- FFO Increase of 7.9% per share - CLEARWATER, Fla., Aug. 7
/PRNewswire-FirstCall/ -- American Land Lease, Inc. (NYSE:ANL)
today released results for second quarter 2006. Summary Financial
Results Second Quarter - Diluted Earnings Per Share ("Diluted EPS")
were $0.28 for the three- month period ended June 30, 2006 compared
to $0.27 from the same period one-year ago. - Funds from Operations
("FFO"; a non-GAAP financial measure defined on page 8 of this
press release) were $3.6 million, or $0.41 per diluted common
share, for the quarter compared to $3.3 million or $0.38 per
diluted common share from the same period one year ago, an increase
of 7.9% on a per share basis. - Unit volume in home sales was 95
new home closings, including 83 new homes sold on expansion home
sites. This compares with 110 new home closings in second quarter
2005. - "Same Store" results provided a revenue increase of 11.1%,
an expense increase of 13.3% and an increase of 10.0% in Net
Operating Income ("NOI"). - "Same Site" results provided a revenue
increase of 4.8%, an expense increase of 6.0% and an increase of
4.1% in NOI. Supplemental Information The full text of this press
release is 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, "In a very
competitive environment, our results for the second quarter of 2006
reflect the stability and strength of our core residential land
lease business. The same site and same store results are strong
from this component of our business. Our residential land lease
business provides the foundation for our earnings and valuation and
we believe that the portfolio performed well in the current market.
We expect to realize strong performance from our portfolio of
residential land leases during the second half of 2006, consistent
with our performance over the past several years. We recognize that
certain expense areas, especially utilities and insurance, require
increased focus in order to deliver enhanced results." "We continue
to view the new home sales business as an activity that complements
our residential land lease business by creating new revenue
generating home sites that increase the rate of growth in
profitability for our portfolio. Consistent with the entire home
sales industry, our new home closings were not as high as we
projected at the beginning of the year, but we fared well
considering the drop in new home sales in the markets in which we
compete. At a time of significant decreases in new home building,
we continue to see long term strength in the active senior segment
that we have targeted. Our backlog is not as strong as compared to
a year ago -- which has us focused for the short term, but over the
longer term we continue to believe that we are well positioned for
future growth. We have adjusted our expectations for new home
closings in the second half of the year, resulting in a lower top
end of our earnings projections. The May purchase of The Grove and
the July purchase of Park Place at Sebastian both give us an
opportunity to use our home sales and property operating skills to
add additional high quality senior communities to our portfolio. We
continue to look for other such opportunities." Mr. Blatz added,
"Over the last twelve months, we have been able to reduce our
exposure to variable rate debt from 35.8% of our total debt to
13.7% of our total debt through refinancing, while reducing the
average interest rate on our mortgage debt by 0.6%. Our development
activities remain on track and continue to provide our path towards
future growth. We maintain a long term focus on our business as we
continue to control costs and build out our current portfolio of
communities. We continue to focus on the success of our core
residential land lease business as we look to continued growth in
earnings and value for the months and years ahead." Dividend
Declaration On August 1, 2006, the Board of Directors declared a
second quarter common stock dividend of $0.25 per share payable on
August 31, 2006, to stockholders of record on August 15, 2006. On
August 1, 2006, the Board of Directors also declared a cash
dividend of $0.4844 per share of Class A Preferred Stock for the
quarter ended June 30, 2006, payable on August 31, 2006 to
shareholders of record on August 15, 2006. 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, 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 - Second
Quarter Second Quarter Property Operations Second quarter revenue
from property operations was $8,657,000 as compared to $7,626,000
in the same period one year ago, a 13.5% increase. Second quarter
property operating expenses totaled $3,085,000 as compared to
$2,651,000 in the same period one year ago, a 16.4% increase. The
Company realized significant increases in rental income driven by
annual rental rate increases and the absorption of new home sites
through its home sales efforts and the acquisition of two
additional communities in the 2006 period. Property operating
expenses increased in second quarter 2006 primarily due to
increases in utility costs, the absence of insurance recoveries
recognized in the 2005 period, tenant related legal costs,
insurance premiums and personnel costs. Property operating margins
before depreciation expense decreased from 62.2% in the prior
year's second quarter to 61.0% in the current quarter. The Company
has previously implemented contractual terms under its leases to
pass on increases in property taxes through billings to the tenants
directly for their proportional share on the increase in expense.
In addition, 23 communities of the 31 we operate include metering
the individual resident's usage where changes in consumption are
billed to the resident. Our targeted rate for expense growth is
CPI; in the current market with taxes, insurance, and utility costs
as the drivers of expense above CPI, we expect that same site
expenses will grow at a rate of CPI plus 2% for the remainder of
the year. Second Quarter "Same Store" Results Second quarter "same
store" results reflect the results of operations for properties and
golf courses owned for both the second quarters of 2006 and 2005.
The same store properties account for 92% of property operating
revenues for the second quarter of 2006. 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 in periods where properties are acquired. The same store
% change results are as follows: 2Q06 Revenue 11.1% Expense 13.3%
Net Operating Income 10.0% 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. Our same store revenues reflect reimbursements from our
tenants for certain expense items, principally utilities and real
estate taxes. When these revenues are associated with the expenses
we incur, the change in revenues and expenses for the quarter are
shown below. 2Q06 Revenues 11.1% Less: Reimbursements (1.5%)
Revenue growth net of reimbursements 9.6% Expenses 13.3% Less:
Reimbursements (4.6%) Expense growth net of reimbursements 8.7%
Same Store NOI Growth 10.0% While we are focused on controlling
operating expenses, our leases provide some insulation from changes
in uncontrollable expenses. 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 and
golf operations contributions to total same store results for
second quarter are as follows: Same Site Absorption Same Site Same
Store Rental Golf Revenue 4.8% 6.0% 0.3% 11.1% Expense 6.0% 5.9%
1.4% 13.3% NOI 4.2% 6.1% (0.3)% 10.0% 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 June 30, 2006 and 2005 can be
found on page 14 of this earnings release. Second Quarter Home
Sales Operations Second quarter 2006 new home sales produced 95
closings, a 13.6% decrease from the 110 closings in the same period
in the prior year. Average selling price per home was $124,000 as
compared to $109,000 in the same period in the prior year, a 13.8%
increase. The decrease in closings compared to the same period in
the prior year was primarily due to decreased sales at three of the
Company's expansion communities in Florida. Brokerage profits were
down 14.4% as compared with the same period in the prior year.
Selling gross margins, excluding brokerage activities, increased to
34.3% in the quarter as compared to 30.3% in the same period in the
prior year. This increase was driven primarily by increased selling
prices and increased manufacturer rebates associated with higher
purchasing volumes partially offset by increases in costs of homes
purchased and the number of homes sold. Selling costs as a
percentage of sales revenue increased from 21.3% in the prior
year's period to 22.9% in the second quarter of 2006, reflecting
incremental advertising and marketing expenses incurred to drive
traffic in a slowing home sales market. The backlog of contracts
for closing stood at 86 home sales, a decrease of 39 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 Quarter ended ended June 30, June 30,
2006 2005 New home closings - Same Store 88 110 New home closings -
Acquisitions 7 -- Total new home closings 95 110 New home contracts
- Same Store 95 145 New home contracts - Acquisitions 30 -- Total
new home contracts 125 145 Home resales 3 5 Brokered home sales 54
90 New home contract backlog - Same Store 63 139 New home contract
backlog - Acquisitions 23 -- Total new home contract backlog 86 139
Outlook for 2006 The table below summarizes the Company's projected
financial outlook for 2006 as of the date of this release and is
based on the estimates and assumptions disclosed in this and
previous press releases: Full Year 2006 Projected FFO $1.70 to
$1.78 AFFO $1.57 to $1.68 Diluted EPS $1.27 to $1.40 Same Store
Sales Revenue Growth 8% to 11% Expense Growth 9% to 13% NOI Growth
8% to 10% Home Sales Operating Income $4.5M to $6.0M Home Sale Net
Contribution $3.2M to $4.6M General and Administrative Expenses
$3.8M to $4.2M Capital Replacements (per site) $150 to $170
Depreciation $3.8M to $4.1M 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 new home sales are
subject to greater volatility than are the earnings from land
leases. The market for new home sales has declined over the first
half of the year and the Company expects that trend to continue in
the second half of the year. The Company's new home sales activity
continues to be reduced at a rate less than that being experienced
by the national homebuilders, but we have lowered our expectations
for the new home sales business for the remainder of the year in
response to a lower backlog. The Company's earnings estimates would
be impacted positively or negatively by changes in the unit volume
of new home sales or in the gross margins from new home sales. Home
sales volume and gross margins are dependent upon a number of
factors, including consumer confidence, the cost of homeowners'
insurance, and consumers' access to financing sources for home
purchases and the sale of their current homes. We have lowered the
upper range of our annual earnings guidance in response to our
lower new home sales backlog and our expectation that new home
sales will be a lower contributor in the second half of the year.
The Company's projected results for 2006 include a reduction in
regulatory compliance costs. Non-employee director compensation
continues to be paid in stock and all stock based compensation is
expensed within the 2006 projections. In addition, projected
results include the expense for performance based restricted stock.
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. 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. Financing Activity On
April 10, 2006, the Company consolidated and modified two existing
notes payables of $5,226,560 and $945,000, resulting in a restated
$8,000,000 note payable with a fixed interest rate of 6.64%
maturing on April 30, 2020. The proceeds will be used to continue
development of our residential land lease communities and for
general corporate purposes. On May 22, 2006, the Company
consolidated and modified two existing notes payables of $9,923,700
and $2,122,000, resulting in a restated $15,950,000 note payable
with a fixed interest rate of 6.76% maturing on November 30, 2018.
The proceeds will be used to continue development of our
residential land lease communities and for general corporate
purposes. On June 1, 2006, the Company entered into a Construction
Loan Agreement with a total commitment of $26,500,000. The loan is
a five-year, interest only note payable with a variable interest
rate of 175 basis points over the three month LIBOR rate, adjusted
quarterly, currently 6.98% at June 30, 2006. At closing $9,426,000
was advanced under the agreement. The proceeds will be used to
continue the development of the residential land lease community.
Development Activity Significant development activity during the
quarter included: - At Sebastian Beach and Tennis Village,
construction and site work continued on schedule for the opening of
the community in early 2007. Pre-sales and marketing activities for
the community have already begun at an off site sales office opened
in January. - At Savanna Club, construction on a 5,000+ square foot
Fitness Center neared completion. - At the Villages at Country Club
project in Mesa, Arizona, site work continued. - At Riverside Club,
construction activities continued for the community's second
clubhouse, this one including more than 22,000 square feet. - At
Sun Lake, construction activities began on the expansion and
renovation of the community center complex. American Land Lease,
Inc. is a REIT that held interests in 31 manufactured home
communities with 7,749 operational home sites, 1,005 developed
expansion sites, 1,518 undeveloped expansion sites and 129
recreational vehicle sites as of June 30, 2006. 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, 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. Management will hold a
teleconference call, Monday, August 7, 2006 at 4:00 p.m. Eastern
Daylight Time to discuss second quarter 2006 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 second quarter 2006 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.
Eastern Daylight Time, August 7, 2006 until midnight on August 14,
2006. To access the replay, dial toll free, (800) 642-1687 and
request information from conference ID 2769227. 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 standard used by American Land Lease management.
Measurements include Funds from Operations ("FFO"), which is an
industry-accepted measurement as based on the definition of the
National Association of Real Estate Investment Trusts (NAREIT).
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. 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: represent 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
where 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) As of June 30, March 31, Dec. 31,
Sept. 30, June 30, 2006 2006 2005 2005 2005 (unaudited) (unaudited)
(unaudited) (unaudited) ASSETS Real Estate $268,731 $259,237
$249,398 $236,588 $232,035 Less accumulated depreciation (27,836)
(26,887) (26,014) (25,172) (24,358) Real estate under development
95,195 87,068 74,416 74,818 70,841 Total Real Estate 336,090
319,418 297,800 286,234 278,518 Cash and cash equivalents 8,497
8,384 1,795 828 1,313 Inventory 23,588 20,654 18,759 19,431 19,478
Other assets 14,601 12,883 11,335 10,074 9,494 Total Assets $
382,776 $361,339 $329,689 $316,567 $308,803 LIABILITIES AND EQUITY
Liabilities Secured long-term notes payable $201,986 $185,015
$151,656 $127,045 $125,712 Secured short-term financing 19,462
16,742 19,669 33,777 30,123 Accounts payable and accrued
liabilities 12,069 12,057 12,510 11,850 10,237 Total Liabilities
233,517 213,814 183,835 172,672 166,072 Minority Interest in
Operating Partnership 16,245 16,137 15,945 15,511 15,312
STOCKHOLDERS' EQUITY Preferred Stock, par value $.01 per share;
1,000 shares authorized, 1,000 and 0 shares issued and outstanding,
respectively 25,000 25,000 25,000 25,000 25,000 Common Stock, par
value $.01 per share; 12,000 shares authorized 92 92 93 93 93
Additional paid-in capital 288,581 287,206 288,224 288,188 288,064
Notes receivable from officers re common stock purchases -- -- --
-- -- Deferred compensation re restricted stock -- -- (1,651)
(1,959) (2,258) Dividends in excess of accumulated earnings
(154,047) (154,298) (155,145) (156,326) (156,868) Treasury stock at
cost (26,612) (26,612) (26,612) (26,612) (26,612) Total
Stockholders Equity 133,014 131,388 129,909 128,384 127,419 Total
Liabilities and Stockholders' Equity $382,776 $361,339 $329,689
$316,567 $308,803 AMERICAN LAND LEASE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share
data) (unaudited) Three Months Ended June 30, March 31, Dec. 31,
Sept. 30, 2006 2006 2005 2005 RENTAL PROPERTY OPERATIONS Rental and
other property revenues $8,657 $8,311 $7,820 $7,876 Golf course
operating revenues 213 470 232 131 Total property operating
revenues 8,870 8,781 8,052 8,007 Property operating expenses
(3,085) (2,943) (2,866) (2,794) Recoveries of casualty expenses
related to hurricanes -- -- (6) (21) Golf course operating expenses
(373) (365) (346) (329) Total property operating expenses (3,458)
(3,308) (3,218) (3,144) Depreciation (1,050) (997) (971) (886)
Income from rental property operations 4,362 4,476 3,863 3,977
SALES OPERATIONS Home sales revenue 12,052 13,496 16,781 13,676
Cost of home sales (7,914) (9,044) (11,444) (9,562) Gross profit on
home sales 4,138 4,452 5,337 4,114 Commissions earned on brokered
sales 164 159 139 112 Commissions paid on brokered sales (76) (82)
(74) (64) Gross profit on brokered sales 88 77 65 48 Selling and
marketing expenses (2,754) (2,800) (3,162) (2,550) Income (loss)
from sales operations 1,472 1,729 2,240 1,612 General and
administrative expenses (995) (891) (1,113) (946) Gain on sale of
property -- -- -- -- Interest and other income 91 53 1 2 Tax
benefit -- -- 600 -- Interest expense (1,878) (1,624) (1,546)
(1,330) Income before minority interest in Operating Partnership
3,052 3,743 4,045 3,315 Minority interest in Operating Partnership
(356) (441) (483) (395) Income from continuing operations 2,696
3,302 3,562 2,920 Cumulative preferred stock dividends (484) (484)
(484) (484) NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS $2,212
$2,818 $3,078 $2,436 Earnings per common share - basic: Income from
continuing operations (net of cumulative unpaid preferred
dividends) $0.30 $0.38 $0.42 $0.33 Net income attributable to
common stockholders $0.30 $0.38 $0.42 $0.33 Earnings per common
share - diluted: Income from continuing operations $0.28 $0.36
$0.40 $0.32 Net income attributable to common stockholders $0.28
$0.36 $0.40 $0.32 Weighted average common shares outstanding 7,465
7,423 7,341 7,331 Weighted average common shares and common share
equivalents outstanding 7,836 7,880 7,722 7,706 Common dividends
paid per share $0.25 $0.25 $0.25 $0.25 AMERICAN LAND LEASE INC. AND
SUBSIDIARIES DEBT ANALYSIS (in thousands) (unaudited) As of June
30, March 31, Dec. 31, Sept. 30, June 30, 2006 2006 2005 2005 2005
DEBT OUTSTANDING Mortgage Loans Payable - Fixed $191,215 $180,570
$136,641 $101,417 $100,084 Mortgage Loans Payable- Floating 10,771
4,445 15,015 25,628 25,628 Floor Plan Facility 19,462 16,642 14,969
19,147 18,929 Line of Credit -- 100 4,700 14,630 11,194 Total Debts
$221,448 $201,757 $171,325 $160,822 $155,835 % FIXED FLOATING Fixed
86.3% 89.5% 79.8% 63.1% 64.2% Floating 13.7% 10.5% 20.2% 36.9%
35.8% Total 100.00% 100.00% 100.00% 100.00% 100.00% AVERAGE
INTEREST RATES Mortgage Loans Payable - Fixed 6.4% 6.4% 6.6% 7.0%
7.0% Mortgage Loans Payable - Floating 7.4% 7.2% 6.7% 6.5% 5.9%
Floor Plan Facility 8.75% 8.2% 7.6% 7.1% 7.7% Line of Credit 7.35%
6.6% 6.4% 5.8% 4.5% Total Weighted Average 6.7% 6.6% 6.7% 6.8% 6.7%
DEBT RATIOS Debt/Total Market Cap(1) 49.2% 43.0% 42.1% 41.2% 43.1%
Debt/Gross Assets 64.6% 55.8% 52.0% 50.8% 50.5% Dec. 31, Dec. 31,
Dec. 31, Dec. 31, Dec. 31, MATURITIES 2006 2007 2008 2009 2010
Mortgage Loan Scheduled Principal Payments 1,484 3,084 3,246 3,418
3,633 Mortgage Loans Balloon Maturities -- 2,665 -- 2,069 -- Floor
Plan Facility -- -- -- -- -- Total $1,484 $5,749 $3,246 $5,487
$3,633 (1) Computed based upon closing price as reported on NYSE as
of the period ended. FFO/AFFO and Payout Ratios AMERICAN LAND LEASE
INC. AND SUBSIDIARIES RECONCILIATION OF NET INCOME TO FFO AND AFFO
(Amounts in thousands, except per share/OP unit amounts)
(Unaudited) Three Months Ended June 30, 2006 2005 Net Income $2,212
$2,082 Adjustments Cumulative unpaid preferred stock dividends 484
484 Minority interest in operating partnership 356 340 Real estate
depreciation 1,050 858 Funds From Operations (FFO) $4,102 $3,764
Cumulative unpaid preferred stock dividends (484) (484) Funds From
Operations attributable to common Stockholders 3,618 3,280 Capital
Replacements (433) (300) Adjusted Funds from Operations (AFFO)
$3,185 $2,980 Weighted Average Common Shares/OP Units Outstanding
8,828 8,578 Per Common Share and OP Unit: FFO: $0.41 $0.38 AFFO:
$0.36 $0.35 Payout Ratio Per Common Share and OP Unit: Gross
Distribution Payout FFO: 61.0% 65.8% AFFO: 69.4% 71.4% AMERICAN
LAND LEASE INC. AND SUBSIDIARIES RECONCILIATION OF SAME SITE AND
SAME STORE OPERATING RESULTS FOR THE QUARTER ENDED JUNE 30, 2006
AND JUNE 30, 2005 (in thousands) (unaudited) Contribution Three
Months Three Months to Same Ended Ended Store June 30, June 30,
Change % Change % Change(1) 2006 2005 Same site rental revenues
$7,696 $7,333 $363 5.0% 4.8% Absorption rental revenues 490 35 455
1300.0% 6.0% Same site golf revenues 213 194 19 9.8% 0.3% Same
store revenues A 8,399 7,562 837 11.1% 11.1% Re-development
property revenues 462 257 205 79.8% Other Income 9 1 8 800.0% Total
property revenues C $8,870 $7,820 $1,050 13.4% Same site rental
expenses $2,300 $2,150 $150 7.0% 6.0% Absorption rental expenses
147 -- 147 100.0% 5.9% Same site golf expenses 373 339 34 10.0%
1.4% Same store expenses B 2,820 2,489 331 13.3% 13.3% Recoveries
of casualty expenses related to hurricanes -- 85 101 118.8%
Re-development property expenses 186 (36) 36 -100.00% Expenses
related to offsite management(2) 452 416 36 8.7% Total property
operating expenses D $3,458 $2,954 $504 17.1% Same Store net
operating income A-B $5,579 $5,073 506 10.0% Total net operating
income C-D $5,412 $4,866 $546 11.2% (1) Contribution to Same Store
% change is 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 2005 period. For example,
same site rental revenues of $364 as compared to the total same
store revenues in 2005 of $7,562 is a 4.8% increase
($364/$7,562=4.8%). (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 JUNE 30,
2006 Operational Home Average Sites Monthly RV Undeveloped
Developed Community Location (1) Occupancy Rent Sites Home Home
Sites Sites Owned Communities Blue Heron Punta Gorda 337 100% $339
-- -- 51 Pines FL Brentwood Hudson 132 98% 266 -- -- 59 Estates FL
Sebastian Micco -- 0% -- -- 533 -- Beach & FL Tennis Club
Serendipity Ft. Myers 338 96% 348 -- -- -- FL Stonebrook Homosassa
187 100% 293 -- -- 20 FL Sunlake Estates Grand Island 349 100% 350
-- -- 47 FL Sun Valley Tarpon Springs 261 97% 383 -- -- -- FL Foley
Grove Foley 92 100% 245 -- 260 73 FL Forest View Homosassa 268 100%
313 -- -- 36 FL Gulfstream Orlando 382 98% 406 -- 50 -- Harbor FL
Gulfstream Orlando 306 100% 403 -- 37 1 Harbor II FL Gulfstream
Orlando 272 57% 388 -- -- 13 Harbor III FL Lakeshore Tampa 281 99%
417 -- -- -- Villas FL Park Royale Pinellas 291 94% 427 -- -- 18
Park FL Pleasant Riverview 245 96% 347 -- -- -- Living FL Riverside
Ruskin 426 100% 516 -- 420 91 GCC FL Royal Palm Haines City 272 97%
343 -- -- 115 Village FL Cypress Lakeland 206 100% 255 -- -- 52
Greens FL Savanna Port St Lucie 946 100% 299 -- -- 121 Club FL
Woodlands Groveland 152 99% 277 -- -- 140 FL Subtotal-Florida 5,743
1,300 837 Blue Star Apache 22 55% 306 129 -- -- Junction AZ
Brentwood Mesa 350 94% 447 -- -- -- West AZ Casa Mesa -- 0% -- --
218 -- Encanta AZ Desert Apache 181 99% 373 -- -- 25 Harbor
Junction AZ Fiesta Mesa 172 86% 387 -- -- -- Village AZ La Casa
Apache 198 98% 383 -- -- -- Blanca Junction AZ Lost Apache 196 82%
318 -- -- 46 Dutchman Junction AZ Rancho Apache 312 94% 419 -- --
-- Mirage Junction AZ Reserve Bull Head 217 100% 308 -- -- 97 at
Fox City Creek AZ Sun Apache 268 93% 248 -- -- -- Valley Junction
AZ Subtotal-Arizona 1,916 129 218 168 Mullica Egg Harbor 90 100%
497 -- -- -- Woods City NJ Total Communities 31 7,749 96% $364 129
1,518 1,005 (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 83.4% across the entire portfolio. Including sites not
yet developed, occupancy was at 72% at June 30, 2006. Portfolio
Summary Operational Developed Undeveloped RV Home sites Home sites
Home sites Sites Total As of Dec. 31, 2005 7,283 976 1,270 129
9,658 Properties developed -- 19 (19) -- -- New lots purchased 302
178 260 740 New leases originated 164 (164) -- -- -- Adjust for
site plan changes -- (4) 7 -- 3 As of June 30, 2006 7,749(1) 1,005
1,518 129 10,401 (1) As of June 30, 2006, 7,417 of these
operational home sites were occupied. Occupancy Roll Forward
Occupied Operational Home sites Home sites Occupancy As of December
31, 2005 6,947 7,283 95.4% New home sales 200 164 Used home sales 2
-- Used homes acquired (21) -- Lots acquired (sold) 302 302 Homes
constructed by others 13 -- Homes removed from previously leased
sites (26) -- As of June 30, 2006 7,417 7,749 95.7% AMERICAN LAND
LEASE, INC. AND SUBSIDIARIES RETURN ON INVESTMENT FROM HOME SALES
(unaudited) Three Months Ended Three Months Ended June 30, 2006
June 30, 2005 Expansion sites leased during the period 83 94
Estimated first year annualized profit on Leases originated during
the period A $305 $340 Costs, including development costs of sites
leased $5,006 $4,153 Home sales income (loss) attributable to sites
leased 1,369 973 Total costs incurred to originate ground leases B
$3,637 $3,180 Estimated first year returns from the leases
originated on expansion home sites during the period A/B 8.4% 10.7%
For the three months ended June 30, 2006 and 2005, we estimate our
profit or loss attributable to the sale of homes situated on
expansion home sites as follows (in thousands): Three Months Ended
Three Months Ended June 30, 2006 June 30, 2005 Reported income from
sales operations $ 1,472 $1,190 Used home sales and brokerage
business income (88) (102) Used home sales (15) (115) Adjusted
income for projection analysis $ 1,369 $973 The reconciliation of
our estimated first year return on investment in expansion home
sites to our return on investment in operational home sites for the
year ended December 31, 2005 in accordance with GAAP is shown below
(in thousands): Total Portfolio for Year Ended December 31, 2005
Property income before depreciation A $ 19,819 Total investment in
operating home sites B $ 242,304 Return on investment from earning
home sites A/B 8.2% AMERICAN LAND LEASE INC. AND SUBSIDIARIES KEY
HOME SALES STATISTICS June 30, Sept. 30, Dec. 31, March 31, June
30, 2005 2005 2005 2006 2006 New home contracts 145 145 105 117 125
New home closings 110 115 133 104 95 Home resales 5 4 1 -- 3
Brokered home sales 90 45 51 62 54 New home contract backlog 125
157 93 75 86 Average Selling Price $109,000 117,000 $125,000
$128,000 $124,000 Average Gross Margin Percentage 30.3% 30.1% 31.8%
33.0% 34.3% 2Q06 over 2Q06 over 1Q06 2Q06 over 2Q05 2Q06 over
Increase/ 1Q06 % Increase/ 2Q05% Decrease Change Decrease Change
New home contracts 8 6.8% -20 -13.8% New home closings -9 -8.7% -15
-13.6% Home resales 3 100.0% -2 -40.0% Brokered home sales -8
-12.9% -36 -40.0% New home contract 11 14.7% -39 -31.2% backlog
Average Selling Price ($4,000) -3.1% $15,000 13.8% Average Gross
Margin Percentage DATASOURCE: American Land Lease, Inc. CONTACT:
Robert G. Blatz, President, +1-727-726-8868, Shannon E. Smith,
Chief Financial Officer, +1-727-726-8868 Web site:
http://www.americanlandlease.com/
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