ANL Amer Land Lease

- 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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