UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report: October 16, 2006 (Date of earliest event reported) EQUITY LIFESTYLE PROPERTIES, INC. (Exact name of registrant as specified in its charter) MARYLAND 1-11718 36-3857664 - -------- (State or other jurisdiction of (Commission (IRS Employer incorporation or organization) File No.) Identification Number) TWO NORTH RIVERSIDE PLAZA, CHICAGO, ILLINOIS 60606 (Address of principal executive offices) (Zip Code) (312) 279-1400 (Registrant's telephone number, including area code) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION On October 16, 2006, Equity LifeStyle Properties, Inc. issued a news release announcing its results of operations for the quarter and nine months ended September 30, 2006. This information is furnished as Exhibit 99.1 to this report on Form 8-K. The information contained in this report on Form 8-K, including Exhibit 99.1, shall not be deemed "filed" with the Securities and Exchange Commission nor incorporated by reference in any registration statement filed by Equity LifeStyle Properties, Inc. under the Securities Act of 1933, as amended. This news 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. These forward-looking statements are subject to numerous assumptions, risks and uncertainties, including, but not limited to: in the age-qualified properties, 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 properties, 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; our ability to maintain rental rates and occupancy with respect to properties currently owned or pending acquisitions; our 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 our filings with the SEC. 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. ELS is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements whether as a result of such changes, new information, subsequent events or otherwise. ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS (c) Exhibits The information contained in the attached exhibit is unaudited and should be read in conjunction with the Registrant's annual and quarterly reports filed with the Securities and Exchange Commission. Exhibit 99.1 Equity LifeStyle Properties, Inc. press release dated October 16, 2006, "ELS Reports Strong Core Performance"
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized. EQUITY LIFESTYLE PROPERTIES, INC. By: /s/ Thomas P. Heneghan ------------------------------------- Thomas P. Heneghan President and Chief Executive Officer By: /s/ Michael B. Berman ------------------------------------- Michael B. Berman Executive Vice President and Chief Financial Officer Date: October 17, 2006
EXHIBIT 99.1 (ELS LOGO) CONTACT: Michael Berman FOR IMMEDIATE RELEASE (312) 279-1496 October 16, 2006 ELS REPORTS STRONG CORE PERFORMANCE ISSUES GUIDANCE FOR 2007 CHICAGO, IL -- OCTOBER 16, 2006 -- Equity LifeStyle Properties, Inc. (NYSE: ELS) announced results for the quarter and nine months ended September 30, 2006. a) Financial Results For the third quarter of 2006, Funds From Operations ("FFO") were $20.1 million or $0.66 per share on a fully diluted basis, compared to $15.9 million or $0.53 per share on a fully diluted basis for the same period in 2005. For the nine months ended September 30, 2006, FFO were $64.0 million or $2.12 per share on a fully diluted basis, compared to $58.5 million or $1.95 per share on a fully diluted basis for the same period in 2005. Net income available to common stockholders totaled $3.6 million or $0.15 per share on a fully diluted basis for the quarter ended September 30, 2006. This compares to net income available to common stockholders of $1.1 million or $0.04 per share on a fully diluted basis for the third quarter of 2005. Net income available to common stockholders totaled $14.8 million or $0.62 per share on a fully diluted basis for the nine months ended September 30, 2006. This compares to net income available to common stockholders of $12.3 million or $0.52 per share on a fully diluted basis for the nine months ended September 30, 2005. The attachment to this press release reconciles FFO to net income, the most directly comparable GAAP measure. The results for the quarter ended September 30, 2005 included a one-time gain from joint ventures of approximately $0.8 million of FFO or approximately $0.6 million of net income available to common stockholders. The results for the nine months ended September 30, 2005 included one-time gains from joint ventures of approximately $2.0 million of FFO or $1.6 million of net income available to common stockholders. b) Portfolio Performance For the third quarter of 2006, property operating revenues were approximately $87.3 million, compared to $77.5 million for the third quarter of 2005. Property operating revenues for the nine months ended September 30, 2006 were $261.9 million, compared to $237.9 million for the same period in 2005.
For the quarter ended September 30, 2006, Core(1) property operating revenues increased approximately 4.4 percent, while operating expenses increased approximately 3.1 percent, over the same period in 2005. Net Core property operating income increased approximately 5.5 percent over the same period last year. For the nine months ended September 30, 2006, Core property operating revenues increased approximately 4.3 percent, while operating expenses increased approximately 5.0 percent and net Core property operating income increased approximately 3.7 percent, over the same period last year. The Company's 2006 acquisitions added approximately $1.4 million of property operating income in the quarter ended September 30, 2006 and approximately $2.9 million of property operating income for the nine months ended September 30, 2006. For the quarter ended September 30, 2006, the Company had 203 new home sales (excluding 17 third-party dealer sales), an approximate 25 percent increase over the quarter ended September 30, 2005. Gross revenues from home sales were approximately $16.6 million for the quarter ended September 30, 2006, compared to approximately $15.7 million for the quarter ended September 30, 2005. Net income from sales operations was approximately $0.1 million for the quarter ended September 30, 2006, compared to approximately $0.9 million for the quarter ended September 30, 2005. For the nine months ended September 30, 2006, the Company had 528 new home sales (excluding 46 third-party dealer sales), an approximate 14 percent increase over the nine months ended September 30, 2005. Gross revenues from home sales were approximately $46.6 million for the nine months ended September 30, 2006, compared to approximately $43.4 million for the same period last year. Net income from sales operations was approximately $2.4 million for the nine months ended September 30, 2006, compared to approximately $2.9 million for the nine months ended September 30, 2005. c) Asset-Related Transactions During the quarter ended September 30, 2006, the Company sold its preferred partnership interest in College Heights for approximately $9.0 million. At the time of the sale, College Heights owned a portfolio of 11 properties with approximately 1,900 sites located in Michigan, Ohio and Florida. The proceeds received represent a per site value of approximately $22,000. The Company currently has four all-age properties held for disposition and is in various stages of negotiations for sale of those properties. The Company plans to reinvest the proceeds from the sale of these properties or reduce its outstanding lines of credit with the proceeds. One of the properties held for disposition, Del Rey located in Albuquerque, New Mexico, was under contract to be sold to a single-family home builder. The contract terminated and the Company retained a non-refundable deposit. In addition, in the quarter ended September 30, 2006, the Company also expensed certain direct costs related to potential transactions no longer being considered. The net effect of these asset-related transactions is included in "Income from other investments, net" and is approximately $0.04 of FFO per share on a fully diluted basis. d) Balance Sheet The Company's average long-term secured debt balance was approximately $1.6 billion for the quarter ended September 30, 2006, with a weighted average interest rate, including amortization, of - ---------- (1) Properties the Company owned for the same period in both 2005 and 2006.
approximately 6.1 percent per annum. The Company's unsecured debt balance currently consists of approximately $108 million outstanding on its lines of credit, and has a current availability of approximately $167 million. Interest coverage was approximately 1.9 times in the quarter ended September 30, 2006. During the quarter ended September 30, 2006, the Company refinanced three of the mortgages that were assumed in March 2006 upon the Company's acquisition of the Mezzanine Portfolio. Net proceeds of approximately $7.8 million were used to pay down amounts outstanding on our lines of credit. e) Guidance The Company projects fourth quarter 2006 FFO per share on a fully diluted basis to be in the range of $0.61 to $0.63. The Company expects Core property operating revenues to increase approximately 4.25 to 4.50 percent and net Core property operating income to grow approximately 3.5 to 4.0 percent over the fourth quarter of 2005. We expect expenses to continue to grow at a rate higher than inflation with utility, insurance and property tax expenses continuing to be the primary drivers. The fourth quarter of 2005 included a one-time charge of $1.3 million from Hurricane Wilma in property operating and maintenance expense and the fourth quarter 2006 guidance excludes the impact of this hurricane related expense. The Company expects its 2006 acquisitions to add approximately $1.5 million of property operating income for the fourth quarter of 2006. Our overall interest rate (including amortization expense) is approximately 6.1 percent per annum. The Company makes no assumptions concerning future acquisitions. Preliminary guidance for 2007 FFO per share on a fully diluted basis is projected to be in the range of $2.95 to $3.05. The Company expects Core property operating revenue for 2007 to grow at approximately 5.25 to 5.75 percent over 2006, assuming stable occupancy. Core property expenses for 2007 are expected to grow approximately 4.75 to 5.25 percent over 2006. In 2007, the Company expects income from property operations in the Core portfolio to grow from 5.50 to 6.00 percent over 2006. The Company expects 2006 acquisitions will contribute approximately $6.75 to $7.25 million to income from property operations. Income from property operations in the first quarter is expected to represent approximately 25 to 30 percent of the 2007 budget with the remainder earned ratably in the other quarters. For 2007, the Company anticipates its income from home sales and other to be in line with 2006 performance. Other income and expenses expected for 2007 include an approximate $18.9 million lease payment from Privileged Access and approximately $3.0 million in equity in income from unconsolidated joint ventures. The remaining items included with other income and expenses for 2007 are expected to be in line with the third quarter 2006 run rate, such as interest income, general and administrative costs and rent control initiatives. The Company's projected interest expense assumes an outstanding mortgage balance of approximately $1.58 billion at an overall interest rate (including amortization) of 6.1 percent per annum. In addition, it is anticipated that the Company's average outstanding balance on its lines of credit will be approximately $108 million at an overall interest rate of approximately 6.75 percent per annum. Short-term interest rates will impact the Company's borrowing costs and its 2007 financial results. Factors impacting 2006 and 2007 guidance include: i) mix of site usage within the portfolio; ii) yield management on short-term resort sites; iii) scheduled or implemented rate increases; and iv) occupancy changes. Results for 2006 and 2007 also may be impacted by, among other things: i) continued competitive
housing options and new home sales initiatives impacting occupancy levels at certain properties; ii) variability in income from home sales operations, including anticipated expansion projects; iii) potential effects of uncontrollable factors such as hurricanes; iv) potential acquisitions, investments and dispositions; v) changes in interest rates; and vi) the Company's continued initiatives regarding rent control legislation in California and related legal fees. Quarter-to-quarter results during the year are impacted by seasonality at certain of the properties. This news 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. These forward-looking statements are subject to numerous assumptions, risks and uncertainties, including, but not limited to: in the age-qualified properties, 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 properties, 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; our ability to maintain rental rates and occupancy with respect to properties currently owned or pending acquisitions; our 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 our filings with the SEC. 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. The Company is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements whether as a result of such changes, new information, subsequent events or otherwise. Equity LifeStyle Properties, Inc. owns or has an interest in 296 quality properties in 30 states and British Columbia consisting of 108,989 sites. We are a self-administered, self-managed, real estate investment trust (REIT) with headquarters in Chicago. A live webcast of Equity LifeStyle Properties, Inc.'s conference call discussing these results will be available via our website in the Investor Info section at www.equitylifestyle.com at 10:00 a.m. Central Time on October 17, 2006. The conference call will be limited to questions and answers from interested parties. ### Tables follow
EQUITY LIFESTYLE PROPERTIES, 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, 2006 2005 2006 2005 ------------ ------------ ------------ ------------ PROPERTY OPERATIONS: Community base rental income ......................... $ 56,877 $ 53,507 $ 168,616 $ 159,467 Resort base rental income ............................ 22,887 17,477 69,794 57,271 Utility and other income ............................. 7,538 6,516 23,451 21,150 ------------ ------------ ------------ ------------ Property operating revenues ....................... 87,302 77,500 261,861 237,888 Property operating and maintenance ................... 30,195 26,153 87,456 76,957 Real estate taxes .................................... 6,785 6,200 20,136 18,646 Property management .................................. 4,301 4,198 13,527 11,813 ------------ ------------ ------------ ------------ Property operating expenses ....................... 41,281 36,551 121,119 107,416 ------------ ------------ ------------ ------------ Income from property operations ................... 46,021 40,949 140,742 130,472 HOME SALES OPERATIONS: Gross revenues from inventory home sales ............. 16,577 15,706 46,578 43,393 Cost of inventory home sales ......................... (15,125) (13,534) (41,229) (38,104) ------------ ------------ ------------ ------------ Gross profit from inventory home sales ............ 1,452 2,172 5,349 5,289 Brokered resale revenues, net ........................ 448 678 1,723 2,095 Home selling expenses ................................ (2,472) (2,290) (7,395) (6,552) Ancillary services revenues, net ..................... 699 308 2,701 2,018 ------------ ------------ ------------ ------------ Income from home sales and other .................. 127 868 2,378 2,850 OTHER INCOME AND EXPENSES: Interest income ...................................... 595 311 1,435 994 Income from other investments, net ................... 6,172 4,233 15,455 12,629 Equity in income of unconsolidated joint ventures .... 1,328 2,891 3,933 7,435 General and administrative ........................... (3,541) (3,512) (10,342) (10,197) Rent control initiatives ............................. (201) (194) (499) (807) ------------ ------------ ------------ ------------ Operating income (EBITDA) ......................... 50,501 45,546 153,102 143,376 Interest and related amortization .................... (26,368) (25,302) (77,254) (75,304) Loss on early debt retirement ........................ -- (482) -- (482) Income from discontinued operations .................. 82 383 519 1,556 Depreciation on corporate assets ..................... (102) (243) (313) (682) Income allocated to Preferred OP Units ............... (4,031) (4,017) (12,099) (9,929) ------------ ------------ ------------ ------------ FUNDS FROM OPERATIONS (FFO) ....................... $ 20,082 $ 15,885 $ 63,955 $ 58,535 Depreciation on real estate and other costs .......... (15,158) (13,984) (44,633) (41,243) Depreciation on unconsolidated joint ventures ........ (459) (517) (1,465) (1,341) Depreciation on discontinued operations .............. -- -- -- (329) Gain on sale of properties ........................... -- -- 852 -- Income allocated to Common OP Units .................. (911) (293) (3,874) (3,335) ------------ ------------ ------------ ------------ NET INCOME AVAILABLE TO COMMON SHARES ............. $ 3,554 $ 1,091 $ 14,835 $ 12,287 ============ ============ ============ ============ NET INCOME PER COMMON SHARE -- BASIC ................... $ 0.15 $ 0.04 $ 0.63 $ 0.53 NET INCOME PER COMMON SHARE -- FULLY DILUTED ........... $ 0.15 $ 0.04 $ 0.62 $ 0.52 ------------ ------------ ------------ ------------ FFO PER COMMON SHARE -- BASIC .......................... $ 0.68 $ 0.54 $ 2.16 $ 1.99 FFO PER COMMON SHARE -- FULLY DILUTED .................. $ 0.66 $ 0.53 $ 2.12 $ 1.95 ------------ ------------ ------------ ------------ Average Common Shares -- Basic ......................... 23,474 23,097 23,397 23,038 Average Common Shares and OP Units -- Basic ............ 29,633 29,405 29,586 29,357 Average Common Shares and OP Units -- Fully Diluted .... 30,239 30,149 30,209 30,008 ------------ ------------ ------------ ------------
EQUITY LIFESTYLE PROPERTIES, INC. (UNAUDITED) AS OF AS OF SEPTEMBER 30, DECEMBER 31, TOTAL COMMON SHARES AND OP UNITS OUTSTANDING: 2006 2005 ------------- ------------- Total Common Shares Outstanding ........... 23,571,624 23,295,956 Total Common OP Units Outstanding ......... 6,102,441 6,207,471 SELECTED BALANCE SHEET DATA: SEPTEMBER 30, DECEMBER 31, 2006 2005 (amounts in 000s) (amounts in 000s) ----------------- ----------------- Total real estate, net ......... $ 1,878,583 $ 1,774,242 Cash and cash equivalents ...... $ 0 $ 610 Total assets (1) ............... $ 2,034,920 $ 1,948,874 Mortgage notes payable ......... $ 1,578,098 $ 1,500,581 Unsecured debt ................. $ 115,200 $ 137,700 Total liabilities .............. $ 1,775,176 $ 1,706,979 Minority interest .............. $ 212,836 $ 209,379 Total stockholders' equity ..... $ 46,908 $ 32,516
EQUITY LIFESTYLE PROPERTIES, INC. (UNAUDITED) SUMMARY OF TOTAL SITES AS OF SEPTEMBER 30, 2006: