Exhibit 99.1
CONTACT: Michael Berman FOR IMMEDIATE RELEASE
(312) 279-1496 October 19, 2004
MHC REPORTS THIRD QUARTER RESULTS
SOLID OPERATING PERFORMANCE CONTINUES
CHICAGO, IL -OCTOBER 19, 2004-- Manufactured Home Communities, Inc.
(NYSE: MHC) today announced results for the quarter and nine months ended
September 30, 2004.
For the third quarter of 2004, Funds From Operations (FFO) were $12.3
million or $0.41 per share on a fully diluted basis compared to $15.9 million or
$0.56 per fully diluted share for the same period in 2003. Third quarter
property operating revenues were $74 million compared to $56.3 million in the
third quarter of 2003. For the third quarter of 2004, average occupancy was 89.7
percent and average monthly base rent per site for the Core Portfolio was
$437.62, up 4.6 percent from $418.25 in the same period last year.
For the nine months ended September 30, 2004, FFO were $41.6 million or
$1.43 per share on a fully diluted basis compared to $51.2 million or $1.83 per
fully diluted share in the same period in 2003. Property operating revenues for
the nine months ended September 30, 2004 were $215.9 million compared to $171.1
million for the same period of 2003. Average occupancy was 89.8 percent and
average monthly base rent per site for the Core Portfolio was $435.16, up 4.7
percent from $415.63 in the same period last year.
Net loss available to common stockholders totaled ($0.6 million) or
($0.03) per fully diluted share for the quarter ended September 30, 2004. This
compares to the net income available to common stockholders of $5.2 million or
$0.23 per fully diluted share in the third quarter of 2003. Net income available
to common stockholders totaled $5.0 million or $0.21 per fully diluted share for
the nine months ended September 30, 2004. This compares to the net income
available to common stockholders of $27.3 million or $1.21 per fully diluted
share for the nine months ended September 30, 2003. See the attachment to this
press release for reconciliation of FFO and FFO per share to net income and net
income per share, respectively, the most directly comparable GAAP measures.
The Company's availability under its line of credit was $99 million as
of September 30, 2004.
Third quarter and year-to-date comparisons were impacted by, among
others, the Company's: (i) $1 million reserve for non-recoverable losses and
deductibles associated with the Florida storms, (ii) previously announced
acquisition program, (iii) the recapitalization, which occurred in the fourth
quarter of 2003, (iv) the sale of three properties in the second quarter of 2003
and the sale of one property in the second quarter of 2004, and (v) OP Units
issued in connection with the acquisitions. On a pro forma basis for the third
quarter of 2003, giving effect to the recapitalization and the reduction in FFO
per share
from the sale of three properties, FFO per share for the third quarter of 2003
would have been approximately $0.33 per share.
MHC's management projects continued growth in 2004 Core Portfolio
performance. Assuming current economic conditions continue to impact
occupancies, overall revenue growth is anticipated to be approximately 3 percent
for the fourth quarter of 2004. Core Portfolio operating expenses are expected
to grow in excess of CPI due to continued increases in real estate taxes and
utility expenses. These projections would result in Core NOI growth of
approximately 2.0 to 2.5 percent.
Results for 2004 will continue to be impacted by: i) the
recapitalization and acquisition program, ii) continued competitive housing
options impacting occupancy levels at certain communities, iii) variability in
income from home sales operations and iv) effects of the Florida storms. Based
upon these factors and excluding potential acquisitions, MHC reaffirms that
fully diluted FFO per share should be between $1.85 and $1.90 for the full year
of 2004.
MHC's management projects continued growth in 2005 Core Portfolio
performance. Core base rent rate growth is expected to be approximately 4
percent, and operating expenses are expected to grow in excess of CPI due to
increases in real estate taxes and utility expenses. These projections would
result in Core NOI growth of between 3 and 3.5 percent.
Results for 2005 may be impacted by, among other things i) continued
competitive housing options and new home sales initiatives impacting occupancy
levels at certain communities, ii) variability in income from home sales
operations, including anticipated expansion projects, iii) acquired properties
operating in line with expectations, and iv) the lingering effects if any on
occupancy levels and sales resulting from changes in customer demand due to the
third quarter Florida storms. Based upon these factors, MHC continues to project
that fully diluted FFO per share will range between $2.20 and $2.25 for the year
ended December 31, 2005.
With respect to the pending Thousand Trails transaction announced on
August 3, 2004, management expects the transaction to close by year-end. The
anticipated investment is $160 million under a sale-lease back structure with an
initial yield of 10 percent. Management is in discussions with its banks
regarding the funding of this transaction. Management currently anticipates new
unsecured financing in addition to its availability under its lines of credit.
To the extent the transaction is completed, management expects to revise
guidance for 2005 taking into account decisions with respect to financing the
transaction.
Commented MHC's CEO and President Thomas P. Heneghan, "We are extremely
pleased with the company's resilience in light of the storms that deluged
Florida during the third quarter. We continue to integrate our acquisitions and
are looking forward to completing the Thousand Trails transaction."
The forward-looking statements contained herein are subject to certain
risks and uncertainties including, but not limited to: 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; the
Company's ability to maintain rental rates and occupancy with respect to
properties currently owned or pending acquisitions; the Company's assumptions
about rental and home sales markets; the completion of pending acquisitions and
timing with respect thereto; 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. In addition, quarter-to-quarter results during the year are
impacted by seasonality at certain of the communities. 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 an interest in 212
quality communities in 23 states consisting of 80,654 sites. MHC is a
self-administered, self-managed, real estate investment trust (REIT) with
headquarters in Chicago.
A 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. If you wish to listen to the
opening remarks in advance, they will be available on our website at 8:00 a.m.
Central today.
###
Tables to 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,
2004 2003 2004 2003
--------- --------- --------- ---------
PROPERTY OPERATIONS:
Community base rental income.......................... $ 53,863 $ 49,203 $ 157,528 $ 147,675
Resort base rental income............................. 14,169 2,144 39,463 8,076
Utility and other income.............................. 5,939 4,904 18,893 15,327
--------- --------- --------- ---------
Property operating revenues........................ 73,971 56,251 215,884 171,078
Property operating and maintenance.................... 25,259 16,283 69,987 48,828
Real estate taxes..................................... 6,161 4,577 17,716 13,960
Property management................................... 3,316 2,364 9,585 6,992
--------- --------- --------- ---------
Property operating expenses........................ 34,736 23,224 97,288 69,780
--------- --------- --------- ---------
Income from property operations.................... 39,235 33,027 118,596 101,298
HOME SALES OPERATIONS:
Gross revenues from inventory home sales.............. 12,594 11,399 30,915 25,058
Cost of inventory home sales.......................... (10,833) (10,115) (27,195) (21,741)
--------- --------- --------- ---------
Gross profit from inventory home sales............. 1,761 1,284 3,720 3,317
Brokered resale revenues, net......................... 540 491 1,628 1,321
Home selling expenses................................. (2,169) (1,971) (6,446) (5,669)
Ancillary services revenues (losses), net............. 770 (125) 2,417 244
--------- --------- --------- ---------
Income (loss) from home sales and other............ 902 (321) 1,319 (787)
OTHER INCOME AND EXPENSES:
Interest income....................................... 309 254 1,076 760
Other corporate income................................ 1,241 490 4,669 1,629
General and administrative............................ (2,110) (2,027) (6,689) (5,959)
--------- --------- --------- ---------
Operating income (EBITDA).......................... 39,577 31,423 118,971 96,941
Interest and related amortization..................... (24,041) (12,408) (67,684) (37,453)
Income from discontinued operations................... -- 10 26 1,042
Depreciation on corporate assets...................... (427) (310) (1,231) (930)
Income allocated to Preferred OP Units................ (2,825) (2,813) (8,459) (8,439)
--------- --------- --------- ---------
FUNDS FROM OPERATIONS (FFO)........................ $ 12,284 $ 15,902 $ 41,623 $ 51,161
Depreciation on real estate and other costs........... (13,052) (9,446) (36,058) (27,537)
Gain on sale of properties............................ -- -- 638 10,197
Loss (Income) allocated to Common OP Units............ 168 (1,248) (1,169) (6,539)
--------- --------- --------- ---------
NET (LOSS) INCOME.................................. $ (600) $ 5,208 $ 5,034 $ 27,282
========= ========= ========= =========
NET (LOSS) INCOME PER COMMON SHARE - BASIC.............. $ (0.03) $ .24 $ 0.22 $ 1.24
NET (LOSS) INCOME PER COMMON SHARE - FULLY DILUTED...... $ (0.03) $ .23 $ 0.21 $ 1.21
--------- --------- --------- ---------
FFO PER COMMON SHARE - BASIC............................ $ 0.42 $ .58 $ 1.45 $ 1.87
FFO PER COMMON SHARE - FULLY DILUTED.................... $ 0.41 $ .56 $ 1.43 $ 1.83
--------- --------- --------- ---------
Average Common Shares - Basic........................... 22,829 22,114 22,747 22,020
Average Common Shares and OP Units - Basic.............. 29,335 27,458 28,661 27,369
Average Common Shares and OP Units - Fully Diluted...... 29,846 28,148 29,188 27,952
--------- --------- --------- ---------
MANUFACTURED HOME COMMUNITIES, INC.
(UNAUDITED)
SELECTED BALANCE SHEET DATA: SEPTEMBER 30, DECEMBER 31,
2004 2003
(amounts in (amounts in
000's) 000's)
------------- ------------
Total real estate, net............................. $1,555,497 $1,042,599
Cash and cash equivalents.......................... $ 6,924 $ 325,740
Total assets....................................... $1,724,104 $1,473,915
Mortgage notes payable............................. $1,413,485 $1,076,183
Unsecured debt..................................... $ 61,225 $ 113
Total liabilities.................................. $1,542,897 $1,341,401
Minority interest.................................. $ 137,823 $ 126,716
Total stockholders' equity......................... $ 43,380 $ 5,798
AS OF AS OF
SEPTEMBER 30, DECEMBER 31,
TOTAL SHARES AND OP UNITS OUTSTANDING: 2004 2003
------------- ------------
Total Common Shares Outstanding.................... 22,885,452 22,563,348
Total Common OP Units Outstanding.................. 6,470,474 5,312,387
MANUFACTURED HOME ("COMMUNITY") AND AS OF AS OF
PARK MODEL/RECREATIONAL VEHICLE ("RESORT") SEPTEMBER 30, DECEMBER 31,
SITE TOTALS: 2004 2003
------------- ------------
Community Sites Owned and Operated................. 45,105 43,143
Community Sites Owned in Joint Ventures............ 9,782 1,521
Resort Sites Owned and Operated.................... 25,767 7,051
------ ------
TOTAL SITES................................... 80,654 51,715
MANUFACTURED HOME SITE AND QUARTERS ENDED NINE MONTHS ENDED
OCCUPANCY AVERAGES: SEPT. 30, SEPT. 30, SEPT. 30, SEPT. 30,
.. 2004 2003 2004 2003
--------- --------- --------- ----------
Total Sites................................. 45,105 43,131 44,477 43,131
Occupied Sites.............................. 40,619 39,213 40,093 39,478
Occupancy %................................. 90.1% 90.9% 90.1% 91.5%
Monthly Base Rent Per Site.................. $ 442.02 $ 418.25 $ 436.56 $ 415.63
Core* Monthly Base Rent Per Site............ $ 437.62 $ 418.25 $ 435.16 $ 415.63
(*) Represents rent per site for properties owned in both periods of comparison.
QUARTERS ENDED NINE MONTHS ENDED
HOME SALES: SEPT. 30, SEPT. 30, SEPT. 30, SEPT. 30,
(amounts in 000's except sales volumes) 2004 2003 2004 2003
--------- --------- --------- ---------
New Home Sales Volume....................... 134 137 348 307
New Home Sales Gross Revenues............... $ 11,732 $ 10,394 $ 27,742 $ 22,654
Used Home Sales Volume...................... 97 53 300 142
Used Home Sales Gross Revenues.............. $ 862 $ 1,005 $ 3,173 $ 2,404
Brokered Home Resale Volume................. 335 287 1,072 829
Brokered Home Resale Revenues, net.......... $ 540 $ 491 $ 1,628 $ 1,321
MANUFACTURED HOME COMMUNITIES, INC.
(UNAUDITED)
(AMOUNTS IN THOUSANDS EXCEPT FOR PER SHARE DATA)
FUNDS AVAILABLE FOR DISTRIBUTION (FAD): QUARTERS ENDED NINE MONTHS ENDED
SEPT. 30, SEPT. 30, SEPT. 30, SEPT. 30,
2004 2003 2004 2003
--------- --------- --------- --------
Funds from operations................................... $ 12,284 $ 15,902 $ 41,623 $ 51,161
Non-revenue producing improvements to real
estate........................................... (2,991) (2,493) (9,498) (8,700)
-------- -------- -------- --------
Funds available for distribution..................... $ 9,293 $ 13,409 $ 32,125 $ 42,461
======== ======== ======== ========
FAD per Common Share - Basic.............................. $ 0.32 $ 0.49 $ 1.12 $ 1.55
FAD per Common Share - Fully Diluted...................... $ 0.31 $ 0.48 $ 1.10 $ 1.52
-------- -------- -------- --------
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. 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.