American Land Lease Announces First Quarter 2008 Results.Strong Property Operating Results Impacted by Lower New Home Sales New Home Sales An economic indicator that measures sales of newly built homes. Released by the U.S. Department of Commerce's Census Bureau, it includes both quantity and price statistics. Results CLEARWATER, Fla. -- American Land Lease, Inc. (NYSE NYSE See: New York Stock Exchange :ANL ANL - Argonne National Laboratory ) today released first quarter results for 2008. Summary Financial Results First Quarter * Diluted Earnings Per Share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of ("Diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. ") were ($0.19) for the three-month period ended March 31, 2008, compared to $0.16 for the same period one year ago, a decrease of 218.8% on a per share basis. The decrease includes previously announced prepayment Prepayment 1. The payment of a debt obligation prior to its due date. 2. The excess payment over a scheduled debt repayment amount. Notes: 1. Examples include deferred expenses such as rent and early loan repayments. 2. costs on debt of $0.23 per share. * Funds from Operations Funds From Operations (FFO) Used by real estate and other investment trusts to define the cash flow from trust operations; earnings with depreciation and amortization added back. ("FFO FFO See: Funds from operations "), a non-GAAP financial measure defined on page 12 of this press release, were ($230,000) or ($0.03) per diluted common share, for the quarter, compared to $2.7 million, or $0.30 per diluted common share, for the same period one year ago, a decrease of 110.0% on a per share basis. The decrease includes previously announced prepayment costs on debt of $0.23 per share. * Home sales volume was $3,855,000, a decline of 49.7% from the same period one year ago, consisting of 28 new home closings, including 27 new homes sold on expansion home sites. This result compares with 55 new home closings in first quarter 2007. * "Same Store" (a non-GAAP financial measure defined on page 12 of this release) results provided a revenue increase of 5.6%, an expense decrease of 0.5% and an increase of 8.4% in Net Operating Income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. ("NOI NOI Net Operating Income NOI Notice of Intent NOI Nation of Islam NOI Notice of Inquiry NOI Neuro Orthopaedic Institute NOI New Organizing Institute NOI Notice of Interest NOI No Offense Intended NOI National Olympiad in Informatics "; a non-GAAP financial measure defined on page 12 of this release). * "Same Site" (a non-GAAP financial measure defined on page 12 of this release) results provided a revenue increase of 3.2%, an expense decrease of 0.4% and an increase of 4.9% in NOI. FFO, NOI, Same Store and Same Site are supplemental non-GAAP financial measures that are defined in the glossary A term used by Microsoft Word and adopted by other word processors for the list of shorthand, keyboard macros created by a particular user. See glossaries in this publication and The Computer Glossary. beginning on page 12. We use FFO in measuring our operating performance because we believe that the items that result in a difference between FFO and net income have a different impact to the ongoing operating performance of a real estate company than to other businesses. We use NOI to evaluate the operating performance of our properties and we believe that it is relevant and useful information as a measure of property performance on an unleveraged basis. We use NOI on a Same Store and Same Site basis as useful information to measure property performance without the impact of newly acquired or newly disposed properties. Neither FFO nor NOI should not be considered an alternative to net income or net cash flows from operating activities, as calculated in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). , as an indication of our performance or as a measure of liquidity. A reconciliation of FFO to the comparable GAAP financial measure is included on page 17. A reconciliation of NOI, Same Store and Same Site to the comparable GAAP financial measure is included on page 18. 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, "Our portfolio of land leases continue to produce strong same site and same store results which have a positive impact on the Company's Net Asset Value or "NAV See navigation system and navigation bar. ". These results underscore The underscore character (_) is often used to make file, field and variable names more readable when blank spaces are not allowed. For example, NOVEL_1A.DOC, FIRST_NAME and Start_Routine. (character) underscore - _, ASCII 95. the continued stability and strength of our core residential land lease business. The severe and continuing decline in the broader home sales markets has continued to impact our ability to add new leases to the portfolio at the same rate we have enjoyed in prior years. As a result, we have reevaluated the contribution to NAV from our unoccupied home sites, both developed and undeveloped, which has resulted in a lowering of NAV. The reduction in the rate at which new leases are added to the portfolio has reduced current land values, slowing the rate at which the Company's NAV grows. Our absorption continues to slow. However, we believe that we are in good markets, with a product - retirement communities - that has a growing customer base and, once confidence returns to the market, our absorption rates will be restored." "The continued expansion of operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: at the property level reflects the strength of our properties and personnel who serve our customers well. Operating margins grew 1.7% over 2007 to 65.6%. This growth reflects both the quality of the core portfolio and the positive impact of our 2006 acquisitions. We continue to view our core business as owning and operating land leases - and in that core business our performance was outstanding." "We view the new home sales business as an activity that complements our residential land lease business by creating new revenue generating home sites. Home sales have continued to decline as our customers are taking longer to sell their current homes and their confidence has been impacted by negative news in the broader economy. We view this as an industry issue and not one that can be solved or completely mitigated by ANL. The unit volume of new homes sold was down by 27, or 49% compared to the first quarter of 2007. In this market, our average home value continues to increase, as the average home sale price was $143,000; an increase of 5.9% over Q107. We have taken numerous steps to lower our sales overhead and marketing costs as we continue to look to decrease the drag that adding new leases to the portfolio has on current earnings. We believe that the value of the ANL business and assets exceed the valuation expressed in the current share price. Therefore, we have and will continue to evaluate repurchasing our common stock in the context of our primary financial objective to maximize long term, risk adjusted returns on investment for common stockholders. "Our core business is solid. Land lease returns grow with increased rents and expense control reflecting the outstanding work of our operations team. Our second growth engine is new home sales, which has been affected by the national decline in home sales. We are focused on operating this business activity efficiently to minimize the drag on Verb 1. drag on - last unnecessarily long drag out last, endure - persist for a specified period of time; "The bad weather lasted for three days" 2. current earnings and Net Asset Value. We are fortunate to have solid locations, a growing base of potential customers, attractive homes, and a hardworking sales team that is selling excellent homes at good prices. While present conditions in the new home sales market continue to be challenging, I remain upbeat and optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about the future of our Company." The term "NAV" is defined on page 12 of this press release. Dividend Declaration On April 30, 2008, the Board of Directors declared a first quarter common stock dividend of $0.25 per share, payable on May 30, 2008, to stockholders of record on May 16, 2008. On April 30, 2008, the Board of Directors also declared a cash dividend of $0.4844 per share of Series A Preferred Stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. for the quarter ended March 31, 2008, payable on May 30, 2008, to shareholders of record on May 16, 2008. 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, competing uses of capital, obligations related to principal payments and capitalized interest Capitalized interest Interest that is not immediately expensed, but rather is considered as an asset and is then amortized through the income statement over time. In the context of project financing, interest that is paid by additional borrowing. , and the availability of debt and equity capital at terms deemed attractive by the Company to finance these expenditures. Further, the Board has and will continue to consider the downturn in new home sales and the opportunity for share repurchases Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. in the context of its quarterly review and dividend decision. As noted in the supplemental schedules to this release on page 17, the Company's common dividend was greater than Adjusted Funds from Operations ("AFFO AFFO Adjusted Funds From Operation ") for 2007 and year to date 2008. The Company's net operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. may be used to offset all or a portion of its real estate investment trust ("REIT REIT See: Real Estate Investment Trust REIT See real estate investment trust (REIT). ") taxable income Under the federal tax law, gross income reduced by adjustments and allowable deductions. It is the income against which tax rates are applied to compute an individual or entity's tax liability. The essence of taxable income is the accrual of some gain, profit, or benefit to a taxpayer. , which may allow the Company to reduce or eliminate its common and preferred dividends preferred dividend n. a payment of a corporation's profits to holders of preferred shares of stock. (See: preferred stock) and still maintain its REIT status. Operational Results - First Quarter First Quarter Property Operations First quarter revenue from property operations was $9,717,000, as compared to $9,336,000 in the same period one year ago, a 4.1% increase. First quarter property operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. totaled $3,163,000, as compared to $3,189,000 in the same period one year ago, a 0.8% decrease. The Company realized increases in rental income Noun 1. rental income - income received from rental properties income - the financial gain (earned or unearned) accruing over a given period of time as the result of annual rental rate increases, rent yield management, and the leasing of new home sites through its home sales efforts. First quarter property operating expenses decreased slightly with the expenses of the prior year's first quarter. In a majority of the communities we operate, the Company has previously implemented contractual terms A contractual term is "[a]ny provision forming part of a contract"[1] Each term gives rise to a contractual obligation, breach of which will can give rise to litigation. under its leases to pass on increases in property taxes through billings to homeowners for their proportional share of increased taxes. In 23 of the 30 communities we operate, the individual homeowner's water and sewer SEWER. Properly a trench artificially made for the purpose of carrying water into the sea, river, or some other place of reception. Public sewers are, in general, made at the public expense. Crabb, R. P. Sec. 113. is metered, and changes in consumption are billed to the homeowner. First quarter property-operating margins before depreciation expense increased to 65.6% from 63.9% in the prior year's first quarter. First Quarter "Same Store" Results First quarter "same store" results reflect the results of operations for properties and golf courses owned during the first quarters of both 2008 and 2007. Same store properties accounted for 100.0% of property operating revenues operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. for first quarter 2008. "Same store" results are defined on page 12, and reconciled to GAAP on page 18, of this press release. We believe that same store information provides an opportunity to understand changes in profitability for properties owned during both reporting periods that cannot be obtained from a review of the consolidated income statement consolidated income statement An income statement that combines the income statements of two or more organizations. As with other consolidated statements, a consolidated income statement eliminates any funds owed to or due from firms within the same group. for periods in which properties are acquired or sold. Our presentation of same store results is a non-GAAP measure and should not be considered in isolation from, and is not intended to represent an alternative measure to, operating income or cash flow or any other measure of performance as determined in accordance with GAAP. [TABLE OMITTED] Our same store revenues reflect reimbursements from our tenants for certain expense items, principally utilities and real estate taxes. During the current period, the property taxes associated with certain Florida properties were reduced when compared to the prior year, resulting in a corresponding reduction in billings to tenants. When adjusted for these items, the change in revenues and expenses for the quarter are shown below. [TABLE OMITTED] In addition to focusing on controlling operating expenses, our leases also provide some insulation from increased expenses. We derive our increase in property revenue (i) from increases in rental rates and other charges at our properties, (ii) re-establishing market rents at times of home transfers, and (iii) through the origination Origination The process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property. Notes: Also known as loan origination, everyone must go through the origination process when securing a mortgage for a piece of real of leases on expansion home sites ("absorption"). "Same site" results reflect the results of operations excluding those sites leased subsequent to the beginning of the prior year period. "Same Site" results are defined on page 12, and reconciled to GAAP on page 18, of this press release. We believe that "same site" information provides the ability to understand the changes in profitability without the changes related to the newly leased sites. Our presentation of same site results is a non-GAAP measure and should not be considered in isolation from, and is not intended to represent an alternative measure to, operating income or cash flow or any other measure of performance as determined in accordance with GAAP. We calculate absorption revenues as the rental revenue recognized on sites leased subsequent to the beginning of the prior year period. We estimate that 50% of the increase in expenses over the prior year period is attributable to newly leased sites in our calculation of same site results. We believe that the allocation of expenses between same site and absorption is an appropriate allocation between fixed and variable costs of operating our properties. Our same site rental, absorption and golf operations contributions to total same store results for first quarter are as follows based upon increases from prior year results. [TABLE OMITTED] A reconciliation of same site and same store operating results used in the above calculations to total property revenues and property expenses, as determined under GAAP, for the three months ended March 31, 2008 and 2007 can be found on page 18 of this earnings release. First Quarter Home Sales Operations First quarter 2008 new home sales were $3,855,000, a 49.7% decrease from the same period in the prior year. There were 28 closings, a 49.1% decrease from the 55 closings during the same period in 2007. Average selling price The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. per home was $143,000, compared to $135,000 in the same period in 2007, an increase of 5.9%. Eight communities reported average selling prices in excess of $100,000. Selling gross margins, excluding brokerage activities, were 26.4% in the quarter, comparable to the same period in 2007. Selling costs as a percentage of sales revenue increased from 30.5% in the first quarter of 2007 to 52.9% in the first quarter of 2008, reflecting lower operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. against fixed costs fixed costs, n.pl the costs that do not change to meet fluctuations in enrollment or in use of services (e.g., salaries, rent, business license fees, and depreciation). . Selling costs, including overhead, marketing and advertising expenses, were down by 12.8% compared to the same period in 2007. However, when allocated against the lower sales volumes, such costs resulted in a higher per home expense than in the same period in 2007. The Company's backlog of contracts to close stood at 12, a decrease of 46, or 79.3%, from the same period in 2007. The Company remains committed to generating revenue growth through new lease originations in its existing portfolio. Even though new home sales slowed from 2007 to 2008, our home sales business continues to provide the Company with additional earning home sites. Summary of home sales activity: [TABLE OMITTED] Share Repurchase The Board of Directors has authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: the Company to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. up to 2,000,000 shares of its outstanding common stock. Pursuant to this authorization, the Company repurchased 33,000 shares of outstanding common stock at an average price of $19.95 for the three months ended March 31, 2008. The Company has repurchased approximately 816,000 shares as of March 31, 2008 pursuant to this authorization. We believe that the value of the ANL business and assets exceed the valuation expressed in the current share price. Therefore, we have and will continue to evaluate repurchasing our common stock in the context of our primary financial objective to maximize long term, risk adjusted returns on investment for common stockholders. Financing Activity During the quarter, the Company closed three loan transactions, which served to refinance Refinance 1. When a business or person revises their payment schedule for repaying debt. 2. Replacing an older loan with a new loan offering better terms. Notes: When a business refinances they typically extend the maturity date. loans on three of our properties. Proceeds to the Company of $15.4 million reflect an average interest rate of approximately 5.91%. In conjunction with this refinancing Refinancing An extension and/or increase in amount of existing debt. , the Company incurred prepayment costs of approximately $2.0 million, which reduced earnings per share during the quarter by approximately $0.23 per share. These loans mature in 2018. Also during the quarter, the Company closed a $6.1 million loan on one property at an interest rate of 6.88% for a term of 5 years. Proceeds were used to continue the development of the Company's inventory of home sites. Development Activity The Company ended the quarter with an inventory of 1,345 developed and unleased home sites. We sell new homes to be located on these home sites so that they will become revenue generating. In addition, the Company has an inventory of 1,191 home sites that are partially developed or undeveloped. All of these sites are fully entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: and zoned for use as a land lease community. With the exception of Sebastian Beach Sebastian Beach is a fictional character in the Blandings stories by P. G. Wodehouse. He is the butler at Blandings Castle, seat of Lord Emsworth and his family, where he serves for over eighteen years. and Tennis Village and the Villages at Country Club, all are contiguous Adjacent or touching. Contrast with fragmentation. See contiguous file. to, and a part of, a current community where there are ongoing property operations and a proven customer base. Significant development activity during the quarter included: * At Sebastian Beach and Tennis Village, construction and site work continued. As reported in prior quarters, a new municipality MUNICIPALITY. The body of officers, taken collectively, belonging to a city, who are appointed to manage its affairs and defend its interests. was formed in July of 2006, which impacts this site. As previously announced, we have been working with the town and county governments to accomplish the platting plat 1 tr.v. plat·ted, plat·ting, plats To plait or braid. n. A braid. [Middle English platen, alteration of plaiten, to fold, braid of the community under this unique set of circumstances. During the quarter, we completed a key step in this process as the entire project site is now located within one governmental jurisdiction through completion of an annexation annexation, in international law, formal act by which a state asserts its sovereignty over a territory previously outside its jurisdiction. Many kinds of territory have been subject to annexation, chief among them those inhabited by settlers of the annexing power, process. Pre-sales and marketing activities for the community have already begun at an off-site sales office, and we expect to begin home and Village Centre construction upon completion of the platting process. * At the Villages at Country Club project in Mesa, Arizona Mesa is a city in Maricopa County, Arizona and part of the Phoenix-Mesa-Scottsdale Metropolitan Area. It is the third-largest city in Arizona, after Phoenix and Tucson. Mesa is one of the United States' fastest-growing cities, and currently ranks as the 38th-largest. , our homebuilding partner began home-building activity in September 2007, and expects to complete the first models in May 2008. Outlook for 2008 The table below summarizes the Company's projected financial outlook for 2008 as of the date of this release and is based on the estimates and assumptions disclosed in this and previous press releases. Our core land lease operating business remains solid and there have been no changes to our projections for this business element. The rate of growth projected for 2008 as compared to 2007 actual results is lower due chiefly to three key factors: 1. The reduction in new home sales in 2007 and sales projections for 2008. The reduced rate of new home sales will result in a lower contribution from absorption to same store revenue growth than in prior years. 2. Certain resident leases increase annually based upon the rate of increase in the Consumer Price Index. The Consumer Price Index applicable to certain leases was 2.0% for lease renewals in 2008 compared to 3.8% for lease renewals for 2007, a 1.8% decrease. 3. In addition, the lower rate of turnover within our communities has slowed the rate at which rents are increased to higher market rates at the time of home transfers. Our outlook for our core land lease operating business is as follows: [TABLE OMITTED] The earnings from the Company's new home sales business are subject to greater volatility than are the earnings from land leases. The Company's new home sales business has been impacted by the general decline in new home sales nationwide. Certain local markets in which the Company operates have been impacted to a greater extent than have the national averages. In this home sales environment, the Company has limited visibility on future new home sales volumes. The Company's earnings estimates would be impacted positively or negatively by changes in the volume of new home sales or in the gross margins from new home sales. New home sales volume and gross margins are dependent upon a number of factors, including but not limited to consumer confidence, the cost of homeowners' insurance, consumer access to financing sources for home purchases and the sale of their current owned homes. We currently do not see a near term catalyst for increased levels of new home sales in Florida and Arizona. The table below reflects our forecast based upon our current information and analysis: [TABLE OMITTED] In consideration of the above projections for our businesses, our total company projections are as follows: [TABLE OMITTED] The Company's reported results are impacted by the amount of interest capitalized on its development properties. The amount of interest capitalized is dependent on the rate of completion of home sites, the timing and amount of capital expenditures and continuing development activities at each location. Changes in any of the preceding factors, along with changes in applicable interest rates, will result in either increases or decreases in the actual amount of interest capitalized. Changes in the amount of interest capitalized will increase or decrease the Company's earnings as compared to historical financial results. Non-employee director compensation continues to be paid in stock and all stock based compensation is expensed within the 2008 projections. The Company's earnings estimates would be adversely impacted by any increased cost of compliance with regulations and laws applicable to public companies and financial reporting. Additional factors that may impact our projected results include a change in the mix of home sales across our communities, occupancy changes, further changes in the residential housing markets, the impact of hurricanes or other natural disasters, changes in interest rates, and additional refinancing transactions. 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. American Land Lease, Inc. is a REIT that held interests in 30 manufactured home communities with 8,011 operational home sites, 1,345 developed expansion sites, 1,191 undeveloped expansion sites and 129 recreational vehicle sites as of March 31, 2008. 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 The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Such statements may include statements regarding the Company's cash flow, results of operations, dividends, anticipated returns on real estate investments, stock repurchases Stock repurchase A firm's repurchase of outstanding shares of its common stock. and future absorption rates. Such forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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 In banking and finance, refinancing risk is the possibility that a borrower cannot refinance by borrowing to repay existing debt. Many types of commercial lending incorporate bullet payments at the point of final maturity; often, the intention or assumption is that the borrower ; risks inherent in owning real estate; demand for new homes; future development rate of home sites; competition; the availability of real estate assets at prices which meet the Company's investment criteria; the Company's ability to reduce expense levels, implement rent increases, use leverage and other risks set forth in the Company's Securities and Exchange Commission filings. We assume no obligation to update or revise any forward-looking statements or to update the reasons why actual results could differ from those projected in any forward-looking statements. As previously announced, management will hold a teleconference call, Friday, May 9, 2008 at 9:30 a.m. Eastern Daylight Time to discuss first quarter 2008 results. You can participate in the conference call by dialing, toll-free, 800-374-5458 approximately five minutes before the conference call is scheduled to begin and indicating that you wish to join the American Land Lease first quarter 2008 results conference call. If you are unable to participate at the scheduled time In rallying, the Scheduled Time of any crew is the time, calculated at the beginning of the event, that they should arrive at any given control. It is different from Due Time in that Due Time is dynamic, ie it can change throughout the event as competitors drop time; whereas , this information will be available for recorded playback from 12:30 p.m. Eastern Daylight Time, May 9, 2008 until midnight on May 16, 2008. To access the replay, dial toll free, 800-642-1687 and request information from conference ID 46621215. GLOSSARY GLOSSARY OF NON-GAAP FINANCIAL AND OPERATING MEASUREMENTS Financial and operational measurements found in the Earnings Release and Supplemental Information include certain non-GAAP financial measurements used by American Land Lease management. Such measurements include Funds from Operations ("FFO"), which is an industry-accepted measurement based in part on the definition of the National Association of Real Estate Investment Trusts (NAREIT NAREIT National Association of Real Estate Investment Trusts ) and "same store" and same site" results. These terms are defined below and, where appropriate, reconciled to the most comparable Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (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 depreciable Of, relating to, or being a long-term tangible asset that is subject to depreciation. real estate property, dispositions of discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. , 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 Residual value Usually refers to the value of a lessor's property at the time the lease expires. residual value The price at which a fixed asset is expected to be sold at the end of its useful life. 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 computing - computer 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 de·pre·ci·ate v. de·pre·ci·at·ed, de·pre·ci·at·ing, de·pre·ci·ates v.tr. 1. To lessen the price or value of. 2. To think or speak of as being of little worth; belittle. assets such as machinery, computers or other personal property while also reflecting that Capital Replacements are necessary to maintain the associated real estate assets. NET OPERATING INCOME ("NOI"): is the property's gross rental income plus any other income, such as late fees or parking income, less vacancies and rental expenses. Essentially, NOI is the net cash generated before mortgage payments and taxes. NET ASSET VALUE: As defined by NAREIT, the net "market value" of all of a company's assets, including but not limited to its properties, after subtracting all its liabilities and other obligations. CAPITALIZATION RATE Capitalization Rate According to the Appraisal Institute, it is a method used to convert an estimate of a single year's income expectancy into an indication of value in one direct step, by dividing the income estimate by an appropriate rate. : The capitalization rate ("cap rate") is the rate at which net operating income is discounted to determine the value of a property. It is one method that is utilized to estimate property value. 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 sta·bi·lize v. sta·bi·lized, sta·bi·liz·ing, sta·bi·liz·es v.tr. 1. To make stable or steadfast. 2. 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 re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. 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. SELLING GROSS MARGIN: represents what remains from sales after paying out the costs of goods sold. Gross Profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. is expressed as a percentage. To obtain a gross profit margin, divide gross profit by sales. USED HOME SALE: represents the sale of a home previously owned by a third party and American Land Lease has acquired title through an eviction The removal of a tenant from possession of premises in which he or she resides or has a property interest done by a landlord either by reentry upon the premises or through a court action. proceeding or through purchase from the third party. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] For the three months ended March 31, 2008 and 2007, we estimate our profit or loss attributable to the sale of homes situated on expansion home sites as follows (in thousands): [TABLE OMITTED] We have changed the method of estimating costs attributable to newly leased sites. Beginning with the third quarter, we revised our estimate of home site costs with respect to indirect general community expenditures. Previously such indirect costs Indirect costs are costs that are not directly accountable to a particular function or product; these are fixed costs. Indirect costs include taxes, administration, personnel and security costs. See also
The reconciliation of our estimated stabilized first year return on investment in expansion home sites to our return on investment in operational home sites for the year ended December 31, 2007 in accordance with GAAP is shown below (in thousands): [TABLE OMITTED] [TABLE OMITTED] |
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