ANL Amer Land Lease

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/

Copyright