Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from David Bragg - Merrill Lynch. Please proceed.
David Bragg - Merrill Lynch
Good morning. I just wanted to touch on the MH segment and occupancy there. Michael, could talk about your target for home sale income for this year and if that has changed? Also in terms of volume. It would be great to hear an update on the correlation between home sale volume and occupancy in that segment.
Michael Berman
Sure. Right now our earnings guidance has zero profit contribution from our overall home sales operation. Obviously given the current economy, we are going to watch that very carefully, but that is our corporate goal right now.
With respect to home sale volumes, we are assuming 2008 to be similar to 2007. We saw an uptick in the RV home sale line; a bit of a downtick in the MH.
With respect to occupancy, our guidance assumes flat occupancy again during ’07 and ’08. We had a bit of drop down in turnover given the reduced transactions that are going on in the marketplace. That has helped to offset the decline in home sales. During 2007, we saw an occupancy gain for the first time in a long time and the driver there was our operations in Arizona.
David Bragg - Merrill Lynch
I think you have said this before, but is it correct that new home sale volume of around 400 to 500 is targeted to not have a negative impact on MH occupancy?
Michael Berman
Yes, and inside that, new home sale volume is roughly 50% MH and 50% RV. It’s the MH that counts towards the occupancy statistics.
David Bragg - Merrill Lynch
Correct. So that was the split this past year in ’07?
Michael Berman
Approximately yes.
David Bragg - Merrill Lynch
Is that the driver behind the lower sale prices that we saw this quarter split towards the park models?
Thomas P. Heneghan
Park models certainly drive it and we have also seen a little bit of selling pressure on the prices in some markets where we sell homes as well.
David Bragg - Merrill Lynch
In Arizona versus Florida, can you update us on the occupancy levels in both of those markets and how they have changed during ’07?
Thomas P. Heneghan
Florida was flat for year. I am going to guess its approximately 90%, David, I don’t remember off the top of my head. Arizona I believe was up approximately 100 sites during the course of the year, on average.
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