American Land Lease, Inc. (NYSE:ANL) today released second quarter
2007 results. Summary Financial Results Second Quarter Diluted
Earnings Per Share (�Diluted EPS�) were $0.13 for the three-month
period ended June 30, 2007 compared to $0.28 for the same period
one-year ago, a decrease of $.15 or 53.6% on a per share basis.
Funds From Operations (�FFO�; a non-GAAP financial measure defined
on page 10 of this press release and reconciled to net income on
page 15 of this press release) were $2.5 million, or $0.28 per
diluted common share, for the quarter compared to $3.6 million or
$0.41 per diluted common share from the same period one year ago, a
decrease of 31.7% on a per share basis. Home sales volume was
$7,929,000 down by 34.2% from the same period one year ago, with 65
new home closings, including 60 new homes sold on expansion home
sites. This compares with 95 new home closings in second quarter
2006. �Same Store� results (a non-GAAP financial measure defined on
page 10 of this press release and reconciled on page 16 of this
press release) provided a revenue increase of 7.5%, an expense
increase of 3.2% and an increase of 9.6% in Net Operating Income
(�NOI�). �Same Site� results (a non-GAAP financial measure defined
on page 10 of this press release and reconciled on page 16 of this
press release) provided a revenue increase of 4.0%, an expense
increase of 1.9% and an increase of 5.1% in NOI. Supplemental
Information The full text of this press release is available upon
request or through the Company�s web site at
www.americanlandlease.com. Management Comments Bob Blatz, President
of American Land Lease, commented, �We continue to build Net Asset
Value or �NAV� through excellent same site and same store results.
These results reflect the continued stability and strength of our
core residential land lease business. The continued expansion of
operating margins at the property level speaks to the strength of
our properties and personnel who serve our customers well.
Operating margins grew 3.0% over the same quarter in 2006. This is
a testament to both the quality of the core portfolio and the
impact of our 2006 acquisitions. We continue to view our core
business as owning and operating land leases � and in that core
business our performance was outstanding.� �We view the new home
sales business as an activity that complements our residential land
lease business by creating new revenue-generating home sites. While
we are pleased that our operating loss from home sales narrowed
from the prior quarter, new home sales activity continues to be
challenging as our buyers take longer to sell their current homes.
We continue to put our emphasis on the excellent lifestyle enjoyed
by our residents and the quality of their communities and homes. We
have maintained pricing� which is reflected in the 2.1% increase in
our second quarter operating margins as compared to the first
quarter. The important objective that we did not achieve was the
number of new contracts during the quarter. The unit volume of New
Home Sales was down by 30, or 32% compared to second quarter of
2006. Still, we did see an increase in traffic and a reduction in
cancellations as compared to recent quarters. In sum, while we are
disappointed by unit sales, we are pleased we have been able to
expand our land lease business, even if at a slower rate.� �Our
core business, owning land lease communities, is solid. Its returns
grow with increased rents and expense control reflecting the
outstanding work of our operations team. Our second growth engine
is new home sales, which has been affected by the national decline
in home sales. That said, we have solid locations, attractive
homes, a hardworking sales team, and we are still selling excellent
homes at good prices. I remain upbeat and optimistic about the
future of our company.� Dividend Declaration On August 7, 2007, the
Board of Directors declared a second quarter common stock dividend
of $0.25 per share payable on August 31, 2007, to stockholders of
record on August 17, 2007. On August 7, 2007, 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, 2007,
payable on August 31, 2007 to shareholders of record on August 17,
2007. 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. Further, the Board has and
will continue to consider the downturn in new home sales in the
context of its quarterly review and dividend decision. 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 $9,715,000 as compared to $8,508,000
in the same period one year ago, a 14.2% increase. Second quarter
property operating expenses totaled $3,247,000 as compared to
$3,056,000 in the same period one year ago, a 6.3% increase. The
Company realized significant increases in rental income due to the
acquisition of three additional communities in 2006, annual rental
rate increases, rent yield management, and the absorption of new
home sites through its home sales efforts. Second quarter property
operating expenses increased primarily due to increases in utility
costs, tenant related legal costs, insurance premiums and the
aforementioned acquisition of three properties. In a majority of
the communities we operate, the Company has previously implemented
contractual terms under its leases to pass on increases in property
taxes through billings to homeowners for their proportional share
of increased taxes. In 24 of the 31 communities we operate, the
individual homeowner�s water and sewer is metered and changes in
consumption are billed to the homeowner. We completed our annual
property insurance renewal during the quarter and the increase in
premiums was lower than anticipated. Second quarter property
operating margins before depreciation expense increased to 63.7%
from 60.7% in the prior year�s second quarter. Second Quarter �Same
Store� Results Second quarter �same store� results reflect the
results of operations for properties and golf courses owned during
the second quarters of both 2007 and 2006. Same store properties
accounted for 93.9% of property operating revenues for second
quarter 2007. �Same store� results are defined on page 10, and
reconciled to GAAP on page 16, of this press release. 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. Our
presentation of same store 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. The same store % change results are as follows: 2Q07
Revenue 7.5% Expense 3.2% Net Operating Income 9.6% 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.
2Q07 Revenues 7.5 % Less: Reimbursements (10.1 %) Revenue growth
net of reimbursements 7.3 % � Expenses 3.2 % Less: Reimbursements
(10.1 %) Expense growth net of reimbursements 1.5 % � Same Store
NOI Growth 9.6 % While we are focused on controlling operating
expenses, our leases also provide some insulation from increased
expenses. We derive our increase in property revenue (i) from
increases in rental rates and other charges at our properties, (ii)
re-establishing market rents at times of home transfers, and (iii)
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. �Same site� results are defined on page
10, and reconciled to GAAP on page 16, of this press release. We
believe that �same site� information provides the ability to
understand the changes in profitability without the changes 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 and golf operations contributions to total same store
results for second quarter are as follows: Same Site Rental
Absorption Same Site Golf Same Store Revenue 4.0 % 3.4 % 0.1 % 7.5
% Expense 1.9 % 1.9 % (0.6 )% 3.2 % NOI 5.1 % 4.1 % 0.4 % 9.6 % 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 June
30, 2007 and 2006 can be found on page 16 of this earnings release.
Second Quarter Home Sales Operations Second quarter 2007 new home
sales were $7,929,000, a 34.2% decrease from the same period in the
prior year. We had 65 closings, a 31.6% decrease from the 95
closings in the same period in the prior year. Average selling
price per home was $122,000 as compared to $125,000 in the same
period in the prior year, a 2.4% decrease. Fourteen communities
reported average selling prices in excess of $100,000. Brokerage
profits were down 77.2% as compared with the same period in the
prior year on 67% lower volume of closings. Selling gross margins,
excluding brokerage activities, decreased to 28.6% in the quarter
as compared to 34.3% in the same period in the prior year but
increased from the 26.5% realized in first quarter 2007. The
year-to-year decrease was driven primarily by decreased
manufacturer rebates associated with lower purchasing volumes;
increases in costs of homes purchased; and decreases attributable
to decreased selling prices. Selling costs as a percentage of sales
revenue increased from 22.9% in the prior year�s period to 29.9% in
the second quarter of 2007. This increase reflects overhead,
together with marketing and advertising expenses, being allocated
against fewer sales even though total marketing and advertising
expenses were down by 20.5%. Selling costs as a percentage of sales
revenue also decreased from the first quarter result of 30.4%. The
backlog of contracts for closing stood at 48, a decrease of 38, or
44.2% from the same period in the prior year. The Company remains
committed to 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, though at a
slower rate than in 2006. Summary of home sales activity: Quarter
ended June 30, 2007 Quarter ended June 30, 2006 New home closings �
Same Store 61 94 New home closings � Acquisitions 4 1 Total new
home closings 65 95 � New home contracts � Same Store 53 125 New
home contracts � Acquisitions 3 -- Total new home contracts 56 125
� Home resales 1 3 � Brokered home sales 18 54 � New home contract
backlog � Same Store 47 86 New home contract backlog - Acquisitions
1 -- Total new home contract backlog 48 86 Outlook for 2007 The
table below summarizes the Company�s projected financial outlook
for 2007 as of the date of this release and is based on the
estimates and assumptions disclosed in this and previous press
releases: The Company�s land lease business continues to perform
predictably and consistently with the Company�s prior guidance. A
portion of the Company�s earnings is from the sale of new homes on
expansion home sites in its developing communities and from the new
leases originated coincident with such new home sales. The earnings
from new home sales are subject to greater volatility than are the
earnings from land leases. The Company�s new home sales business
has been impacted by the general decline in new home sales
nationwide; certain local markets in which the Company operates
have been impacted to a greater extent than the national averages.
The traffic levels during the recent months, while increased, have
not generated the sales activity that had been anticipated. In this
home sales environment, the Company has limited visibility on
future new home sales volumes. As a result, the Company has lowered
and widened its earnings guidance to reflect the possible
variations in new home sales and the limited visibility on total
volumes for the second half of 2007. The Company's earnings
estimates would be impacted positively or negatively by changes in
the 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. � Revised
Full Year 2007 Projected FFO $1.05 to $1.40 AFFO $0.90 to $1.24
Diluted EPS $0.47 to $0.85 � � Same Store � Revenue Growth 6.5% to
8.5% Expense Growth 6.0% to 9.0% NOI Growth 7.0% to 9.0%
Contribution from Acquired Properties and Redevelopment $2.4M to
$2.8M Growth in Income from Property Operations Before Depreciation
Expense 9.5% to 12.5% � � Home Sales Operating Income(Loss) ($1.0M)
to $1.5M Home Sales Net Contribution ($1.85M) to $0.7M � � General
and Administrative Expenses $4.2M to $4.7M � � Capital Replacements
(per site) $140 to $170 Depreciation $4.8M to $5.5M The Company�s
reported results are impacted by the amount of interest capitalized
on its development properties. The amount of interest capitalized
is dependent on the rate of completion of home sites, the timing
and amount of capital expenditures and continuing development
activities at each location. Changes in any of the preceding
factors, along with changes in applicable interest rates, will
result in either increases or decreases in the actual amount of
interest capitalized. Changes in the amount of interest capitalized
will increase or decrease the Company�s earnings as compared to
historical financial results. The Company's projected results for
2007 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 2007
projections. 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. Share Repurchase The Board of Directors has
authorized the Company to repurchase up to 2,000,000 shares of our
outstanding common stock. Pursuant to this authorization, the
Company repurchased 27,000 shares of outstanding common stock at an
average price of $24.64 for the three months ended June 30, 2007.
The Company has repurchased approximately 604,000 shares as of June
30, 2007 pursuant to this authorization, including the 27,000
shares repurchased in 2007. We believe that the current share price
reflects a discount from the Company�s Net Asset Value. Therefore,
we have repurchased and continue repurchasing additional shares of
our common stock in the third quarter 2007. Financing Activity The
Company closed a future advance associated with one property
mortgage for proceeds of $4.5 million bearing interest at 5.89% for
a term of 9 years. Proceeds were used to continue the development
of the Company�s inventory of home sites. In conjunction with the
decline in new home sales profitability, the Company had lower
earnings causing us not to comply with our cash flow coverage debt
covenant on our secured corporate line of credit which
non-compliance was waived by the lender. This $16 million facility
is secured by properties with a net book value of $35.5 million.
Development Activity The Company ended the quarter with an
inventory of 1,079 developed home sites. We sell new homes to be
located on these home sites so that they will become revenue
generating. In addition, the Company has an inventory of 1,566 home
sites that are partially developed or undeveloped. All of these
sites are fully entitled and zoned for a land lease community. With
the exception of Sebastian Beach and Tennis Village and the
Villages at Country Club, all are contiguous and a part of a
current community where there are ongoing property operations and a
proven customer base. Significant development activity during the
quarter included: At Sebastian Beach and Tennis Village,
construction and site work continued. As reported in prior
quarters, a new municipality was formed in July of 2006 which
impacts the largest part of this site. We are working with the Town
and County to accomplish the platting of the community under this
unique set of circumstances. Pre-sales and marketing activities for
the community have already begun at an off site sales office opened
in January 2006 and we expect to begin home and Village Centre
construction in the second half of 2007. At the Villages at Country
Club project in Mesa, Arizona, site work was completed. Our
homebuilding partner began home sales activity in July 2007 and we
expect they will begin home building activity in August 2007 with
first closings in first quarter 2008. American Land Lease, Inc. is
a REIT that held interests in 31 manufactured home communities with
8,160 operational home sites, 1,079 developed expansion sites,
1,566 undeveloped expansion sites and 129 recreational vehicle
sites as of June 30, 2007. 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,
results of operations, 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. As previously
announced, management will hold a teleconference call, Thursday,
August 9, 2007 at 9:30 a.m. Eastern Daylight Time to discuss second
quarter 2007 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 2007 results
conference call. If you are unable to participate at the scheduled
time, this information will be available for recorded playback from
12:30 p.m. Eastern Daylight Time, August 9, 2007 until midnight on
August 16, 2007. To access the replay, dial toll free, 800-642-1687
and request information from conference ID 11843847. 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 used by American Land Lease management. Such
measurements include Funds from Operations (�FFO�), which is an
industry-accepted measurement based in part on the definition of
the National Association of Real Estate Investment Trusts (NAREIT)
and �same store� and "same site� results. 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, 2007 March 31,
2007 December 31, 2006 September 30, 2006 June 30, 2006 (unaudited)
(unaudited) (unaudited) (unaudited) � ASSETS Real Estate $ 308,671
$ 304,484 $ 311,392 $ 298,293 $ 264,947 Less accumulated
depreciation (31,191 ) (30,120 ) (29,068 ) (28,041 ) (27,836 ) Real
estate under development � 117,755 � � 115,798 � � 100,682 � �
103,940 � � 95,195 � Total Real Estate 395,235 390,162 383,006
374,192 332,306 Cash and cash equivalents 308 293 253 311 8,497
Inventory 21,031 20,705 22,827 23,731 23,588 Other assets 16,085
15,662 15,969 14,845 14,488 Assets Held for Sale � -- � � -- � � --
� � 3,874 � � 3,897 � � Total Assets $ 432,659 � $ 426,822 � $
422,055 � $ 416,953 � $ 382,776 � � LIABILITIES AND EQUITY
Liabilities Secured long-term notes payable $ 238,676 $ 234,826 $
235,567 $ 203,428 $ 199,746 Secured short-term financing 30,013
25,012 20,059 43,783 19,462 Accounts payable and accrued
liabilities 11,545 13,239 13,216 17,359 12,036 Liabilities related
to assets held for sale � -- � � -- � � -- � � 2,261 � � 2,273 � �
Total Liabilities 280,234 273,077 268,842 266,831 233,517 �
Minority Interest in Operating Partnership 16,421 16,475 16,502
16,333 16,245 � STOCKHOLDERS� EQUITY Preferred Stock, par value
$.01 per share; 3,000 shares authorized, 1,000 shares issued and
outstanding � 25,000 25,000 25,000 25,000 25,000 Common Stock, par
value $.01 per share; 12,000 shares authorized 95 95 94 92 92
Additional paid-in capital 293,113 292,757 291,460 289,223 288,581
Dividends in excess of accumulated earnings (154,920 ) (153,970 )
(153,231 ) (153,914 ) (154,047 ) Treasury stock at cost � (27,284 )
� (26,612 ) � (26,612 ) � (26,612 ) � (26,612 ) � Total
Stockholders Equity � 136,004 � � 137,270 � � 136,711 � � 133,789 �
� 133,014 � � � Total Liabilities and Stockholders� Equity $
432,659 � $ 426,822 � $ 422,055 � $ 416,953 � $ 382,776 � AMERICAN
LAND LEASE INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data) (unaudited) Three Months
Ended June 30, 2007 March 31, 2007 December 31, 2006 September 30,
2006 � RENTAL PROPERTY OPERATIONS Rental and other property
revenues $ 9,715 $ 9,721 $ 9,347 $ 9,121 Golf course operating
revenues � 219 � � 430 � � 249 � � 154 � Total property operating
revenues 9,934 10,151 9,596 9,275 � Property operating expenses
(3,247 ) (3,329 ) (3,193 ) (3,136 ) Golf course operating expenses
� (357 ) � (335 ) � (313 ) � (296 ) Total property operating
expenses (3,604 ) (3,664 ) (3,506 ) (3,432 ) � Depreciation �
(1,251 ) � (1,229 ) � (1,199 ) � (1,136 ) � Income from rental
property operations 5,079 5,258 4,891 4,707 � SALES OPERATIONS Home
sales revenue 7,929 7,665 9,493 12,197 Cost of home sales � (5,658
) � (5,633 ) � (6,323 ) � (8,244 ) Gross profit on home sales 2,271
2,032 3,170 3,953 � Commissions earned on brokered sales 44 75 86
45 Commissions paid on brokered sales � (24 ) � (44 ) � (43 ) � (27
) Gross profit on brokered sales 20 31 43 18 � Selling and
marketing expenses � (2,370 ) � (2,328 ) � (2,416 ) � (2,582 )
Income (loss) from sales operations (79 ) (265 ) 797 1,389 �
General and administrative expenses (993 ) (964 ) (1,054 ) (1,055 )
Interest and other income 8 170 115 34 Interest expense � (2,278 )
� (2,243 ) � (2,251 ) � (2,218 ) � Income before minority interest
in Operating Partnership 1,737 1,956 2,498 2,857 Minority interest
in Operating Partnership � (198 ) � (221 ) � (295 ) � (330 ) Income
from continuing operations 1,539 1,735 2,203 2,527 DISCONTINUED
OPERATIONS Income (loss) from discontinued operations, net of
Minority Interest � -- � � -- � � 923 � � 40 � Net Income 1,539
1,735 3,126 2,567 Cumulative preferred stock dividends � (485 ) �
(484 ) � (485 ) � (485 ) Net Income Attributable to common
shareholders $ 1,054 � $ 1,251 � $ 2,641 � $ 2,082 � � Basic
earnings from continuing operations (net of cumulative unpaid
preferred dividends) $ 0.14 $ 0.16 $ 0.23 $ 0.27 Basic earnings
(loss) from discontinued operations � -- � � -- � � 0.12 � � 0.01 �
Basic earnings per common share $ 0.14 � $ 0.16 � $ 0.35 � $ 0.28 �
� Diluted earnings from continuing operations $ 0.13 $ 0.16 $ 0.22
$ 0.26 Diluted earnings (loss) from discontinued operations � -- �
� -- � � 0.11 � � 0.01 � Diluted earnings per common share $ 0.13 �
$ 0.16 � $ 0.33 � $ 0.27 � � Weighted average common shares
outstanding 7,745 7,688 7,553 7,507 Weighted average common shares
and common share equivalents outstanding 8,029 8,054 7,953 7,808 �
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, 2007 March 31, 2007
December 31, 2006 September 30, 2006 June 30, 2006 � DEBT
OUTSTANDING Mortgage Loans Payable � Fixed $ 227,320 $ 223,470 $
224,211 $ 192,072 $ 188,975 Mortgage Loans Payable � Floating
11,356 11,356 11,356 11,356 10,771 Floor Plan Facility 20,508
19,636 14,754 23,813 19,462 Acquisition Bridge Loan -- -- -- 10,000
-- Line of Credit � 9,505 � � 5,376 � � 5,305 � � 9,970 � � -- � �
Total Debts $ 268,689 � $ 259,838 � $ 255,626 � $ 247,211 � $
219,208 � � % FIXED FLOATING Fixed 84.6 % 86.0 % 87.7 % 77.7 % 86.2
% Floating � 15.4 % � 14.0 % � 12.3 % � 22.3 % � 13.8 % Total
100.00 % 100.00 % 100.00 % 100.00 % 100.00 % � AVERAGE INTEREST
RATES Mortgage Loans Payable � Fixed 6.3 % 6.4 % 6.4 % 6.4 % 6.4 %
Mortgage Loans Payable � Floating 7.1 % 7.1 % 7.1 % 6.9 % 7.4 %
Floor Plan Facility 8.5 % 8.5 % 8.5 % 8.6 % 8.75 % Acquisition
Bridge Loan -- -- -- 7.3 % -- Line of Credit � 6.9 % � 6.9 % � 7.3
% � 7.0 % � 7.35 % Total Weighted Average � 6.5 % � 6.6 % � 6.6 % �
6.7 % � 6.7 % � DEBT RATIOS Debt/Total Market Cap(1) 51.7 % 50.8 %
49.4 % 51.4 % 47.6 % � Debt/Gross Assets 62.1 % 60.9 % 60.6 % 59.3
% 57.3 % � � � � � � � � � � MATURITIES December 31, 2007 December
31, 2008 December 31, 2009 December 31, 2010 December 31, 2011
Mortgage Loan Scheduled Principal Payments 1,561(2 ) 3,239 3,725
3,976 4,133 Mortgage Loan Balloon Maturities � 2,665 � � - � � - �
� - � � 21,740 � Total $ 4,226 � $ 3,239 � $ 3,725 � $ 3,976 � $
25,873 � � (1) Computed based upon closing price as reported on
NYSE as of the period ended. � (2) Computed based on the remaining
payments to be made in 2007. AMERICAN LAND LEASE INC. AND
SUBSIDIARIES RECONCILIATION OF NET INCOME TO FFO/AFFO AND PAYOUT
RATIOS (Amounts in thousands, except per share/OP unit amounts)
(Unaudited) � � Three Months Ended June 30, � 2007 � � � 2006 � �
Net Income $ 1,054 $ 2,212 Adjustments Cumulative unpaid preferred
stock dividends 485 484 Minority interest in operating partnership
198 350 Real estate depreciation 1,251 1,032 Discontinued
operations: Real estate depreciation, net of minority interests --
18 Minority interest in operating partnership attributed
discontinued operations � -- � � 6 � Funds From Operations (FFO) $
2,988 $ 4,102 Cumulative unpaid preferred stock dividends � (485 )
� (484 ) Funds From Operations attributable to common Stockholders
2,503 3,618 Capital Replacements � (385 ) � (436 ) Adjusted Funds
from Operations (AFFO) $ 2,118 � $ 3,182 � � Weighted Average
Common Shares/OP Units Outstanding � 9,022 � � 8,828 � Per Common
Share and OP Unit: FFO: $ 0.28 $ 0.41 AFFO: $ 0.23 $ 0.36 � Payout
Ratio Per Common Share and OP Unit: Gross Distribution Payout FFO:
89.3 % 61.0 % AFFO: 108.7 % 69.4 % AMERICAN LAND LEASE INC. AND
SUBSIDIARIES RECONCILIATION OF SAME SITE AND SAME STORE OPERATING
RESULTS FOR THE QUARTER ENDED June 30, 2007 AND June 30, 2006 (in
thousands) (unaudited) Three Months Ended June 30, 2007 Three
Months Ended June 30, 2006 � � Change � � % Change � Contribution
to Same Store % Change(1) � Same site rental revenues $ 8,699 $
8,350 $ 349 4.2 % 4.0 % Absorption rental revenues 412 120 292
243.3 % 3.4 % Same store golf revenues � 219 � 213 � 6 � 2.8 % 0.1
% Same store revenues A 9,330 8,683 647 7.5 % 7.5 % Newly acquired
property revenues � 604 � 38 � 566 � 1489.5 % Total property
revenues C $ 9,934 $ 8,721 $ 1,213 � 13.9 % � Same site rental
expenses $ 2,632 $ 2,577 $ 55 2.1 % 1.9 % Absorption rental
expenses 55 - 55 100.0 % 1.9 % Same store golf expenses � 357 � 373
� (16 ) (4.3 %) (0. 6 %) Same store expenses B 3,044 2,950 94 3.2 %
3.2 % Newly acquired property expenses 149 33 116 351.5 % Expenses
related to offsite management2 � 411 � 446 � (35 ) (7.8 %) Total
property operating expenses D $ 3,604 $ 3,429 $ 175 � 5.1 % � Same
store net operating income A-B $ 6,286 $ 5,733 � 553 � 9.6 % �
Total net operating income C-D $ 6,330 $ 5,292 $ 1,038 � 19.6 % �
(1) 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 2006 period. For example, same
site rental revenues of $349 as compared to the total same store
revenues in 2006 of $8,683 is a 4.0% increase ($349/$8,683=4.0%). �
(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, 2007 � Community �
Location Operational Home Sites (1) � Occupancy Average Monthly
Rent RV Sites Undeveloped Home Sites Developed Home Sites Owned
Communities � � � � � � � Blue Heron Pines Punta Gorda, FL 344 100%
$350 -- -- 45 Brentwood Estates Hudson, FL 141 98% 279 -- -- 50
Sebastian Beach & Tennis Club Micco, FL -- 0% -- -- 533 --
Serendipity Ft. Myers, FL 338 96% 365 -- -- -- Stonebrook
Homosassa, FL 196 100% 303 -- -- 6 Sunlake Estates Grand Island, FL
358 100% 365 -- -- 42 Sun Valley Tarpon Springs, FL 261 97% 406 --
-- -- Forest View Homosassa, FL 271 100% 328 -- -- 33 Gulfstream
Harbor Orlando, FL 382 98% 424 -- 50 -- Gulfstream Harbor II
Orlando, FL 306 100% 422 -- 37 1 Gulfstream Harbor III Orlando, FL
172 99% 397 -- -- 112 Lakeshore Villas Tampa, FL 281 98% 437 -- --
-- Park Place Sebastian, FL 370 100% 331 -- -- 96 Park Royale
Pinellas Park, FL 296 94% 440 -- -- 13 Pleasant Living Riverview,
FL 245 95% 364 -- -- -- Riverside GCC Ruskin, FL 460 100% 531 --
311 169 Royal Palm Village Haines City, FL 283 97% 358 -- -- 104
Cypress Greens Lakeland, FL 221 100% 263 -- -- 37 Savanna Club Port
St Lucie, FL 993 100% 299 -- -- 74 Woodlands Groveland, FL 161 99%
291 -- -- 131 � Subtotal�Florida 6,079 � � � 931 913 � � � � � � �
� � � � � � � � � Blue Star Apache Junction AZ 22 50% 320 129 -- --
Brentwood West Mesa, AZ 350 94% 470 -- -- -- Casa Encanta Mesa, AZ
-- 0% -- -- 375 -- Desert Harbor Apache Junction AZ 205 100% 378 --
-- 1 Fiesta Village Mesa, AZ 172 86% 405 -- -- -- La Casa Blanca
Apache Junction AZ 197 100% 400 -- -- -- Lost Dutchman Apache
Junction AZ 205 77% 327 -- -- 37 Rancho Mirage Apache Junction AZ
312 96% 434 -- -- -- Reserve at Fox Creek Bull Head City, AZ 251
100% 326 -- -- 62 Sun Valley Apache Junction AZ 268 91% 365 -- --
-- � Subtotal�Arizona 1,982 � � 129 375 100 � � � � � � � � Foley
Grove Foley, AL 99 100% 290 -- 260 66 � � � � � � � � � � � � � � �
� Total Communities 31 8,160 97% $373 129 1,566 1,079 (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 84.6% across
the entire portfolio.��Including sites not yet developed, occupancy
was at 73% at June 30, 2007. Portfolio Summary Operational Home
sites Developed Home sites Undeveloped Home sites RV Sites Total �
As of December 31, 2006 8,044 1,192 1,566 129 10,931 � New lots
purchased -- 4 -- -- 4 � New leases originated 114 (1) (114 ) -- --
-- � Adjust for site plan changes 2 � (3 ) -- -- (1 ) � As of June
30, 2007 8,160 (2) 1,079 � 1,566 129 10,934 � � (1) During 2007, a
new lease was originated for a used home at one community. The
Company inadvertently reported the home site as non-operational. �
(2) As of June 30, 2007, 7,935 of these operational home sites were
occupied. Occupancy Roll Forward Occupied Home sites Operational
Home sites Occupancy � As of December 31, 2006 7,833 8,044 97.4 % �
New home sales 120 113 � Used home sales 4 2 � Used homes acquired
(4 ) -- � Homes constructed by others 4 1 � Homes removed from
previously leased sites (22 )(1) -- � As of June 30, 2007 7,935 �
8,160 97.2 % � (1) Of these 22 homes, 17 were as a result of
vacation initiated by the Company as a part of its continuing
program of community renewal. AMERICAN LAND LEASE, INC. AND
SUBSIDIARIES RETURN ON INVESTMENT FROM HOME SALES (unaudited) Three
Months Ended June 30, 2007 Three Months Ended June 30, 2006 �
Expansion sites leased during the period � 60 � � 83 � Estimated
first year annualized profit on leases originated during the period
A $ 191 � $ 305 � Costs, including development costs of sites
leased $ 3,613 $ 5,006 Home sales (loss) income attributable to
sites leased � (105 ) � 1,369 � Total costs incurred to originate
ground leases B $ 3,718 � $ 3,637 � Estimated first year returns
from the leases originated on expansion home sites during the
period A/B � 5.1 % � 8.4 % For the three months ended June 30, 2007
and 2006, we estimate our profit or loss attributable to the sale
of homes situated on expansion home sites as follows (in
thousands): Three Months Ended June 30, 2007 Three Months Ended
June 30, 2006 � Reported (loss)/income from sales operations $ (79
) $ 1,472 Brokerage business income (20 ) (88 ) Used home sales �
(6 ) � (15 ) Adjusted income for projection analysis $ (105 ) $
1,369 � 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, 2006 in
accordance with GAAP is shown below (in thousands): Total Portfolio
for Year Ended December 31, 2006 � Property income before
depreciation A $ 22,847 � Total investment in operating home sites
B $ 294,394 � Return on investment from earning home sites(1) A/B
7.8% (1) Our return on investment in operational sites reflects our
income from and investment in sites that were leased for the first
time during the year ended December 31, 2006.��For these leases,
the income reported above includes less than a full twelve months
of operating results.��Consequently, when compared to the
investment we have made in these home sites, the return on
investment during the year ended December 31, 2006 is less than the
return when measured using a full twelve months of operating
results. AMERICAN LAND LEASE INC. AND SUBSIDIARIES KEY HOME SALES
STATISTICS June 30, 2006 � September 30, 2006 � December 31, 2006 �
March 31, 2007 � June 30, 2007 � 2Q07 over 1Q07 Increase/ Decrease
� 2Q07 over 1Q07 % Change � 2Q07 over 2Q06 Increase/ Decrease �
2Q07 over 2Q06 % Change New home contracts 125 81 73 96 56 (40 )
(41.7 %) (69 ) (55.2 %) New home closings 95 92 71 55 65 10 18.2 %
(30 ) (31.6 %) Home resales 3 2 1 3 1 (2 ) (66.7 %) (2 ) (66.7 %)
Brokered home sales 54 20 27 31 18 (13 ) (41.9 %) (36 ) (66.7 %)
New home contract backlog 86 51 34 58 48 (10 ) (17.2 %) (38 ) (44.2
%) � Average Selling Price $ 125,000 $ 129,000 $ 131,000 $ 135,000
$ 122,000 ($13,000 ) (9.6 %) ($3,000 ) (2.4 %) � Average Gross
Margin Percentage � 34.3 % � � 32.4 % � � 33.4 % � � 26.5 % � �
28.6 % � � � � � � �
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