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ELS Reports Second Quarter Results

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Continued Strong Performance;
Guidance Update

CHICAGO, July 18, 2022--(BUSINESS WIRE)--Equity LifeStyle Properties, Inc. (NYSE: ELS) (referred to herein as "we," "us," and "our") today announced results for the quarter and six months ended June 30, 2022. All per share results are reported on a fully diluted basis unless otherwise noted.

Financial Results for the Quarter and Six Months Ended June 30, 2022

For the quarter ended June 30, 2022, total revenues increased $35.2 million, or 10.7%, to $365.3 million, compared to $330.1 million for the same period in 2021. For the quarter ended June 30, 2022, net income available for Common Stockholders increased $0.4 million, to $61.5 million, or $0.33 per Common Share, compared to $61.1 million, or $0.33 per Common Share, for the same period in 2021.

For the six months ended June 30, 2022, total revenues increased $91.7 million, or 14.5%, to $725.5 million, compared to $633.8 million for the same period in 2021. For the six months ended June 30, 2022, net income available for Common Stockholders increased $18.1 million, or $0.09 per Common Share, to $144.4 million, or $0.78 per Common Share, compared to $126.3 million, or $0.69 per Common Share, for the same period in 2021.

Non-GAAP Financial Measures and Portfolio Performance

For the quarter ended June 30, 2022, Funds from Operations ("FFO") available for Common Stock and OP Unit holders increased $4.0 million, or $0.01 per Common Share, to $121.6 million, or $0.62 per Common Share, compared to $117.6 million, or $0.61 per Common Share, for the same period in 2021. For the six months ended June 30, 2022, Funds from Operations available for Common Stock and OP Unit holders increased $24.4 million, or $0.10 per Common Share, to $262.5 million, or $1.34 per Common Share, compared to $238.1 million, or $1.24 per Common Share, for the same period in 2021.

For the quarter ended June 30, 2022, Normalized Funds from Operations ("Normalized FFO") available for Common Stock and OP Unit holders increased $7.0 million, or $0.03 per Common Share, to $125.3 million, or $0.64 per Common Share, compared to $118.3 million, or $0.61 per Common Share, for the same period in 2021. For the six months ended June 30, 2022, Normalized Funds from Operations available for Common Stock and OP Unit holders increased $25.8 million, or $0.12 per Common Share, to $266.7 million, or $1.37 per Common Share, compared to $240.9 million, or $1.25 per Common Share, for the same period in 2021.

For the quarter ended June 30, 2022, property operating revenues, excluding deferrals, increased $20.7 million to $315.8 million, compared to $295.1 million for the same period in 2021. For the six months ended June 30, 2022, property operating revenues, excluding deferrals, increased $57.8 million to $638.2 million, compared to $580.4 million for the same period in 2021. For the quarter ended June 30, 2022, income from property operations, excluding deferrals and property management, increased $8.3 million to $174.8 million, compared to $166.5 million for the same period in 2021. For the six months ended June 30, 2022, income from property operations, excluding deferrals and property management, increased $30.5 million to $367.3 million, compared to $336.8 million for the same period in 2021.

For the quarter ended June 30, 2022, Core property operating revenues, excluding deferrals, increased approximately 4.9% and Core income from property operations, excluding deferrals and property management, increased approximately 3.3%, compared to the same period in 2021. For the six months ended June 30, 2022, Core property operating revenues, excluding deferrals, increased approximately 7.2% and Core income from property operations, excluding deferrals and property management, increased approximately 6.2%, compared to the same period in 2021.

Business Updates

Pages 1 and 2 of this Earnings Release and Supplemental Financial Information provide an update on operations and 2022 guidance.

Investment Activity

In June 2022, we completed the acquisition of Holiday Trav-L-Park Resort, a 299-site oceanfront Recreational Vehicle ("RV") community located in Emerald Isle, North Carolina, Oceanside RV Resort, a 139-site RV community located in Oceanside, California, and one land parcel adjacent to one of our properties for an aggregate purchase price of $97.4 million. Our total year to date acquisition investment is $113 million.

About Equity LifeStyle Properties

We are a self-administered, self-managed real estate investment trust ("REIT") with headquarters in Chicago. As of July 18, 2022, we own or have an interest in 449 quality properties in 35 states and British Columbia consisting of 170,880 sites.

For additional information, please contact our Investor Relations Department at (800) 247-5279 or at investor_relations@equitylifestyle.com.

Conference Call

A live webcast of our conference call discussing these results will take place tomorrow, Tuesday, July 19, 2022, at 10:00 a.m. Central Time. Please visit the Investor Relations section at www.equitylifestyleproperties.com for the link. A replay of the webcast will be available for two weeks at this site.

Forward-Looking Statements

In addition to historical information, this press release includes certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. When used, words such as "anticipate," "expect," "believe," "project," "intend," "may be" and "will be" and similar words or phrases, or the negative thereof, unless the context requires otherwise, are intended to identify forward-looking statements and may include without limitation, information regarding our expectations, goals or intentions regarding the future, and the expected effect of our acquisitions. These forward-looking statements are subject to numerous assumptions, risks and uncertainties, including, but not limited to:

  • our ability to control costs and real estate market conditions, our ability to retain customers, the actual use of sites by customers and our success in acquiring new customers at our properties (including those that we may acquire);

  • our ability to maintain historical or increase future rental rates and occupancy with respect to properties currently owned or that we may acquire;

  • our ability to attract and retain customers entering, renewing and upgrading membership subscriptions;

  • our assumptions about rental and home sales markets;

  • our assumptions and guidance concerning 2022 growth rates and Net Income, FFO and Normalized FFO per share data;

  • our ability to manage counterparty risk;

  • our ability to renew our insurance policies at existing rates and on consistent terms;

  • home sales results could be impacted by the ability of potential homebuyers to sell their existing residences as well as by financial, credit and capital markets volatility;

  • results from home sales and occupancy will continue to be impacted by local economic conditions, including an adequate supply of homes at reasonable costs, lack of affordable manufactured home financing and competition from alternative housing options including site-built single-family housing;

  • impact of government intervention to stabilize site-built single-family housing and not manufactured housing;

  • effective integration of recent acquisitions and our estimates regarding the future performance of recent acquisitions;

  • the completion of future transactions in their entirety, if any, and timing and effective integration with respect thereto;

  • unanticipated costs or unforeseen liabilities associated with recent acquisitions;

  • our ability to obtain financing or refinance existing debt on favorable terms or at all;

  • the effect of inflation and interest rates;

  • the effect from any breach of our, or any of our vendors' data management systems;

  • the dilutive effects of issuing additional securities;

  • the outcome of pending or future lawsuits or actions brought by or against us, including those disclosed in our filings with the Securities and Exchange Commission; and

  • other risks indicated from time to time in our filings with the Securities and Exchange Commission.

Our guidance acknowledges the existence of volatile economic conditions, which may impact our current guidance assumptions. Factors impacting 2022 guidance include, but are not limited to the following: (i) the mix of site usage within the portfolio; (ii) yield management on our short-term resort and marina sites; (iii) scheduled or implemented rate increases on community, resort and marina sites; (iv) scheduled or implemented rate increases in annual payments under membership subscriptions; (v) occupancy changes; (vi) our ability to attract and retain membership customers; (vii) change in customer demand regarding travel and outdoor vacation destinations; (viii) our ability to manage expenses in an inflationary environment; (ix) our ability to integrate and operate recent acquisitions in accordance with our estimates; (x) our ability to execute expansion/development opportunities in the face of supply chain delays/shortages; (xi) completion of pending transactions in their entirety and on assumed schedule; (xii) our ability to attract and retain property employees, particularly seasonal employees; (xiii) ongoing legal matters and related fees; and (xiv) costs to restore property operations and potential revenue losses following storms or other unplanned events. In addition, these forward-looking statements, including our 2022 guidance are subject to risks related to the COVID-19 pandemic, many of which are unknown, including the duration of the pandemic, the extent of the adverse health impact on the general population and on our residents, customers and employees in particular, its impact on the employment rate and the economy, the extent and impact of governmental responses and the impact of operational changes we have implemented and may implement in response to the pandemic.

For further information on these and other factors that could impact us and the statements contained herein, refer to our filings with the Securities and Exchange Commission, including the "Risk Factors" section in our most recent Annual Report on Form 10-K and subsequent quarterly reports on Form 10-Q.

These forward-looking statements are based on management's present expectations and beliefs about future events. As with any projection or forecast, these statements are inherently susceptible to uncertainty and changes in circumstances. We are under no obligation to, and expressly disclaim any obligation to, update or alter our forward-looking statements whether as a result of such changes, new information, subsequent events or otherwise.

Supplemental Financial Information

Operations Update

Normalized FFO per Common Share

  • Second Quarter ("Q2") 2022: $0.64 or 4.5% growth compared to the same period in 2021.

  • June Year to Date ("YTD") 2022: $1.37 or 9.3% growth compared to the same period in 2021.

Core Income from property operations, excluding deferrals and property management

  • Q2 2022: 3.3% growth compared to the same period in 2021.

  • June YTD 2022: 6.2% growth compared to the same period in 2021.

MH - 60% of Total Property Operating Revenues

  • Q2 2022 Core MH base rental income: 5.7% growth compared to the same period in 2021, which reflects 5.3% growth from rate increases and 0.4% from occupancy gains.

  • June YTD 2022 Core MH base rental income: 5.7% growth compared to the same period in 2021, which reflects 5.2% growth from rate increases and 0.5% from occupancy gains.

  • June YTD 2022 Core MH occupancy increased by 97 sites since December 31, 2021.

  • June YTD 2022 Core Manufactured homeowners increased by 443 since December 31, 2021.

  • Q2 New home sales: 365 which represents the highest volume of new home sales in a quarter in our history.

RV and Marina - 32% of Total Property Operating Revenues

  • Q2 2022 Core RV and marina base rental income: 6.6% growth compared to the same period in 2021.

  • June YTD 2022 Core RV and marina base rental income: 13.9% growth compared to the same period in 2021.

  • Q2 2022 Core RV annual base rental income: 9.2% growth compared to the same period in 2021, which reflects 7.1% growth from rate increases and 2.1% from occupancy gains.

  • Q2 2022 combined Core Seasonal and Transient RV base rental income: 2.4% or $0.6 million growth over the same period in 2021. Growth was $0.5 million below the midpoint of our guidance.

  • June YTD 2022 combined Core Seasonal and Transient RV base rental income: 22.8% or $13.3 million growth over the same period in 2021.

  • Core RV Site Composition

June 30, 2022

June 30, 2021

Annual

32,000

31,300

Seasonal

12,100

10,700

Transient

12,500

14,200

Member

25,400

24,800

  • Second quarter total nights camped increased 1.8% and 8.3% compared to the quarter ended June 30, 2021 and June 30, 2019, respectively.

  • During the quarter and six months ended June 30, 2022 combined Utility, Payroll and Repair & Maintenance expense, which represent approximately two thirds of property operating expense, were 28.8% and 27.1%, respectively, of total property operating revenue compared to 27.7% and 26.1% for the quarter and six months ended June 30, 2021.

  • Added 458 and 514 expansion Sites during the quarter and six months ended June 30, 2022, respectively.

  • Core Transient RV base rental income for the 2022 4th of July holiday weekend declined 5.7% over 2021 and increased 14.7% over 2019.

2022 Guidance (1)

($ in millions except per share)

Third Quarter

Full Year

Net Income/share

$0.37 to $0.43

$1.54 to $1.64

FFO/share

$0.66 to $0.72

$2.65 to $2.75

Normalized FFO/share

$0.66 to $0.72

$2.68 to $2.78

Core Portfolio:

MH rate growth

5.3% to 5.5%

5.2% to 5.4%

RV Annual rate growth

6.6% to 6.8%

6.4% to 6.6%

Combined RV Seasonal and Transient base rental income growth

(2.5)% to (3.5)%

10.6% to 11.6%

Property operating revenue growth rate

4.3% to 4.9%

5.4% to 6.4%

Property operating expense growth rate

3.7% to 4.3%

5.2% to 6.2%

Income from property operations, excluding deferrals and property management growth rate(2)

4.7% to 5.3%

5.6% to 6.6%

______________________

(1)

Third quarter and full year 2022 guidance ranges represent a range of possible outcomes and the midpoint reflects management's estimate of the most likely outcome. Actual growth rates and per share amounts could vary materially from growth rates and per share amounts presented above if any of our assumptions, including occupancy and rate changes, our ability to manage expenses in an inflationary environment, our ability to integrate and operate recent acquisitions and costs to restore property operations and potential revenue losses following storms or other unplanned events, is incorrect. See Forward-Looking Statements in this release for additional factors impacting our 2022 guidance assumptions.

(2)

The expected contribution of our third quarter Core Income from property operations, excluding deferrals and property management is within a range of 24.6% to 25.6% of our expected full year Core Income from property operations, excluding deferrals and property management.

Investor Information

Equity Research Coverage(1)

Bank of America Securities

Barclays

Berenberg Bank

Jeffrey Spector/ Joshua Dennerlein

Anthony Powell

Keegan Carl

BMO Capital Markets

Citi Research

Colliers Securities

John Kim

Michael Bilerman/ Nick Joseph

David Toti

Evercore ISI

Green Street Advisors

RBC Capital Markets

Steve Sakwa/ Samir Khanal

John Pawlowski

Brad Heffern

Robert W. Baird & Company

Truist

UBS

Wes Golladay

Anthony Hau

Michael Goldsmith

______________________

1.

Any opinions, estimates or forecasts regarding our performance made by these analysts or agencies do not represent our opinions, forecasts or predictions. We do not, by reference to these firms, imply our endorsement of or concurrence with such information, conclusions or recommendations.

Financial Highlights

(In millions, except Common Shares and OP Units outstanding and per share data, unaudited)

As of and for the Three Months Ended

Jun 30,
2022

Mar 31,
2022

Dec 31,
2021

Sept 30,
2021

Jun 30,
2021

Operating Information

Total revenues

$

365.3

$

360.2

$

335.3

$

347.2

$

330.1

Net income

$

64.6

$

87.1

$

68.8

$

74.1

$

64.1

Net income available for Common Stockholders

$

61.5

$

82.9

$

65.5

$

70.6

$

61.1

Adjusted EBITDAre (1)

$

153.3

$

168.4

$

150.7

$

150.8

$

144.6

FFO available for Common Stock and OP Unit holders (1)(2)

$

121.6

$

140.9

$

123.0

$

124.5

$

117.6

Normalized FFO available for Common Stock and OP Unit holders (1)(2)

$

125.3

$

141.4

$

123.6

$

124.5

$

118.3

Funds Available for Distribution ("FAD") for Common Stock and OP Unit holders (1)(2)

$

103.6

$

125.1

$

102.3

$

106.1

$

99.0

Common Shares and OP Units Outstanding (In thousands) and Per Share Data

Common Shares and OP Units, end of the period

195,373

195,303

194,946

192,852

192,847

Weighted average Common Shares and OP Units outstanding - Fully Diluted

195,227

195,246

193,412

192,736

192,701

Net income per Common Share - Fully Diluted (3)

$

0.33

$

0.45

$

0.36

$

0.38

$

0.33

FFO per Common Share and OP Unit - Fully Diluted

$

0.62

$

0.72

$

0.64

$

0.65

$

0.61

Normalized FFO per Common Share and OP Unit - Fully Diluted

$

0.64

$

0.72

$

0.64

$

0.65

$

0.61

Dividends per Common Share

$

0.4100

$

0.4100

$

0.3625

$

0.3625

$

0.3625

Balance Sheet

Total assets

$

5,400

$

5,265

$

5,308

$

4,982

$

4,824

Total liabilities

$

3,878

$

3,734

$

3,822

$

3,673

$

3,522

Market Capitalization

Total debt (4)

$

3,298

$

3,193

$

3,303

$

3,154

$

3,010

Total market capitalization (5)

$

17,066

$

18,130

$

20,392

$

18,216

$

17,340

Ratios

Total debt / total market capitalization

19.3

%

17.6

%

16.2

%

17.3

%

17.4

%

Total debt / Adjusted EBITDAre (6)

5.3

5.2

5.6

5.5

5.4

Interest coverage (7)

5.7

5.7

5.5

5.5

5.4

Fixed charges(8)

5.6

5.6

5.5

5.4

5.3

______________________

1.

See Non-GAAP Financial Measures Definitions and Reconciliations at the end of the supplemental financial information for definitions of Adjusted EBITDAre, FFO, Normalized FFO and FAD and a reconciliation of Consolidated net income to Adjusted EBITDAre.

2.

See page 9 for a reconciliation of Net income available for Common Stockholders to Non-GAAP financial measures FFO available for Common Stock and OP Unit holders, Normalized FFO available for Common Stock and OP Unit holders and FAD for Common Stock and OP Unit holders.

3.

Net income per Common Share - Fully Diluted is calculated before Income allocated to non-controlling interest - Common OP Units.

4.

Excludes deferred financing costs of approximately $29.8 million as of June 30, 2022.

5.

See page 16 for the calculation of market capitalization as of June 30, 2022.

6.

Calculated using trailing twelve months Adjusted EBITDAre.

7.

Calculated by dividing trailing twelve months Adjusted EBITDAre by the interest expense incurred during the same period.

8.

See Non-GAAP Financial Measures Definitions and Reconciliations at the end of the supplemental financial information for a definition of fixed charges. This ratio is calculated by dividing trailing twelve months Adjusted EBITDAre by the sum of fixed charges and preferred stock dividends, if any, during the same period.

Consolidated Balance Sheets

(In thousands, except share and per share data)

June 30, 2022

December 31, 2021

(unaudited)

Assets

Investment in real estate:

Land

$

2,073,106

$

2,019,787

Land improvements

4,031,259

3,912,062

Buildings and other depreciable property

1,138,211

1,057,215

7,242,576

6,989,064

Accumulated depreciation

(2,197,013

)

(2,103,774

)

Net investment in real estate

5,045,563

4,885,290

Cash and restricted cash

42,426

123,398

Notes receivable, net

41,925

39,955

Investment in unconsolidated joint ventures

84,113

70,312

Deferred commission expense

48,806

47,349

Other assets, net

136,755

141,567

Total Assets

$

5,399,588

$

5,307,871

Liabilities and Equity

Liabilities:

Mortgage notes payable, net

$

2,724,040

$

2,627,783

Term loan, net

496,373

297,436

Unsecured line of credit

47,800

349,000

Accounts payable and other liabilities

185,961

172,285

Deferred membership revenue

188,582

176,439

Accrued interest payable

9,520

9,293

Rents and other customer payments received in advance and security deposits

145,265

118,696

Distributions payable

80,311

70,768

Total Liabilities

3,877,852

3,821,700

Equity:

Preferred stock, $0.01 par value, 10,000,000 shares authorized as of June 30, 2022 and December 31, 2021; none issued and outstanding.

Common stock, $0.01 par value, 600,000,000 shares authorized as of June 30, 2022 and December 31, 2021; 186,076,327 and 185,640,379 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively.

1,916

1,913

Paid-in capital

1,622,876

1,593,362

Distributions in excess of accumulated earnings

(191,828

)

(183,689

)

Accumulated other comprehensive income

16,241

3,524

Total Stockholders’ Equity

1,449,205

1,415,110

Non-controlling interests – Common OP Units

72,531

71,061

Total Equity

1,521,736

1,486,171

Total Liabilities and Equity

$

5,399,588

$

5,307,871

Consolidated Statements of Income

(In thousands, unaudited)

Quarters Ended June 30,

Six Months Ended June 30,

2022

2021

2022

2021

Revenues:

Rental income

$

275,330

$

255,698

$

560,395

$

504,720

Annual membership subscriptions

15,592

14,267

30,749

27,921

Membership upgrade sales current period, gross

9,535

9,207

16,686

19,221

Membership upgrade sales upfront payments, deferred, net

(6,367

)

(6,454

)

(10,451

)

(13,881

)

Other income

14,195

14,185

27,736

24,706

Gross revenues from home sales, brokered resales and ancillary services (1)

52,681

40,237

92,390

65,478

Interest income

1,722

1,742

3,481

3,509

Income from other investments, net

2,617

1,222

4,521

2,158

Total revenues

365,305

330,104

725,507

633,832

Expenses:

Property operating and maintenance

114,307

102,663

218,299

191,536

Real estate taxes

19,182

17,896

38,639

35,746

Sales and marketing, gross

6,409

6,298

11,323

12,474

Membership sales commissions, deferred, net

(957

)

(1,438

)

(1,540

)

(2,937

)

Property management

19,099

16,560

36,970

31,940

Depreciation and amortization

50,796

48,316

100,190

93,714

Cost of home sales, brokered resales and ancillary services (1)

40,971

31,793

71,670

50,710

Home selling expenses and ancillary operating expenses (1)

7,584

6,090

14,066

11,031

General and administrative

11,695

10,228

23,992

20,740

Other expenses

4,189

800

5,009

1,498

Early debt retirement

640

755

1,156

2,784

Interest and related amortization

28,053

27,131

55,517

53,406

Total expenses

301,968

267,092

575,291