Exhibit 99.2
First Quarter 2006
Supplemental Operating and Financial Data
Affordable Residential Communities
7887 East Belleview Avenue, Suite 200
Englewood, CO 80111
Phone: (866) 847-8931
Fax: (303) 294-0121
www.aboutarc.com
| Table of Contents |
Portfolio Map | 1 |
| |
Press Release Text | 2 |
| |
Financial Data: | |
| Financial Highlights | 5 |
| Balance Sheets | 6 |
| Statements of Operations | 7 |
| Cash Flows | 8 |
| Segment Income / Real Estate Net Segment Income Reconciliation | 9 |
| |
Real Estate Segment | 10 |
Occupancy | 11 |
Operating Results by Occupancy Level | 12 |
Top 20 Markets | 13 |
Asset Highlights | 14 |
Debt Analysis | 15 |
Investor Inquiries | 16 |
| Portfolio Map |
| Homesites owned as of March 31, 2006 |
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| Press Release Text |
AFFORDABLE RESIDENTIAL COMMUNITIES ANNOUNCES
FIRST QUARTER 2006 RESULTS
DENVER, CO — (BUSINESS WIRE) — Monday, May 8, 2006 — Affordable Residential Communities Inc. (NYSE:ARC) today announced results for the first quarter ended March 31, 2006.
First Quarter Operating Results
Consolidated gross revenue for the first quarter of 2006 increased 2.5% to $60.6 million, compared to $59.2 million in the first quarter of 2005, and was approximately equal to the fourth quarter ended December 31, 2005. Net loss to common shareholders for the first quarter of 2006 was ($3.9) million, or ($0.10) per share, compared to a net loss of ($15.9) million, or ($0.39) per share, in the first quarter of 2005 and a net loss of ($33.8) million, or ($0.83) per share, in the fourth quarter of 2005. Net loss in the first quarter of 2006 includes gains on sales of discontinued operations of $10.3 million, or $0.25 per share, associated with community sales contracts closed during the quarter as discussed below. Net loss in the fourth quarter of 2005 includes a goodwill impairment charge, a retail and real estate impairment adjustment and discontinued operations impairment charge in an aggregate amount of $6.4 million. On
March 30, 2006, the Company elected not to be taxed as a REIT for the year ending December 31, 2006, as previously announced.
Net loss from continuing operations in the first quarter of 2006 was $12.7 million as compared to $26.9 million in the fourth quarter of 2005, reflecting increased net segment income, reduced property management and general and administrative expenses, reduced depreciation and amortization expense, reduced interest expense and reduced impairment charges.
Net segment income was $34.6 million in the first quarter of 2006, as compared to $27.7 million in the fourth quarter of 2005, reflecting increased community net segment income and reduced retail net segment loss. Community net segment income increased to $35.8 million the first quarter of 2006 from $31.3 million in the fourth quarter of 2005 as a result of an increase in average rental rates applicable to both homeowners and renters, partially offset by lower average resident occupancy. In addition, community net segment income in the first quarter of 2006 reflects reduced operating expenses primarily resulting from reduced repairs and maintenance expense.
Retail net segment loss was $0.8 million in the first quarter of 2006, as compared to $3.2 million in the fourth quarter of 2005, reflecting lower operating expenses and increased gross margins on homes sold partially offset by lower volume of homes sold. In the fourth quarter of 2005, as previously announced, the Company restructured its marketing programs, reducing its retail operating expenses primarily as a result of the elimination of approximately 150 sales management and administration positions.
Net occupancy decreased by 4 residents during the first quarter of 2006 to overall occupancy of 83.7% compared with a net occupancy decrease of 769 residents in the fourth quarter of 2005 and a net occupancy increase of 290 residents in the first quarter of 2005. The Company experienced lower home sales transactions as compared with both periods, but higher rental home move-ins as compared with both periods.
General and administrative and property management expenses were $4.4 million and $1.6 million, respectively, in the first quarter of 2006 as compared to $8.4 million and $1.8 million in the fourth quarter of 2005, respectively, reflecting costs incurred in the fourth quarter of 2005 for severance of two
2
former senior officers of the Company and completion of the Company’s internal control evaluation as required by the Sarbanes-Oxley Act.
Interest expense was $19.8 million in the first quarter of 2006, as compared to $20.4 million in the fourth quarter of 2005 reflecting, primarily, the repayment of mortgage debt from net proceeds of the community sales, as discussed below.
Depreciation expense was $21.7 million in the first quarter of 2006, as compared to $23.3 million in the fourth quarter of 2005 reflecting additional charges in the fourth quarter of 2005 for the re-continuance of 41 communities in the fourth quarter of 2005 previously discontinued and the placement of substantial fixed assets into service in the fourth quarter of 2005.
With respect to other charges, the first quarter of 2006 reflects a loss of $0.5 million related to the sale of a Company aircraft. The fourth quarter of 2005 reflects a goodwill impairment charge of $4.0 million and a reduction of a community impairment charge of $1.3 million related to the re-continuance of 41 communities previously discontinued.
Community Sales Results
As previously announced, through May 8, 2006, the Company has closed on the sales of 28 communities, resulting in $38.1 million of cash proceeds net of related debt, defeasance and other closing costs totaling $34.4 million. The Company expects to close the sale of an additional ten communities during the calendar year 2006. However, there can be no assurance that the Company will realize net cash proceeds from the sales of any of these communities or that sales under contract will ultimately close.
For the first quarter of 2006, the Company recorded gains of $10.3 million on the sales of the above-mentioned community closings. In the fourth quarter of 2005, the Company recorded a charge of $3.7 million in addition to a charge of $6.5 million recorded in the third quarter of 2005 for the discontinued communities in which the Company expected to incur a loss. For the discontinued communities in which the Company expects a gain, the Company is recording such gains only when the sales close. The Company continues to market an additional eight communities in private party transactions or through brokers. There can be no assurances that any or all of these remaining transactions will close, or that, if they do close, that any gains will be recognized with respect to any such transactions.
Balance Sheet and Liquidity
At March 31, 2006, the Company had $31.3 million in cash and cash equivalents and approximately $34.2 million of additional borrowing capacity available under its lease receivables line of credit. The Company has also obtained $38.1 million of net proceeds from the 28 properties sold at auction which have closed through May 8, 2006, and anticipates receiving additional proceeds during the year 2006 from the sale of the additional ten communities. The Company used a substantial portion of these net proceeds to repay mortgage and floorplan indebtedness. The Company can make no assurance that all or any of these sales will close as anticipated.
In the aggregate at March 31, 2006, the Company had approximately $1.1 billion in outstanding debt related to continuing operations as well as approximately $30.2 million related to communities held for sale. The weighted average interest rate on the Company’s aggregate outstanding debt related to continuing operations was 7.05% at March 31, 2006. Approximately $895 million of the Company’s outstanding debt is payable in 2008 or later. The amount of fixed rate loans amounted to $805.3 million, which was approximately 72% of total loans outstanding.
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First Quarter 2006 Conference Call
The Company will host a conference call, today, Monday, May 8, 2006, at 5:00 P.M. Eastern time. The call will be webcast live over the Internet from the Company’s website at www.aboutarc.com under the section titled “Webcast”. Participants should follow the instructions provided on the website for the download and installation of audio applications necessary to join the webcast. The call also can be accessed live over the phone by dialing (800) 817-4887 or (913) 981-4913 for international callers.
A replay will be available at approximately 8:00 P.M. Eastern time after the call and can be accessed by dialing 1-888-203-1112 or
1-719-457-0820 for international callers; the password is 4566915. The replay will be available from May 8, 2006 through May 15, 2006, and also will be archived on ARC’s website.
About Affordable Residential Communities Inc.
Affordable Residential Communities Inc. (“ARC”), excluding discontinued operations, currently owns and operates approximately 57,600 homesites located in 278 communities in 24 states. ARC is focused on the acquisition, renovation, repositioning and operation of primarily all-age manufactured home communities with headquarters in Englewood, CO.
CONTACTS
Affordable Residential Communities Inc.
Lawrence Kreider, Chief Financial Officer
(866) 847-8931
investor.relations@aboutarc.com
or
Integrated Corporate Relations, Inc.
Brad Cohen, (203) 682-8211
Forward-Looking Statements
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements contained in this news release are subject to certain risks and uncertainties including, but not limited to, statements about the Company’s plans, objectives, expectations and intentions and other statements that are not historical facts. Actual results may differ materially from those set forth in the forward-looking statements. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: general risks affecting the real estate industry; the Company’s ability to maintain or increase rental rates and occupancy with respect to properties currently owned; the Company’s assumptions on rental home and home sales and financing activity; completion of pending acquisitions and sales, if any, and terms of and timing with respect thereto; the Company’s growth and expansion into new markets or successful integration of acquisitions; and the effect of interest rates. Additional factors that could cause the Company’s results to differ materially from those described in the forward-looking statements can be found in the Company’s 2005 Annual Report on Form 10-K (included under the heading “Forward-Looking Statements”), and in the Company’s Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission (“SEC”) and available at the SEC’s internet site (http://www.sec.gov). The forward-looking statements contained in this news release speak only as of the date of the release, and the Company assumes no obligation to update the forward-looking statements or update the reasons why actual results could differ from those contained in the forward-looking statements.
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| Financial Highlights |
| | Three Months Ended | |
($ in thousands, except per share data) | | 03/31/06 | | 12/31/05 | | 9/30/05 | | 06/30/05 | | 03/31/05 | |
Operating Data | | | | | | | | | | | |
Revenue | | | | | | | | | | | |
Real estate | | $ | 57,559 | | $ | 55,350 | | $ | 54,192 | | $ | 51,974 | | $ | 51,511 | |
Retail home sales | | 2,687 | | 4,859 | | 10,852 | | 16,434 | | 7,526 | |
Finance and insurance | | 389 | | 430 | | 977 | | 414 | | 137 | |
Total revenue | | $ | 60,635 | | $ | 60,639 | | $ | 66,021 | | $ | 68,822 | | $ | 59,174 | |
| | | | | | | | | | | |
Avg. monthly rental income per occupied homesite | | $ | 354 | | $ | 341 | | $ | 332 | | $ | 326 | | $ | 325 | |
Avg. monthly homeowner rental income per homeowner occupied homesite | | $ | 306 | | $ | 290 | | $ | 284 | | $ | 285 | | $ | 283 | |
Avg. monthly home renter income per occupied rental home | | $ | 603 | | $ | 605 | | $ | 591 | | $ | 581 | | $ | 623 | |
Average occupied homesites | | 48,207 | | 48,703 | | 49,008 | | 48,188 | | 47,791 | |
| | | | | | | | | | | |
Net segment income | | | | | | | | | | | |
Real estate | | $ | 35,812 | | $ | 31,320 | | $ | 29,568 | | $ | 29,648 | | $ | 29,115 | |
Retail home sales | | (834 | ) | (3,210 | ) | (4,720 | ) | (846 | ) | (2,856 | ) |
Finance and insurance | | (358 | ) | (392 | ) | (833 | ) | (712 | ) | (291 | ) |
Total net segment income | | $ | 34,620 | | $ | 27,718 | | $ | 24,015 | | $ | 28,090 | | $ | 25,968 | |
| | | | | | | | | | | |
Net income (loss) | | | | | | | | | | | |
Continuing operations | | $ | (15,263 | ) | $ | (29,509 | ) | $ | (120,469 | ) | $ | (18,585 | ) | $ | (15,941 | ) |
Discontinued operations | | 11,316 | | (4,282 | ) | (6,460 | ) | 392 | | 69 | |
Net income (loss) to common stockholders | | $ | (3,947 | ) | $ | (33,791 | ) | $ | (126,929 | ) | $ | (18,193 | ) | $ | (15,872 | ) |
| | | | | | | | | | | |
Diluted earnings per share | | | | | | | | | | | |
Continuing operations | | $ | (0.37 | ) | $ | (0.72 | ) | $ | (2.95 | ) | $ | (0.45 | ) | $ | (0.39 | ) |
Discontinued operations | | 0.27 | | (0.11 | ) | (0.15 | ) | — | | — | |
Net income (loss) to common stockholders | | $ | (0.10 | ) | $ | (0.83 | ) | $ | (3.10 | ) | $ | (0.45 | ) | $ | (0.39 | ) |
| | | | | | | | | | | |
Distributions | | | | | | | | | | | |
Common stock and operating partnership units | | $ | — | | $ | — | | $ | — | | $ | 0.1875 | | $ | 0.3125 | |
Preferred stock | | $ | 0.5156 | | $ | 0.5156 | | $ | 0.5156 | | $ | 0.5156 | | $ | 0.5156 | |
| | | | | | | | | | | |
Cash Flows | | | | | | | | | | | |
Operating | | $ | 3,939 | | $ | 6,734 | | $ | (688 | ) | $ | (5,608 | ) | $ | 6,597 | |
Investing | | 60,857 | | (16,871 | ) | (56,289 | ) | (46,458 | ) | 6,670 | |
Financing | | (61,410 | ) | (8,015 | ) | 86,566 | | 28,155 | | (5,726 | ) |
Increase (decrease) in cash | | $ | 3,386 | | $ | (18,152 | ) | $ | 29,589 | | $ | (23,911 | ) | $ | 7,541 | |
| | | | | | | | | | | |
Share Detail | | | | | | | | | | | |
Weighted average number of shares outstanding | | | | | | | | | | | |
Common stock | | 41,179 | | 40,957 | | 40,886 | | 40,877 | | 40,876 | |
Operating partnership units | | 1,616 | | 1,832 | | 2,038 | | 2,398 | | 2,403 | |
Preferred partnership units (common stock equivalent shares) | | 1,680 | | 1,851 | | 1,890 | | 1,883 | | 1,987 | |
Restricted stock | | 11 | | 54 | | 57 | | 38 | | 14 | |
Total weighted average shares outstanding | | 44,486 | | 44,694 | | 44,871 | | 45,196 | | 45,280 | |
| | 03/31/06 | | 12/31/05 | | 9/30/05 | | 06/30/05 | | 03/31/05 | |
Balance Sheet Data | | | | | | | | | | | |
Total assets | | $ | 1,658,843 | | $ | 1,728,481 | | $ | 1,769,472 | | $ | 1,804,786 | | $ | 1,791,285 | |
Total debt | | $ | 1,112,900 | | $ | 1,152,998 | | $ | 1,155,116 | | $ | 1,039,673 | | $ | 989,177 | |
| | | | | | | | | | | |
Market Value | | | | | | | | | | | |
Common equity | | $ | 433,534 | | $ | 390,458 | | $ | 414,678 | | $ | 546,759 | | $ | 517,078 | |
Preferred equity | | 109,550 | | 97,000 | | 104,250 | | 128,250 | | 125,500 | |
OP units | | 15,929 | | 17,449 | | 18,623 | | 30,190 | | 30,334 | |
Preferred partnership units | | 17,642 | | 17,642 | | 17,642 | | 25,142 | | 25,142 | |
Total market value of equity including minority interest | | $ | 576,655 | | $ | 522,549 | | $ | 555,193 | | $ | 730,342 | | $ | 698,055 | |
Debt / total assets | | 67.1 | % | 66.7 | % | 65.3 | % | 57.6 | % | 55.2 | % |
Debt / total market capitalization | | 65.9 | % | 68.8 | % | 67.5 | % | 58.7 | % | 58.6 | % |
| | | | | | | | | | | |
Other Data | | | | | | | | | | | |
Total properties | | 278 | | 278 | | 278 | | 278 | | 278 | |
Total homesites | | 57,699 | | 57,578 | | 57,562 | | 57,760 | | 58,392 | |
Occupied homesites | | 48,316 | | 48,320 | | 49,089 | | 48,738 | | 47,952 | |
Occupancy percentage – total portfolio | | 83.7 | % | 83.9 | % | 85.3 | % | 84.4 | % | 82.1 | % |
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| Balance Sheets |
($ in thousands) | | 03/31/06 | | 12/31/05 | | 09/30/05 | | 06/30/05 | | 03/31/05 | |
Assets | | | | | | | | | | | |
Rental property | | | | | | | | | | | |
Land | | $ | 195,722 | | $ | 195,772 | | $ | 195,738 | | $ | 195,738 | | $ | 195,738 | |
Land improvements and buildings | | 1,198,579 | | 1,198,907 | | 1,197,899 | | 1,209,816 | | 1,194,623 | |
Manufactured homes and improvements | | 261,970 | | 261,546 | | 250,999 | | 222,359 | | 192,629 | |
Furniture, equipment and vehicles | | 13,011 | | 16,102 | | 14,406 | | 13,928 | | 13,331 | |
Rental property, gross | | 1,669,282 | | 1,672,327 | | 1,659,042 | | 1,641,841 | | 1,596,321 | |
Accumulated depreciation | | | | | | | | | | | |
On improvements to land and buildings | | (174,791 | ) | (164,849 | ) | (154,778 | ) | (142,140 | ) | (128,759 | ) |
On rental homes and improvements | | (43,641 | ) | (37,085 | ) | (29,500 | ) | (26,345 | ) | (25,605 | ) |
On furniture, equipment and vehicles | | (6,466 | ) | (7,302 | ) | (6,521 | ) | (5,983 | ) | (5,470 | ) |
Total accumulated depreciation | | (224,898 | ) | (209,236 | ) | (190,799 | ) | (174,468 | ) | (159,834 | ) |
Rental property, net | | 1,444,384 | | 1,463,091 | | 1,468,243 | | 1,467,373 | | 1,436,487 | |
| | | | | | | | | | | |
Assets held for sale | | 68,905 | | 122,285 | | 125,478 | | 131,955 | | 135,905 | |
Cash and cash equivalents | | 31,312 | | 27,926 | | 46,078 | | 16,489 | | 40,400 | |
Restricted cash | | 6,702 | | 7,022 | | 3,419 | | 3,712 | | 7,330 | |
Tenant and other receivables, net | | 3,369 | | 3,945 | | 6,413 | | 8,664 | | 4,403 | |
Notes receivable, net | | 33,622 | | 33,418 | | 31,501 | | 23,199 | | 14,009 | |
Inventory | | 13 | | 50 | | 125 | | 307 | | 4,696 | |
Loan origination costs, net | | 15,444 | | 16,205 | | 16,960 | | 13,777 | | 13,102 | |
Loan reserves | | 35,307 | | 35,088 | | 39,784 | | 35,453 | | 31,756 | |
Goodwill | | — | | — | | 3,990 | | 78,783 | | 78,783 | |
Lease intangibles and customer relationships, net | | 10,667 | | 12,063 | | 13,466 | | 14,868 | | 16,103 | |
Prepaid expenses and other assets | | 9,118 | | 7,388 | | 14,015 | | 10,207 | | 8,311 | |
Total assets | | $ | 1,658,843 | | $ | 1,728,481 | | $ | 1,769,472 | | $ | 1,804,786 | | $ | 1,791,285 | |
| | | | | | | | | | | |
Liabilities and Stockholders’ Equity | | | | | | | | | | | |
Notes payable | | $ | 1,112,900 | | $ | 1,152,998 | | $ | 1,155,116 | | $ | 1,039,673 | | $ | 989,177 | |
Liabilities related to assets held for sale | | 31,124 | | 50,007 | | 53,129 | | 54,112 | | 55,659 | |
Accounts payable and accrued expenses | | 27,451 | | 34,595 | | 33,903 | | 40,303 | | 47,840 | |
Tenant deposits and other liabilities | | 15,996 | | 14,884 | | 15,469 | | 14,037 | | 12,881 | |
Total liabilities | | 1,187,471 | | 1,252,484 | | 1,257,617 | | 1,148,125 | | 1,105,557 | |
| | | | | | | | | | | |
Minority interest | | 29,293 | | 31,902 | | 33,512 | | 51,440 | | 54,918 | |
| | | | | | | | | | | |
Stockholders’ equity | | | | | | | | | | | |
Preferred stock | | 119,108 | | 119,108 | | 119,108 | | 119,108 | | 119,108 | |
Common stock | | 413 | | 410 | | 410 | | 410 | | 409 | |
Paid-in capital | | 793,712 | | 791,201 | | 791,232 | | 790,983 | | 790,390 | |
Accumulated other comprehensive income | | — | | 583 | | 1,008 | | 1,206 | | 1,519 | |
Retained deficit | | (471,154 | ) | (467,207 | ) | (433,415 | ) | (306,486 | ) | (280,616 | ) |
Total stockholders’ equity | | 442,079 | | 444,095 | | 478,343 | | 605,221 | | 630,810 | |
Total liabilities and stockholders’ equity | | $ | 1,658,843 | | $ | 1,728,481 | | $ | 1,769,472 | | $ | 1,804,786 | | $ | 1,791,285 | |
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| Statements of Operations |
| | Three Months Ended | |
($ in thousands; except per share data) | | 03/31/06 | | 12/31/05 | | 09/30/05 | | 06/30/05 | | 03/31/05 | |
| | | | | | | | | | | |
Revenue | | | | | | | | | | | |
Communities | | $ | 57,559 | | $ | 55,350 | | $ | 54,192 | | $ | 51,974 | | $ | 51,511 | |
Retail home sales | | 2,687 | | 4,859 | | 10,852 | | 16,434 | | 7,526 | |
Finance and insurance | | 389 | | 430 | | 977 | | 414 | | 137 | |
Total revenue | | 60,635 | | 60,639 | | 66,021 | | 68,822 | | 59,174 | |
| | | | | | | | | | | |
Operating Expenses | | | | | | | | | | | |
Communities | | 16,569 | | 19,587 | | 20,657 | | 18,227 | | 18,399 | |
Retail home sales | | 3,521 | | 8,069 | | 15,572 | | 17,280 | | 10,382 | |
Finance and insurance | | 747 | | 822 | | 1,810 | | 1,126 | | 428 | |
Real estate taxes | | 5,178 | | 4,443 | | 3,967 | | 4,099 | | 3,997 | |
Property management | | 1,592 | | 1,815 | | 3,030 | | 2,368 | | 2,145 | |
General and administrative | | 4,421 | | 8,417 | | 7,334 | | 6,389 | | 5,494 | |
Total expenses | | 32,028 | | 43,153 | | 52,370 | | 49,489 | | 40,845 | |
| | | | | | | | | | | |
Depreciation and amortization | | 21,704 | | 23,258 | | 19,681 | | 18,840 | | 16,375 | |
Loss on sale of airplane | | 541 | | — | | — | | — | | — | |
Real estate and retail home asset impairment | | — | | (1,336 | ) | 23,158 | | — | | — | |
Goodwill impairment | | — | | 3,990 | | 74,793 | | — | | — | |
Net consumer finance interest expense | | — | | — | | 18 | | 204 | | 446 | |
Interest expense | | 19,754 | | 20,431 | | 19,746 | | 17,197 | | 15,790 | |
Interest income | | (423 | ) | (883 | ) | (743 | ) | (268 | ) | (373 | ) |
Income (loss) before minority interest | | (12,969 | ) | (27,974 | ) | (123,002 | ) | (16,640 | ) | (13,909 | ) |
Minority interest | | 284 | | 1,043 | | 5,111 | | 633 | | 546 | |
Income (loss) from continuing operations | | (12,685 | ) | (26,931 | ) | (117,891 | ) | (16,007 | ) | (13,363 | ) |
Discontinued operations, net | | 11,316 | | (4,282 | ) | (6,460 | ) | 392 | | 69 | |
Income (loss) before preferred stock dividend | | (1,369 | ) | (31,213 | ) | (124,351 | ) | (15,615 | ) | (13,294 | ) |
Preferred stock dividend | | (2,578 | ) | (2,578 | ) | (2,578 | ) | (2,578 | ) | (2,578 | ) |
Income (loss) available to common stockholders | | $ | (3,947 | ) | $ | (33,791 | ) | $ | (126,929 | ) | $ | (18,193 | ) | $ | (15,872 | ) |
| | | | | | | | | | | |
Earnings per share | | | | | | | | | | | |
Basic | | $ | (0.10 | ) | $ | (0.83 | ) | $ | (3.10 | ) | $ | (0.45 | ) | $ | (0.39 | ) |
Diluted | | $ | (0.10 | ) | $ | (0.83 | ) | $ | (3.10 | ) | $ | (0.45 | ) | $ | (0.39 | ) |
| | | | | | | | | | | |
Distributions per share/unit | | | | | | | | | | | |
Common stock/operating partnership units | | $ | — | | $ | — | | $ | — | | $ | 0.1875 | | $ | 0.3125 | |
Preferred stock | | $ | 0.5156 | | $ | 0.5156 | | $ | 0.5156 | | $ | 0.5156 | | $ | 0.5156 | |
| | | | | | | | | | | |
Weighted average shares outstanding | | | | | | | | | | | |
Basic | | 41,179 | | 40,957 | | 40,886 | | 40,877 | | 40,876 | |
Diluted | | 44,486 | | 44,694 | | 44,871 | | 45,196 | | 45,280 | |
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| Statement of Cash Flows |
| | Three Months Ended | |
| | 03/31/06 | | 12/31/05 | | 09/30/05 | | 06/30/05 | | 03/31/05 | |
Cash flow from operating activities | | | | | | | | | | | |
Net loss | | $ | (1,369 | ) | $ | (31,213 | ) | $ | (124,351 | ) | $ | (15,615 | ) | $ | (13,294 | ) |
Adjustments to reconcile net loss to net cash provided by operating activities: | | | | | | | | | | | |
Depreciation and amortization | | 21,704 | | 23,259 | | 19,680 | | 18,840 | | 16,375 | |
Amortization of loan origination costs | | 1,434 | | 1,960 | | 1,875 | | 1,728 | | 1,693 | |
Adjustments to fair value for interest rate caps | | (312 | ) | (2 | ) | (7 | ) | 8 | | 219 | |
Stock grant compensation expense | | 49 | | (25 | ) | 81 | | 312 | | 14 | |
Partnership preferred unit distributions declared | | 276 | | 275 | | 299 | | 393 | | 393 | |
Minority interest in net loss | | (560 | ) | (1,318 | ) | (5,410 | ) | (1,026 | ) | (939 | ) |
Real estate and retail home asset impairment | | — | | (1,336 | ) | 23,158 | | — | | — | |
Goodwill impairment | | — | | 3,990 | | 74,793 | | — | | — | |
Depreciation and minority interest included in income from discontinued operations | | 542 | | (695 | ) | 860 | | 1,648 | | 2,002 | |
(Gain) loss on sale of discontinued operations | | (10,296 | ) | — | | — | | (52 | ) | 730 | |
Loss on sale of airplane | | 541 | | — | | — | | — | | — | |
Impairment charges on assets held for sale | | — | | 3,708 | | 6,546 | | — | | — | |
(Gain) loss on sale of manufactured homes | | (340 | ) | 200 | | (636 | ) | (533 | ) | (99 | ) |
Changes in operating assets and liabilities, net of acquisitions | | (7,730 | ) | 7,931 | | 2,424 | | (11,311 | ) | (497 | ) |
Net cash provided by operating activities | | 3,939 | | 6,734 | | (688 | ) | (5,608 | ) | 6,597 | |
| | | | | | | | | | | |
Cash flow from investing activities | | | | | | | | | | | |
Purchases of manufactured homes | | (1,964 | ) | (14,274 | ) | (38,679 | ) | (56,619 | ) | (11,681 | ) |
Proceeds from community sales | | 60,804 | | — | | — | | 11,343 | | 37,378 | |
Proceeds from manufactured home sales | | 2,561 | | 2,599 | | 3,037 | | 5,774 | | 7,240 | |
Proceeds from sale of airplane | | 1,170 | | — | | — | | — | | — | |
Community improvements and equipment purchases | | (1,815 | ) | (6,304 | ) | (16,387 | ) | (6,246 | ) | (26,359 | ) |
Restricted cash | | 320 | | (3,603 | ) | 293 | | 3,618 | | (9 | ) |
Loan reserves | | (219 | ) | 4,711 | | (4,553 | ) | (4,328 | ) | 101 | |
Net cash provided by investing activities | | 60,857 | | (16,871 | ) | (56,289 | ) | (46,458 | ) | 6,670 | |
| | | | | | | | | | | |
Cash flow from financing activities | | | | | | | | | | | |
Proceeds from issuance of debt | | 23,035 | | 17,688 | | 156,652 | | 91,825 | | 63,658 | |
Repayment of debt | | (80,918 | ) | (21,090 | ) | (47,647 | ) | (42,809 | ) | (51,543 | ) |
Payment of common and OP Unit dividends | | — | | — | | (8,103 | ) | (13,524 | ) | (13,521 | ) |
Payment of preferred dividends | | (2,578 | ) | (2,578 | ) | (2,578 | ) | (2,578 | ) | (2,578 | ) |
Payment of partnership preferred distributions | | (276 | ) | (275 | ) | (299 | ) | (393 | ) | (393 | ) |
Repurchase of OP Units | | — | | (1 | ) | (4,572 | ) | (1,836 | ) | — | |
Repurchase of PPUs | | — | | — | | (2,501 | ) | — | | — | |
Loan origination costs | | (673 | ) | (1,759 | ) | (4,386 | ) | (2,530 | ) | (1,349 | ) |
Net cash used in financing activities | | (61,410 | ) | (8,015 | ) | 86,566 | | 28,155 | | (5,726 | ) |
Net increase in cash and cash equivalents | | 3,386 | | (18,152 | ) | 29,589 | | (23,911 | ) | 7,541 | |
Cash and cash equivalents, beginning of period | | 27,926 | | 46,078 | | 16,489 | | 40,400 | | 32,859 | |
Cash and cash equivalents, end of period | | $ | 31,312 | | $ | 27,926 | | $ | 46,078 | | $ | 16,489 | | $ | 40,400 | |
8
| Segment Income / Real Estate Net Segment Income Reconciliation |
| | Three Months Ended | |
($ in thousands) | | 03/31/06 | | 12/31/05 | | 9/30/05 | | 06/30/05 | | 03/31/05 | |
Revenue | | | | | | | | | | | |
Real estate | | $ | 57,559 | | $ | 55,350 | | $ | 54,192 | | $ | 51,974 | | $ | 51,511 | |
Retail homes sales | | 2,687 | | 4,859 | | 10,852 | | 16,434 | | 7,526 | |
Finance and insurance | | 389 | | 430 | | 977 | | 414 | | 137 | |
Segment revenue | | 60,635 | | 60,639 | | 66,021 | | 68,822 | | 59,174 | |
| | | | | | | | | | | |
Expenses | | | | | | | | | | | |
Property operations | | 16,569 | | 19,587 | | 20,657 | | 18,227 | | 18,399 | |
Real estate taxes | | 5,178 | | 4,443 | | 3,967 | | 4,099 | | 3,997 | |
Retail homes sales | | 3,521 | | 8,069 | | 15,572 | | 17,280 | | 10,382 | |
Finance and insurance | | 747 | | 822 | | 1,810 | | 1,126 | | 428 | |
Segment expenses | | 26,015 | | 32,921 | | 42,006 | | 40,732 | | 33,206 | |
| | | | | | | | | | | |
Net Segment Income | | | | | | | | | | | |
Real estate | | 35,812 | | 31,320 | | 29,568 | | 29,648 | | 29,115 | |
Retail homes sales | | (834 | ) | (3,210 | ) | (4,720 | ) | (846 | ) | (2,856 | ) |
Finance and insurance | | (358 | ) | (392 | ) | (833 | ) | (712 | ) | (291 | ) |
Net segment income | | 34,620 | | 27,718 | | 24,015 | | 28,090 | | 25,968 | |
Other expenses: | | | | | | | | | | | |
Property management | | 1,592 | | 1,815 | | 3,030 | | 2,368 | | 2,145 | |
General and administrative | | 4,421 | | 8,417 | | 7,334 | | 6,389 | | 5,494 | |
Depreciation and amortization | | 21,704 | | 23,258 | | 19,681 | | 18,840 | | 16,375 | |
Loss on sale of airplane | | 541 | | — | | — | | — | | — | |
Retail home sales asset impairment and other exp. | | — | | (1,336 | ) | 23,158 | | — | | — | |
Goodwill impairment | | — | | 3,990 | | 74,793 | | — | | — | |
Net consumer finance interest expense | | — | | — | | 18 | | 204 | | 446 | |
Interest expense | | 19,754 | | 20,431 | | 19,746 | | 17,197 | | 15,790 | |
Total other expenses | | 48,012 | | 56,575 | | 147,760 | | 44,998 | | 40,250 | |
Interest income | | 423 | | 883 | | 743 | | 268 | | 373 | |
Loss before allocation to minority interest | | (12,969 | ) | (27,974 | ) | (123,002 | ) | (16,640 | ) | (13,909 | ) |
Minority interest | | 284 | | 1,043 | | 5,111 | | 633 | | 546 | |
Net loss from continuing operations | | (12,685 | ) | (26,931 | ) | (117,891 | ) | (16,007 | ) | (13,363 | ) |
Income (loss) from discontinued operations | | 1,807 | | (4,473 | ) | (6,751 | ) | 361 | | 803 | |
Gain (loss) on sale of discontinued operations | | 10,296 | | — | | — | | 52 | | (730 | ) |
Income tax on discontinued operations | | (371 | ) | — | | — | | — | | — | |
Minority interest in discontinued operations | | (416 | ) | 191 | | 291 | | (21 | ) | (4 | ) |
Net loss | | (1,369 | ) | (31,213 | ) | (124,351 | ) | (15,615 | ) | (13,294 | ) |
| | | | | | | | | | | |
Preferred stock dividend | | (2,578 | ) | (2,578 | ) | (2,578 | ) | (2,578 | ) | (2,578 | ) |
Net loss available to common stockholders | | $ | (3,947 | ) | $ | (33,791 | ) | $ | (126,929 | ) | $ | (18,193 | ) | $ | (15,872 | ) |
| | | | | | | | | | | |
Results include charges as scheduled below: | | | | | | | | | | | |
Loss on sale of airplane | | $ | 541 | | $ | — | | $ | — | | $ | — | | $ | — | |
Real estate and retail home asset impairment | | — | | (1,336 | ) | 23,158 | | — | | — | |
Goodwill impairment | | — | | 3,990 | | 74,793 | | — | | — | |
Impairment charges included in discontinued operations | | — | | 3,708 | | 6,546 | | — | | — | |
Executive severance charges | | — | | 1,870 | | 1,000 | | — | | — | |
Minority interest portion of above | | (19 | ) | (354 | ) | (4,531 | ) | — | | — | |
Total | | $ | 522 | | $ | 7,878 | | $ | 100,966 | | $ | — | | $ | — | |
9
| Real Estate Segment |
| | 2006 | | 2005 | |
($ in thousands) | | 1st Qtr | | 4th Qtr | | 3rd Qtr | | 2nd Qtr | | 1st Qtr | |
| | | | | | | | | | | |
For the full quarter noted: | | | | | | | | | | | |
Average total homesites | | 57,669 | | 57,569 | | 57,665 | | 58,248 | | 58,408 | |
Average total rental homes | | 9,343 | | 9,200 | | 8,484 | | 7,819 | | 7,595 | |
Average occupied homesites – homeowners | | 40,570 | | 41,074 | | 41,618 | | 41,855 | | 42,142 | |
Average occupied homesites – home renters | | 7,637 | | 7,629 | | 7,390 | | 6,333 | | 5,649 | |
Average occupied homesites – total | | 48,207 | | 48,703 | | 49,008 | | 48,188 | | 47,791 | |
Average occupancy – rental homes | | 81.7 | % | 82.9 | % | 87.1 | % | 81.0 | % | 74.4 | % |
Average occupancy – total | | 83.6 | % | 84.6 | % | 85.0 | % | 82.7 | % | 81.8 | % |
| | | | | | | | | | | |
For the full quarter noted: | | | | | | | | | | | |
Real estate revenue | | | | | | | | | | | |
Homeowner rental income | | $ | 37,189 | | $ | 35,720 | | $ | 35,506 | | $ | 35,798 | | $ | 35,817 | |
Home renter rental income | | 13,825 | | 13,841 | | 13,109 | | 11,047 | | 10,550 | |
Other | | 216 | | 259 | | 243 | | 297 | | 284 | |
Rental income | | 51,230 | | 49,820 | | 48,858 | | 47,142 | | 46,651 | |
Utility and other income | | 6,329 | | 5,530 | | 5,334 | | 4,832 | | 4,860 | |
Total real estate revenue | | 57,559 | | 55,350 | | 54,192 | | 51,974 | | 51,511 | |
| | | | | | | | | | | |
Real estate expenses | | | | | | | | | | | |
Property operations expenses | | 16,569 | | 19,587 | | 20,657 | | 18,227 | | 18,399 | |
Real estate taxes | | 5,178 | | 4,443 | | 3,967 | | 4,099 | | 3,997 | |
Total real estate expenses | | 21,747 | | 24,030 | | 24,624 | | 22,326 | | 22,396 | |
| | | | | | | | | | | |
Real estate net segment income | | $ | 35,812 | | $ | 31,320 | | $ | 29,568 | | $ | 29,648 | | $ | 29,115 | |
| | | | | | | | | | | |
Average monthly rental income per total occupied homesite (a) | | $ | 354 | | $ | 341 | | $ | 332 | | $ | 326 | | $ | 325 | |
Average monthly homeowner rental income per homeowner occupied homesite (b) | | $ | 306 | | $ | 290 | | $ | 284 | | $ | 285 | | $ | 283 | |
Average monthly home renter income per occupied rental home (c) | | $ | 603 | | $ | 605 | | $ | 591 | | $ | 581 | | $ | 623 | |
(a) Average monthly rental income per occupied homesite is defined as total rental income (including homeowner, home renter, and other) divided by average total occupied homesites divided by the number of months in the period.
(b) Average monthly homeowner rental income per homeowner occupied homesite is defined as homeowner rental income divided by average homeowner occupied homesites divided by the number of months in the period.
(c) Average monthly home renter income per occupied rental home is defined as total home renter rental income divided by average occupied rental homes divided by the number of months in the period.
10
| | Occupancy |
| | 2006 | | 2005 | |
($ in thousands) | | 1st Qtr | | 4th Qtr | | 3rd Qtr | | 2nd Qtr | | 1st Qtr | |
At end of quarter: | | | | | | | | | | | |
Total communities owned | | 278 | | 278 | | 278 | | 278 | | 278 | |
Total homesites | | 57,699 | | 57,578 | | 57,562 | | 57,760 | | 58,392 | |
Occupied homesites | | 48,316 | | 48,320 | | 49,089 | | 48,738 | | 47,952 | |
Total rental homes owned | | 9,361 | | 9,328 | | 8,947 | | 8,083 | | 7,665 | |
Occupied rental homes | | 7,970 | | 7,491 | | 7,711 | | 6,958 | | 6,016 | |
| | | | | | | | | | | |
Homeowner activity : | | | | | | | | | | | |
Homeowner move ins | | 255 | | 168 | | 65 | | 136 | | 252 | |
Homeowner move outs | | (552 | ) | (584 | ) | (631 | ) | (742 | ) | (690 | ) |
Home sales | | 132 | | 241 | | 586 | | 903 | | 741 | |
Repossession move outs & other | | (318 | ) | (374 | ) | (422 | ) | (453 | ) | (607 | ) |
Net homeowner activity | | (483 | ) | (549 | ) | (402 | ) | (156 | ) | (304 | ) |
| | | | | | | | | | | |
Home renter activity : | | | | | | | | | | | |
Home renter move ins | | 927 | | 344 | | 416 | | 1,026 | | 838 | |
Home renter lease to own move ins | | 388 | | 432 | | 1,764 | | 1,189 | | 793 | |
Home renter move outs | | (836 | ) | (996 | ) | (1,427 | ) | (1,273 | ) | (1,037 | ) |
Net home renter activity | | 479 | | (220 | ) | 753 | | 942 | | 594 | |
Net activity | | (4 | ) | (769 | ) | 351 | | 786 | | 290 | |
Acquisitions and other- homeowners | | — | | — | | — | | — | | — | |
Acquisitions and other- home renters | | — | | — | | — | | — | | — | |
Net activity, including acquisitions and other | | (4 | ) | (769 | ) | 351 | | 786 | | 290 | |
Net homeowner activity | | (483 | ) | (549 | ) | (402 | ) | (156 | ) | (304 | ) |
Occupied homeowner sites, beginning of period | | 40,829 | | 41,378 | | 41,780 | | 41,936 | | 42,240 | |
Occupied homeowner sites, end of period | | 40,346 | | 40,829 | | 41,378 | | 41,780 | | 41,936 | |
Net home renter activity | | 479 | | (220 | ) | 753 | | 942 | | 594 | |
Occupied home renter sites, beginning of period | | 7,491 | | 7,711 | | 6,958 | | 6,016 | | 5,422 | |
Occupied home renter sites, end of period | | 7,970 | | 7,491 | | 7,711 | | 6,958 | | 6,016 | |
Total occupied homesites, end of period | | 48,316 | | 48,320 | | 49,089 | | 48,738 | | 47,952 | |
Occupancy percentage | | 83.7% | | 83.9 | % | 85.3 | % | 84.4 | % | 82.1 | % |
11
| | Operating Results by Occupancy Level (Last 5 Quarters) |
| | | | | | Q1 2006 | | Q4 2005 | |
Occupancy | | | | Home- | | | | | | Margin | | EoP | | | | | | Margin | | EoP | |
03/31/06 | | Comm. | | sites | | Rev. | | NSI ** | | % | | Occ % | | Rev. | | NSI ** | | % | | Occ % | |
| | | | | | | | | | | | | | | | | | | | | |
Total Real Estate Segment | | | | | | | | | | | | | | | | | | | | | |
90 - 100% | | 122 | | 22,846 | | $ | 26,686 | | $ | 17,569 | | 65.8 | % | 95.5 | % | $ | 25,168 | | $ | 14,676 | | 58.3 | % | 95.0 | % |
80 - 89.9% | | 71 | | 15,786 | | 16,646 | | 10,468 | | 62.9 | % | 85.4 | % | 15,984 | | 8,725 | | 54.6 | % | 85.6 | % |
70 - 79.9% | | 43 | | 10,022 | | 8,141 | | 4,952 | | 60.8 | % | 75.5 | % | 7,991 | | 4,413 | | 55.2 | % | 75.6 | % |
< 70% | | 42 | | 9,045 | | 6,086 | | 2,824 | | 46.4 | % | 60.3 | % | 6,207 | | 3,506 | | 56.5 | % | 62.0 | % |
Total | | 278 | | 57,699 | | $ | 57,559 | | $ | 35,812 | | 62.2 | % | 83.7 | % | $ | 55,350 | | $ | 31,320 | | 56.6 | % | 83.9 | % |
| | | | | | Q1 2006 | | Q4 2005 | |
Occupancy | | | | Home- | | | | | | Margin | | EoP | | | | | | Margin | | EoP | |
03/31/06 | | Comm. | | sites | | Rev. | | NSI ** | | % | | Occ % | | Rev. | | NSI ** | | % | | Occ % | |
| | | | | | | | | | | | | | | | | | | | | |
Total Real Estate Segment | | | | | | | | | | | | | | | | | | | | | |
90 - 100% | | 122 | | 22,846 | | $ | 24,466 | | $ | 15,073 | | 61.6 | % | 95.2 | % | $ | 23,369 | | $ | 14,854 | | 63.6 | % | 94.0 | % |
80 - 89.9% | | 71 | | 15,786 | | 15,384 | | 8,297 | | 53.9 | % | 87.0 | % | 14,814 | | 8,464 | | 57.1 | % | 85.5 | % |
70 - 79.9% | | 43 | | 10,022 | | 8,110 | | 4,046 | | 49.9 | % | 78.1 | % | 7,717 | | 3,937 | | 51.0 | % | 77.7 | % |
< 70% | | 42 | | 9,045 | | 6,232 | | 2,152 | | 34.5 | % | 64.9 | % | 6,074 | | 2,393 | | 39.4 | % | 65.4 | % |
Total | | 278 | | 57,699 | | $ | 54,192 | | $ | 29,568 | | 54.6 | % | 85.3 | % | $ | 51,974 | | $ | 29,648 | | 57.0 | % | 84.4 | % |
| | | | | | Q1 2006 | | Q4 2005 | |
Occupancy | | | | Home- | | | | | | Margin | | EoP | | | | | | Margin | | EoP | |
03/31/06 | | Comm. | | sites | | Rev. | | NSI ** | | % | | Occ % | | Rev. | | NSI ** | | % | | Occ % | |
| | | | | | | | | | | | | | | | | | | | | |
Total Real Estate Segment | | | | | | | | | | | | | | | | | | | | | |
90 - 100% | | 122 | | 22,846 | | $ | 23,298 | | $ | 14,355 | | 61.6 | % | 91.4 | % | $ | 99,689 | | $ | 62,172 | | 62.4 | % | 94.9 | % |
80 - 89.9% | | 71 | | 15,786 | | 14,479 | | 8,331 | | 57.5 | % | 83.2 | % | 62,828 | | 35,954 | | 57.2 | % | 85.9 | % |
70 - 79.9% | | 43 | | 10,022 | | 7,586 | | 3,887 | | 51.2 | % | 75.9 | % | 31,959 | | 17,348 | | 54.3 | % | 76.7 | % |
< 70% | | 42 | | 9,045 | | 6,147 | | 2,542 | | 41.4 | % | 63.9 | % | 24,599 | | 10,875 | | 44.2 | % | 63.2 | % |
Total | | 278 | | 57,699 | | $ | 51,511 | | $ | 29,115 | | 56.5 | % | 82.1 | % | $ | 219,075 | | $ | 126,348 | | 57.7 | % | 84.3 | % |
| | Comm. | | | | | | | | | | | | | | | | | | | |
| | 9 | | Moved from 80-89 bucket to the 90%+ bucket | | | | | | | | | | |
| | 3 | | Moved from 70-79 bucket to the 80-89% bucket | | | | | | | | | | |
| | 5 | | Moved from <70 bucket to the 70-79% bucket | | | | | | | | | | |
| | 0 | | Moved up 2 or more buckets (Ex. 70-79% to 90%+) | | | | | | | | | | |
| | 242 | | Stayed in the same occupancy bucket | | | | | | | | | | |
| | 19 | | Went to lower occupancy bucket | | | | | | | | | | |
| | 278 | | Total | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Notes:
** NSI = Net Segment Income
12
| | Top 20 Markets |
| | | | Percentage | | | | | | | | | | | |
| | Number of | | of | | | |
| | Total | | Total | | Occupancy Percentage | |
Markets (a) | | Homesites | | Homesites | | 03/31/06 | | 12/31/05 | | 09/30/05 | | 06/30/05 | | 03/31/05 | |
Dallas – Ft. Worth, TX | | 7,181 | | 12.4 | % | 80.4 | % | 81.4 | % | 84.2 | % | 82.7 | % | 79.8 | % |
Atlanta, GA | | 4,967 | | 8.6 | % | 89.1 | % | 89.1 | % | 90.0 | % | 89.2 | % | 86.7 | % |
Salt Lake City, UT | | 3,796 | | 6.6 | % | 92.6 | % | 92.2 | % | 93.1 | % | 92.1 | % | 91.1 | % |
Front Range of CO | | 3,290 | | 5.7 | % | 84.0 | % | 84.9 | % | 88.2 | % | 89.1 | % | 87.0 | % |
Kansas City – Lawrence – Topeka, MO – KS | | 2,424 | | 4.2 | % | 87.2 | % | 87.6 | % | 89.6 | % | 89.6 | % | 88.1 | % |
Jacksonville, FL | | 2,258 | | 3.9 | % | 90.7 | % | 89.5 | % | 89.7 | % | 88.2 | % | 86.9 | % |
Wichita, KS | | 2,162 | | 3.7 | % | 64.6 | % | 64.7 | % | 67.5 | % | 66.7 | % | 62.7 | % |
Orlando, FL | | 1,986 | | 3.4 | % | 92.8 | % | 91.4 | % | 91.3 | % | 89.8 | % | 88.5 | % |
St. Louis, MO – IL | | 1,914 | | 3.3 | % | 79.1 | % | 80.3 | % | 80.9 | % | 81.0 | % | 78.7 | % |
Oklahoma City, OK | | 1,891 | | 3.3 | % | 80.1 | % | 78.4 | % | 80.5 | % | 78.5 | % | 77.1 | % |
Greensboro – Winston Salem, NC | | 1,396 | | 2.4 | % | 67.0 | % | 68.5 | % | 69.8 | % | 69.5 | % | 68.2 | % |
Davenport – Moline – Rock Island, IA – IL | | 1,382 | | 2.4 | % | 86.9 | % | 87.0 | % | 87.8 | % | 86.8 | % | 83.9 | % |
Elkhart – Goshen, IN | | 1,209 | | 2.1 | % | 88.5 | % | 86.5 | % | 86.8 | % | 85.6 | % | 82.1 | % |
Charleston – North Charleston, SC | | 1,184 | | 2.1 | % | 83.0 | % | 84.1 | % | 83.7 | % | 81.8 | % | 77.9 | % |
Raleigh – Durham – Chapel Hill, NC | | 1,092 | | 1.9 | % | 90.3 | % | 90.7 | % | 90.1 | % | 85.7 | % | 83.4 | % |
Sioux City, IA – NE | | 994 | | 1.7 | % | 79.6 | % | 79.3 | % | 80.5 | % | 79.8 | % | 78.5 | % |
Syracuse, NY | | 939 | | 1.6 | % | 61.3 | % | 64.9 | % | 67.5 | % | 64.7 | % | 54.2 | % |
Des Moines, IA | | 859 | | 1.5 | % | 88.0 | % | 88.0 | % | 88.5 | % | 86.9 | % | 86.5 | % |
Flint, MI | | 838 | | 1.5 | % | 72.9 | % | 73.0 | % | 73.4 | % | 74.0 | % | 72.4 | % |
Pueblo, CO | | 752 | | 1.3 | % | 67.0 | % | 69.1 | % | 70.5 | % | 70.0 | % | 71.0 | % |
Subtotal – Top 20 Markets | | 42,514 | | 73.7 | % | 83.1 | % | 83.3 | % | 84.8 | % | 83.8 | % | 81.4 | % |
All Other Markets | | 15,185 | | 26.3 | % | 85.6 | % | 85.6 | % | 86.6 | % | 86.0 | % | 84.2 | % |
Total / Weighted Average | | 57,699 | | 100.0 | % | 83.7 | % | 83.9 | % | 85.3 | % | 84.4 | % | 82.1 | % |
| | | | | | | | | | | | | | | |
| | | | Percentage | | | | | | | | | | | |
| | Number of | | of | | | | | | | | | | | |
| | Total | | Total | | Rental Income Per Occupied Homesite Per Month (b) | |
Markets (a) | | Homesites | | Homesites | | 03/31/06 | | 12/31/05 | | 09/30/05 | | 06/30/05 | | 03/31/05 | |
| | | | | | | | | | | | | | | |
Dallas – Ft. Worth, TX | | 7,181 | | 12.4 | % | $ | 384 | | $ | 370 | | $ | 347 | | $ | 349 | | $ | 353 | |
Atlanta, GA | | 4,967 | | 8.6 | % | 387 | | 371 | | 353 | | 349 | | 345 | |
Salt Lake City, UT | | 3,796 | | 6.6 | % | 364 | | 351 | | 348 | | 348 | | 348 | |
Front Range of CO | | 3,290 | | 5.7 | % | 460 | | 450 | | 430 | | 429 | | 425 | |
Kansas City – Lawrence – Topeka, MO – KS | | 2,424 | | 4.2 | % | 315 | | 295 | | 291 | | 285 | | 280 | |
Jacksonville, FL | | 2,258 | | 3.9 | % | 371 | | 363 | | 350 | | 349 | | 348 | |
Wichita, KS | | 2,162 | | 3.7 | % | 301 | | 279 | | 270 | | 273 | | 287 | |
Orlando, FL | | 1,986 | | 3.4 | % | 383 | | 374 | | 366 | | 368 | | 355 | |
St. Louis, MO – IL | | 1,914 | | 3.3 | % | 312 | | 306 | | 296 | | 290 | | 287 | |
Oklahoma City, OK | | 1,891 | | 3.3 | % | 317 | | 298 | | 281 | | 289 | | 295 | |
Greensboro – Winston Salem, NC | | 1,396 | | 2.4 | % | 296 | | 277 | | 273 | | 270 | | 259 | |
Davenport – Moline – Rock Island, IA – IL | | 1,382 | | 2.4 | % | 295 | | 277 | | 267 | | 265 | | 265 | |
Elkhart – Goshen, IN | | 1,209 | | 2.1 | % | 383 | | 358 | | 335 | | 326 | | 319 | |
Charleston – North Charleston, SC | | 1,184 | | 2.1 | % | 307 | | 276 | | 267 | | 251 | | 241 | |
Raleigh – Durham – Chapel Hill, NC | | 1,092 | | 1.9 | % | 385 | | 365 | | 348 | | 340 | | 344 | |
Sioux City, IA – NE | | 994 | | 1.7 | % | 330 | | 305 | | 295 | | 290 | | 285 | |
Syracuse, NY | | 939 | | 1.6 | % | 380 | | 376 | | 345 | | 340 | | 342 | |
Des Moines, IA | | 859 | | 1.5 | % | 353 | | 318 | | 313 | | 307 | | 302 | |
Flint, MI | | 838 | | 1.5 | % | 395 | | 378 | | 361 | | 358 | | 352 | |
Pueblo, CO | | 752 | | 1.3 | % | 331 | | 321 | | 318 | | 321 | | 327 | |
Subtotal – Top 20 Markets | | 42,514 | | 73.7 | % | 364 | | 349 | | 335 | | 333 | | 332 | |
All Other Markets | | 15,185 | | 26.3 | % | 329 | | 316 | | 311 | | 309 | | 309 | |
Total / Weighted Average | | 57,699 | | 100.0 | % | $ | 354 | | $ | 341 | | $ | 332 | | $ | 326 | | $ | 325 | |
(a) Markets are defined by our management.
(b) Rental Income is defined as homeowner rental income, home rental income, and other rental income reduced by move-in bonuses and rent concessions.
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| | Asset Highlights |
Capital Expenditure Summary
| | Three Months Ended | |
($ in thousands) | | 03/31/06 | | 12/31/05 | | 9/30/05 | | 06/30/05 | | 03/31/05 | |
| | | | | | | | | | | |
Recurring capital expenditures (a) | | $ | 378 | | $ | 991 | | $ | 2,810 | | $ | 2,913 | | $ | 3,190 | |
| | | | | | | | | | | |
Recurring capital expenditures per average site per annum | | 26 | | 69 | | 195 | | 200 | | 218 | |
| | | | | | | | | | | |
Homesite upgrades (b) | | 475 | | 2,366 | | 3,679 | | 2,964 | | 2,437 | |
| | | | | | | | | | | |
Expansion, development, renovation and improvements (c) | | 358 | | 1,956 | | 2,807 | | 4,077 | | 6,399 | |
| | | | | | | | | | | |
Other capital expenditures (d) | | — | | — | | — | | 191 | | 215 | |
Total capital improvements | | $ | 1,211 | | $ | 5,313 | | $ | 9,296 | | $ | 10,145 | | $ | 12,241 | |
| | | | | | | | | | | |
Recurring capital expenditures including discontinued operations (a) | | $ | 378 | | $ | 991 | | $ | 2,810 | | $ | 3,111 | | $ | 3,835 | |
Manufactured Home Data
| | Three Months Ended | |
($ in thousands) | | 03/31/06 | | 12/31/05 | | 9/30/05 | | 06/30/05 | | 03/31/05 | |
| | | | | | | | | | | |
Home purchase data | | | | | | | | | | | |
Number of manufactured homes purchased | | 165 | | 622 | | 1,450 | | 1,321 | | 985 | |
| | | | | | | | | | | |
Home sales data | | | | | | | | | | | |
New homes sold | | 11 | | 52 | | 118 | | 187 | | 38 | |
Used homes sold | | 121 | | 189 | | 468 | | 716 | | 703 | |
Total homes sales | | 132 | | 241 | | 586 | | 903 | | 741 | |
| | | | | | | | | | | |
Average homes sale price | | $ | 20,356 | | $ | 20,162 | | $ | 18,519 | | $ | 18,199 | | $ | 10,157 | |
| | | | | | | | | | | | | | | | |
| | 03/31/06 | | 12/31/05 | | 9/30/05 | | 06/30/05 | | 03/31/05 | |
Home Inventory Data | | | | | | | | | | | |
Home inventory | | 9,361 | | 9,328 | | 8,947 | | 8,083 | | 7,665 | |
| | | | | | | | | | | |
Gross asset value including setup costs ($000’s) | | $ | 261,970 | | $ | 261,546 | | $ | 250,999 | | $ | 222,359 | | $ | 192,629 | |
Gross asset value per home | | $ | 27,985 | | $ | 28,039 | | $ | 28,054 | | $ | 27,509 | | $ | 25,131 | |
| | | | | | | | | | | |
Current asset value including setup costs ($000’s) | | $ | 218,329 | | $ | 224,461 | | $ | 221,499 | | $ | 196,014 | | $ | 167,024 | |
Current asset value per home | | $ | 23,323 | | $ | 24,063 | | $ | 24,757 | | $ | 24,250 | | $ | 21,790 | |
Dispositions
| | | | | | Number of | | Number of | | Net Assets | | Gain (Loss) | | Impairment | |
Transaction | | Month | | Market | | Communities | | Homesites | | Held for Sale | | on Sale | | Loss | |
| | | | | | | | | | | | | | | |
Discontinued | | September 2005 | | Various | | 79 | | 13,393 | | $ | 139,517 | | $ | — | | $ | (34,794 | ) |
Re-continued | | December 2005 | | Various | | (41 | ) | (8,067 | ) | (67,239 | ) | — | | 24,540 | |
| | | | | | 38 | | 5,326 | | $ | 72,278 | | $ | — | | $ | (10,254 | ) |
Closed | | February/March 2006 | | Various | | (27 | ) | (2,860 | ) | (34,497 | ) | 10,296 | | — | |
| | | | | | 11 | | 2,466 | | $ | 37,781 | | $ | 10,296 | | $ | (10,254 | ) |
(a) Includes capital expenditures necessary to maintain asset quality, including purchasing and replacing assets used to operate the community. These capital expenditures include repairs of roads, driveways, pools, renovation of clubhouses and replacement or installation of street lights, playground equipment, signage, maintenance facilities, manager housing and property vehicles. These capital expenditures do not include water meters, sheds, homes or community acquisitions. Our minimum capitalizable amount of a project is $500.
(b) Includes capital expenditures that improve homesites for placement of a new home typically when an existing older home moves out and the site is prepared for a new home. Many of these activities are governed by manufacturers’ installation requirements and state building codes and include grading, electrical, concrete, landscaping, drainage and water/sewer lines. We estimate that the new home will be in the community for an average of at least 20 years although we depreciate these costs over 10 years.
(c) These are the costs to develop, expand, renovate and improve communities following acquisition. They include costs for engineering, driveways, paving, utilities, and amenities.
(d) These costs include capitalized interest and wages.
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| | Debt Analysis |
| | As of March 31, 2006 |
| | Debt | | % of Total | | Interest | | Maturity | |
($ in thousands) | | Amount | | Debt | | Rate | | Date | |
| | | | | | | | | |
Fixed Rate Debt | | | | | | | | | |
Senior fixed rate mortgage due 2009 | | $ | 89,155 | | 8.0 | % | 5.05 | % | 2009 | |
Senior fixed rate mortgage due 2012 | | 283,705 | | 25.5 | % | 7.35 | % | 2012 | |
Senior fixed rate mortgage due 2014 | | 195,550 | | 17.6 | % | 5.53 | % | 2014 | |
Senior exchangeable notes due 2025 | | 96,600 | | 8.7 | % | 7.50 | % | 2025 | |
Various individual fixed rate mortgages | | 136,571 | | 12.3 | % | 7.23 | % | 2006-2031 | |
DAM preferred partnership units due 2006 | | 2,499 | | 0.2 | % | 7.00 | % | 2006 | |
Other loans due 2012 | | 1,255 | | 0.1 | % | 6.97 | % | 2012 | |
Total fixed rate debt | | 805,335 | | 72.4 | % | 6.65 | % | | |
Variable Rate Debt (a) | | | | | | | | | |
Senior variable rate mortgage due 2007 | | 122,223 | | 11.0 | % | 7.83 | % | 2007 | |
Revolving credit mortgage facility due 2006 | | 58,764 | | 5.3 | % | 7.58 | % | 2006 | |
Trust preferred securities due 2035 | | 25,780 | | 2.3 | % | 8.25 | % | 2035 | |
Consumer finance chattel facility due 2008 | | 18,188 | | 1.6 | % | 7.83 | % | 2008 | |
Lease receivables facility due 2008 | | 75,500 | | 6.8 | % | 8.95 | % | 2008 | |
Floorplan lines of credit due 2007 | | 7,110 | | 0.6 | % | 8.50 | % | 2007 | |
Total variable rate debt | | 307,565 | | 27.6 | % | 8.11 | % | | |
Total debt | | 1,112,900 | | $ | 100.0 | % | 7.05 | % | | |
% Fixed / Variable | | | | | | | | | |
Fixed | | $ | 805,335 | | 72.4 | % | 6.65 | % | | |
Variable | | 307,565 | | 27.6 | % | 8.11 | % | | |
Total debt | | 1,112,900 | | $ | 100.0 | % | 7.05 | % | | |
| | 2006 | | 2007 | | 2008 | | 2009 | | 2010 | | Thereafter | |
Maturity Schedule | | | | | | | | | | | | | |
Senior fixed rate mortgages | | $ | 5,501 | | $ | 7,929 | | $ | 8,342 | | $ | 92,481 | | $ | 7,869 | | $ | 446,288 | |
Various individual fixed rate mortgages (b) | | 6,745 | | 2,114 | | 45,785 | | 12,144 | | 5,242 | | 64,543 | |
Senior variable rate mortgage (c) | | — | | 122,223 | | — | | — | | — | | — | |
Senior exchangeable notes due 2025 | | — | | — | | — | | — | | — | | 96,600 | |
Floorplan lines of credit | | — | | 7,110 | | — | | — | | — | | — | |
Trust preferred securities due 2035 | | — | | — | | — | | — | | — | | 25,780 | |
Consumer finance chattel facility | | — | | — | | 18,188 | | — | | — | | — | |
Lease receivables facility | | — | | — | | 75,500 | | — | | — | | — | |
Revolving credit mortgage facility | | 58,764 | | — | | — | | — | | — | | — | |
Other debt | | 2,576 | | 109 | | 117 | | 126 | | 135 | | 689 | |
Total debt maturities | | $ | 73,586 | | $ | 139,485 | | $ | 147,932 | | $ | 104,751 | | $ | 13,246 | | $ | 633,900 | |
(a) In February 2004, we entered into a two-year $100 million swap that expired in February 2006 and purchased interest rate caps covering our senior variable rate mortgage.
(b) Includes debt premium of $5,273 related to indebtedness assumed in HTA and DAM acquisitions as of March 31, 2006.
(c) In February 2006, we extended the senior variable rate mortgage due 2006 to February 2007. At our option, and subject to certain conditions, we may extend it for two additional twelve - month periods.
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| | Investor Inquiries |
Common stock symbol: | | ARC | | |
Preferred stock symbol: | | ARC-PA | | |
| | | | |
Exchange Traded: | | NYSE | | |
| | Q1 | | Q4 | | Q3 | | Q2 | | Q1 | |
| | 2006 | | 2005 | | 2005 | | 2005 | | 2005 | |
Common Stock Dividend Information | | | | | | | | | | | |
Declaration date | | N/A | | N/A | | N/A | | 5/23/2005 | | 3/16/2005 | |
Record date | | N/A | | N/A | | N/A | | 6/30/2005 | | 3/31/2005 | |
Payment date | | N/A | | N/A | | N/A | | 7/15/2005 | | 4/15/2005 | |
Distributions per share | | N/A | | N/A | | N/A | | $ | 0.1875 | | $ | 0.3125 | |
| | | | | | | | | | | |
Preferred Stock Dividend Information | | | | | | | | | | | |
Declaration date | | 3/2/2006 | | 12/14/2005 | | 9/21/2005 | | 5/23/2005 | | 3/16/2005 | |
Record date | | 4/14/2006 | | 1/13/2006 | | 10/15/2005 | | 7/15/2005 | | 4/15/2005 | |
Payment date | | 4/28/2006 | | 1/30/2006 | | 10/30/2005 | | 7/29/2005 | | 4/29/2005 | |
Distributions per share | | $ | 0.5156 | | $ | 0.5156 | | $ | 0.5156 | | $ | 0.5156 | | $ | 0.5156 | |
| | | | | | | | | | | | | | | | |
Inquiries:
Affordable Residential Communities welcomes any questions or comments from our investors, prospective investors, analysts, investment managers or media professionals. Please direct all inquiries to one of the following contact points:
At our website: | www.aboutarc.com |
By phone: | (866) 847-8931 |
By fax: | (303) 294-0121 |
By e-mail: | investor.relations@aboutarc.com |
By mail: | Affordable Residential Communities, Inc. |
| Investor Relations Department |
| 7887 East Belleview Avenue |
| Suite 200 |
| Englewood, CO 80111 |
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