MHC Reports Second Quarter Results
Portfolio Continues Strong Performance
2nd Quarter New Home Sales Volumes Up 13% Over 2002
CHICAGO, July 22 /PRNewswire-FirstCall/ -- Manufactured Home Communities, Inc. (NYSE: MHC) today announced results for the quarter and six months ended June 30, 2003.
For the second quarter of 2003, Funds From Operations (FFO) were $16.7 million or $.60 per share on a fully diluted basis compared to $17.1 million or $.62 per fully diluted share in the same period in 2002. Second quarter property operating revenues were $56.1 million compared to $55.4 million in the second quarter of 2002. For the second quarter of 2003, average occupancy was 91.4 percent and average monthly base rent per site for the Core Portfolio was $419.82, up 5.1 percent from $399.52 in the same period last year. Second quarter results reflect a seasonal decrease in FFO from Resort Properties (park model / recreational vehicle properties).
For the six months ended June 30, 2003, FFO were $35.3 million or $1.27 per share on a fully diluted basis compared to $35.0 million or $1.27 per fully diluted share in the same period in 2002. Property operating revenues for the six months ended June 30, 2003 were $114.8 million compared to $112.3 million for the same period of 2002. Average occupancy was 91.8 percent and average monthly base rent per site for the Core Portfolio was $418.81, up 5.2 percent from $398.13 in the same period last year.
During the second quarter, MHC sold three properties as part of its long- term strategy to focus on properties located in vacation / retirement destinations and major metropolitan areas. The three properties sold were: Brook Gardens, a 424-site all-age community located in Buffalo, New York; Independence Hill, a 203-site all-age community located in Morgantown, West Virginia; and Pheasant Ridge, a 101-site all-age community located in Mount Airy, Maryland. The properties were sold in a single transaction for $27 million and proceeds from the transaction were initially used to pay down MHC's line-of-credit. MHC recorded a gain on the sale of approximately $10 million.
MHC's management projects continued growth in 2003 Core Portfolio performance. For the six months ended June 30, 2003, Core Portfolio average base rent rate growth has been approximately 5 percent. Assuming current economic conditions continue to impact occupancies, overall revenue growth will be approximately 3 percent. Core portfolio operating expenses are expected to grow in excess of CPI due to continued increases in insurance, real estate taxes and utility expenses. These projections would result in core NOI growth of approximately 2.5 percent.
Results for 2003 will continue to be impacted by 1) the 2002 sales of primarily all-age communities in Michigan, Florida, Minnesota and Ohio coupled with the 2002 purchases of age-qualified communities in Florida, Arizona, and Texas, 2) continued competitive housing options impacting occupancy levels at certain communities and 3) variability in income from home sales operations. In addition, 2003 results will be impacted by the sale of the all-age communities in Buffalo, N.Y., West Virginia and Maryland. In the age- qualified communities, home sales results could be impacted by the ability of potential homebuyers to sell their existing residences as well as by financial markets volatility. In the all-age communities, results from home sales and occupancy will continue to be impacted by local economic conditions, lack of affordable manufactured home financing and competition from alternative housing options including site-built single family housing. Based upon these factors, MHC projects that growth in FFO per share should be between 0 and 3 percent for the full year of 2003 compared to the full year of 2002. As a result, given the recently completed property sales, the acquisition of more seasonal Resort Properties in 2002 and the traditionally higher fourth quarter home sales activity, MHC expects FFO for the third quarter of 2003 to be between $.55 and $.56 per share and expects fourth quarter FFO to range between $.66 and $.72 per share.
The forward-looking statements contained in this news release are subject to certain risks and uncertainties including, but not limited to, the Company's ability to maintain rental rates and occupancy; the Company's assumptions about rental and home sales markets; the effect of interest rates as well as other risks indicated from time to time in the Company's filings with the Securities and Exchange Commission. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.
Manufactured Home Communities, Inc. owns or has a controlling interest in 139 quality communities in 19 states consisting of 50,807 sites. MHC is a self-administered, self-managed, real estate investment trust (REIT) with headquarters in Chicago.
A live webcast of the Company's conference call discussing these results
will be available via the Company's website in the Investor Info section at
www.mhchomes.com at 10:00 a.m. Central today.
Manufactured Home Communities, Inc.
Selected Financial Data
(Unaudited)
(Amounts in thousands except for per share data)
Quarters Ended Six Months Ended
June 30, June 30, June 30, June 30,
2003 2002 2003 2002
Property Operations:
Community base
rental income $49,111 $49,011 $98,472 $98,206
Resort base
rental income 1,854 1,218 5,931 3,655
Utility and other
income 5,091 5,176 10,422 10,413
Property operating
revenues 56,056 55,405 114,825 112,274
Property operating
and maintenance 15,818 15,345 32,545 31,204
Real estate taxes 4,745 4,573 9,383 9,033
Property management 2,276 2,267 4,628 4,674
Property operating
expenses 22,839 22,185 46,556 44,911
Income from property
operations 33,217 33,220 68,269 67,363
Home Sales Operations:
Gross revenues from
inventory home sales 9,567 7,930 13,659 12,656
Cost of inventory
home sales (8,166) (5,920) (11,626) (9,655)
Gross profit
from inventory
home sales 1,401 2,010 2,033 3,001
Brokered resale
revenues, net 454 455 830 886
Home selling
expenses (1,808) (2,007) (3,702) (4,125)
Ancillary services
revenues, net (111) 112 371 669
Income from home
sales and other (64) 570 (468) 431
Other Income and Expenses:
Interest income 244 220 505 484
Other corporate income 550 292 1,139 665
General and
administrative (2,000) (2,063) (3,932) (3,943)
Operating income
(EBITDA) 31,947 32,239 65,513 65,000
Interest and related
amortization (12,652) (12,725) (25,045) (25,275)
Income from
discontinued
operations 533 723 1,035 1,502
Depreciation on
corporate assets (310) (310) (620) (636)
Income allocated to
Preferred OP Units (2,813) (2,813) (5,626) (5,626)
Funds from
operations (FFO) $16,705 $17,114 $35,257 $34,965
Depreciation on real
estate and other
costs (9,558) (9,086) (18,091) (18,057)
Gain on sale of
properties 10,697 -- 10,197 --
Income allocated
to Common OP Units (3,444) (1,590) (5,292) (3,357)
Net Income $14,400 $6,438 $22,071 $13,551
Net income per Common
Share - Basic $.65 $.30 $1.00 $.63
Net income per Common
Share - Fully Diluted $.64 $.29 $.98 $.61
FFO per Common
Share - Basic $.61 $.63 $1.29 $1.30
FFO per Common
Share - Fully Diluted $.60 $.62 $1.27 $1.27
Average Common
Shares - Basic 22,027 21,563 21,973 21,498
Average Common Shares
and OP Units - Basic 27,371 26,980 27,324 26,919
Average Common Shares
and OP Units - Fully
Diluted 27,965 27,664 27,853 27,587
Manufactured Home Communities, Inc.
(Unaudited)
Selected Balance Sheet Data: As Of As Of
June 30, December 31,
2003 2002
(amounts in 000's) (amounts in 000's)
Total real estate, net $1,033,446 $1,057,909
Cash and cash equivalents $12,212 $7,270
Total assets $1,155,504 $1,162,850
Mortgage notes payable $586,589 $575,370
Unsecured debt $154,213 $184,863
Total liabilities $800,293 $816,730
Minority interest $169,655 $168,501
Total shareholder's equity $185,556 $177,619
Total Shares and OP Units Outstanding: As Of As Of
June 30, December 31,
2003 2002
Total Common Shares Outstanding 22,335,999 22,093,240
Total Common OP Units Outstanding 5,355,658 5,359,927
Manufactured Home ("Community") and As Of As Of
Park Model / Recreational Vehicle June 30, December 31,
("Resort") 2003 2002
Site Totals:
Community Sites Owned and Operated 43,131 43,906
Community Sites Owned in Joint Ventures 1,521 1,521
Resort Sites Owned and Operated 6,155 6,155
Total Sites 50,807 51,582
Manufactured Home Site Quarters Ended Six Months Ended
and Occupancy June 30, June 30, June 30, June 30,
Averages: 2003 2002 2003 2002
Total Sites 43,131 44,731 43,132 44,750
Occupied Sites 39,421 41,469 39,611 41,683
Occupancy % 91.4% 92.7% 91.8% 93.1%
Monthly Base Rent
Per Site $415.28 $393.95 $414.33 $392.67
Core* Monthly Base
Rent Per Site $419.82 $399.52 $418.81 $398.13
(*) Represents rent per site for properties owned in both periods of
comparison.
Manufactured Home Communities, Inc.
(Unaudited)
Home Sales: Quarters Ended Six Months Ended
June 30, June 30, June 30, June 30,
2003 2002 2003 2002
New Home Sales Volume 118 104 170 161
New Home Sales Gross
Revenues $8,651 $7,420 $12,260 $11,729
Used Home Sales Volume 57 41 89 78
Used Home Sales Gross
Revenues $916 $510 $1,399 $927
Brokered Home Resale
Volume 282 312 542 543
Brokered Home Resale
Revenues, net $454 $455 $830 $886
Funds available Quarters Ended Six Months Ended
for distribution June 30, June 30, June 30, June 30,
(FAD): 2003 2002 2003 2002
Funds from
operations $16,705 $17,114 $35,257 $34,965
Non-revenue
producing
improvements to
real estate (3,190) (3,628) (6,207) (6,004)
Funds available
for distribution $13,515 $13,486 $29,050 $28,961
FAD per Common
Share - Basic $.49 $.50 $1.06 $1.08
FAD per Common
Share - Fully Diluted $.48 $.49 $1.04 $1.05
The Company believes that Funds From Operations provide an indicator of
its financial performance and is influenced by both the operations of the
properties and the capital structure of the Company. FFO is defined by
the National Association of Real Estate Investment Trusts ("NAREIT") as
net income (computed in accordance with generally accepted accounting
principles ["GAAP"]), before allocation to minority interests, excluding
gains (or losses) from sales of property, plus real estate depreciation.
The Company computes FFO in accordance with the NAREIT definition, which
may differ from the methodology for calculating FFO utilized by other
equity REITs and, accordingly, may not be comparable to such other REITs'
computations. Funds Available for Distribution ("FAD") is defined as FFO
less non-revenue producing capital expenditures and amortization payments
on mortgage loan principal. The Company believes that FFO and FAD are
useful to investors as a measure of the performance of an equity REIT
because, along with cash flows from operating activities, financing
activities and investing activities, they provide investors an
understanding of the ability of the Company to incur and service debt and
to make capital expenditures. FFO and FAD in and of themselves do not
represent cash generated from operating activities in accordance with GAAP
and therefore should not be considered an alternative to net income as an
indication of the Company's performance or to net cash flows from
operating activities as determined by GAAP as a measure of liquidity and
are not necessarily indicative of cash available to fund cash needs.
SOURCE Manufactured Home Communities, Inc.