EXHIBIT 99.1
CONTACT: John Zoeller FOR IMMEDIATE RELEASE
(312) 279-1466 July 22, 2003
MHC REPORTS SECOND QUARTER RESULTS
PORTFOLIO CONTINUES STRONG PERFORMANCE
2ND QUARTER NEW HOME SALES VOLUMES UP 13% OVER 2002
CHICAGO, IL - JULY 22, 2003-- 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.
###
TABLES FOLLOW
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 ("RESORT") JUNE 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 SIX MONTHS ENDED
OCCUPANCY AVERAGES: JUNE 30, JUNE 30, JUNE 30, JUNE 30,
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 FOR DISTRIBUTION (FAD): QUARTERS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
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 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.