MHC Reports Second Quarter Results; Announces Pending Acquisitions and Joint Venture Restructuring
CHICAGO, July 23 /PRNewswire-FirstCall/ -- Manufactured Home Communities, Inc. (NYSE: MHC) today announced results for the quarter and six months ended June 30, 2002.
For the second quarter of 2002, Funds From Operations (FFO) were $17.1 million or $.62 per share on a fully diluted basis compared to $16.3 million or $.61 per fully diluted share in the same period in 2001. Second quarter property operating revenues were $53.8 million compared to $52.0 million in the second quarter of 2001. For the second quarter of 2002, average occupancy was 93.1 percent and average monthly base rent per site for the Core Portfolio was $401.51, up 5.1 percent from $381.87 in the same period last year.
For the six months ended June 30, 2002, FFO were $35.0 million or $1.27 per share on a fully diluted basis compared to $32.8 million or $1.22 per fully diluted share in the same period in 2001. Property operating revenues for the six months ended June 30, 2002 were $108.9 million compared to $105.8 million for the same period of 2001. Average occupancy was 93.6 percent and average monthly base rent per site for the Core Portfolio was $400.19, up 5.1 percent from $380.78 in the same period last year.
In addition, MHC announced pending contracts for the purchase of nine age-qualified communities from Diversified Investments, LLC (Diversified) for approximately $89 million. Seven communities are located in Florida and two in Arizona and consist of 1,735 manufactured home sites and 1,632 recreational vehicle sites. As part of the purchase, MHC will sell Diversified a 319 site family community in Burnsville, Minnesota for approximately $14 million. The closing of the transactions are expected to be completed by January 31, 2003.
MHC has also entered into an agreement with RHP Investments, LLC to restructure MHC's interest in the College Heights joint venture. Under the agreement MHC will 1) assume sole ownership of a 361 site age-qualified community in Clearwater, Florida; 2) receive approximately $6.8 million in cash; 3) relinquish its general partner interest in the joint venture; and 4) maintain a preferred interest in the joint venture of approximately $10 million. The restructuring transaction is expected to close in the third quarter 2002 and will be accounted for as a sale of 17 properties with the College Heights venture retaining $57.6 million of outstanding property debt. These properties have been reclassified as held-for-sale and their results of operations are shown as income from discontinued operations.
In addition, MHC has entered into a contract to purchase Tropic Winds, a 536-site recreational vehicle resort in Harlingen, Texas for approximately $4.8 million. The Tropic Winds purchase is expected to close in the third quarter of 2002.
MHC's management projects that 2002 core property performance will continue to be stable. Through June 30, 2002, FFO per share growth has been approximately 4 percent on an annualized basis. This rate of growth is sustainable subject to several factors, including; 1) the extent of 2002 FFO dilution from the College Heights joint venture restructuring; 2) the impact, amount and timing of the acquisition of properties from Diversified Investments; 3) the variability in home sales due to economic conditions and a shortage of affordable home financing in the manufactured home lending sector; 4) the impact on occupancy from continued weakness in family communities in certain markets; and 5) the impact of stock option exercises and the relatively low return from reinvestment of exercise proceeds.
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 149 quality communities in 23 states consisting of 51,238 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 Data section at
http://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,
2002 2001 2002 2001
(Proforma) (Proforma)
Property Operations:
Base rental income $47,471 $46,012 $95,034 $92,354
RV base rental
income 1,218 635 3,655 2,485
Utility and
other income 5,065 5,335 10,179 10,920
Property operating
revenues 53,754 51,982 108,868 105,759
Property operating
and maintenance 14,911 14,323 29,963 29,224
Real estate taxes 4,395 4,084 8,684 8,341
Property management 2,137 2,141 4,423 4,264
Property operating
expenses 21,443 20,548 43,070 41,829
Income from
property
operations 32,311 31,434 65,798 63,930
Home Sales Operations:
Gross revenues from
inventory
home sales 7,930 8,739 12,659 14,681
Cost of inventory
home sales (5,920) (6,765) (9,655) (11,318)
Gross profit from
inventory
home sales 2,010 1,974 3,004 3,363
Brokered resale
revenues, net 455 510 886 900
Home selling
expenses (2,007) (1,781) (4,127) (4,057)
Ancillary services
revenues, net 112 102 674 777
Income from
home sales
and other 570 805 437 983
Other Income and Expenses:
Interest income 220 302 454 653
Other corporate income 292 461 666 1,138
General and
administrative (2,063) (1,857) (3,943) (3,512)
Operating income
(EBITDA) 31,330 31,145 63,412 63,192
Interest and related
amortization (11,705) (12,097) (23,170) (24,729)
Income from
discontinued
operations 612 361 988 574
Depreciation on
corporate assets (310) (310) (636) (614)
Income allocated to
Preferred
OP Units (2,813) (2,813) (5,626) (5,626)
Funds from
operations
(FFO) $17,114 $16,286 $34,968 $32,797
Depreciation on
real estate
and other costs (9,086) (8,587) (18,057) (17,266)
Gain on sale of
properties
and other -- -- -- 8,093
Income allocated
to Common
OP Units (1,590) (1,564) (3,357) (4,846)
Net Income $6,438 $6,135 $13,554 $18,778
Net income per
Common Share --
Basic $.30 $.29 $.63 $.90
Net income
per Common Share --
Fully Diluted $.29 $.29 $.61 $.88
FFO per Common Share --
Basic $.63 $.61 $1.30 $1.24
FFO per Common Share --
Fully Diluted $.62 $.61 $1.27 $1.22
Average Common Shares --
Basic 21,563 20,969 21,498 20,881
Average Common Shares
and OP Units --
Basic 26,980 26,540 26,919 26,375
Average Common Shares
and OP Units --
Fully Diluted 27,664 26,898 27,587 26,835
Funds From Operations:
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.
The proforma amounts shown for the quarter and six months ended June 30,
2001 have no effect on previously reported FFO or Net Income. The 2001
amounts have been reclassified to conform to the 2002 financial presentation
for comparison purposes.
Manufactured Home Communities, Inc.
(Unaudited)
As Of As Of
Selected Balance Sheet Data: June 30, December 31,
2002 2001
(amounts in (amounts in
000's) 000's)
Total real estate, net $1,036,089 $1,026,260
Cash and cash equivalents $10,383 $1,354
Total assets $1,128,311 $1,099,963
Mortgage notes payable $587,063 $590,371
Unsecured debt $146,727 $118,486
Total liabilities $784,420 $753,666
Minority interest $170,075 $171,147
Total shareholder's equity $173,816 $175,150
As Of As Of
June 30, December 31,
Total Shares and OP Units Outstanding: 2002 2001
Total Common Shares Outstanding 21,890,879 21,562,343
Total Common OP Units Outstanding 5,415,046 5,426,374
As Of As Of
June 30, December 31,
Site Totals: 2002 2001
Manufactured Home Sites Owned and Operated 42,550 42,523
Manufactured Home Sites in Joint Ventures 1,521 1,521
Total RV Sites 3,947 3,497
Total Sites -- Continuing Operations 48,018 47,541
Manufactured Home Sites -- Discontinued
Operations 3,220 3,220
Total Sites 51,238 50,761
Manufactured Home Site
and Quarters Ended Six Months Ended
Occupancy Averages: June 30, June 30, June 30, June 30,
2002 2001 2002 2001
Total Sites 42,550 43,077 42,493 43,242
Occupied Sites 39,612 40,642 39,786 40,941
Occupancy % 93.1% 94.3% 93.6% 94.7%
Monthly Base Rent
Per Site $399.47 $377.38 $398.10 $375.96
Core* Monthly Base Rent
Per Site $401.51 $381.87 $400.19 $380.78
(*) Represents rent per site for properties owned in both periods of
comparison
All numbers exclude site and occupancy information for the properties
classified as held-for-sale.
Quarters Ended Six Months Ended
June 30, June 30, June 30, June 30,
Home Sales: 2002 2001 2002 2001
New Home Sales Volume 104 119 161 197
New Home Sales Gross
Revenues $7,420 $7,762 $11,729 $13,026
Used Home Sales Volume 41 80 78 138
Used Home Sales Gross
Revenues $510 $977 $927 $1,654
Brokered Home Resale
Volume 311 326 542 596
Brokered Home Resale
Gross Revenues $455 $510 $886 $899
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SOURCE Manufactured Home Communities, Inc.
Web site: http: //www.mhchomes.com
CONTACT: Marty McKenna of Manufactured Home Communities, Inc., +1-312-928-1901