American Land Lease, Inc. (NYSE:ANL) today released results for
third quarter 2006. Summary Financial Results Third Quarter Diluted
Earnings Per Share (�Diluted EPS�) were $0.27 for the three-month
period ended September 30, 2006 compared to $0.32 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 $3.7 million or $0.43 per diluted common share from the
same period one year ago, a decrease of 4.7% on a per share basis.
Unit volume in home sales was 92 new home closings, including 76
new homes sold on expansion home sites. This compares with 115 new
home closings in third quarter 2005. �Same Store� results provided
a revenue increase of 10.0%, an expense increase of 6.0% and an
increase of 12.0% in Net Operating Income (�NOI�). �Same Site�
results provided a revenue increase of 4.4%, an expense increase of
3.6% and an increase of 4.8% 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, �In a very competitive environment, excellent same site
and same store third quarter results reflect the stability and
strength of our core residential land lease business. As compared
to 2005, third quarter property operating margins before
depreciation expense were up 22%. We increased our focus on certain
expense areas, especially utilities and insurance, in this quarter
which yielded improved results.� �We view the new home sales
business as an activity that complements our residential land lease
business by creating new revenue generating home sites. Consistent
with the entire home sales industry, our new home closings were not
as high as we projected at the beginning of the year. We did not
achieve our objective for new contracts during the quarter as
traffic was not as strong as we anticipated. We have a cautious
outlook for the near term, but the absence of hurricanes this
season coupled with our focus on the senior customer provide
encouragement for the future. This outlook was reinforced by our
ability to generate over 40 `sign and close deals' in the quarter
which was evidence of pent up demand.� �Our core business, owning
land lease communities, is solid. Its returns grow with increased
rents and with home sales. The latter has been affected by the
national decline in new home sales. That said, we have solid
locations, attractive homes, a hardworking sales team, and we are
still selling homes at good prices. I remain upbeat and optimistic
about the future of our company.� Dividend Declaration On November
1, 2006, the Board of Directors declared a third quarter common
stock dividend of $0.25 per share payable on November 30, 2006, to
stockholders of record on November 16, 2006. On November 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 September
30, 2006, payable on November 30, 2006 to shareholders of record on
November 16, 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 � Third Quarter Third Quarter
Property Operations Third quarter revenue from property operations
was $9,121,000 as compared to $7,740,000 in the same period one
year ago, a 17.8% increase. Third quarter property operating
expenses totaled $3,136,000 as compared to $2,750,000 in the same
period one year ago, a 14.0% increase. The Company realized
significant increases in rental income driven by annual rental rate
increases, the absorption of new home sites through its home sales
efforts and the acquisition of three additional communities in the
2006 period. Third quarter property operating expenses increased
primarily due to increases in utility costs, tenant related legal
costs, insurance premiums and the acquisition of three properties.
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
addition, in 24 of the 32 communities we operate the individual
homeowner�s energy is metered and changes in consumption are billed
to the homeowner. Third quarter property operating margins before
depreciation expense increased to 63.0% from 60.6% in the prior
year�s third quarter. Third Quarter �Same Store� Results Third
quarter �same store� results reflect the results of operations for
properties and golf courses owned during the third quarters of both
2006 and 2005. Same store properties account for 90% of property
operating revenues for third quarter 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: 3Q06 Revenue 10.0% Expense 6.0%
Net Operating Income 12.0% 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. 3Q06 Revenues 10.0% Less: Reimbursements (0.3%)
Revenue growth net of reimbursements 9.7% � Expenses 6.0% Less:
Reimbursements (1.5%) Expense growth net of reimbursements 4.5% �
Same Store NOI Growth 12.0% 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 third
quarter are as follows: Same Site Rental Absorption Same Site Golf
Same Store Revenue 4.4% 5.3% 0.3% 10.0% Expense 3.6% 3.6% (1.2)%
6.0% NOI 4.7% 6.2% 1.1% 12.0% 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 September 30, 2006 and 2005 can be
found on page 14 of this earnings release. Third Quarter Home Sales
Operations Third quarter 2006 new home sales produced 92 closings,
a 20.0% decrease from the 115 closings in the same period in the
prior year. Average selling price per home was $129,000 as compared
to $117,000 in the same period in the prior year, a 10.3% increase.
Fourteen communities reported average selling prices in excess of
$100,000 and five of the closings during the quarter exceeded
$200,000 in selling price. 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 59.3% as compared with the same period
in the prior year. Selling gross margins, excluding brokerage
activities, increased to 32.4% in the quarter as compared to 30.1%
in the same period in the prior year, but reflected a rate lower
than the 34.3% realized during second quarter 2006. This increase
was driven primarily by increased selling prices which were
partially offset by increases in costs of homes purchased. Selling
costs as a percentage of sales revenue increased from 18.6% in the
prior year�s period to 21.2% in the third 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 51, a decrease of 68% or 106 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. Summary of home sales activity:
Quarter ended Sept. 30, 2006 Quarter ended Sept. 30, 2005 New home
closings � Same Store 73� 115� New home closings � Acquisitions 19�
--� Total new home closings 92� 115� � New home contracts � Same
Store 67� 145� New home contracts � Acquisitions 14� --� Total new
home contracts 81� 145� � Home resales 2� 4� � Brokered home sales
20� 45� � New home contract backlog � Same Store 36� 157� New home
contract backlog - Acquisitions 15� --� Total new home contract
backlog 51� 157� 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 $1.75 AFFO $1.50 to $1.55 Diluted EPS $1.20
to $1.25 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 $4.2 M Capital Replacements (per
site) $163 to $190 Depreciation $3.8M to $4.5M 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 nine months of the year and the Company expects that trend to
continue through the fourth quarter of the year. 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 adjusted our guidance as to annual
ranges based upon lower expected results from our home sales
business. We expect full year results to be within that reduced
range. 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. Dispositions During
the quarter, the Company placed its New Jersey property under
contract for sale subject to customary contingencies. There can be
no assurance that the transaction will close. Financing Activity
During the quarter, the Company closed four transactions. The
Company completed the refunding of a series of variable rate
mortgages and provided additional proceeds of approximately $2.5
million which were used for the continued development of the
Company�s inventory of home sites. The new note of $3.8 million
bears interest at 6.63% with a fourteen year term. The Company
issued a $10 million short-term note payable with a variable rate
of 200 basis points over the 1-month LIBOR rate maturing on January
25, 2007 in conjunction with the acquisition of a community. The
Company expects to refund this bridge facility through permanent
financing of the community The Company borrowed $1.9 million on its
construction loan facility to fund work at Sebastian Beach and
Tennis Village. The Company reduced the interest rate spread on its
variable rate floor plan facility by 25 basis points to prime plus
25 basis points. After the end of the quarter, on October 13, 2006,
the Company closed a loan of $7.25 million for its Reserve at Fox
Creek community that was acquired in February of 2006. The loan has
a ten-year term and bears interest at 6.06%. The loan includes an
interest only feature for five years, provides for future advances
totaling $3.75 million at the 6.06% rate and provides further for
additional advances above the $11 million total loan amount during
the first five years based upon achieving certain levels of
performance. The full funding of this loan will refund the
Company�s original purchase price for the community. Development
Activity The company maintains an inventory of 1,142 home sites
that are fully developed. 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 1,675 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 ANL land lease 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 on schedule. The Company has learned that a new
municipality was formed in July of 2006 which impacts a majority of
the project. Known as the Town of Grant-Valkaria, the new
municipality does not have a building department and the election
of the first mayor and town council will be held on November 7,
2006. While the county continues to inspect the project, we are
unable to project what impact the formation of the town may have on
the timing of the project. 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 was completed. At the Villages at Country Club
project in Mesa, Arizona, site work continued. At Riverside Club,
construction neared completion for the community�s second
clubhouse, this one including more than 22,000 square feet. This
substantial amenity will be opened for resident use during fourth
quarter. At Sun Lake, construction activities continued on the
expansion and renovation of the community center complex. This
increased and improved amenity is scheduled to open in first
quarter 2007. American Land Lease, Inc. is a REIT that held
interests in 32 manufactured home communities with 8,075
operational home sites, 1,142 developed expansion sites, 1,675
undeveloped expansion sites and 129 recreational vehicle sites as
of September 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, November 6, 2006 at 4:00 p.m. Eastern
Standard Time to discuss third 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 third 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 Standard Time, November 6, 2006 until midnight on November
13, 2006. To access the replay, dial toll free, (800) 642-1687 and
request information from conference ID 1428246. 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: represents 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 Sept. 30, 2006 June 30,
2006 March 31, 2006 Dec. 31, 2005 Sept. 30, 2005 (unaudited)
(unaudited) (unaudited) (unaudited) � ASSETS Real Estate $ 298,293�
$ 264,947� $ 254,690� $ 244,987� $ 232,178�
Lessaccumulateddepreciation (28,041) (27,836) (26,132) (25,277)
(24,451) Real estate under development 103,940� 95,195� 87,068�
74,416� 74,818� Total Real Estate 374,192� 332,306� 315,626�
294,126� 282,545� Cash and cash equivalents 311� 8,497� 8,384�
1,795� 828� Inventory 23,731� 23,588� 20,654� 18,759� 19,431� Other
assets 14,845� 14,488� 12,786� 11,236� 9,969� Assets Held for Sale
3,874� 3,897� 3,889� 3,773� 3,794� � Total Assets $ 416,953� $
382,776� $ 361,339� $ 329,689� $ 316,567� � LIABILITIES AND EQUITY
Liabilities Secured long-term notes payable $ 203,428� $ 199,746� $
182,762� $ 149,388� $ 124,763� Secured short-term financing 43,783�
19,462� 16,742� 19,669� 33,777� Accounts payable and accrued
liabilities 17,359� 12,036� 12,006� 12,474� 11,804� Liabilities
related to assets held for sale 2,261� 2,273� 2,304� 2,304� 2,328�
� Total Liabilities 266,831� 233,517� 213,814� 183,835� 172,672� �
Minority Interest in Operating Partnership 16,333� 16,245� 16,137�
15,945� 15,511� � 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� 92� 93� 93� Additional paid-in capital 289,223�
290,576� 289,206� 288,224� 288,188� Deferred compensation re
restricted stock --� (1,995) (2,000) (1,651) (1,959) Dividends in
excess of accumulated earnings (153,914) (154,047) (154,298)
(155,145) (156,326) Treasury stock at cost (26,612) (26,612)
(26,612) (26,612) (26,612) � Total Stockholders' Equity 133,789�
133,014� 131,388� 129,909� 128,384� � Total Liabilities and
Stockholders� Equity $ 416,953� $ 382,776� $ 361,339� $ 329,689� $
316,567� AMERICAN LAND LEASE INC. AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF INCOME (in thousands, except per share data)
(unaudited) � Three Months Ended Sept. 30, 2006 June 30, 2006 March
31, 2006 Dec. 31, 2005 RENTAL PROPERTY OPERATIONS Rental and other
property revenues $ 9,121� $ 8,507� $ 8,173� $ 7,684� Golf course
operating revenues 154� 213� 470� 232� Total property operating
revenues 9,275� 8,720� 8,643� 7,916� � Property operating expenses
(3,136) (3,056) (2,916) (2,827) Recoveries of casualty expenses
related to hurricanes --� --� --� (6) Golf course operating
expenses (296) (373) (365) (346) Total property operating expenses
(3,432) (3,429) (3,281) (3,179) � Depreciation (1,136) (1,032)
(979) (954) � Income from rental property operations 4,707� 4,259�
4,383� 3,783� � SALES OPERATIONS Home sales revenue 12,197� 12,052�
13,496� 16,781� Cost of home sales (8,244) (7,914) (9,044) (11,444)
Gross profit on home sales 3,953� 4,138� 4,452� 5,337� �
Commissions earned on brokered sales 45� 164� 159� 139� Commissions
paid on brokered sales (27) (76) (82) (74) Gross profit on brokered
sales 18� 88� 77� 65� � Selling and marketing expenses (2,582)
(2,754) (2,800) (3,162) Income (loss) from sales operations 1,389�
1,472� 1,729� 2,240� � General and administrative expenses (1,055)
(995) (891) (1,113) Gain on sale of property -� -� -� -� Interest
and other income 34� 91� 53� 1� Tax benefit --� --� --� 600�
Interest expense (2,218) (1,832) (1,579) (1,498) � Income before
minority interest in Operating Partnership 2,857� 2,995� 3,695�
4,013� Minority interest in Operating Partnership (330) (350) (435)
(479) Income from continuing operations 2,527� 2,645� 3,260� 3,534�
DISCONTINUED OPERATIONS Income (loss) from discontinued operations,
net of Minority Interest 40� 51� 42� 28� Net Income Cumulative
preferred stock dividends (485) (484) (484) (484) Net Income
Attributable to common shareholders $ 2,082� $ 2,212� $ 2,818� $
3,078� � Basic earnings from continuing operations (net of
cumulative unpaid preferred dividends) $ 0.27� $ 0.29� $ 0.37� $
0.42� Basic earnings (loss) from discontinued operations 0.01�
0.01� 0.01� 0.00� Basic earnings per common share $ 0.28� $ 0.30� $
0.38� $ 0.42� � Diluted earnings from continuing operations $ 0.26�
$ 0.28� $ 0.35� $ 0.39� Diluted earnings (loss) from discontinued
operations 0.01� 0.01� 0.01� 0.01� Diluted earnings per common
share $ 0.27� $ 0.29� $ 0.36� $ 0.40� � Weighted average common
shares outstanding 7,507� 7,465� 7,423� 7,341� Weighted average
common shares and common share equivalents outstanding 7,808�
7,836� 7,880� 7,722� � 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 Sept. 30, 2006
June 30, 2006 March 31, 2006 Dec. 31, 2005 Sept. 30, 2005 � DEBT
OUTSTANDING Mortgage Loans Payable � Fixed $ 192,072� $ 191,215� $
180,570� $ 136,641� $ 101,417� Mortgage Loans Payable � Floating
11,356� 10,771� 4,445� 15,015� 25,628� Floor Plan Facility 23,813�
19,462� 16,642� 14,969� 19,147� Acquisition Bridge Loan 10,000� --�
--� --� --� Line of Credit 9,970� --� 100� 4,700� 14,630� � Total
Debts $ 247,211� $ 221,448� $ 201,757� $ 171,325� $ 160,822� � %
FIXED FLOATING Fixed 77.7% 86.3% 89.5% 79.8% 63.1% Floating 22.3%
13.7% 10.5% 20.2% 36.9% Total 100.00% 100.00% 100.00% 100.00%
100.00% � AVERAGE INTEREST RATES Mortgage Loans Payable � Fixed
6.4% 6.4% 6.4% 6.6% 7.0% Mortgage Loans Payable � Floating 6.9%
7.4% 7.2% 6.7% 6.5% Floor Plan Facility 8.6% 8.75% 8.2% 7.6% 7.1%
Acquisition Bridge Loan 7.3% --� --� --� --� Line of Credit 7.0%
7.35% 6.6% 6.4% 5.8% Total Weighted Average 6.7% 6.7% 6.6% 6.7%
6.8% � DEBT RATIOS Debt/Total Market Cap(1) 51.4% 49.2% 43.0% 42.1%
41.2% � Debt/Gross Assets 59.2% 64.6% 55.8% 52.0% 50.8% � � � � � �
� � � � MATURITIES Dec. 31, 2006 Dec. 31, 2007 Dec. 31, 2008 Dec.
31, 2009 Dec. 31, 2010 Mortgage Loan Scheduled Principal Payments
733� 2,978� 3,132� 3,346� 3,573� Mortgage Loans Balloon Maturities
-� 2,665� -� -� -� Floor Plan Facility -� -� -� -� -� Total $ 733�
$ 5,643� $ 3,132� $ 3,346� $ 3,573� � (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/OPunit amounts) (Unaudited) � Three Months Ended
September 30, 2006� � 2005� � Net Income $2,082� $2,436�
Adjustments Cumulative unpaid preferred stock dividends 485� 484�
Minority interest in operating partnership 330� 391� Minority
interest related to discontinued operations 18� 17� Depreciation
from discontinued operations 6� 4� Real estate depreciation 1,136�
869� � � Funds From Operations (FFO) $4,057� $4,201� Cumulative
unpaid preferred stock dividends (485) (484) Funds From Operations
attributable to common Stockholders 3,572� 3,717� Capital
Replacements (285) (300) Adjusted Funds from Operations (AFFO)
$3,287� $3,417� � Weighted Average Common Shares/OP Units
Outstanding 8,800� 8,688� Per Common Share and OP Unit: FFO: $0.41�
$0.43� AFFO: $0.37� $0.39� � Payout Ratio Per Common Share and OP
Unit: Gross Distribution Payout FFO: 61.0% 58.1% AFFO: 67.6% 64.1%
AMERICAN LAND LEASE INC. AND SUBSIDIARIES RECONCILIATION OF SAME
SITE AND SAME STORE OPERATING RESULTS FOR THE QUARTER ENDED
SEPTEMBER 30, 2006 AND SEPTEMBER 30, 2005 (in thousands)
(unaudited) � Three Months Ended Sept. 30, 2006 Three Months Ended
Sept. 30, 2005 Change % Change� Contribution to Same Store %
Change(1) � Same site rental revenues $ 7,661� $ 7,327� $ 334� 4.6%
4.4% Absorption rental revenues 577� 171� 406� 237.4% 5.3% Same
site golf revenues 154� 131� 23� 17.6% 0.3% Same store revenues A
8,392� 7,629� 763� 10.0% 10.0% Re-development and newly acquired
property revenues 883� 242� 641� 264.9% Total property revenues C $
9,275� $ 7,871� $ 1,404� 17.8% � Same site rental expenses $ 2,315�
$ 2,223� $ 92� 4.1% 3.6% Absorption rental expenses 93� -� 93�
100.0% 3.6% Same site golf expenses 296� 329� (33) (10.0)% (1.2)%
Same store expenses B 2,704� 2,552� 152� 6.0% 6.0% Re-development
and newly acquired property expenses 305� 96� 209� 217.7%
Recoveries of casualty expenses related to hurricanes --� (21) 21�
100.00% Expenses related to offsite management2 423� 473� (50)
10.6% Total property operating expenses D $ 3,432� $ 3,100� $ 332�
10.7% � Same Store net operating income A-B $ 5,688� $ 5,077� 611�
12.0% � Total net operating income C-D $ 5,843� $ 4,771� $ 1,072�
22.5% � (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 $334 as compared to the total same store revenues in
2005 of $7,629 is a 4.4% increase ($334/$7,629=4.4%). (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 SEPTEMBER 30, 2006 � Community Location
Oper-ational Home Sites (1) Occupancy Average Monthly Rent RV Sites
Un-developed Home Sites Developed Home Sites Owned Communities � �
� � � � � Blue Heron Pines Punta Gorda, FL 341� 100% $333� --� --�
48� Brentwood Estates Hudson, FL 133� 98% 264� --� --� 58�
Sebastian Beach & Tennis Club Micco,FL --� 0% --� --� 533� --�
Serendipity Ft. Myers, FL 338� 96% 348� --� --� --� Stonebrook
Homosassa, FL 188� 100% 296� --� --� 14� Sunlake Estates Grand
Island, FL 354� 100% 351� --� --� 42� Sun Valley Tarpon Springs, FL
261� 97% 382� --� --� --� Forest View Homosassa, FL 268� 100% 311�
--� --� 36� Gulfstream Harbor Orlando, FL 382� 98% 409� --� 50� --�
Gulfstream Harbor II Orlando, FL 306� 100% 402� --� 37� 1�
Gulfstream Harbor III Orlando, FL 158� 100% 396� --� --� 127�
Lakeshore Villas Tampa, FL 281� 98% 419� --� --� --� Park Place
Sebastian, FL 368� 100% 320� --� --� 97� Park Royale Pinellas Park,
FL 294� 95% 422� --� --� 15� Pleasant Living Riverview, FL 245� 96%
358� --� --� --� Riverside GCC Ruskin, FL 434� 100% 505� --� 420�
86� Royal Palm Village Haines City, FL 277� 97% 340� --� --� 110�
Cypress Greens Lakeland, FL 210� 100% 251� --� --� 48� SavannaClub
Port St Lucie, FL 959� 100% 296� --� --� 108� Woodlands Groveland,
FL 157� 99% 308� --� --� 135� � Subtotal-Florida 5,954� � � �
1,040� 925� � � � � � � � � � � � � � � � � Blue Star Apache
Junction AZ 22� 55% 397� 129� --� --� Brentwood West Mesa, AZ 350�
93% 447� --� --� --� CasaEncanta Mesa, AZ --� 0% --� --� 375� --�
Desert Harbor Apache Junction, AZ 189� 99% 359� --� --� 17� Fiesta
Village Mesa, AZ 172� 86% 378� --� --� --� La Casa Blanca Apache
Junction AZ 197� 99% 378� --� --� --� Lost Dutchman Apache Junction
AZ 196� 81% 321� --� --� 46� Rancho Mirage Apache Junction AZ 312�
94% 418� --� --� --� Reserve at Fox Creek Bull Head City, AZ 231�
100% 315� --� --� 83� Sun Valley Apache Junction AZ 268� 92% 347�
--� --� --� � Subtotal-Arizona 1,937� � � 129� 375� 146� � � � � �
� � � Foley Grove Foley, AL 94� 100% 282� � 260� 71� � � � � � � �
� Mullica Woods Egg Harbor City, NJ 90� 100% 491� --� --� --� � � �
� � � � � Total Communities 32� 8,075� 97% $362� 129� 1,675� 1,142�
� (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 84.1% across
the entire portfolio. Including sites not yet developed, occupancy
was at 73.2% at September 30, 2006. Portfolio Summary � Operational
Home sites Developed Home sites Undeveloped Home sites RV Sites
Total � As of December 31, 2005 7,283� 976� 1,270� 129� 9,658� �
Properties developed --� 19� (19) --� --� � Redevelopment of lots
(114) 114� --� --� --� � New lots purchased 667� 278� 260� 1,205� �
New leases originated 240� (240) --� --� --� � Adjust for site plan
changes (1) (5) 164� --� 158� � As of September 30, 2006 8,075(1)
1,142� 1,675� 129� 11,021� � (1) As of September 30, 2006, 7,862 of
these operational home sites were occupied. Occupancy Roll Forward
� Occupied Home sites Operational Home sites Occupancy � As of
December 31, 2005 6,947� 7,283� 95.4% � New home sales 292� 240� �
Used home sales 4� --� � Used homes acquired (30) --� �
Redevelopment of lots --� (114) � Lots acquired (sold) 667� 667� �
Homes constructed by others 15� --� � Homes removed from previously
leased sites (33) (1) � As of September 30, 2006 7,862� 8,075�
97.4% AMERICAN LAND LEASE, INC. AND SUBSIDIARIES RETURN ON
INVESTMENT FROM HOME SALES (unaudited) � Three Months Ended Sept.
30, 2006 Three Months Ended Sept. 30, 2005 � Expansion sites leased
during the period 76� 92� Estimated first year annualized profit on
leases originated during the period A $269� $369� Costs, including
development costs of sites leased $4,714� $4,607� Home sales income
(loss) attributable to sites leased 1,370� 1,564� Total costs
incurred to originate ground leases B $3,344� $3,037� Estimated
first year returns from the leases originated on expansion home
sites during the period A/B 8.0% 12.1% For the three months ended
September 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 Sept. 30, 2006
Three Months Ended Sept. 30, 2005 � Reported income from sales
operations $ 1,389� $1,612� Used home sales and brokerage business
income (19) (48) Used home sales --� --� Adjusted income for
projection analysis $ 1,370� $1,564� 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 Dec. 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 � Sept. 30, 2005 Dec. 31,
2005 March 31, 2006 June 30, 2006 Sept. 30, 2006 3Q06 over 2Q06
Increase/ Decrease 3Q06 over 2Q06 % Change 3Q06 over 3Q05 Increase/
Decrease 3Q06 over 3Q05% Change New home contracts 145� 105� 117�
125� 81� -44� -35.2% -64� -44.1% New home closings 115� 133� 104�
95� 92� -3� -3.2% -23� -20.0% Home resales 4� 1� --� 3� 2� -1�
-33.3% -2� -50.0% Brokered home sales 45� 51� 62� 54� 20� -34�
-63.0% -25� -55.6% New home contract backlog 157� 93� 75� 86� 51�
-35� -40.7% -106� -67.5% � Average Selling Price $117,000�
$125,000� $128,000� $124,000� $129,000� $5,000� 4.0% $12,000� 10.3%
� Average Gross Margin Percentage 30.1% 31.8% 33.0% 34.3% 32.4% --�
--� --� --� American Land Lease, Inc. (NYSE:ANL) today released
results for third quarter 2006. Summary Financial Results Third
Quarter -- Diluted Earnings Per Share ("Diluted EPS") were $0.27
for the three-month period ended September 30, 2006 compared to
$0.32 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 $3.7 million or $0.43 per
diluted common share from the same period one year ago, a decrease
of 4.7% on a per share basis. -- Unit volume in home sales was 92
new home closings, including 76 new homes sold on expansion home
sites. This compares with 115 new home closings in third quarter
2005. -- "Same Store" results provided a revenue increase of 10.0%,
an expense increase of 6.0% and an increase of 12.0% in Net
Operating Income ("NOI"). -- "Same Site" results provided a revenue
increase of 4.4%, an expense increase of 3.6% and an increase of
4.8% 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, "In a very competitive
environment, excellent same site and same store third quarter
results reflect the stability and strength of our core residential
land lease business. As compared to 2005, third quarter property
operating margins before depreciation expense were up 22%. We
increased our focus on certain expense areas, especially utilities
and insurance, in this quarter which yielded improved results." "We
view the new home sales business as an activity that complements
our residential land lease business by creating new revenue
generating home sites. Consistent with the entire home sales
industry, our new home closings were not as high as we projected at
the beginning of the year. We did not achieve our objective for new
contracts during the quarter as traffic was not as strong as we
anticipated. We have a cautious outlook for the near term, but the
absence of hurricanes this season coupled with our focus on the
senior customer provide encouragement for the future. This outlook
was reinforced by our ability to generate over 40 `sign and close
deals' in the quarter which was evidence of pent up demand." "Our
core business, owning land lease communities, is solid. Its returns
grow with increased rents and with home sales. The latter has been
affected by the national decline in new home sales. That said, we
have solid locations, attractive homes, a hardworking sales team,
and we are still selling homes at good prices. I remain upbeat and
optimistic about the future of our company." Dividend Declaration
On November 1, 2006, the Board of Directors declared a third
quarter common stock dividend of $0.25 per share payable on
November 30, 2006, to stockholders of record on November 16, 2006.
On November 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 September 30, 2006, payable on November 30, 2006 to
shareholders of record on November 16, 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 - Third Quarter
Third Quarter Property Operations Third quarter revenue from
property operations was $9,121,000 as compared to $7,740,000 in the
same period one year ago, a 17.8% increase. Third quarter property
operating expenses totaled $3,136,000 as compared to $2,750,000 in
the same period one year ago, a 14.0% increase. The Company
realized significant increases in rental income driven by annual
rental rate increases, the absorption of new home sites through its
home sales efforts and the acquisition of three additional
communities in the 2006 period. Third quarter property operating
expenses increased primarily due to increases in utility costs,
tenant related legal costs, insurance premiums and the acquisition
of three properties. 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 addition, in 24 of the 32 communities we
operate the individual homeowner's energy is metered and changes in
consumption are billed to the homeowner. Third quarter property
operating margins before depreciation expense increased to 63.0%
from 60.6% in the prior year's third quarter. Third Quarter "Same
Store" Results Third quarter "same store" results reflect the
results of operations for properties and golf courses owned during
the third quarters of both 2006 and 2005. Same store properties
account for 90% of property operating revenues for third quarter
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: -0- *T 3Q06 ------------------ Revenue 10.0% Expense 6.0%
Net Operating Income 12.0% *T 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. -0- *T 3Q06 -------------- Revenues 10.0% Less:
Reimbursements (0.3%) -------------- Revenue growth net of
reimbursements 9.7% Expenses 6.0% Less: Reimbursements (1.5%)
-------------- Expense growth net of reimbursements 4.5% Same Store
NOI Growth 12.0% *T 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 third
quarter are as follows: -0- *T Same Site Rental Absorption Same
Site Golf Same Store ---------------- ------------ --------------
---------- Revenue 4.4% 5.3% 0.3% 10.0% Expense 3.6% 3.6% (1.2)%
6.0% NOI 4.7% 6.2% 1.1% 12.0% *T 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 September 30, 2006 and 2005 can be
found on page 14 of this earnings release. Third Quarter Home Sales
Operations Third quarter 2006 new home sales produced 92 closings,
a 20.0% decrease from the 115 closings in the same period in the
prior year. Average selling price per home was $129,000 as compared
to $117,000 in the same period in the prior year, a 10.3% increase.
Fourteen communities reported average selling prices in excess of
$100,000 and five of the closings during the quarter exceeded
$200,000 in selling price. 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 59.3% as compared with the same period
in the prior year. Selling gross margins, excluding brokerage
activities, increased to 32.4% in the quarter as compared to 30.1%
in the same period in the prior year, but reflected a rate lower
than the 34.3% realized during second quarter 2006. This increase
was driven primarily by increased selling prices which were
partially offset by increases in costs of homes purchased. Selling
costs as a percentage of sales revenue increased from 18.6% in the
prior year's period to 21.2% in the third 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 51, a decrease of 68% or 106 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. Summary of home sales activity:
-0- *T Quarter ended Quarter ended Sept. 30, 2006 Sept. 30, 2005
----------------- ----------------- New home closings - Same Store
73 115 New home closings - Acquisitions 19 -- -----------------
----------------- Total new home closings 92 115 New home contracts
- Same Store 67 145 New home contracts - Acquisitions 14 --
----------------- ----------------- Total new home contracts 81 145
Home resales 2 4 Brokered home sales 20 45 New home contract
backlog - Same Store 36 157 New home contract backlog -
Acquisitions 15 -- ----------------- ----------------- Total new
home contract backlog 51 157 *T 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: -0- *T
Full Year 2006 Projected
----------------------------------------------------------------------
FFO $1.70 to $1.75
----------------------------------------------------------------------
AFFO $1.50 to $1.55
----------------------------------------------------------------------
Diluted EPS $1.20 to $1.25
----------------------------------------------------------------------
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 $4.2 M
----------------------------------------------------------------------
Capital Replacements (per site) $163 to $190
----------------------------------------------------------------------
Depreciation $3.8M to $4.5M
----------------------------------------------------------------------
*T 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 nine months of the year and the Company
expects that trend to continue through the fourth quarter of the
year. 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 adjusted our guidance as to annual
ranges based upon lower expected results from our home sales
business. We expect full year results to be within that reduced
range. 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. Dispositions During
the quarter, the Company placed its New Jersey property under
contract for sale subject to customary contingencies. There can be
no assurance that the transaction will close. Financing Activity
During the quarter, the Company closed four transactions. -- The
Company completed the refunding of a series of variable rate
mortgages and provided additional proceeds of approximately $2.5
million which were used for the continued development of the
Company's inventory of home sites. The new note of $3.8 million
bears interest at 6.63% with a fourteen year term. -- The Company
issued a $10 million short-term note payable with a variable rate
of 200 basis points over the 1-month LIBOR rate maturing on January
25, 2007 in conjunction with the acquisition of a community. The
Company expects to refund this bridge facility through permanent
financing of the community -- The Company borrowed $1.9 million on
its construction loan facility to fund work at Sebastian Beach and
Tennis Village. -- The Company reduced the interest rate spread on
its variable rate floor plan facility by 25 basis points to prime
plus 25 basis points. After the end of the quarter, on October 13,
2006, the Company closed a loan of $7.25 million for its Reserve at
Fox Creek community that was acquired in February of 2006. The loan
has a ten-year term and bears interest at 6.06%. The loan includes
an interest only feature for five years, provides for future
advances totaling $3.75 million at the 6.06% rate and provides
further for additional advances above the $11 million total loan
amount during the first five years based upon achieving certain
levels of performance. The full funding of this loan will refund
the Company's original purchase price for the community.
Development Activity The company maintains an inventory of 1,142
home sites that are fully developed. 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 1,675 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 ANL land lease 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 on schedule.
The Company has learned that a new municipality was formed in July
of 2006 which impacts a majority of the project. Known as the Town
of Grant-Valkaria, the new municipality does not have a building
department and the election of the first mayor and town council
will be held on November 7, 2006. While the county continues to
inspect the project, we are unable to project what impact the
formation of the town may have on the timing of the project.
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 was
completed. -- At the Villages at Country Club project in Mesa,
Arizona, site work continued. -- At Riverside Club, construction
neared completion for the community's second clubhouse, this one
including more than 22,000 square feet. This substantial amenity
will be opened for resident use during fourth quarter. -- At Sun
Lake, construction activities continued on the expansion and
renovation of the community center complex. This increased and
improved amenity is scheduled to open in first quarter 2007.
American Land Lease, Inc. is a REIT that held interests in 32
manufactured home communities with 8,075 operational home sites,
1,142 developed expansion sites, 1,675 undeveloped expansion sites
and 129 recreational vehicle sites as of September 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, November 6, 2006 at 4:00 p.m. Eastern
Standard Time to discuss third 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 third 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 Standard Time, November 6, 2006 until midnight on November
13, 2006. To access the replay, dial toll free, (800) 642-1687 and
request information from conference ID 1428246. 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: represents 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. -0- *T
AMERICAN LAND LEASE INC. AND SUBSIDIARIES CONSOLIDATED BALANCE
SHEETS (in thousands, except per share data) As of
--------------------------------------------------------- Sept. 30,
June 30, March 31, Dec. 31, Sept. 30, 2006 2006 2006 2005 2005
----------- ----------- ----------- --------- -----------
(unaudited) (unaudited) (unaudited) (unaudited) ASSETS Real Estate
$298,293 $264,947 $254,690 $244,987 $232,178 Less accumulated
depreciation (28,041) (27,836) (26,132) (25,277) (24,451) Real
estate under development 103,940 95,195 87,068 74,416 74,818
----------- ----------- ----------- --------- ----------- Total
Real Estate 374,192 332,306 315,626 294,126 282,545 Cash and cash
equivalents 311 8,497 8,384 1,795 828 Inventory 23,731 23,588
20,654 18,759 19,431 Other assets 14,845 14,488 12,786 11,236 9,969
Assets Held for Sale 3,874 3,897 3,889 3,773 3,794 -----------
----------- ----------- --------- ----------- Total Assets $416,953
$382,776 $361,339 $329,689 $316,567 =========== ===========
=========== ========= =========== LIABILITIES AND EQUITY
Liabilities Secured long-term notes payable $203,428 $199,746
$182,762 $149,388 $124,763 Secured short-term financing 43,783
19,462 16,742 19,669 33,777 Accounts payable and accrued
liabilities 17,359 12,036 12,006 12,474 11,804 Liabilities related
to assets held for sale 2,261 2,273 2,304 2,304 2,328 -----------
----------- ----------- --------- ----------- Total Liabilities
266,831 233,517 213,814 183,835 172,672 Minority Interest in
Operating Partnership 16,333 16,245 16,137 15,945 15,511
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 92 93 93
Additional paid-in capital 289,223 290,576 289,206 288,224 288,188
Deferred compensation re restricted stock -- (1,995) (2,000)
(1,651) (1,959) Dividends in excess of accumulated earnings
(153,914) (154,047) (154,298) (155,145) (156,326) Treasury stock at
cost (26,612) (26,612) (26,612) (26,612) (26,612) -----------
----------- ----------- --------- ----------- Total Stockholders'
Equity 133,789 133,014 131,388 129,909 128,384 -----------
----------- ----------- --------- ----------- Total Liabilities and
Stockholders' Equity $416,953 $382,776 $361,339 $329,689 $316,567
=========== =========== =========== ========= =========== *T -0- *T
AMERICAN LAND LEASE INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS
OF INCOME (in thousands, except per share data) (unaudited) Three
Months Ended --------------------------------------- Sept. 30, June
30, March 31, Dec. 31, 2006 2006 2006 2005 --------- ---------
--------- --------- RENTAL PROPERTY OPERATIONS Rental and other
property revenues $9,121 $8,507 $8,173 $7,684 Golf course operating
revenues 154 213 470 232 --------- --------- --------- ---------
Total property operating revenues 9,275 8,720 8,643 7,916 Property
operating expenses (3,136) (3,056) (2,916) (2,827) Recoveries of
casualty expenses related to hurricanes -- -- -- (6) Golf course
operating expenses (296) (373) (365) (346) --------- ---------
--------- --------- Total property operating expenses (3,432)
(3,429) (3,281) (3,179) Depreciation (1,136) (1,032) (979) (954)
--------- --------- --------- --------- Income from rental property
operations 4,707 4,259 4,383 3,783 SALES OPERATIONS Home sales
revenue 12,197 12,052 13,496 16,781 Cost of home sales (8,244)
(7,914) (9,044) (11,444) --------- --------- --------- ---------
Gross profit on home sales 3,953 4,138 4,452 5,337 Commissions
earned on brokered sales 45 164 159 139 Commissions paid on
brokered sales (27) (76) (82) (74) --------- --------- ---------
--------- Gross profit on brokered sales 18 88 77 65 Selling and
marketing expenses (2,582) (2,754) (2,800) (3,162) ---------
--------- --------- --------- Income (loss) from sales operations
1,389 1,472 1,729 2,240 General and administrative expenses (1,055)
(995) (891) (1,113) Gain on sale of property - - - - Interest and
other income 34 91 53 1 Tax benefit -- -- -- 600 Interest expense
(2,218) (1,832) (1,579) (1,498) --------- --------- ---------
--------- Income before minority interest in Operating Partnership
2,857 2,995 3,695 4,013 Minority interest in Operating Partnership
(330) (350) (435) (479) --------- --------- --------- ---------
Income from continuing operations 2,527 2,645 3,260 3,534
DISCONTINUED OPERATIONS Income (loss) from discontinued operations,
net of Minority Interest 40 51 42 28 --------- --------- ---------
--------- Net Income Cumulative preferred stock dividends (485)
(484) (484) (484) --------- --------- --------- --------- Net
Income Attributable to common shareholders $2,082 $2,212 $2,818
$3,078 ========= ========= ========= ========= Basic earnings from
continuing operations (net of cumulative unpaid preferred
dividends) $0.27 $0.29 $0.37 $0.42 Basic earnings (loss) from
discontinued operations 0.01 0.01 0.01 0.00 --------- ---------
--------- --------- Basic earnings per common share $0.28 $0.30
$0.38 $0.42 ========= ========= ========= ========= Diluted
earnings from continuing operations $0.26 $0.28 $0.35 $0.39 Diluted
earnings (loss) from discontinued operations 0.01 0.01 0.01 0.01
--------- --------- --------- --------- Diluted earnings per common
share $0.27 $0.29 $0.36 $0.40 ========= ========= =========
========= Weighted average common shares outstanding 7,507 7,465
7,423 7,341 Weighted average common shares and common share
equivalents outstanding 7,808 7,836 7,880 7,722 Common dividends
paid per share $0.25 $0.25 $0.25 $0.25 *T -0- *T AMERICAN LAND
LEASE INC. AND SUBSIDIARIES DEBT ANALYSIS (in thousands)
(unaudited) As of -------------------------------------------------
Sept. 30, June 30, March 31, Dec. 31, Sept. 30, 2006 2006 2006 2005
2005 --------- --------- --------- --------- --------- DEBT
OUTSTANDING Mortgage Loans Payable - Fixed $192,072 $191,215
$180,570 $136,641 $101,417 Mortgage Loans Payable - Floating 11,356
10,771 4,445 15,015 25,628 Floor Plan Facility 23,813 19,462 16,642
14,969 19,147 Acquisition Bridge Loan 10,000 -- -- -- -- Line of
Credit 9,970 -- 100 4,700 14,630 --------- --------- ---------
--------- --------- Total Debts $247,211 $221,448 $201,757 $171,325
$160,822 ========= ========= ========= ========= ========= % FIXED
FLOATING Fixed 77.7% 86.3% 89.5% 79.8% 63.1% Floating 22.3% 13.7%
10.5% 20.2% 36.9% --------- --------- --------- --------- ---------
Total 100.00% 100.00% 100.00% 100.00% 100.00% AVERAGE INTEREST
RATES Mortgage Loans Payable - Fixed 6.4% 6.4% 6.4% 6.6% 7.0%
Mortgage Loans Payable - Floating 6.9% 7.4% 7.2% 6.7% 6.5% Floor
Plan Facility 8.6% 8.75% 8.2% 7.6% 7.1% Acquisition Bridge Loan
7.3% -- -- -- -- Line of Credit 7.0% 7.35% 6.6% 6.4% 5.8% ---------
--------- --------- --------- --------- Total Weighted Average 6.7%
6.7% 6.6% 6.7% 6.8% ========= ========= ========= =========
========= DEBT RATIOS Debt/Total Market Cap(1) 51.4% 49.2% 43.0%
42.1% 41.2% Debt/Gross Assets 59.2% 64.6% 55.8% 52.0% 50.8%
------------------------------------------------- MATURITIES Dec.
31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, 2006 2007 2008 2009 2010
--------- --------- --------- --------- --------- Mortgage Loan
Scheduled Principal Payments 733 2,978 3,132 3,346 3,573 Mortgage
Loans Balloon Maturities - 2,665 - - - Floor Plan Facility - - - -
- --------- --------- --------- --------- --------- Total $733
$5,643 $3,132 $3,346 $3,573 ========= ========= ========= =========
========= (1) Computed based upon closing price as reported on NYSE
as of the period ended. *T -0- *T 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/OPunit amounts) (Unaudited) Three Months Ended September 30,
------------------- 2006 2005 ------------------- Net Income $2,082
$2,436 Adjustments Cumulative unpaid preferred stock dividends 485
484 Minority interest in operating partnership 330 391 Minority
interest related to discontinued operations 18 17 Depreciation from
discontinued operations 6 4 Real estate depreciation 1,136 869
--------- --------- Funds From Operations (FFO) $4,057 $4,201
Cumulative unpaid preferred stock dividends (485) (484) ---------
--------- Funds From Operations attributable to common Stockholders
3,572 3,717 Capital Replacements (285) (300) --------- ---------
Adjusted Funds from Operations (AFFO) $3,287 $3,417 =========
========= Weighted Average Common Shares/OP Units Outstanding 8,800
8,688 ========= ========= Per Common Share and OP Unit: FFO: $0.41
$0.43 AFFO: $0.37 $0.39 Payout Ratio Per Common Share and OP Unit:
Gross Distribution Payout FFO: 61.0% 58.1% AFFO: 67.6% 64.1% *T -0-
*T AMERICAN LAND LEASE INC. AND SUBSIDIARIES RECONCILIATION OF SAME
SITE AND SAME STORE OPERATING RESULTS FOR THE QUARTER ENDED
SEPTEMBER 30, 2006 AND SEPTEMBER 30, 2005 (in thousands)
(unaudited) Three Months Three Months Contribution Ended Ended to
Same Sept. 30, Sept. 30, Store 2006 2005 Change % Change %
Change(1) ------------ ------------ ------- --------- ------------
Same site rental revenues $7,661 $7,327 $334 4.6% 4.4% Absorption
rental revenues 577 171 406 237.4% 5.3% Same site golf revenues 154
131 23 17.6% 0.3% ------------ ------------ ------- ------------
Same store revenues A 8,392 7,629 763 10.0% 10.0% ============
Re-development and newly acquired property revenues 883 242 641
264.9% ------------ ------------ ------- Total property revenues C
$9,275 $7,871 $1,404 17.8% ============ ============ ======= Same
site rental expenses $2,315 $2,223 $92 4.1% 3.6% Absorption rental
expenses 93 - 93 100.0% 3.6% Same site golf expenses 296 329 (33)
(10.0)% (1.2)% ------------ ------------ ------- ------------ Same
store expenses B 2,704 2,552 152 6.0% 6.0% ============
Re-development and newly acquired property expenses 305 96 209
217.7% Recoveries of casualty expenses related to hurricanes --
(21) 21 100.00% Expenses related to offsite management(2) 423 473
(50) 10.6% ------------ ------------ ------- Total property
operating expenses D $3,432 $3,100 $332 10.7% ============
============ ======= Same Store net operating income A-B $5,688
$5,077 611 12.0% ============ ============ ======= Total net
operating income C-D $5,843 $4,771 $1,072 22.5% ============
============ ======= (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 $334 as compared to the total same store
revenues in 2005 of $7,629 is a 4.4% increase ($334/$7,629=4.4%).
(2) Expenses related to offsite management reflect portfolio
property management costs not attributable to a specific property.
*T -0- *T AMERICAN LAND LEASE, INC. AND SUBSIDIARIES NUMBER OF
HOMESITES AND AVERAGE RENT BY COMMUNITY AS OF SEPTEMBER 30, 2006
Oper- ational Un- Home Average developed Developed Sites Monthly RV
Home Home Community Location (1) Occupancy Rent Sites Sites Sites
----------------------------------------------------------------------
Owned Communities
----------------------------------------------------------------------
Blue Heron Punta Pines Gorda, FL 341 100% $333 -- -- 48
----------------------------------------------------------------------
Brentwood Estates Hudson, FL 133 98% 264 -- -- 58
----------------------------------------------------------------------
Sebastian Micco, Beach & FL Tennis Club -- 0% -- -- 533 --
----------------------------------------------------------------------
Serendipity Ft. Myers, FL 338 96% 348 -- -- --
----------------------------------------------------------------------
Stonebrook Homosassa, FL 188 100% 296 -- -- 14
----------------------------------------------------------------------
Sunlake Grand Estates Island, FL 354 100% 351 -- -- 42
----------------------------------------------------------------------
Sun Valley Tarpon Springs, FL 261 97% 382 -- -- --
----------------------------------------------------------------------
Forest View Homosassa, FL 268 100% 311 -- -- 36
----------------------------------------------------------------------
Gulfstream Orlando, Harbor FL 382 98% 409 -- 50 --
----------------------------------------------------------------------
Gulfstream Orlando, Harbor II FL 306 100% 402 -- 37 1
----------------------------------------------------------------------
Gulfstream Orlando, Harbor III FL 158 100% 396 -- -- 127
----------------------------------------------------------------------
Lakeshore Tampa, FL Villas 281 98% 419 -- -- --
----------------------------------------------------------------------
Park Place Sebastian, FL 368 100% 320 -- -- 97
----------------------------------------------------------------------
Park Royale Pinellas Park, FL 294 95% 422 -- -- 15
----------------------------------------------------------------------
Pleasant Riverview, Living FL 245 96% 358 -- -- --
----------------------------------------------------------------------
Riverside GCC Ruskin, FL 434 100% 505 -- 420 86
----------------------------------------------------------------------
Royal Palm Haines Village City, FL 277 97% 340 -- -- 110
----------------------------------------------------------------------
Cypress Lakeland, Greens FL 210 100% 251 -- -- 48
----------------------------------------------------------------------
Savanna Port St Club Lucie, FL 959 100% 296 -- -- 108
----------------------------------------------------------------------
Woodlands Groveland, FL 157 99% 308 -- -- 135
----------------------------------------------------------------------
Subtotal- Florida 5,954 1,040 925
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
Blue Star Apache Junction AZ 22 55% 397 129 -- --
----------------------------------------------------------------------
Brentwood West Mesa, AZ 350 93% 447 -- -- --
----------------------------------------------------------------------
Casa Mesa, AZ Encanta -- 0% -- -- 375 --
----------------------------------------------------------------------
Desert Apache Harbor Junction, AZ 189 99% 359 -- -- 17
----------------------------------------------------------------------
Fiesta Village Mesa, AZ 172 86% 378 -- -- --
----------------------------------------------------------------------
La Casa Apache Blanca Junction AZ 197 99% 378 -- -- --
----------------------------------------------------------------------
Lost Apache Dutchman Junction AZ 196 81% 321 -- -- 46
----------------------------------------------------------------------
Rancho Apache Mirage Junction AZ 312 94% 418 -- -- --
----------------------------------------------------------------------
Reserve at Bull Head Fox Creek City, AZ 231 100% 315 -- -- 83
----------------------------------------------------------------------
Sun Valley Apache Junction AZ 268 92% 347 -- -- --
----------------------------------------------------------------------
Subtotal- Arizona 1,937 129 375 146
----------------------------------------------------------------------
----------------------------------------------------------------------
Foley Grove Foley, AL 94 100% 282 260 71
----------------------------------------------------------------------
----------------------------------------------------------------------
Mullica Egg Harbor Woods City, NJ 90 100% 491 -- -- --
----------------------------------------------------------------------
----------------------------------------------------------------------
Total Communities 32 8,075 97% $362 129 1,675 1,142
----------------------------------------------------------------------
(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 84.1% across
the entire portfolio. Including sites not yet developed, occupancy
was at 73.2% at September 30, 2006. *T -0- *T Portfolio Summary
Operational Developed Undeveloped RV Home sites Home sites Home
sites Sites Total
-------------------------------------------------- As of December
31, 2005 7,283 976 1,270 129 9,658 Properties developed -- 19 (19)
-- -- Redevelopment of lots (114) 114 -- -- -- New lots purchased
667 278 260 1,205 New leases originated 240 (240) -- -- -- Adjust
for site plan changes (1) (5) 164 -- 158
-------------------------------------------------- As of September
30, 2006 8,075(1) 1,142 1,675 129 11,021
================================================== (1) As of
September 30, 2006, 7,862 of these operational home sites were
occupied. *T -0- *T Occupancy Roll Forward Occupied Operational
Home sites Home sites Occupancy ------------- -------------
----------- As of December 31, 2005 6,947 7,283 95.4% New home
sales 292 240 Used home sales 4 -- Used homes acquired (30) --
Redevelopment of lots -- (114) Lots acquired (sold) 667 667 Homes
constructed by others 15 -- Homes removed from previously leased
sites (33) (1) ------------- ------------- As of September 30, 2006
7,862 8,075 97.4% ============= ============= *T -0- *T AMERICAN
LAND LEASE, INC. AND SUBSIDIARIES RETURN ON INVESTMENT FROM HOME
SALES (unaudited) Three Months Ended Three Months Ended Sept. 30,
2006 Sept. 30, 2005 ------------------ -------------------
Expansion sites leased during the period 76 92 ==================
=================== Estimated first year annualized profit on
leases originated during the period A $269 $369 ==================
=================== Costs, including development costs of sites
leased $4,714 $4,607 Home sales income (loss) attributable to sites
leased 1,370 1,564 ------------------ ------------------- Total
costs incurred to originate ground leases B $3,344 $3,037
================== =================== Estimated first year returns
from the leases originated on expansion home sites during the
period A/B 8.0% 12.1% ================== =================== *T -0-
*T For the three months ended September 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 Sept. 30, 2006 Sept. 30, 2005
------------------ ------------------ Reported income from sales
operations $1,389 $1,612 Used home sales and brokerage business
income (19) (48) Used home sales -- -- ------------------
------------------ Adjusted income for projection analysis $1,370
$1,564 ================== ================== *T -0- *T 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
Dec. 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%
========================= *T -0- *T AMERICAN LAND LEASE INC. AND
SUBSIDIARIES KEY HOME SALES STATISTICS Sept. 30, Dec. 31, March 31,
June 30, Sept. 30, 2005 2005 2006 2006 2006
-------------------------------------------------- New home
contracts 145 105 117 125 81 New home closings 115 133 104 95 92
Home resales 4 1 -- 3 2 Brokered home sales 45 51 62 54 20 New home
contract backlog 157 93 75 86 51 Average Selling Price $117,000
$125,000 $128,000 $124,000 $129,000 Average Gross Margin Percentage
30.1% 31.8% 33.0% 34.3% 32.4% 3Q06 over 3Q06 over 2Q06 3Q06 over
3Q05 3Q06 over Increase/ 2Q06 % Increase/ 3Q05% Decrease Change
Decrease Change --------------------------------------------------
New home contracts -44 -35.2% -64 -44.1% New home closings -3 -3.2%
-23 -20.0% Home resales -1 -33.3% -2 -50.0% Brokered home sales -34
-63.0% -25 -55.6% New home contract backlog -35 -40.7% -106 -67.5%
Average Selling Price $5,000 4.0% $12,000 10.3% Average Gross
Margin Percentage -- -- -- -- *T
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