2 % 84.6 % 86.0 %
87.7 % Floating � 19.6 % � 15.8 % � 15.4 % � 14.0 % � 12.3 % Total
100.0 % 100.0 % 100.0 % 100.0 % 100.0 % � AVERAGE INTEREST RATES
Mortgage Loans Payable � Fixed 6.3 % 6.3 % 6.3 % 6.4 % 6.4 %
Mortgage Loans Payable � Floating 6.7 % 6.9 % 7.1 % 7.1 % 7.1 %
Floor Plan Facility 7.5 % 8.5 % 8.5 % 8.5 % 8.5 % Line of Credit �
6.6 % � 7.2 % � 6.9 % � 6.9 % � 7.3 % Total Weighted Average � 6.4
% � 6.5 % � 6.5 % � 6.6 % � 6.6 % � DEBT RATIOS Debt/Total Market
Cap(1) 57.7 % 53.7 % 51.7 % 50.8 % 49.4 % � Debt/Gross Assets 62.0
% 60.4 % 62.1 % 60.9 % 60.6 % � � MATURITIES Dec. 31,2008 Dec.
31,2009 Dec. 31,2010 Dec. 31,2011 Dec. 31,2012 Mortgage Loan
Scheduled Principal Payments 3,145 3,625 3,869 4,018 4,202 Mortgage
Loan Balloon Maturities � 2,661 � � -- � � -- � � 21,740 � � 10,750
� Total $ 5,806 � $ 3,625 � $ 3,869 � $ 25,758 � $ 14,952 � � � (1)
Computed based upon closing price as reported on NYSE as of the
period ended. � � AMERICAN LAND LEASE INC. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO FFO/AFFO AND PAYOUT RATIOS (Amounts
in thousands, except per share/OP unit amounts) (Unaudited) � � �
Three Months Ended December 31, 2007 2006 � Net Income $ 222 $
2,641 Adjustments Cumulative unpaid preferred stock dividends 485
485 Minority interest in operating partnership 88 290 Gain on sale
of assets � 3 (1,006 ) Real estate depreciation 1,286 1,175
Discontinued operations: Real estate depreciation -- 37 � Minority
interest in operating partnership attributed discontinued
operations � (24 ) � 127 � Funds From Operations (FFO) $ 2,060 $
3,749 Cumulative unpaid preferred stock dividends � (485 ) � (485 )
Funds From Operations attributable to common Stockholders 1,575
3,264 Capital Replacements � (295 ) � (289 ) Adjusted Funds from
Operations (AFFO) $ 1,280 � $ 2,975 � � Weighted Average Common
Shares/OP Units Outstanding � 8,747 � � 8,946 � Per Common Share
and OP Unit: FFO: $ 0.18 $ 0.36 AFFO: $ 0.15 $ 0.33 � Payout Ratio
Per Common Share and OP Unit: Gross Distribution Payout FFO: 138.9
% 69.4 % AFFO: 166.7 % 75.8 % � � AMERICAN LAND LEASE INC. AND
SUBSIDIARIES RECONCILIATION OF NET INCOME TO FFO/AFFO AND PAYOUT
RATIOS (Amounts in thousands, except per share/OP unit amounts)
(Unaudited) � � � Twelve Months Ended December 31, 2007 2006 � Net
Income $ 12,418 $ 9,753 Adjustment Cumulative unpaid preferred
stock dividends 1,938 1,938 Minority interest in operating
partnership 651 1,380 Gain on sale of assets (10,302 ) (1,006 )
Real estate depreciation 4,957 4,248 Discontinued operations: Real
estate depreciation 64 165 Minority interest in operating
partnership attributed discontinued operations � 1,181 � � 170 �
Funds From Operations (FFO) $ 10,907 $ 16,648 Cumulative unpaid
preferred stock dividends � (1,938 ) � (1,938 ) Funds From
Operations attributable to common Stockholders 8,969 14,710 Capital
Replacements � (1,174 ) � (1,662 ) Adjusted Funds from Operations
(AFFO) $ 7,795 � $ 13,048 � � Weighted Average Common Shares/OP
Units Outstanding � 8,916 � � 8,876 � Per Common Share and OP Unit:
FFO: $ 1.01 $ 1.66 AFFO: $ 0.87 $ 1.47 � Payout Ratio Per Common
Share and OP Unit: Gross Distribution Payout FFO: 99.0 % 60.2 %
AFFO: 114.9 % 68.0 % � � � � � � � AMERICAN LAND LEASE INC. AND
SUBSIDIARIES RECONCILIATION OF SAME SITE AND SAME STORE OPERATING
RESULTS FOR THE THREE MONTHS ENDED DECEMBER 31, 2007 AND DECEMBER
31, 2006 (in thousands) (unaudited) � � ThreeMonthsEndedDec.
31,2007 ThreeMonthsEndedDec. 31,2006 � � Change � � % Change �
Contribution to Same Store % Change(1) � Same site rental revenues
$ 9,034 $ 8,707 $ 327 3.8 % 3.5 % Absorption rental revenues 531
290 241 83.1 % 2.6 % Same store golf revenues � 250 � � 249 � 1 �
0.4 % 0.0 % Same store revenues A 9,815 9,246 569 6.1 % 6.1 %
Property revenues other then from land leases 9 5 4 80.0 %
Intercompany revenues � (46 ) � -- � (46 ) (100.0 %) Total property
revenues C $ 9,778 � $ 9,251 $ 527 � 5.7 % � Same site rental
expenses $ 2,647 $ 2,603 $ 44 1.7 % 1.5 % Absorption rental
expenses 44 - 44 100.0 % 1.5 % Same store golf expenses � 336 � �
313 � 23 � 7.3 % 0.8 % Same store expenses B 3,027 2,916 111 3.8 %
3.8 % Newly acquired property expenses 7 5 2 40.0 % Expenses
related to offsite management(2) � 506 � � 443 � 63 � 14.2 % Total
property operating expenses D $ 3,540 � $ 3,364 $ 176 � 5.2 % �
Same store net operating income A-B $ 6,788 � $ 6,330 � 458 � 7.2 %
� Total net operating income C-D $ 6,238 � $ 5,887 $ 351 � 6.0 % �
(1) Computed as the change in the individual component of same
store revenue or expense divided by the total applicable same store
base (revenue or expense) for the 2006 period. For example same
store rental revenue increase of $327 as compared to the total same
store revenues in 2006 of $9,246 is a 3.5% increase
($327/$9,246=3.5%). � (2) Expenses related to offsite management
reflect portfolio property management costs not attributable to a
specific property. � � � � � � � AMERICAN LAND LEASE INC. AND
SUBSIDIARIES RECONCILIATION OF SAME SITE AND SAME STORE OPERATING
RESULTS FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2007 AND DECEMBER
31, 2006 (in thousands) (unaudited) � � TwelveMonthsEndedDec.
31,2007 TwelveMonthsEndedDec. 31,2007 � � Change � � % Change
Contribution to Same Store % Change(1) � Same site rental revenues
$ 32,367 $ 31,277 $ 1,090 3.5 % 3.3 % Absorption rental revenues
1,763 645 1,118 173.3 % 3.4 % Same store golf revenues � 1,064 � �
1,086 � (22 ) (2.0 %) (0.1 %) Same store revenues A 35,194 33,008
2,186 6.6 % 6.6 % Newly acquired property revenues 3,599 1,834
1,765 96.2 % Intercompany revenues � (142 ) � -- � (142 ) (100 %)
Total property revenues C $ 38,651 � $ 34,842 $ 3,809 � 10.9 % �
Same site rental expenses $ 9,558 $ 9,388 $ 170 1.8 % 1.6 %
Absorption rental expenses 170 - 170 100.0 % 1.6 % Same store golf
expenses � 1,369 � � 1,347 � 22 � 1.6 % 0.2 % Same store expenses B
11,097 10,735 362 3.4 % 3.4 % Newly acquired property expenses
1,025 617 408 66.1 % Expenses related to offsite management2 �
1,843 � � 1,764 � 79 � 4.5 % Total property operating expenses D $
13,965 � $ 13,116 $ 849 � 6.5 % � Same store net operating income
A-B $ 24,097 � $ 22,273 � 1,824 � 8.2 % � Total net operating
income C-D $ 24,686 � $ 21,726 $ 2,960 � 13.6 % � (1) Computed as
the change in the individual component of same store revenue or
expense divided by the total applicable same store base (revenue or
expense) for the 2006 period. For example same store rental revenue
increase of $1,090 as compared to the total same store revenues in
2006 of $33,008 is a 3.3% increase ($1,090/$33,008=3.3%). � (2)
Expenses related to offsite management reflect portfolio property
management costs not attributable to a specific property. � �
AMERICAN LAND LEASE, INC. AND SUBSIDIARIES NUMBER OF HOMESITES AND
AVERAGE RENT BY COMMUNITY AS OF DECEMBER 31, 2007 � � � Community �
� Location � Operational Home Sites (1) � � Occupancy � Average
Monthly Rent � RV Sites � Undeveloped Home Sites � Developed Home
Sites Owned Communities Blue Heron Pines Punta Gorda, FL 345 100%
$351 -- -- 44 Brentwood Estates Hudson, FL 143 98% 280 -- -- 48
Sebastian Beach & Tennis Club Micco, FL -- 0% -- -- 533 --
Serendipity Ft. Myers, FL 338 96% 365 -- -- -- Stonebrook
Homosassa, FL 198 100% 312 -- -- 3 Sunlake Estates Grand Island, FL
366 100% 362 -- -- 35 Forest View Homosassa, FL 273 100% 328 -- --
31 Gulfstream Harbor Orlando, FL 382 98% 424 -- 50 -- Gulfstream
Harbor II Orlando, FL 306 100% 428 -- 37 1 Gulfstream Harbor III
Orlando, FL 176 97% 394 -- -- 108 Lakeshore Villas Tampa, FL 281
96% 440 -- -- -- Park Place Sebastian, FL 374 100% 325 -- -- 93
Park Royale Pinellas Park, FL 297 93% 441 -- -- 12 Pleasant Living
Riverview, FL 245 95% 387 -- -- -- Riverside GCC Ruskin, FL 472
100% 535 -- 311 158 Royal Palm Village Haines City, FL 288 96% 355
-- -- 99 Cypress Greens Lakeland, FL 230 100% 260 -- -- 28 Savanna
Club Port St Lucie, FL 1003 100% 300 -- -- 64 Woodlands Groveland,
FL 168 99% 290 - -- 124 Subtotal�Florida 5,885 99% $368 -- 931 848
� � Blue Star Apache Junction AZ 22 50% 320 129 -- -- Brentwood
West Mesa, AZ 350 94% 471 -- -- -- The Villages(a) Mesa, AZ -- 0%
-- -- -- 375 Desert Harbor Apache Junction AZ 205 100% 376 -- -- --
Fiesta Village Mesa, AZ 172 86% 402 -- -- -- La Casa Blanca Apache
Junction AZ 197 100% 400 -- -- -- Lost Dutchman Apache Junction AZ
215 77% 315 -- -- 27 Rancho Mirage Apache Junction AZ 312 96% 434
-- -- -- Reserve at Fox Creek Bull Head City, AZ 256 100% 331 -- --
57 Sun Valley Apache Junction AZ 268 91% 364 -- -- --
Subtotal�Arizona 1,997 93% $393 129 -- 459 � Foley Grove Foley, AL
102 100% 278 -- 260 63 � � Total Communities 30 7,984 97% $373 129
1,191 1,370 � � (1) We define operational home sites as those sites
within our portfolio that have been leased to a tenant during our
ownership of the community. Since our portfolio contains a large
inventory of developed home sites that have not been occupied
during our ownership, we have expressed occupancy as the number of
occupied sites as a percentage of operational home sites. We
believe this measure most accurately describes the performance of
an individual property relative to prior periods and other
properties without our portfolio. The occupancy of all developed
sites was 82.8% across the entire portfolio. Including sites not
yet developed, occupancy was at 73.5% at December 31, 2007. � (a)
FKA - Casa Encanta � � � � � � Portfolio Summary � Operational Home
sites Developed Home sites Undeveloped Home sites RV Sites Total �
As of December 31, 2006 8,044 1,192 1,566 129 10,931 � Properties
developed -- 375 (375 ) (2) -- -- � � New lots purchased / (Sold)
Sun Valley Estates FL (261 ) 6 -- -- (255 ) � New leases originated
199 (199 ) -- -- -- � Adjust for site plan changes 2 � (4 ) -- � --
(2 ) � As of December 31, 2007 7,984 (1 ) 1,370 � 1,191 � 129
10,674 � � (1) As of December 31, 2007, 7,748 of these operational
home sites were occupied. � (2) The Villages, Arizona completion of
development of site work, 375 sites � � � � Occupancy Roll Forward
� Occupied Home sites Operational Home sites Occupancy � As of
December 31, 2006 7,833 8,044 97.3 % � New home sales 209 198 �
Used home sales 10 2 � Used homes acquired (25 ) -- � � Lots
acquired (sold) (255 ) (261 ) � Homes constructed by others 5 1 �
Homes removed from previously leased sites (29 ) -- � � As of
December 31, 2007 7,748 � 7,984 � 97.0 % � � � � AMERICAN LAND
LEASE, INC. AND SUBSIDIARIES RETURN ON INVESTMENT FROM HOME SALES
(unaudited) � � Three Months Ended December 31, 2007 Three Months
Ended December 31, 2006 � Expansion sites leased during the period
� 36 � � 56 � Estimated stabilized first year profit on leases
originated during the period A $ 124 � $ 201 � Allocated costs,
including development costs of sites leased $ 1,420 $ 2,392 Home
sales (loss) income attributable to sites leased � (772 ) � 740 �
Total costs incurred to originate ground leases B $ 2,192 � $ 1,652
� Estimated stabilized first year returns from the leases
originated on expansion home sites during the period A/B � 5.7 % �
12.2 % For the three months ended December 31, 2007 and 2006, we
estimate our profit or loss attributable to the sale of homes
situated on expansion home sites as follows (in thousands): � Three
Months EndedDecember 31, 2007 � Three Months EndedDecember 31, 2006
� Reported (loss)/income from sales operations $ (719 ) $ 797
Brokerage business income (41 ) (47 ) Used home sales � (12 ) � (10
) Adjusted ( loss) income for projection analysis $ (772 ) $ 740 �
We have changed the method of estimating costs attributable to
newly leased sites. Beginning with the third quarter, we revised
our estimate of home site costs with respect to indirect general
community expenditures. Previously such indirect costs were
allocated to remaining unleased lots; now such costs are allocated
to all sites within the community. For example, the Company has
constructed additional amenities such as an additional clubhouse at
our Sunlake Community, which will benefit all sites in the
community, whether leased or unleased. If calculated using the
previous methodology, the estimated return would have been 3.4%
instead of 5.7%. � � � � AMERICAN LAND LEASE, INC. AND SUBSIDIARIES
RETURN ON INVESTMENT FROM HOME SALES (unaudited) � � Twelve Months
Ended December 31, 2007 Twelve Months Ended December 31, 2006 �
Expansion sites leased during the period � 198 � � 300 � Estimated
stabilized first year profit on leases originated during the period
A $ 668 � $ 1,107 � Allocated costs, including development costs of
sites leased $ 8,664 $ 13,042 Home sales (loss) income attributable
to sites leased � (1,538 ) � 5,133 � Total costs incurred to
originate ground leases B $ 10,202 � $ 7,909 � Estimated stabilized
first year returns from the leases originated on expansion home
sites during the period A/B � 6.6 % � 14.0 % For the year ended
December 31, 2007 and 2006, we estimate our profit or loss
attributable to the sale of homes situated on expansion home sites
as follows (in thousands): � Twelve Months EndedDecember 31, 2007 �
Twelve Months EndedDecember 31, 2006 � Reported (loss)/income from
sales operations $ (1,265 ) $ 5,387 Brokerage business income (143
) (234 ) Used home sales � (130 ) � (20 ) Adjusted income for
projection analysis $ (1,538 ) $ 5,133 � We have changed the method
of estimating costs attributable to newly leased sites. Beginning
with the third quarter, we revised our estimate of home site costs
with respect to indirect general community expenditures. Previously
such indirect costs were allocated to remaining unleased lots; now
such costs are allocated to all sites within the community. For
example, the Company has constructed additional amenities such as
an additional clubhouse at our Sunlake Community, which will
benefit all sites in the community, whether leased or unleased. If
calculated using the previous methodology, the estimated return
would have been 4.5% instead of 6.6%. The reconciliation of our
estimated stabilized first year return on investment in expansion
home sites to our return on investment in operational home sites
for the year ended December 31, 2007 in accordance with GAAP is
shown below (in thousands): � � Total Portfolio forYear
EndedDecember 31, 2007 Property income before depreciation A $
24,686 � Total investment in operating home sites B $ 295,898 �
Return on investment from earning home sites(1) A/B � 8.3 % � � (1)
Our return on investment in operational sites reflects our income
from and investment in sites that were leased for the first time
during the year ended December 31, 2007.��For these leases, the
income reported above includes less than a full twelve months of
operating results.��Consequently, when compared to the investment
we have made in these home sites, the return on investment during
the year ended December 31, 2007 is less than the return when
measured using a full twelve months of operating results. � �
AMERICAN LAND LEASE INC. AND SUBSIDIARIES KEY HOME SALES STATISTICS
� � � ThreeMonthsended Dec. 31,2006 � ThreeMonthsended March
31,2007 � ThreeMonths ended June 30, 2007 � ThreeMonthsended Sept.
30,2007 � ThreeMonthsended Dec. 31,2007 � 4Q07 over 3Q07 Increase/
Decrease � 4Q07 over 3Q07 % Change � 4Q07 over 4Q06 Increase/
Decrease � 4Q07 over 4Q06 % Change New home contracts 73 96 56 44
37 (7 ) (15.9 %) (36 ) (49.3 %) New home closings 71 55 65 51 38
(13 ) (25.5 %) (33 ) (46.5 %) Home resales 1 3 1 4 2 (2 ) (50 %) 1
100 % Brokered home sales 27 31 18 22 26 4 18.2 % (1 ) (3.7 %) New
home contract backlog 34 58 48 32 23 (9 ) (28.1 %) (11 ) (32.4 %) �
Average Selling Price $ 131,000 $ 135,000 $ 122,000 $ 137,000 $
128,000 ($9,000 ) (6.6 %) ($3,000 ) (2.3 %) � Average Gross Margin
Percentage 33.4 % 26.5 % 28.6 % 29.4 % 29.8 %
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