American Land Lease Announces First Quarter 2004 Financial Results; 24% Increase in Funds From Operations per Share over 2003
April 29 2004 - 6:52PM
PR Newswire (US)
American Land Lease Announces First Quarter 2004 Financial Results;
24% Increase in Funds From Operations per Share over 2003
CLEARWATER, Fla., April 29 /PRNewswire-FirstCall/ -- American Land
Lease, Inc. today released results for first quarter 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 First
Quarter * Diluted Earnings Per Share ("Diluted EPS") were $0.33 for
the three- month period ended March 31, 2004 as compared to $0.26
from the same period one year ago, an increase of 26.9% on a per
share basis. * Funds from Operations ("FFO"; a non-GAAP financial
measure defined in the Supplemental Information) were $3.4 million,
or $0.41 per diluted common share, for the quarter compared to $2.6
million, or $0.33 per diluted common share from the same period one
year ago, an increase of 24.2% on a per share basis. * Unit volume
in home sales was 91 new home closings, including 89 new homes sold
on expansion home sites. This compares with 98 new home closings in
first quarter 2003. * "Same Store" results provided a revenue
increase of 9.4%, an expense increase of 5.3% and an increase of
11.6% in Net Operating Income ("NOI"). * "Same Site" results
provided a revenue increase of 2.9%, an expense increase of 2.5%
and an increase of 3.1% in NOI. 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 results for the first quarter 2004. The impact of newly
leased sites continues to drive the out performance of our same
store growth rate while our focus on senior communities continues
to provide stable growth in our core business. "Our home sales unit
volume dropped as compared to first quarter 2003 -- but total
revenue for home sales was above that of a year ago. As we look at
our long-term goals for our communities, we are encouraged that the
average home sales price reached $100,000. Our backlog is up over
the prior year so we continue to see growth in the volume and
quality of our home sales as a driver for improved results. Both
our occupied communities and new homes offered for sale performed
well in the current market." Dividend Declaration On April 28,
2004, the Board of Directors declared a regular first quarter
dividend of $0.25 per share payable on May 27, 2004, to
stockholders of record on May 12, 2004. The Company has suspended
its dividend reinvestment plan as of the current quarter. 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 First Quarter Property Operations First quarter
revenue from property operations was $7,436,000 as compared to
$6,719,000 in the same period one year ago, a 10.7% increase. First
quarter property operating expenses totaled $2,857,000 as compared
to $2,650,000 in the same period one year ago, a 7.8% increase. The
Company realized significant increases in rental income driven by
annual rental rate increases, the absorption of new home sites as a
result of its home sales efforts and the acquisition of one
community during fourth quarter 2003. Property operating expenses
increased in the first quarter 2004 as compared to the same 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 60.6% in the
prior year's first quarter to 61.6% in the first quarter 2004.
First Quarter "Same Store" Results First quarter "same store"
results reflect the results of operations for properties and golf
courses owned for both the first quarter of 2004 and the prior year
periods. The same store properties account for 98% of the property
operating revenues for the first quarter of 2004. We believe that
same store information provides insights as to 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 29. The
same store increases are as follows: 1Q04 Revenue 9.4 % Expense 5.3
% Net Operating Income 11.6 % 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 first quarter are as follows: Same Site
Rental Absorption Same Site Golf Same Store Revenue 2.9 % 5.5 % 1.0
% 9.4 % Expense 2.5 % 2.5 % 0.3 % 5.3 % NOI 3.1 % 7.0 % 1.5 % 11.6
% 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 March 31, 2004 and 2003 can be found in the Supplemental
Information, page 29. First Quarter Home Sales Operations First
quarter 2004 new home sales unit volume was 91 closings, a 7.1%
decrease from the 98 closings in the same period in the prior year.
Average selling price per home was $100,000 as compared to $79,000
in the same period in the prior year, a 26.6% increase. The
decrease 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 39.3% as compared with the same period in
the prior year driven by an increase in the number of transactions.
Selling gross margins, excluding brokerage activities, improved to
33.2% in the quarter as compared to 26.7% 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 sales of upgrades to base home models. 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 23.2% in the prior year's period to 25.2% in the
first quarter of 2004, reflecting additional investments in
personnel and advertising in support of a higher operating level
for the business. The backlog of contracts for closing stood at 164
home sales, an increase of 15 contracts from the same period in the
prior year. The Company remains committed to its program of
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. Summary of home sales activity:
Quarter ended Quarter ended March 31, 2004 March 31, 2003 New home
closings 91 98 New home contracts 168 177 Home resales 12 14
Brokered home sales 79 45 New home contract backlog 164 149 Other
Income During the quarter, the Company realized the remaining value
of a retained residual interest in a bond securitization asset from
its prior bond business. This income was recorded as other income,
totaled $0.03 per diluted common share and OP unit for the quarter,
and will not recur in future periods. 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 ($0.12) 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. Development Activity
The Company completed development of its new subdivision at Savanna
Club, "Eagles Retreat," that provides an additional 216 developed
home sites available for immediate occupancy. 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. Construction began for
subdivisions at the Royal Palm and Brentwood communities that will
provide an additional 162 home sites for immediate occupancy in
third quarter 2004. Planning and permitting a subdivision at an
additional community continued during the quarter. American Land
Lease, Inc. is a REIT that holds interests in 29 manufactured home
communities with 6,663 operational home sites, 1,065 developed
expansion sites, 1,267 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'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. Management will hold a teleconference call,
Monday, May 3, 2004 at 4:00 p.m. Eastern Daylight Time to discuss
first quarter 2004 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 first
quarter 2004 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. EDT, May 3, 2004
until midnight on May 10, 2004. To access the replay, dial
toll-free, (800) 642-1687 and request information from conference
ID 7205266. 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/
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