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: September 5, 2012
(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 incorporation or organization) |
(Commission File No.) | (IRS Employer 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. |
Equity LifeStyle Properties, Inc. (the “Company”) hereby reconfirms previously issued guidance for its net income per share (fully diluted) and funds from operations per share (fully diluted) for the year ending December 31, 2012 to be between $1.04 and $1.24 and $4.44 and $4.64, respectively.
The Company previously announced an offer to acquire all of the 8,000,000 shares of its 8.034% Series A Cumulative Redeemable Perpetual Preferred Stock, par value $0.01per share (the “Series A Shares”) in exchange for (i) one newly issued depository share (each a “Depository Share”) representing 1/100th of a share of its newly created 6.75% Series C Cumulative Redeemable Preferred Stock, par value $0.01 per share (each a “Series C Share”) with a liquidation value equal to $25.00 per Depository Share, plus (ii) cash in an amount equal to the amount of unpaid dividends accrued on such tendered Series A Share through and including the expiration date of the offer. The Company’s guidance assumes all the Series A Shares remain outstanding for the year ended December 31, 2012 and makes no assumptions about the offer.
| Item 7.01 | Regulation FD Disclosure. |
In accordance with General Instruction B.2. of Form 8-K, the following information shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. Nor shall the information in this Current Report be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended. The Company disclaims any intention or obligation to update or revise this information.
From time to time, the Company will meet with analysts and investors and present a slide presentation. A copy of this slide presentation is attached hereto as Exhibit 99.1 and is incorporated herein by reference. Included in this slide presentation is a discussion of the Company’s business and certain financial information regarding 2012 guidance.
This report 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 the Company’s expectations, goals or intentions regarding the future, and the expected effect of the recent acquisitions on the Company. These forward-looking statements are subject to numerous assumptions, risks and uncertainties, including, but not limited to:
| • | the Company’s ability to control costs, real estate market conditions, the actual rate of decline in customers, the actual use of sites by customers and its success in acquiring new customers at its Properties (including those that it may acquire); |
| • | the Company’s ability to maintain historical rental rates and occupancy with respect to Properties currently owned or that the Company may acquire; |
| • | the Company’s ability to retain and attract customers renewing, upgrading and entering right-to-use contracts; |
| • | the Company’s assumptions about rental and home sales markets; |
| • | the Company’s assumptions and guidance concerning 2012 estimated net income and funds from operations; |
| • | the Company’s ability to manage counterparty risk; |
| • | 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, credit and capital markets volatility; |
| • | 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; |
| • | impact of government intervention to stabilize site-built single family housing and not manufactured housing; |
| • | effective integration of the recent acquisitions and the Company’s estimates regarding the future performance of recent acquisitions; |
| • | unanticipated costs or unforeseen liabilities associated with the recent acquisitions; |
| • | ability to obtain financing or refinance existing debt on favorable terms or at all; |
| • | the effect of interest rates; |
| • | the dilutive effects of issuing additional securities; |
| • | the effect of accounting for the entry of contracts with customers representing a right-to-use the Properties under the Codification Topic “Revenue Recognition;” and |
| • | other risks indicated from time to time in the Company’s filings with the Securities and Exchange Commission. |
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. is a fully integrated owner and operator of lifestyle-oriented properties and owns or has an interest in 382 quality properties in 32 states and British Columbia consisting of 141,076 sites. The Company is a self-administered, self-managed, real estate investment trust (REIT) with headquarters in Chicago.
| Item 9.01 | Financial Statements and Exhibits |
(d) Exhibits
Exhibit 99.1 Investor Presentation
SIGNATURE
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 hereunto duly authorized.
| EQUITY LIFESTYLE PROPERTIES, INC. | ||||||
| Date: September 5, 2012 | By | /s/ Marguerite Nader | ||||
| Marguerite Nader | ||||||
| President and Chief Financial Officer | ||||||
Exhibit 99.1
Investor Presentation September 2012
Equity Lifestyle Properties, Inc.
Two North Riverside Plaza
Chicago, IL 60606
Equity LifeStyle Properties
Forward-Looking Statements
This presentation 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 the Company’s expectations, goals or intentions regarding the future, and the expected effect of the recent acquisitions on the Company. These forward-looking statements are subject to numerous assumptions, risks and uncertainties, including, but not limited toThese to: the Company’s ability to control costs, real estate market conditions, the actual rate of decline in customers, the actual use of sites by customers and its success in acquiring new customers at its Properties (including those that it may acquire);
the Company’s ability to maintain historical rental rates and occupancy with respect to Properties currently owned or that the Company may acquire;
the Company’s ability to retain and attract customers renewing, upgrading and entering right-to-use contracts;
the Company’s assumptions about rental and home sales markets;
the Company’s assumptions and guidance concerning 2012 estimated net income and funds from operations;
the Company’s ability to manage counterparty risk;
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, credit and capital markets volatility;
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;
impact of government intervention to stabilize site-built single family housing and not manufactured housing;
effective integration of the recent acquisitions and the Company’s estimates regarding the future performance of the recent acquisitions; 2 unanticipated costs or unforeseen liabilities associated with the recent acquisitions;
ability to obtain financing or refinance existing debt on favorable terms or at all;
the effect of interest rates;
the dilutive effects of issuing additional securities;
the effect of accounting for the entry of contracts with customers representing a right-to-use the Properties under the Codification Topic “Revenue Recognition;” and
other risks indicated from time to time in the Company’s filings with the Securities and Exchange Commission. 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
Real Estate
| 3 |
|
Equity LifeStyle Properties
ELS Property Locations
| 4 |
|
Equity LifeStyle Properties
One of the nation’s largest real estate networks with 382 properties containing over
141,000 sites in 32 states and British Columbia ELS Overview
ELS has a unique business model
ELS owns the land
Leases individual developed sites to customers
Customers own the units they place on the sites
ELS site composition
Over 93% of property operating revenue is from annual revenue streams (1)
75,600 manufactured or resort home sites
| 5 |
|
Note:
1) See page 22 for details.
65,500 sites for resort cottages (park models) and recreational vehicles
• Includes 46,000 sites primarily rented on an annual basis
ELS’s rent position is prime
Over 1,000,000 customer contacts
Equity LifeStyle Properties
ELS Investment Highlights
Well Located Real Estate
>80 properties with lake, river or ocean frontag frontage
>100 properties within 10 miles of coastal United States
Property locations are strongly correlated with population migration
Financial Performance and Fundamentals
Strong Long Term Performance
Long Term Predictable Cash Flows
Balance Sheet Flexibility
Favorable Customer Demographics
Baby Boomers
Active adults and RV owners / Outdoor enthusiasts
Seasoned Management Team
| 6 |
|
Equity LifeStyle Properties
Property Location Shift (1)(2)(3)(4)
Top 5 New Acquisition States: +226 properties; +15.4% population growth All Disposition States: -13 properties; +6.4% population growth
122
Properties currently on the west coast (5) 66 properties currently on the east coast (5)
| 7 |
|
+ properties since IPO
- properties since IPO
Notes:
1) Source: US Census Bureau, 2010.
2) Population change is from 2000 – 2010.
3) Top 5 additional states are FL, CA, AZ, TX, and WA.
4) Canada not included.
5) West coast = AZ, CA, NV, OR, WA and British Columbia. East coast = CT, DE, MA, MD, ME, NC, NH, NJ, NY, PA, SC, and VA.
134 properties
currently
in FL & TX
Equity LifeStyle Properties
Real Estate
Primary investment is in land; the appreciating component of real estate in the De Anza Santa Cruz—Santa Cruz, CA long run
Lower maintenance costs/customer turnover costs than other forms of real estate
High quality real estate
Asset scarcity
High barriers to entry
Retirement and vacation destinations
Colony Cove—Ellenton, FL
Award winning properties
| 8 |
|
Equity LifeStyle Properties
Manufactured Home Community
Colony Cove—Ellenton, FL
9
Equity LifeStyle Properties
Manufactured Home Community
Contempo Marin—San Rafael, CA
10
Equity LifeStyle Properties
Manufactured Home Community
De Anza Santa Cruz—Santa Cruz, CA
11
Equity LifeStyle Properties
Manufactured Home Community
Mariner’s Cove—Lewes, DE
12
Equity LifeStyle Properties
RV Resort
Viewpoint—Mesa, AZ
13
Equity LifeStyle Properties
RV Resort
Sunshine Key RV Resort & Marina—The Florida Keys
14
Equity LifeStyle Properties
Financial Performance
15
Equity LifeStyle Properties
Track Record
| Item |
|
IPOYear |
|
|
2012 |
| ||
| Properties |
|
41 |
|
|
382 |
| ||
| Sites |
|
12,312 |
|
|
141,076 |
| ||
| States |
|
16 |
|
|
32 |
| ||
| FFO Per Share (1) |
$ |
0.94 |
|
$ |
4.54 |
| ||
| Common Stock Price (2) |
$ |
12.88 |
|
$ |
68.76 |
| ||
| Enterprise Value (3) |
$ |
296 |
|
$ |
5.6 |
| ||
| Dividend Paid Cumulative (4) |
|
- |
|
$ |
30.07 |
| ||
| Cumulative Total Return (5) |
|
- |
|
|
1,240 |
% | ||
| S&P 500 Total Return (5) |
|
- |
|
|
366 |
% |
Notes:
1) See page 43 for definition of FFO. 1993 amount was determined from amounts presented in the 1996 Form 10-K. FFO in the 1996 Form 10-K is presented in accordance with NAREIT’s definition of FFO established in March 1995. 2012 amount is the midpoint of the estimated 2012 FFO per share range of $4.44 to $4.64 disclosed in the Second Quarter 2012 Supplemental Operating and Financial Information furnished with the SEC as Exhibit 99.2 to the Form 8-K filed on July 17, 2012 (the “Supplemental Package”). On August 9, 2012, the Company announced an offer to acquire all of the 8 million shares of its 8.034% Series A Shares in exchange for (i) one newly issued depository share (each a “Depository Share”) representing 1/100th of a share of its newly created 6.75% Series C Cumulative Redeemable Preferred Stock, par value $0.01 per share (each a “Series C Share”) with a liquidation value equal to $25.00 per Depository Share, plus (ii) cash in an amount equal to the amount of unpaid dividends accrued on such tendered Series A Share through and including the expiration date of the offer. The Company’s guidance assumes all the Series A Shares remain outstanding for the year ended December 31, 2012 and includes no assumptions about the outcome of the offer. 2) The 1993 stock price is split-adjusted; the 2012 price is the closing price as of August 31, 2012. 3) 2012 amount is as of June 30, 2012. See page 27. 4) Source: SNL Financial. Includes dividends paid from IPO date of February 25, 1993 through August 31, 2012. 5) Source: SNL Financial from IPO through August 31, 2012 (calculation assumes common dividend reinvestment).16
Equity LifeStyle Properties
Total Return Performance (1)
ELS total return has
40 60 80
Total Return (%)
| 5 |
|
Year -Total Return Performance |
outperformed both the S&P 500 and other REIT’s for both the last 5 and 10 years
ELS announced
-80 -60 -40 -20 0 20July-07 July-08 July-09 July-10 July-11July-12 ELS (+77%) SNL US REIT Equity (+31%) (2) S&P 500 (+6%) 200 250
10 Year -Total Return Performance
17
2012 dividend is 17% higher than 2011
Notes: Source: SNL Financial. 1) Total return calculation assumes dividend reinvestment. 2) SNL US REIT Equity : Includes all publicly traded (NYSE, NYSE Amex, NASDAQ, OTC BB, Pink Sheets) Equity REITs in SNL’s coverage universe. -50 0 50 100 150 July-02 July-03 July-04 July-05 July-06 July-07 July-08 July-09 July-10 July-11 July-12 Total Return (%) ELS (+230%) SNL US REIT Equity (+200%) (2) S&P 500 (+85%)
Equity LifeStyle Properties
Consistent Same Store NOI Growth and Outperformance Q3 1998 – Q2 2012 (1) Same Store NOI Averages: 9.0% 9.5% 10.0% REIT Industry ELS Industry Average—2.3% ELS Average—3.8% Apartments Average—2.3% ELS has maintained positive same store NOI growth all quarters since at least Q3 ‘98 ELS 3.8% REIT’s 2.3% Apartments 2.3%
-0.5% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% 7.5% 8.0% 8.5% 18 Note:
1) Source for Same Store NOI data: Citi Investment Research, August 2012. Earliest quarter collected by Citi is third quarter of 1998. “REIT Industry” includes an index of REITs across a variety of asset classes, including regional malls, shopping centers, multi family, student housing, manufactured homes, self storage, office, industrial, mixed office and specialty.
-3.5% -3.0% -2.5% -2.0% -1.5% -1.0% 3Q98 4Q98 1Q99 2Q99 3Q99 4Q99 1Q00 2Q00 3Q00 4Q00 1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
Equity LifeStyle Properties
ELS vs. Multifamily
Same Store NOI Indexed Growth (1) ELS compounded Same Store NOI growth rates
$165
Same Store NOI Indexed Growth significantly
outperformed the REIT Multifamily industry since 1999
$115 $120 $125 $130 $135 $140 $145 $150 $155 $160
FFO Multiples
ELS Multifamily 1996 – 2001(3) 12.9x 11.0x
19
Notes:
1) Source: Citi Investment Research, August 2012. Same Store Indexed Growth assumes initial investment of $100 multiplied by the annual same store NOI growth rate. 2) Source: Citi Investment Research, August 2012. Averages equal annualized quarterly same store NOI averages collected by Citi. See page 12. 3) Source: SNL Financial. Average FFO Multiple for the period calculated on a trailing 12 month basis. Multiple equals stock price divided by FFO per share. $95
$100 $105 $110 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Multifamily Averages (2) ELS Averages (2) 2001 2002 – 2011(3) 16.9x 18.2x 2012 15.8x 20.5x
Equity LifeStyle Properties
ELS vs. Multifamily (cont’d) FFO/Share and Total Return
While ELS and SNL Multifamily Index have had
FFO/Share and Total Return: 2002-2011 (1)
similar total returns, ELS has far outpaced Multifamily Index in FFO/share growth
$150 $200 $250 $300 $350
FFO/Share and Total Return (Indexed)
20
Notes:
Source: SNL Financial, May 2012. 1) Growth in FFO/Share and Total Return assumes initial investment of $100 multiplied by the annual FFO/Share and Total Return growth rates, respectively. Total Return assumes dividend reinvestment. $50 $100
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
ELS FFO/Share (61.2%) US REIT Multifamily FFO/Share (2.4%) ELS Total Return (234.2%) US REIT Multifamily Total Return (241.9%)
Equity LifeStyle Properties
Long Term Predictable Cash Flows Revenue (In $US millions) FFO expected to grow
$707.6 $600 $700 $800
Funds from Operations (In $US millions) (3) 40% in 2012 Over 96% of estimated 2012 revenues is comprised of property operating revenues 2011 and 2012 growth largely driven by $1.4 $250
$439.1 $467.3 $508.3 $517.3 $589.2 $0 $100 $200 $300 $400 $500 $600 2007 2008 2009 2010 2011 2012 (1)
HTA Revenue (2) 21
billion Hometown acquisition during the second half of 2011
Notes:
1) Based on Company’s estimate and represents the midpoint of a range. See the Supplemental Package.
2) Portion of Total Revenue earned or expected to be earned from properties and chattel loans acquired from Hometown. 3) See page 43 for definition of FFO and reconciliation of Net Income available for common shares to FFO. See also footnote 1 on page 16.
$92.8 $98.8 $120.4 $126.0 $147.5 $206.2 $0 $50 $100 $150 $200
2007 2008 2009 2010 2011 2012 (1)
Equity LifeStyle Properties
Steady, Predictable Revenue Streams
Property Revenue Buckets (1) Transient Seasonal Annual Annual RV MH Utility & Other Annual Right to Use
12.7% 9.4% 9.0% 62.2% 22
All Annual Revenue = 93.3%
$687M Property Operating Revenues Note:
1) Property revenue buckets reflect Company’s estimated 2012 property operating revenues.
Equity LifeStyle Properties
Manufactured Homes
Casa del Sol East – Glendale, AZ
23
Equity LifeStyle Properties
Resort Cottages (Park Models)
O’Connell’s—Amboy, IL
24
Equity LifeStyle Properties
RV Units
Green Mountain—Lenoir, NC (Thousand Trails)
25
Equity LifeStyle Properties
Balance Sheet Flexibility
Total Debt / Total Capitalization (1)
$344 million of
75%
Fixed Interest Coverage (2)
common equity raised in
2011
200 properties are
3.0x 51.3% 54.9% 43.9% 39.3% 41.6% 0% 25% 50%
2007 2008 2009 2010 2011
26
2.1x 2.2x 2.5x 2.6x 2.7x 0.0x 0.5x 1.0x 1.5x 2.0x 2.5x
2007 2008 2009 2010 2Notes: 011
1) Source: SNL Financial.
2) Fixed interest coverage equals interest expense divided by EBITDA.
Equity LifeStyle Properties
Capital Structure As of June 30, 2012 (In $US millions)
Total enterprise
value (1) is $5.6 billion
Debt to enterprise
value is 41% $380 million
undrawn line of credit Mortgage Debt,
$2,089, 37.2% Common (1),
$2,850, 50.8% 27
Notes:
1) Stock price as of 6/30/2012.2) The 8 million shares of 8.034% Series A Cumulative Redeemable Perpetual Preferred Stock outstanding can be redeemed by the Company at any time at a redemption price of $25 per share, plus accumulated and unpaid dividends. Seealso footnote 1 on page 16 for a discussion of the recent tender offer for the Series A Shares.
Term Loan, $200, 3.6% OPU’s (1), $273, 4.9% Preferred (2), $200, 3.6%
Equity LifeStyle Properties
Acquisition Overview
2011 Acquisition
$1.4 billion acquisition of 75 propertie properties
2012 estimated income from property operations of $101.3 million (1)
28
Note:
1) See Supplemental Package.
Equity LifeStyle Properties
Resort Homes (1)
205 manufactured home communities – $475 million, or 69%, of estimated 2012 property operating revenues
Casa del Sol Resort East – Glendale, AZ
74,100 sites
Total occupancy is 89.3% and up 164 sites since 12/31/11 (2)
Core
Core occupancy has grown for 11 consecutive quarters through 6/30/12
Core occupancy of 91.4% and up 72 sites since 12/31/11 (2)
Pine Ridge at Crestwood – Whiting, NJ
29
Core Community base rental income growth for the eight months ended 8/31/12 is 2.9% (3)
Notes:
1) Excludes joint venture sites.
2) As of August 31, 2012. Core Portfolio is defined for this presentation as properties acquired prior to December 31, 2011 and which are expected to be owned and operated by the Company continuously for 2011 and 2012. The Core Portfolio may change from time-to-time depending on acquisitions, dispositions and significant transactions or unique situations. 3) Compared to the eight months ended August 31, 2011.
Equity LifeStyle Properties
RV Resorts (1)
172 RV resorts – $212 million, or 31%, of estimated 2012 property operating revenues
Goose Creek—Newport, NC
Total Sites = 63,900
Annual / Seasonal Sites = 30,000
Transient Sites = 9,600
Thousand Trails Sites = 24,300 (2)
• 97,300 members as of 8/31/12
– Average annual customer payments (dues) – $459
– Industry standard ratio = 10 members to 1 site
– Roughly 10,400 implied excess sites (5 to 1 ratio)
– Excess sites do not require any significant cap ex
Lake Conroe—Willis, TX
30
Core resort income growth for the eight months
ended 8/31/12 is 2.5% (3)
Notes:
1) Excludes joint venture sites. 2) As of August 31, 2012, 4,200 of these sites are rented on an annual basis. 2012 right-to-use annual payments (dues) are expected to be $48 million and 86+% is earned or prepaid as of 8/31/12 (comparable to August 2011 YTD) 3) Compared to the five months ended August 31, 2011.
Equity LifeStyle Properties
Customers
31
Equity LifeStyle Properties
Customer Demographics
U.S. Population Over Age of 50
(in millions)
20
40 60 80 100 120 70 to 74 65 to 69 60 to 64 55 to 59 50 to 54
32
Note:
Sources: University of Michigan’s Survey Research Center 2005, Acxiom 2009, Statistical Surveys 2011, US Census 2008.
2010 2015 2020 2025
The population of people 50 – 74 is expected to grow 24% from 2010 to 2025 ELS only needs a small percentage of this customer pool to feed its revenue streams
Equity LifeStyle Properties
Customer Demographics
Target CustomeCustomer Pyramid by Revenue % (1) r
Transient RV Customer
35-55 years old
Right to Use RV and Seasonal RV Customer
Traditionally 55-69 years old
Zone Park Pass – low cost product introduced in 2010
• 50-59 years old
MH and Annual RV Customer
Annual MH & RV
Transient, Seasonal and
Membership RV
65-74 years old
33
Note:
1) See page 22.
Equity LifeStyle Properties
RV Customer Acquisition Channels
RV Dealers
RV Manufacturers
Foothills West – Casa Grande, AZ
RV Service Providers
Insurance
Reservations
RV Retail Suppliers Soledad Canyon—Acton, CA
34
Equity LifeStyle Properties
ELS LifeStyle and Activities
Recreatio Recreation
Golf, softball, fishing, tennis, swimming, lawn bowling, bocce ball
Arts
Concerts, shows, art fairs, crafts
Education
Seminars, One Day University
35
Volunteerism
Consider Others, fund raising
Equity LifeStyle Properties
Customer Engagement
Engage the customer early in life, will become part of a lifestyle for the customecustomer
Our member base is loyal with over 50% having been with us 20+ years
MyRVMarket—order branded items online (1,000 sku’s)
Social Networking application
36
Equity LifeStyle Properties
Customer Engagement
Facebook—20,000 fans, friends of fans 4.5 milliomillion
16 likes
53 comments
Detailed
response thread
37
Note:
1) Facebook logo is a registered trademark of Facebook, Inc.
Equity LifeStyle Properties
Customer Engagement
Photo Contests Conducted on our Facebook Page
Pacific City—Cloverdale, OR Lake Minden—Nicolaus, TX
38
Equity LifeStyle Properties
Customer Engagement
Photo Contests Conducted on our Facebook Page
Snowflower—Emigrant Gap, CA Yosemite Lakes—Groveland, CA
39
Equity LifeStyle Properties
People
40
Equity LifeStyle Properties
Experienced, Proven Management and Board of Directors Executive OfficerBoard of Directors s Samuel Zell—Chairman of the Board, Director Thomas Heneghan—Chief Executive Officer and member of the Board of Directors (with ELS since 1995). Previous roles at ELS: President, Chief Operating Officer (“COO”), Chief Financial Officer and Treasurer. Marguerite Nader—President and Chief Financial Officer (with ELS since 1993). Previous roles at ELS: Executive Vice President (“EVP”) of New Business Development, EVP of Sales and Marketing. Roger Maynard—Executive Vice President of since 1993, purchased the Company’s predecessor in 1983 Howard Walker—Vice-Chairman of the Board and Director since 1997 (Former CEO) Philip Calian—Director since 2005 David Contis—Director since 2009 41 Asset Management (with ELS since 1997). Previous roles at ELS: EVP and COO, Regional Vice President. Thomas Dobrowski—Director since 1993 Sheli Rosenberg—Director since 1996 Gary Waterman—Director since 1993
Equity LifeStyle Properties
Organizational Overview
Regional Corporate
Administrativ 2 Regional Offices
e Administrative
Accounting
• SVP of Finance and Treasurer—18+ years at ELS
• SVP and CAO – 25+ years of experience in public accounting, joined ELS in
2012
| • |
|
4 VP’s / Directors—Average 7+ years at ELS/Thousand Trails |
• Compliance Officer – 17+ years at ELS
Financial Planning
• VP of Investor Relations and Financial Planning—18+ years at ELS
• Director of Financial Planning—17+ years at ELS
Human Resources
• VP—18+ years at ELS
Information Technology
• VP and Chief Information Officer – 4+ years at ELS
• Director of IS Operations—11+ years at ELS
Legal
• SVP and General Counsel—4+ years at ELS
Tampa, FL
Phoenix, AZ
Property Management
3 Senior Vice Presidents
• Average 19+ years at ELS/Thousand Trails
• Average 26+ years in MH/RV business
6 Vice Presidents
• Average 9+ years at ELS
Asset Management
42
• VP of Legal – 29+ years at ELS/Thousand Trails
Sales & Marketing
President of sales subsidiary – 8+ years at ELS/Thousand Trails
2 Senior VP’s and 1 VP – Average 9+ at ELS/Thousand Trails
3 Senior Directors of Marketing – Average 13+ years at ELS/Thousand
Trails
2 Call Center Directors / Managers – Average 15+ years at ELS/Thousand
Trails
Acquisitions / Dispositions
Senior VP of Asset Management & Investments—6+ years at ELS
Vice President
• 8+ years at ELS
Senior Regional Construction Manager
• 9+ years at ELS
Environmental Engineer
• 4+ years at ELS
Non GAAP Financial Measures
Funds from Operations (“FFO”) is a non-GAAP financial measure. The Company believes that FFO, as defined by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”), is generally an appropriate measure of performance for an equity REIT. While FFO is a relevant and widely used measure of operating performance for equity REITs, it does not represent cash flow from operations or net income as defined by GAAP, and it should not be considered as an alternative to these indicators in evaluating liquidity or operating performancenot performance. The Company defines FFO as net income, computed in accordance with GAAP, excluding gains or actual or estimated losses from sales of properties, plus real estate related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO on the same basis. The Company receives up-front non-refundable payments from the entry of rightto- use contracts. In accordance with GAAP, the upfront non-refundable payments and related commissions are deferred and amortized over the estimated customer life. Although the NAREIT definition of FFO does not address the treatment of nonrefundable right-to-use payments, the Company believes that it is appropriate to adjust for the impact of the deferral activity in its calculation of FFO. The Company believes that FFO is helpful to investors as one of several measures of the performance of an equity REIT. The Company further believes that by excluding the effect of depreciation, amortization and gains or actual or estimated losses from sales of real estate, all of which are based on historical costs and which may be of limited relevance in evaluating current performance, FFO can facilitate comparisons of operating performance between periods and among other equity REITs. The Company believes that the adjustment to FFO for the net revenue deferral of upfront non-refundable payments and expense deferral of right-to-use contract commissions also facilitates the comparison to other equity REITs. Investors should review FFO, along with GAAP net income and cash flow from operating activities, investing activities and financing activities, when evaluating an equity REIT’s operating performance. The Company computes FFO in accordance with its interpretation of standards established by NAREIT, which may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently than the Company does. FFO does not represent cash generated from operating activities in accordance with GAAP, nor does it represent cash available to pay distributions and should not be considered as an alternative to net income, determined in accordance with GAAP, as an indication of the Company’s financial performance, or to cash flow from operating activities, determined in accordance with GAAP, as a measure of the Company’s liquidity, nor is it 43
indicative of funds available to fund its cash needs, including its ability to make cash distributions.
Net Income to FFO Reconciliation (In $US millions)
| Computation of funds from operations: |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
||||||||||||||||||
| Net income available for common shares |
|
32.1 |
|
|
18.3 |
|
|
34.0 |
|
|
38.4 |
|
|
22.8 |
|
|
47.3 |
| ||||||
| Income allocated to common OP units |
|
7.7 |
|
|
4.3 |
|
|
6.1 |
|
|
5.9 |
|
|
3.1 |
|
|
4.5 |
| ||||||
| Series B Redeemable Preferred Stock Dividends |
|
0.0 |
|
|
0.0 |
|
|
0.0 |
|
|
0.0 |
|
|
0.5 |
|
|
0.0 |
| ||||||
| Right-to-use contract upfront payments, deferred, net |
|
0.0 |
|
|
10.6 |
|
|
18.9 |
|
|
14.9 |
|
|
11.9 |
|
|
5.5 |
| ||||||
| Right-to-use contract commissions, deferred, net |
|
0.0 |
|
|
(3.6 |
) |
|
(5.7 |
) |
|
(5.5 |
) |
|
(4.8 |
) |
|
(2.4 |
) | ||||||
| Depreciation on real estate assets and other |
|
63.6 |
|
|
66.2 |
|
|
69.0 |
|
|
68.1 |
|
|
80.0 |
|
|
98.9 |
| ||||||
| Depreciation on rental homes |
|
0.0 |
|
|
1.2 |
|
|
2.4 |
|
|
2.8 |
|
|
4.3 |
|
|
6.1 |
| ||||||
| Amortization of in-place leases |
|
0.0 |
|
|
0.0 |
|
|
0.0 |
|
|
0.0 |
|
|
28.5 |
|
|
45.1 |
| ||||||
| Depreciation on unconsolidated joint ventures |
|
1.4 |
|
|
1.8 |
|
|
1.3 |
|
|
1.2 |
|
|
1.2 |
|
|
1.2 |
| ||||||
| (Gain) loss on real estate |
|
(12.0 |
) |
|
0.1 |
|
|
(5.5 |
) |
|
0.2 |
|
|
0.0 |
|
|
0.0 |
| ||||||
| Funds from operations |
|
92.8 |
|
|
98.8 |
|
|
120.4 |
|
|
126.0 |
|
|
147.5 |
|
|
206.2 |
| ||||||
Note:
| (1) |
|
2012 amounts are the midpoint of an estimated range. See Supplemental Package. |