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News
Release
|
FOR
IMMEDIATE RELEASE
|
CONTACT
|
|
March
30, 2009
|
Craig
Renner
|
|
301-843-8600
|
ACPT
REPORTS RESULTS FOR 2008
ST. CHARLES, MD.— American
Community Properties Trust (“ACPT” or the “Company”), (NYSE Amex: APO), today
announced results for the year and quarter ended December 31,
2008. For the year ended December 31, 2008, ACPT reported a net loss
of $11,356,000, or $2.18 per basic and diluted share, on revenues of
$82,914,000. This compares to a net loss of $541,000, or $0.10 per
basic and diluted share, on revenues of $85,376,000 for the year ended December
31, 2007. For the year ended December 31, 2008, operating income was
$7,356,000, compared to $16,082,000 in 2007. Impairment charges of
$7,456,000, an allowance for deferred tax assets of $3,403,000 and $4,691,000 of
severance and salary expenses for employees who are no longer with the Company
are included in the 2008 results.
For the
quarter ended December 31, 2008, ACPT reported a net loss of $9,355,000, or
$1.80 per basic and diluted share, on revenues of $24,634,000. This
compares to net income of $718,000, or $0.14 per basic and diluted share, on
revenues of $23,919,000 for the same quarter in 2007. For the quarter
ended December 31, 2008, ACPT reported an operating loss of $3,135,000, compared
to operating income of $4,771,000 in the same quarter in
2007. Impairment charges of $7,456,000, an allowance for deferred tax
assets of $3,403,000 and $3,315,000 of severance and salary expenses for
employees who are no longer with the Company are included in the 2008 fourth
quarter results.
Steve
Griessel, who was appointed Chief Executive Officer of the Company effective
October 1, 2008, said that overall results for 2008 reflect the difficult
macro-economic conditions existing in the market, costs associated with
streamlining the Company’s management structure and reducing the staff count,
and impairment charges on property in Parque Escorial, Puerto Rico and
Baltimore, Maryland.
Mr.
Griessel also said the Company has dramatically changed the focus of its
operations since October 1, 2008. “We are now focused on generating
free cash flow and attempting to strategically divest assets to strengthen our
balance sheet. We split the Company into two primary segments based
on our business lines of operating real estate and land development as opposed
to strictly reporting them geographically. We believe the revised
segment reporting makes the performance of each line of business easier to
understand and allows us to focus on making each operate
independently. It also highlights the historical dependence that the
land development entity has had on the operations and cash flows of our
operating real estate, as evidenced by a significant intercompany loan balance
at December 31, 2008. We believe that restructuring and representing
our operations in this manner makes the Company more efficient while leaving us
well-positioned to capitalize on future growth opportunities,” said Mr.
Griessel.
Matthew
M. Martin, Chief Financial Officer, noted that the Company was subject to two
impairments and a valuation allowance for certain deferred tax assets that
significantly affected the Company’s financial results. In Puerto
Rico, the Company reported a $6,200,000 impairment charge related to the Hilltop
section of Parque Escorial, the last section of the 2,700 unit planned
community. The Company also reported a $1,256,000 impairment charge
related to its apartment properties in Baltimore, Maryland. In
addition, the Company recorded a $3,403,000 valuation allowance for deferred tax
assets for investments and property management services for which future income
could not be projected in the near term.
Mr.
Martin also noted that revenues from the Company’s investment property portfolio
increased 3%, to $62,243,000 for 2008. Net operating income1 for the U.S and Puerto Rico Operating Real
Estate segments also increased $2,145,000, or 11%, and $343,000, or 3%,
respectively, as compared to 2007. Mr. Martin attributed the increase
to a full twelve months of operations of Sheffield Greens apartments in the
United States in 2008, overall rent increases of 3% at properties in the United
States and Puerto Rico, and a decrease of $965,000 in rental property expenses
due to improvements in operating efficiencies. Funds from
Operations2 (“FFO”) in the U.S. Operating Real Estate
segment decreased by $831,000, or 11%, driven by the $1,256,000 impairment
charge in the fourth quarter of 2008 offset by a full twelve months of
operations of Sheffield Greens apartments. FFO from the Puerto Rico
Operating Real Estate segment increased by $395,000, or 20%, as compared to
2007, primarily attributable to an increase in the annual rent in 2008 and
controlling the costs of property operations.
Mr.
Martin added that in St. Charles, Maryland, the Company reported sales of 61
single family lots and 58 town home lots generating revenue of approximately
$8,700,000 in 2008, compared to 34 single family and 44 town home lots
generating revenue of approximately $5,900,000 in 2007. “Although the
number of lots delivered increased, we saw a reduction in final lot price
between 2007 and 2008. Average single family final lot prices
decreased 28% to $90,000 per lot and townhouse final lot prices decreased 22% to
$73,000. These declines were driven by Lennar bringing a more
affordable product into St. Charles,” said Mr. Martin.
In
addition to lot sales, in December 2008 the Company sold its interest in the
Heritage at St. Charles joint venture to Lennar for $3,467,000. The Company also
announced during the fourth quarter 2008 that it had reached an agreement to
modify its lot sales agreement with Lennar. Under the terms of the agreement,
Lennar will purchase a minimum of 100 lots annually in each of the next three
years versus the 200 lots previously agreed. The amendment also represents the
end of Lennar’s exclusivity in the Company’s St. Charles planned
community. Accordingly, the Company has signed purchase agreements
with NVR, Inc., Richmond American Homes of Maryland, Inc., and Riverview
Builders, LLC. NVR, Inc. and Richmond American Homes of Maryland,
Inc. have each agreed to purchase 24 lots per year in St. Charles in each of the
next three years at a pace and price schedule similar to that in the agreement
with Lennar, subject to customary due diligence and requisite approvals. “Each
home builder will focus on different product types to ensure that we grow our
market,” said Mr. Griessel.
Commercial
land sales decreased to $1,900,000 compared to $5,333,000 in
2007. During 2008, the Company saw a significant decline in its
commercial sales activity as a result of the difficult market
conditions. During 2008, the Company lost three commercial contracts
totaling approximately $2,200,000 and delayed the settlement of another contract
for approximately $450,000 that was subsequently closed in March
2009. The Company has $13,900,000 in commercial sales backlog as of
December 31, 2008, primarily related to the sale of a 76 acre parcel to
Competitive Power Ventures, Inc. (“CPV”), whose sales contract expires in June
of 2010. Settlement of the sale is dependent upon CPV obtaining
financing to construct the facility, and a purchase agreement for the
electricity that will be produced by the plant.
In Parque
Escorial, homebuilding sales
decreased to $3,730,000 in 2008 compared to $7,580,000 in 2007. The Company had
21 units in inventory at the beginning of 2008 and sold 15 of those units for an
average selling price of $248,000. Both the average selling price and the gross
profit margin on units sold decreased in 2008 compared to 2007. The
Company began development work on the Hilltop section of Parque Escorial in
2008.
Mr.
Martin also noted that the Company reported a 36% increase in general,
administrative, selling and marketing (“G&A”) costs in 2008. The
increase was primarily attributable to $4,691,000 in salaries and benefits for
executive severance packages, other severance for employees who were involved in
the workforce reduction, and consulting fees.
Mr.
Martin noted the Company had cash and cash equivalents of $24,035,000 at the end
of 2008, of which the corporate entity controlled $12,257,000, with $11,778,000
resided within the multifamily apartment entities. Cash within the
multifamily apartment entities is limited to the operations of the individual
apartment entity and cannot be transferred between apartment entities nor used
by the corporate entity. “The Company is focused on managing cash
flows during 2009 and conserving cash to address the debt maturities that are
scheduled to occur during the year,” said Mr. Martin. In the first
quarter of 2009, the Company executed purchase agreements for the sale of three
of the five U.S. Apartment Properties in Baltimore, Maryland for
$29,200,000. The Company received non-binding offers of $6,598,000
and is negotiating agreements for the other two properties. In addition, the
Company executed a non-binding letter of intent to sell the Puerto Rico
Apartment Properties. We anticipate closing on the sale of these
apartment properties in the second quarter of 2009.
The
Company has $10,898,000 of recourse and $6,816,000 of non-recourse debt as of
December 31, 2008 that was due to mature in 2009. “We have been able
to work with the bank to extend the payment terms of the $14 million development
line of credit which was set to mature on April 14, 2009, and has been extended
to March 31, 2010,” said Mr. Martin. Further, the Company received a waiver of
default related to a minimum net worth covenant on this
facility. This line of credit had a balance of $6,571,000 at December
31, 2008. The Company has another $10 million development line of
credit in its Puerto Rico subsidiary, which matures on August 31,
2009. The Company will seek to refinance the line into a construction
loan for the development of residential condominiums or extend the term of the
facility. In the event that the bank is unwilling to refinance or
extend the terms of this facility, the bank’s sole recourse on the loan is the
underlying collateral. “We have a 50 year relationship with the bank
in Puerto Rico, and we will diligently work with them to reach a mutually
beneficial arrangement in this matter,” said Mr. Martin.
“We have
worked very conscientiously to streamline the Company’s operations and flatten
our management structure,” said Mr. Griessel. “We believe this will result in a
45% savings in G&A costs going forward in 2009 as compared to 2008. We are
also instilling a culture of business ownership and innovation at every level in
the organization which is already bearing fruit. Lastly, we have completely
changed the reward system to ensure it aligns with the new strategy of the
Company and our shareholders.”
Mr.
Griessel added that the Company’s operating results should be evaluated over an
extended period of time due to the cyclical nature of its business.
ACPT is a diversified real estate
organization with operations in Maryland and Puerto Rico that specializes in
community development, investment apartment properties, and property management
services. ACPT is currently listed on the NYSE Amex under the symbol
APO.
When
filed, ACPT's Annual Report on Form 10-K will be available via the Internet at
www.acptrust.com
Certain
matters within this press release may be deemed to be forward- looking
statements within the meaning of the federal securities laws. Investors are
cautioned that all forward-looking statements involve risks, uncertainties, and
other factors that could cause actual results to differ materially from those in
the forward-looking statement. Forward-looking statements relate to anticipated
revenues, gross margins, earnings, and the growth of the market for our
products. Numerous factors could cause results to differ, including but not
limited to, changes in market demand and acceptance of the Company products,
impact of competitive products and pricing, dependence on third-party customers
(specifically Lennar Corporation), dependence on third-party suppliers, changes
in government regulations, the normal cyclical nature of the real estate
industry and development economy and changes in our tax status. Although the
Company believes the expectations reflected in such forward-looking statements
are based on reasonable assumptions, it can give no assurance that its
expectations will be attained. For more information, please refer to the
Company's Annual Report on Form 10-K for the year ended December 31, 2008 when
filed with the Securities and Exchange Commission.
1 Net
Operating Income (“NOI”) is calculated as real estate rental revenue less real
estate operating expense. NOI is a non-GAAP
measure. Management believes that NOI is helpful to investors as it
captures the performance of our real estate operations in a measure that is
comparable with other entities that have different capitalization.
2 Funds
From Operations (“FFO”) is a non-GAAP financial measure, that we believe, when
considered with the financial statements, prepared in accordance with GAAP, is
helpful to investors in understanding our performance because it captures
features particular to real estate performance by recognizing that real estate
generally appreciates over time or maintains residual value to a much greater
extent than do other depreciable assets such as machinery, computers or other
personal property. The Company computes FFO in accordance with the
Board of Governors of the National Association of Real Estate Investments
Trusts, or NAREIT, which defines FFO as net income (loss) computed in accordance
with GAAP, excluding gains or losses from sales of depreciable property, plus
depreciation and amortization, and after adjustments for unconsolidated
partnerships and joint ventures.
AMERICAN
COMMUNITY PROPERTIES TRUST
Financial
Highlights
(in
thousands)
|
For
the Years Ended
|
For
the Three Months Ended
|
|||||||||||||||
|
12/31/08
|
12/31/07
|
12/31/08
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12/31/07
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|||||||||||||
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(Audited)
|
(Audited)
|
(Unaudited)
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(Unaudited)
|
|||||||||||||
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Revenues
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$ | 82,914 | $ | 85,376 | $ | 24,634 | $ | 23,919 | ||||||||
|
Expenses
|
75,558 | 69,294 | 27,769 | 19,148 | ||||||||||||
|
Operating
income (loss)
|
7,356 | 16,082 | (3,135 | ) | 4,771 | |||||||||||
|
Other
expenses, net
|
(17,859 | ) | (16,930 | ) | (4,374 | ) | (4,341 | ) | ||||||||
|
(Loss)
income before provision (benefit) for income taxes
|
(10,503 | ) | (848 | ) | (7,509 | ) | 430 | |||||||||
|
Provision
(benefit) from income taxes *
|
853 | (307 | ) | 1,846 | (288 | ) | ||||||||||
|
Net
(loss) income
|
$ | (11,356 | ) | $ | (541 | ) | $ | (9,355 | ) | $ | 718 | |||||
|
(Loss)
earnings per share
|
||||||||||||||||
|
Basic
and Diluted
|
$ | (2.18 | ) | $ | (0.10 | ) | $ | (1.80 | ) | $ | 0.14 | |||||
|
Weighted
average shares outstanding
|
||||||||||||||||
|
Basic
|
5,217 | 5,207 | 5,224 | 5,210 | ||||||||||||
|
Diluted
|
5,217 | 5,207 | 5,224 | 5,214 | ||||||||||||
|
Total
cash dividends per share
|
$ | 0.10 | $ | 0.30 | $ | 0.10 | $ | - | ||||||||
The
provision for income taxes in 2008 includes a $3,403,000 valuation allowance
against its net deferred tax asset. The benefit for income taxes in
2007 includes $460,000 recorded in the 4th quarter
2007 related to the statutory rate change for Maryland and its impact on our net
deferred tax assets.
U.S. Operating Real Estate
Segment
|
For
the year ended
|
||||||||
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December 31, 2008
|
December 31, 2007
|
|||||||
|
Operating
revenues
|
$ | 39,515 | $ | 38,416 | ||||
|
Operating
expenses
|
18,189 | 19,235 | ||||||
|
Net
operating income
|
21,326 | 19,181 | ||||||
|
Management
and other fees, substantially all from related entities
|
157 | 194 | ||||||
|
General,
administrative, selling and marketing
|
(1,441 | ) | (2,252 | ) | ||||
|
Impairment
charges
|
(1,256 | ) | - | |||||
|
Depreciation
and amortization
|
(6,082 | ) | (5,592 | ) | ||||
|
Operating
income
|
12,704 | 11,531 | ||||||
|
Other
expense
|
(10,405 | ) | (9,998 | ) | ||||
|
Income
before provision for income taxes
|
2,299 | 1,533 | ||||||
|
Provision
for income taxes
|
(1,624 | ) | (463 | ) | ||||
|
Net
income
|
$ | 675 | $ | 1,996 | ||||
|
Depreciation
|
6,082 | 5,592 | ||||||
|
FFO
|
$ | 6,757 | $ | 7,588 | ||||
Puerto
Rico Operating Real Estate Segment
|
For
the year ended
|
||||||||
|
December 31, 2008
|
December 31, 2007
|
|||||||
|
Operating
revenues
|
$ | 22,728 | $ | 22,306 | ||||
|
Operating
expenses
|
11,512 | 11,433 | ||||||
|
Net
operating income
|
11,216 | 10,873 | ||||||
|
Management
and other fees, substantially all from related entities
|
624 | 635 | ||||||
|
General,
administrative, selling and marketing
|
(3,631 | ) | (3,159 | ) | ||||
|
Depreciation
and amortization
|
(3,769 | ) | (3,694 | ) | ||||
|
Operating
income
|
4,440 | 4,655 | ||||||
|
Other
expense
|
(5,837 | ) | (4,536 | ) | ||||
|
Income
before benefit for income taxes
|
(1,397 | ) | 119 | |||||
|
Provision
for income taxes
|
37 | 373 | ||||||
|
Net
loss
|
$ | (1,434 | ) | $ | (254 | ) | ||
|
Depreciation
and unconsolidated entity adjustment
|
3,769 | 2,194 | ||||||
|
FFO
|
$ | 2,335 | $ | 1,940 | ||||
###
The following information was filed by American Community Properties Trust on Tuesday, March 31, 2009 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.
View differences made from one year to another to evaluate American Community Properties Trust's financial trajectory
Compare this 10-K Annual Report to its predecessor by reading our highlights to see what text and tables were removed , added and changed by American Community Properties Trust.
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American Community Properties Trust provided additional information to their SEC Filing as exhibits
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CIK: 1065645
Form Type: 10-K Annual Report
Accession Number: 0001065645-09-000013
Submitted to the SEC: Tue Mar 31 2009 5:04:49 PM EST
Accepted by the SEC: Tue Mar 31 2009
Period: Wednesday, December 31, 2008
Industry: Land Subdividers And Developers No Cemeteries
External Resources:
Insider Transactions
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