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/
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