================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
OCTOBER 21, 2003
(Date of Report)
MANUFACTURED HOME COMMUNITIES, INC.
(Exact name of registrant as specified in its Charter)
1-11718
(Commission File No.)
MARYLAND 36-3857664
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
TWO NORTH RIVERSIDE PLAZA, CHICAGO, ILLINOIS 60606
(Address of principal executive offices) (Zip Code)
(312) 279-1400
(Registrant's telephone number, including area code)
================================================================================
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
The information contained in the attached exhibit is unaudited and
should be read in conjunction with the Registrant's annual and quarterly reports
filed with the Securities and Exchange Commission.
Exhibit 99.1 Manufactured Home Communities, Inc. press release dated
October 21, 2003 "MHC Reports Third Quarter Results".
ITEM 9. REGULATION FD DISCLOSURE
On October 21, 2003, Manufactured Home Communities, Inc. issued a press
release announcing its results of operations for the quarter and nine months
ended September 30, 2003. This information is furnished as Exhibit 99.1 pursuant
to Item 12. Disclosure of Results of Operations and Financial Condition, under
Item 9 of Form 8-K in accordance with interim guidance provided by the
Securities and Exchange Commission in Release No. 33-8216 issued March 27, 2003.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
MANUFACTURED HOME COMMUNITIES, INC.
BY: /s/ Michael Berman
---------------------------------
Michael Berman
Vice President and Chief Financial
Officer
BY: /s/ Mark Howell
---------------------------------
Mark Howell
Principal Accounting Officer and
Assistant Treasurer
DATE: October 21, 2003
EXHIBIT 99.1
CONTACT: Michael Berman FOR IMMEDIATE RELEASE
(312) 279-1496 October 21, 2003
MHC REPORTS THIRD QUARTER RESULTS
PORTFOLIO CONTINUES STRONG PERFORMANCE
CHICAGO, IL -- OCTOBER 21, 2003-- Manufactured Home Communities, Inc.
(NYSE: MHC) today announced results for the quarter and nine months ended
September 30, 2003.
For the third quarter of 2003, Funds From Operations (FFO) were $15.9
million or $.56 per share on a fully diluted basis compared to $16.0 million or
$.58 per fully diluted share in the same period in 2002. Third quarter property
operating revenues were $56.3 million compared to $55.4 million in the third
quarter of 2002. For the third quarter of 2003, average occupancy was 90.9
percent and average monthly base rent per site for the Core Portfolio was
$422.91, up 5.0 percent from $402.69 in the same period last year.
For the nine months ended September 30, 2003, FFO were $51.2 million or
$1.83 per share on a fully diluted basis compared to $51.0 million or $1.85 per
fully diluted share in the same period in 2002. Property operating revenues for
the nine months ended September 30, 2003 were $171.1 million compared to $167.6
million for the same period of 2002. For the nine months ended September 30,
2003, average occupancy was 91.5 percent and average monthly base rent per site
for the Core Portfolio was $420.17, up 5.1 percent from $399.64 in the same
period last year.
MHC's management projects continued growth in 2003 Core Portfolio
performance. Through September 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.
MHC's President Thomas P. Heneghan commented, "Our Core Portfolio
continues to perform well and we expect this performance to continue in 2004."
UPDATE ON THE RECAPITALIZATION
On October 17, 2003, MHC closed 51 mortgage loans providing total
proceeds of approximately $501 million at a weighted average interest rate 5.84%
with a weighted average maturity of almost 9 years. Commented MHC's CEO Howard
Walker, "We were extremely pleased with the execution of this first step in the
previously announced recapitalization plan. Our ability to have moved quickly
through this process is a result of our long standing relationships with the
participating capital providers and their understanding of the quality of MHC's
assets."
A portion of the proceeds was used to repay the Company's line of
credit and term loan totaling approximately $170 million. At this time it is
unlikely that MHC will redeem the $125 million of Series D Cumulative Perpetual
Preferred Units before their call date in September 2004.
Decisions with respect to the use of the remaining proceeds have not
yet been made; however, at the current time, management's recommendations are
that a large portion of the remaining proceeds be used for a special dividend.
Any special dividend or future dividend paid by the Company is subject to future
consideration and declaration by the Company's Board of Directors. In addition,
the Company currently has authorization for repurchase of up to three million
shares under the Company's stock repurchase plan.
Although the Company has not completed all steps of the
recapitalization, management expects FFO for the fourth quarter of 2003 to be
reduced by $.35 to $.40 per share as a result of one-time and ongoing costs
associated with the completion of the recapitalization.
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; and 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.
###
TABLES FOLLOW
MANUFACTURED HOME COMMUNITIES, INC.
SELECTED FINANCIAL DATA
(UNAUDITED)
(AMOUNTS IN THOUSANDS EXCEPT FOR PER SHARE DATA)
QUARTERS ENDED NINE MONTHS ENDED
SEPT. 30, SEPT. 30, SEPT. 30, SEPT. 30,
2003 2002 2003 2002
-------------- ------------ -------------- ------------
PROPERTY OPERATIONS:
Community base rental income........................ $ 49,203 $ 48,858 $ 147,675 $ 147,064
Resort base rental income........................... 2,144 1,770 8,076 5,425
Utility and other income............................ 4,904 4,737 15,327 15,150
-------------- ------------ -------------- ------------
Property operating revenues...................... 56,251 55,365 171,078 167,639
Property operating and maintenance.................. 16,283 15,860 48,828 47,062
Real estate taxes................................... 4,577 4,321 13,960 13,354
Property management................................. 2,364 2,329 6,992 7,003
-------------- ------------ -------------- ------------
Property operating expenses...................... 23,224 22,510 69,780 67,419
-------------- ------------ -------------- ------------
Income from property operations.................. 33,027 32,855 101,298 100,220
HOME SALES OPERATIONS:
Gross revenues from inventory home sales............ 11,399 9,120 25,058 21,775
Cost of inventory home sales........................ (10,115) (7,404) (21,741) (17,059)
-------------- ------------ -------------- ------------
Gross profit from inventory home sales........... 1,284 1,716 3,317 4,716
Brokered resale revenues, net....................... 491 348 1,321 1,234
Home selling expenses............................... (1,971) (1,934) (5,669) (6,061)
Ancillary services revenues, net.................... (125) (62) 244 604
-------------- ------------ -------------- ------------
Income from home sales and other................. (321) 68 (787) 493
OTHER INCOME AND EXPENSES:
Interest income..................................... 254 239 760 723
Other corporate income.............................. 490 213 1,629 878
General and administrative.......................... (2,027) (1,972) (5,959) (5,915)
-------------- ------------ -------------- ------------
Operating income (EBITDA)........................ 31,423 31,403 96,941 96,399
Interest and related amortization................... (12,408) (13,119) (37,452) (38,393)
Income from discontinued operations................. 10 873 1,042 2,381
Depreciation on corporate assets.................... (310) (320) (930) (956)
Income allocated to Preferred OP Units.............. (2,813) (2,813) (8,439) (8,439)
-------------- ------------ -------------- ------------
FUNDS FROM OPERATIONS (FFO)...................... $ 15,902 $ 16,024 $ 51,162 $ 50,992
Depreciation on real estate and other costs......... (9,446) (8,937) (27,537) (26,994)
Gain on sale of properties.......................... --- 1,270 10,197 1,270
Income allocated to Common OP Units................. (1,248) (1,645) (6,539) (5,007)
-------------- ------------ -------------- ------------
NET INCOME....................................... $ 5,208 $ 6,712 $ 27,283 $ 20,261
============== ============ ============== ============
NET INCOME PER COMMON SHARE -- BASIC.................. $ .24 $ .31 $ 1.24 $ .94
NET INCOME PER COMMON SHARE -- FULLY DILUTED.......... $ .23 $ .30 $ 1.21 $ .91
-------------- ------------ -------------- ------------
FFO PER COMMON SHARE -- BASIC......................... $ .58 $ .59 $ 1.87 $ 1.89
FFO PER COMMON SHARE -- FULLY DILUTED................. $ .56 $ .58 $ 1.83 $ 1.85
-------------- ------------ -------------- ------------
Average Common Shares -- Basic........................ 22,114 21,676 22,020 21,558
Average Common Shares and OP Units -- Basic........... 27,458 27,076 27,369 26,972
Average Common Shares and OP Units -- Fully Diluted... 28,148 27,693 27,952 27,622
-------------- ------------ -------------- ------------
MANUFACTURED HOME COMMUNITIES, INC.
(UNAUDITED)
SELECTED BALANCE SHEET DATA: AS OF AS OF
SEPT. 30, DECEMBER 31,
2003 2002
------------------ ------------------
(amounts in (amounts in
000's) 000's)
Total real estate, net......................... $ 1,028,660 $ 1,057,909
Cash and cash equivalents...................... $ 17,981 $ 7,270
Total assets................................... $ 1,147,967 $ 1,162,850
Mortgage notes payable......................... $ 578,483 $ 575,370
Unsecured debt................................. $ 158,613 $ 184,863
Total liabilities.............................. $ 797,647 $ 816,730
Minority interest.............................. $ 168,671 $ 168,501
Total shareholder's equity..................... $ 181,649 $ 177,619
TOTAL SHARES AND OP UNITS OUTSTANDING: AS OF AS OF
SEPT. 30, DECEMBER 31,
2003 2002
------------------ ------------------
Total Common Shares Outstanding............... 22,415,165 22,093,240
Total Common OP Units Outstanding............. 5,343,812 5,359,927
MANUFACTURED HOME ("COMMUNITY") AND AS OF AS OF
PARK MODEL / RECREATIONAL VEHICLE ("RESORT") SEPT. 30, DECEMBER 31,
SITE TOTALS: 2003 2002
------------------ ------------------
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 AND QUARTERS ENDED NINE MONTHS ENDED
OCCUPANCY AVERAGES: SEPT. 30, SEPT. 30, SEPT. 30, SEPT. 30,
2003 2002 2003 2002
------------ ----------- ------------ -----------
Total Sites................................... 43,131 42,259 43,131 43,919
Occupied Sites................................ 39,213 39,086 39,478 40,817
Occupancy %................................... 90.9% 92.5% 91.5% 92.9%
Monthly Base Rent Per Site.................... $ 418.25 $ 400.16 $ 415.63 $ 395.06
Core* Monthly Base Rent Per Site.............. $ 422.91 $ 402.69 $ 420.17 $ 399.64
(*) Represents rent per site for properties owned in both periods of
comparison.
MANUFACTURED HOME COMMUNITIES, INC.
(UNAUDITED)
HOME SALES: QUARTERS ENDED NINE MONTHS ENDED
SEPT. 30, SEPT. 30, SEPT. 30, SEPT. 30,
2003 2002 2003 2002
------------ ----------- ------------ -----------
New Home Sales Volume......................... 137 112 307 273
New Home Sales Gross Revenues................. $ 10,394 $ 8,328 $ 22,654 $ 20,056
Used Home Sales Volume........................ 53 48 142 126
Used Home Sales Gross Revenues................ $ 1,005 $ 792 $ 2,404 $ 1,719
Brokered Home Resale Volume................... 287 216 829 759
Brokered Home Resale Revenues, net............ $ 491 $ 348 $ 1,321 $ 1,234
FUNDS AVAILABLE FOR DISTRIBUTION (FAD): QUARTERS ENDED NINE MONTHS ENDED
SEPT. 30, SEPT. 30, SEPT. 30, SEPT. 30,
2003 2002 2003 2002
------------ ----------- ------------ -----------
Funds from operations........................... $ 15,902 $ 16,024 $ 51,162 $ 50,992
Non-revenue producing improvements to real
estate................................... (2,493) (4,290) (8,700) (10,058)
------------ ----------- ------------ -----------
Funds available for distribution............. $ 13,409 $ 11,734 $ 42,462 $ 40,934
============ =========== ============ ===========
FAD per Common Share -- Basic...................... $ .49 $ .43 $ 1.55 $ 1.52
FAD per Common Share -- Fully Diluted.............. $ .48 $ .42 $ 1.52 $ 1.48
------------ ----------- ------------ -----------
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 REIT's 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.
