ANL Amer Land Lease

American Land Lease Announces Fourth Quarter 2003 and Full Year Financial Results - 20% Increase in Funds From Operations per share over 2002 - CLEARWATER, Fla., Feb. 12 /PRNewswire-FirstCall/ -- American Land Lease, Inc. today released results forfourth quarter and full year 2003 and expectations for full year 2004. Please refer to the Supplemental Information which the Company also released today for definitions of measures of performance not determined in accordance with generally accepted accounting principles ("non-GAAP") and reconciliation of non-GAAP measures to measures determined in accordance with generally accepted accounting principles ("GAAP"). Summary Financial Results Fourth Quarter -- Diluted Earnings Per Share ("Diluted EPS") were $0.27 for the three- month period ended December 31, 2003 as compared to $0.21 from the same period one year ago, an increase of 29% on a per share basis. -- Funds from Operations ("FFO"; a non-GAAP financial measure defined in the Supplemental Information) were $2.9 million, or $0.36 per diluted common share, for the quarter compared to $2.5 million, or $0.32 per diluted common share from the same period one year ago, an increase of 13% on a per share basis. -- Unit volume in home sales was 103 new home closings, including 97 new homes sold on expansion home sites. This compares with 90 new home closings in fourth quarter 2002. -- "Same Store" results provided a revenue increase of 9.4%, an expense increase of 6.2% and an increase of 10.9% in Net Operating Income ("NOI"). -- "Same Site" results provided a revenue increase of 3.4%, an expense increase of 3.0% and an increase of 3.6% in NOI. 2003 Year -- Diluted EPS were $1.24 for the year ended December 31, 2003 as compared to $0.86 for the year ended December 31, 2002, an increase of 44% on a per share basis. -- FFO was $11.6 million, or $1.45 per diluted common share, for the year compared to $9.4 million, or $1.21 per diluted common share from the same period one year ago, an increase of 20% on a per share basis. -- Unit volume in home sales was 414 new home closings, including 397 new homes sold on expansion home sites, for 2003 as compared to 307 new home closings in 2002. -- "Same Store" results provided a revenue increase of 8.6%, an expense increase of 3.9% and an increase of 11.1% in NOI. -- "Same Site" results provided a revenue increase of 3.4%, an expense increase of 2.1% and an increase of 4.2% in NOI. -- Physical occupancy at December 31, 2003 was 6,349 sites or 96.5%, as compared to 5,895 sites or 96.8% as of December 31, 2002. Supplemental Information The full text of this press release and Supplemental Information are available upon request or through the Company's web site at http://www.americanlandlease.com/. Management Comments Bob Blatz, President of American Land Lease, commented, "We are pleased to report strong results for the fourth quarter and full year of 2003. These results reflect better than projected performance of our home sales division, and the resulting positive effect that absorption from home sales is having on our property operations. While as compared to third quarter our home sales business declined some, we believe this is indicative of a superior performance inthird quarter home sales rather than a decrease in performance in this quarter. I note that as compared to previous performance, fourth quarter home sales represent the second highest quarter for the Company. We continue to see growth in the volume and quality of our home sales as a driver for continued growth. Both our occupied communities and new homes offered for sale performed well in the current market." Mr. Blatz added, "As we close out 2003, we have had an outstanding year for our home sales business. Our continued investment in high-quality communities has resulted in increased investments by homeowners. Our fourth quarter new home price averaged $95,000 and our full year results reflect an average new home price of $90,000, a 22% increase in average new home price over the 2002 average price of $74,000. Our outlook is for continued success in our core property ownership business and we forecast our home sales/development business to continue to be strong as we enter 2004." Dividend Declaration On February 5, 2004, the Board of Directors declared a regular fourth quarter dividend of $0.25 per share payable on February 26, 2004, to stockholders of record on February 13, 2004. The Company continues to offer a dividend reinvestment and stock purchase plan ("DRIP") which allows stockholders of the Company to reinvest dividends paid on shares of Company common stock and make optional cash investments in additional shares of Company common stock at a discount. Stockholders can contact the Company to obtain information on how to participate in the DRIP. (Point of Contact: Debbie Lollar, (727) 726-8868) The Board of Directors reviews the dividend policy quarterly. The Company's dividend is set quarterly and is subject to change or elimination at any time. The Company's primary financial objective is to maximize long-term, risk-adjusted returns on investment for shareholders. While the dividend policy is considered within the context of this objective, maintenance of past dividend levels is not a primary investment objective of the Company and is subject to numerous factors including the Company's profitability, capital expenditure plans, obligations related to principal payments and capitalized interest, and the availability of debt and equity capital at terms deemed attractive by the Company to finance these expenditures. The Company's net operating loss may be used to offset all or a portion of its real estate investment trust ("REIT") taxable income, which may allow the Company to reduce or eliminate its dividends and still maintain its REIT status. Operational Results - Fourth Quarter Fourth Quarter Property Operations Fourth quarter revenue from property operations was $6,893,000 as compared to $6,235,000in the same period one year ago, a 10.6% increase. Fourth quarter property operating expenses totaled $2,722,000 as compared to $2,516,000 in the same period one year ago, an 8.2% increase. The Company realized significant increases in rental income driven by annual rental rate increases, the absorption of new home sites through its home sales efforts and the acquisition of one community during fourth quarter 2003. Property operating expenses increased in the fourth quarter 2003 as compared to thesame period in the prior year driven primarily by increases in labor and benefit costs, the acquisition of one community during the fourth quarter 2003, utility costs including heating fuel and waste water treatment, and property management overhead, offset by decreases in tenant-related legal costs. The combination of increased revenue and expenses resulted in an overall improvement in property operating margins before depreciation expense from 59.6% in the prior year's fourth quarter to 60.5% in the fourth quarter 2003. Fourth Quarter "Same Store" Results Fourth quarter "same store" results reflect the results of operations for properties and golf courses owned for both the fourth quarter of 2003 and the prior year periods. The same store properties account for 98% of the property operating revenues for the fourth quarter of 2003. We believe that same store information provides the ability to understand the changes in profitability for properties owned during both reporting periods that could not be obtained from a review of the consolidated income statement in periods where properties are acquired. A reconciliation of "same store" operating results reported below to total property revenues and property expenses, as determined under GAAP, can be found in the Supplemental Information, page 32. The same store results are as follows: 4Q03 Revenue 9.4% Expense 6.6% Net Operating Income 10.9% We derive our increase in property revenue (i) from increases in rental rates and other charges at our properties and (ii) through the origination of leases on expansion home sites ("absorption"). "Same site" results reflect the results of operations excluding those sites leased subsequent to the beginning of the prior year period. We believe that "same site" information provides the ability to understand the changes in profitability without the growth related to the newly leased sites. Our presentation of same site results is a non-GAAP measure and should not be considered in isolation from, and is not intended to represent, an alternative measure to operating income or cash flow or any other measure of performance as determined in accordance with GAAP. We calculate absorption revenues as the rental revenue recognized on sites leased subsequent to the beginning of the prior year period. We estimate that 50% of the increase in expenses over the prior year period is attributable to newly leased sites in our calculation of same site results. We believe that the allocation of expenses between same site and absorption is an appropriate allocation between fixed and variable costs of operating our properties. Our same site, absorption, golf operations and total same store results for fourth quarter are as follows: Same Site Absorption Same Site Same Rental Golf Store Revenue 3.4% 5.1% 0.9% 9.4% Expense 3.0% 3.0% 0.6% 6.6% NOI 3.6% 6.2% 1.1% 10.9% 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, 2003 and 2002 can be found in the Supplemental Information, page 32. Fourth Quarter Home Sales Operations Fourth quarter 2003 new home sales volume was 97 closings, a 7.8% increase from the 90 closings in the same period in the prior year. Average selling price per home was $95,000 as compared to $80,000 in the same period in the prior year, an 18.8% increase. The increase in closings compared to the same period in the prior year was balanced across the Company's expansion communities, with increases in six communities and decreases in six communities. Brokerage profits were up 48% as compared with the same period in the prior year. Selling gross margins, excluding brokerage activities, improved to 29.7% in the quarter as compared to 24.5% in the same period in the prior year. This increase was driven by increased selling prices, increased manufacturer rebates associated with higher purchasing volumes, and the initial impact of cost savings efforts in home construction. These increases in revenue and cost savings were offset by increases in cost of homes purchased. Selling costs as a percentage of sales revenue increased from 20.0% in the prior year's period to 21.8% in the fourth quarter of 2003, reflecting additional investments in personnel and advertising in support of a higher operating level for the business. Thebacklog of contracts for closing stood at 89 home sales, a decrease of 6 contracts from the same period in the prior year, reflecting the change in the company's policy to use non-refundable deposits for establishing its contract backlog that began in third quarter 2003. The Company remains committed to its program of generating continued revenue growth through new lease originations in its existing portfolio. The home sales business continues to provide the Company with additional earning home sites that have a greater return on investment than is currently available through the purchase of occupied communities. Summary of home sales activity: Quarter ended Quarter ended December 31, December 31, 2003 2002 New home closings 97 90 New home contracts 76 87 Home resales 7 11 Brokered home sales 51 43 New home contract backlog 89 95 Comparison of Forecast The table below compares the Company's projected financial outlook for fourth quarter 2003 and its actual results: 4th Quarter 4th Quarter 2003 Actual 2003 Projected FFO $0.36 $0.34 to $0.36 AFFO $0.34 $0.31 to $0.33 Diluted EPS $0.27 $0.26 to $0.28 Same Store Sales Revenue Growth 9.4% 7.9% to 9.6% Expense Growth 6.6% 4.5% to 6.5% NOI Growth 10.9% 9.0% to 11.0% Home Sales Operating Income $852,000 $700,000 General and Administrative Expenses $756,000 $660,000 Other Income $32,000 $34,000 Capital Replacements (per site) $28 $32 Depreciation $698,000 $675,000 Operational Results - 2003 Year 2003 Property Operations 2003 revenue from property operations was $26,700,000 as compared to $24,547,000 in 2002, an 8.8% increase. 2003 property operating expenses totaled $10,595,000 as compared to $10,041,000 in 2002, a 5.5% increase. The Company realized significant increases in rental income driven by annual rental rate increases, the absorption of new home sites through its home sales efforts andthe acquisition of one community during fourth quarter 2003. Property operating expenses increased in 2003 as compared to 2002 driven primarily by increases in labor and benefit costs, property tax expense, utility costs including heating fuel and waste water treatment, and property management overhead, offset by decreases in tenant related legal costs. The combination of increased revenue and expenses resulted in an overall improvement in property operating margins before depreciation expense from 59.1% in the prior year to 60.3% in 2003. 2003 "Same Store" Results 2003 "same store" results reflect the results of operations for properties and golf courses owned for both 2003 and 2002. The same store properties account for 98% of the property operating revenues for 2003. We believe that same store information provides the ability to understand the changes in profitability for properties owned during both reporting periods that could not be obtained from a review of the consolidated income statement in periods where properties are acquired. A reconciliation of "same store" operating results reported below to total property revenues and property expenses, as determined under GAAP, can be found in the Supplemental Information, page 33. The same store results are as follows: 2003 Revenue 8.6% Expense 3.9% Net Operating Income 11.1% We derive our increase in property revenue (i) from increases in rental rates and other charges at our properties and (ii) through the origination of leases on expansion home sites ("absorption"). We believe that "same site" information provides the ability to understand the changes in profitability related to the newly leased sites. "Same site" results reflect the results of operations excluding those sites leased subsequent to the beginning of the prior year period. 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. We estimate that 50% of the increase in expenses over the prior year is attributable to newly leased sites in our calculation of same site results. We believe that the allocation of expenses between same site and absorption is an appropriate allocation between fixed and variable costs of operating our properties. Our same site, absorption, golf operations and total same store results for 2003 are as follows: Same Site Absorption Same Site Same Rental Golf Store Revenue 3.4% 4.8% 0.4% 8.6% Expense 2.1% 1.8% 0.0% 3.9% NOI 4.2% 6.3% 0.6% 11.1% 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 years ended December 31, 2003 and 2002 can be found in Supplemental Information, page 33. 2003 Home Sales Operations 2003 new home sales volume was 414 closings, a 35% increase from the 307 closings in the prior year. Average selling price per home in 2003 was $90,000 as compared to $74,000 in the prior year, a 22% increase. The increase in closings compared to the prior year was balanced across the Company's expansion communities, with increases in eight communities and decreases in four communities. Brokerage profits were up 22% as compared with the prior year's results. Selling gross margins, excluding brokerage activities, improved to 28.3% for 2003 as compared to 24.2% for 2002. This increase was driven by increased selling prices, increased manufacturer rebates associated with higher purchasing volumes, and the initial impact of cost savings efforts in home construction. These increases in revenue and cost savings were offset by increases in cost of homes purchased. Selling costs as a percentage of sales revenue decreased from 23.7% in the prior year to 20.2% in 2003, reflecting additional operating leverage against fixed costs. The backlog of contracts for closing stood at 89 home sales, a decrease of 6 contracts from the same period in the prior year, in part reflecting the change in the company's policy to use non-refundable deposits for establishing its contract backlog that began in third quarter 2003. The Company remains committed to its program of generating continued revenue growth through new lease originations in its existing portfolio. The home sales business continues to provide the Company with additional earning home sites that have a greater return on investment than is currently available through the purchase of occupied communities. Summary of home sales activity: Year ended Year ended December 31, December 31, 2003 2002 New home closings 414 307 Home resales 41 27 Brokered home sales 193 171 New home contract backlog 89 95 Outlook for 2004 The table below summarizes the Company's projected financial outlook for 2004 as of the date of this release and is based on the estimates and assumptions disclosed in this and previous press releases: Full Year 2004 Projected FFO $1.40 to $1.60 AFFO $1.28 to $1.44 Diluted EPS $1.03 to $1.24 Same Store Sales Revenue Growth 5.0% to 9.0% Expense Growth 4.5% to 7.5% NOI Growth 6.0% to 9.5% Home Sales Operating Income $2,000,000 to $3,250,000 General and Administrative Expenses $3,200,000 to $3,700,000 Other Income $210,000 to $280,000 Capital Replacements (per site) $115 to $135 Depreciation $2,900,000 to $3,200,000 Based on the outlook provided above, the Company is projecting a reduction in Diluted EPS from $1.24 for the year ended December 31, 2003. The reduction is a result of the gains on sale of real estate in 2003 that are not expected to recur in 2004. A portion of the Company's earnings is from the sale of new homes on expansion home sites in its developing communities. The earnings from the new home sales are subject to greater volatility than the earnings from rental property activities. The Company's earnings estimates would be impacted positively by increases in the unit volume of new home sales or increases in the gross margins from new home sales. Conversely, decreases in the unit volume of new home sales or decreases in the gross margins from new home sales would negatively impact the Company's earnings estimates. Home sales volume is dependent upon a number of factors, including consumer confidence and consumer access to financing sources for home purchases and the sale of their current home. The Company's projected results for 2004 include increased corporate governance costs based upon current estimates of the cost of compliance. Non- employee director compensation continues to be paid in stock and all stock based compensation is expensed within the 2004 projections. The Company's earnings estimates would be adversely impacted by the increased cost of compliance with regulations and laws applicable to public companies and financial reporting. The financial and operating projections provided in this release are the result of management's consideration of past operating performance, current and anticipated market conditions and other factors that management considers relevant from its past experience Financing Activity During fourth quarter 2003, the Company closed an $8 million mortgage on a property in Florida at an interest rate of 5.65% for a term of 10 years. The loan terms also provide for future advances based upon increased value of pledged collateral as additional phases of the community are completed and occupied. The Company renegotiated its floor plan facility with Textron Financial Corporation used to finance the Company's inventory of homes. The $15,000,000 credit facility interest rate was reduced from a minimum rateof 7% to a minimum rate of 5.5%. Development Activity The Company continued development of its new subdivision at Savanna Club, "Eagles Retreat," that will provide an additional 216 developed home sites available for immediate occupancy. The Companyexpects to complete the new subdivision during first quarter 2004. In addition, in response to increased activity at "The Bluffs," a new subdivision within the Riverside Club Community, the Company accelerated construction of the next phase that will provide 148 developed home sites available for immediate occupancy. Planning and permitting for subdivisions at two additional communities continued during the quarter. American Land Lease, Inc. is a REIT that holds interests in 29 manufactured home communities with 6,578 operational home sites, 979 developed expansion sites, 1,437 undeveloped expansion sites and 129 recreational vehicle sites. Some of the statements in this press release, as well as oral statements made by the Company's officials to analysts and stockholders in the course of presentations about the Company and conference calls following quarterly earnings releases, constitute "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.Such statements may include projections of the Company's cash flow, dividends and anticipated returns on real estate investments. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include: general economic and business conditions; interest rate changes, financing and refinancing risks; risks inherent in owning real estate; future development rate of home sites; competition; the availability of real estate assets at prices which meet the Company's investment criteria; the Company'sability to reduce expense levels, implement rent increases, use leverage and other risks set forth in the Company's Securities and Exchange Commission filings. Management will hold a teleconference call, Wednesday, February 18, 2004 at 4:00 p.m. Eastern Standard Time to discuss fourth quarter 2003 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 2003 results conference call. If you are unable to participate at the scheduled time, this information will be available for recorded playback from 5:30 p.m. EST, February 18, 2004 until midnight on February 25, 2004. To access the replay, dial toll free, (800) 642-1687 and request information from conference ID 5377670. DATASOURCE: American Land Lease, Inc. CONTACT: Robert G. Blatz, President, or Shannon E. Smith, Chief Financial Officer, both of American Land Lease, +1-727-726-8868 Web site: http://www.americanlandlease.com/

Copyright