================================================================================ 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: July 17, 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 File No.) (IRS Employer incorporation or organization) 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 July 17, 2006, Equity LifeStyle Properties, Inc. issued a news release announcing its results of operations for the quarter and six months ended June 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. ITEM 8.01 OTHER EVENTS On July 17, 2006, Equity LifeStyle Properties, Inc. issued a news release announcing comments on the Company's second quarter of 2006 results. The comments reflect the prepared remarks of Thomas Heneghan, President and CEO of the Company. The remarks should be read in conjunction with the second quarter earnings release issued separately today. The news release is furnished as Exhibit 99.2 to this report on Form 8-K. 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 July 17, 2006, "ELS Reports Second Quarter Results." Exhibit 99.2 Equity LifeStyle Properties, Inc. press release dated July 17, 2006 "ELS CEO Comments on Second Quarter Results."
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 thereunto duly authorized. EQUITY LIFESTYLE PROPERTIES, INC. BY: /s/ Thomas P. Heneghan ------------------------------------- Thomas P. Heneghan President and Chief Executive Officer BY: /s/ Michael Berman ------------------------------------- Michael Berman Executive Vice President and Chief Financial Officer DATE: July 18, 2006
EXHIBIT 99.1 CONTACT: Michael Berman FOR IMMEDIATE RELEASE (312) 279-1496 July 17, 2006 ELS REPORTS SECOND QUARTER RESULTS SOLID CORE PERFORMANCE; RENEWS CREDIT FACILITIES CHICAGO, IL -- JULY 17, 2006 -- Equity LifeStyle Properties, Inc. (NYSE: ELS) announced results for the quarter and six months ended June 30, 2006. a) Financial Results For the second quarter of 2006, Funds From Operations ("FFO") were $16.3 million or $0.54 per share on a fully diluted basis, compared to $17.3 million or $0.58 per fully diluted share for the same period in 2005. For the six months ended June 30, 2006, FFO were $43.9 million or $1.45 per share on a fully diluted basis, compared to $42.7 million or $1.42 per fully diluted share for the same period in 2005. Net income available to common stockholders totaled $1.2 million or $0.05 per fully diluted share for the quarter ended June 30, 2006. This compares to net income available to common stockholders of $2.5 million or $0.11 per fully diluted share for the second quarter of 2005. Net income available to common stockholders totaled $11.3 million or $0.47 per fully diluted share for the six months ended June 30, 2006. This compares to net income available to common stockholders of $11.2 million or $0.48 per fully diluted share for the six months ended June 30, 2005. The attachment to this press release reconciles FFO to net income, the most directly comparable GAAP measure. The results for the quarter and six months ended June 30, 2005 included a one-time gain from refinancing proceeds from a joint venture of approximately $1.2 million of FFO or approximately $0.9 million of net income available to common stockholders. b) Portfolio Performance For the second quarter of 2006, property operating revenues were approximately $84.2 million, compared to $75.2 million for the second quarter of 2005. Property operating revenues for the six months ended June 30, 2006 were $174.6 million, compared to $160.4 million for the same period in 2005.
For the quarter ended June 30, 2006, Core(1) property operating revenues increased approximately 4.5 percent, while operating expenses increased approximately 7.0 percent, over the same period in 2005. Net Core property operating income increased approximately 2.3 percent over the same period last year. For the six months ended June 30, 2006, Core property operating revenues increased 4.2 percent, while operating expenses increased 6.0 percent and net Core property operating income increased 2.9 percent, over the same period last year. For the quarter ended June 30, 2006, the Company had 193 new home sales (excluding 15 third-party dealer sales), an approximate 6.0 percent increase over the quarter ended June 30, 2005. Gross revenues from home sales were approximately $18.1 million for the quarter ended June 30, 2006, compared to approximately $17.5 million for the quarter ended June 30, 2005. Net income from sales operations was approximately $0.6 million for the quarter ended June 30, 2006, compared to approximately $0.4 million for the quarter ended June 30, 2005. For the six months ended June 30, 2006, the Company had 325 new home sales (excluding 29 third-party dealer sales), an approximate 8.0 percent increase over the six months ended June 30, 2005. Gross revenues from home sales were approximately $30.0 million for the six months ended June 30, 2006, compared to approximately $27.7 million for the same period last year. Net income from sales operations was approximately $2.3 million for the six months ended June 30, 2006, compared to approximately $2.0 million for the six months ended June 30, 2005. c) Asset-Related Transactions 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 sale proceeds or reduce its outstanding lines of credit with the sale proceeds. One of the properties held for disposition, Del Rey in Albuquerque, New Mexico, was under contract to be sold for $16.5 million to a single-family home builder. The contract terminated on July 13, 2006, and the Company retained a $1 million non-refundable deposit. The Company is evaluating other indications of interest with respect to Del Rey. During the second quarter of 2006, the Company closed on the previously announced exchange of two all-age properties located in Indiana, previously designated as held for disposition, containing 495 sites, together with $5.0 million, for the purchase of seven lifestyle-oriented properties with 1,594 sites, including 950 acres of developable expansion land. The seven properties are located in Florida, New York, North Carolina, South Carolina, Michigan, Kentucky and Alabama and have been leased to Privileged Access. In April 2006, Indian Wells, a 350-site joint venture property located in Indio, California, was sold. The Company recognized a net gain of approximately $0.9 million this quarter as a result of the exchange of the two Indiana properties and the sale of Indian Wells. These gains are excluded from the Company's FFO. In June 2006, we closed on the acquisition of Tranquil Timbers, a 270-site resort property located in Door County, Wisconsin, for a purchase price of $2.8 million. d) Privileged Access As of June 30, 2006, the Company has leased 20,259 sites to Privileged Access. The sites are comprised of 18,535 sites at 59 Thousand Trails properties, 1,594 sites at the seven recently acquired - --------------------- (1) Properties we owned for the same period in both years.
properties noted above and 130 sites at Tropical Palms Resort. Tropical Palms is a 541-site resort property near Orlando, Florida. e) Balance Sheet The Company's average long-term secured debt balance was approximately $1.6 billion for the quarter ended June 30, 2006, with a weighted average interest rate of approximately 6.0 percent per annum. Our unsecured debt balance currently consists of approximately $140 million outstanding on our lines of credit, and current availability is approximately $135 million. Interest coverage was approximately 1.8 times in the quarter ended June 30, 2006. The Company recently renewed its unsecured debt. A syndicated term loan and $160 million in lines of credit was replaced with $275 million in lines of credit with a four-year maturity and one-year extension option, bearing interest at LIBOR plus 1.20 percent with a 0.15 percent facility fee. The renewal increases our financial flexibility and lowers our credit spread. The interest rate on the term loan was LIBOR plus 1.75 percent and the $160 million lines of credit had an interest rate of LIBOR plus 1.65 percent and had a 0.15 percent unused fee. The interest rate on $100 million of the outstanding balance on the new lines of credit is fixed at 6.18 percent per annum through mid-December 2006. f) Guidance The Company projects 2006 fully diluted FFO per share to be in the range of $2.70 - $2.75. The Company continues to expect inflationary pressures to impact its expenses. The Company expects Core portfolio property operating revenues to increase approximately 4.0 -- 4.25 percent and net Core portfolio property operating income to grow approximately 2.5 - 3.0 percent. Our overall interest rate (including amortization expense) is approximately 6.2 percent per annum. The Company makes no assumptions concerning future acquisitions. The Company recently conducted a three-year prospective review of its business and expects a positive operating environment in 2007 and beyond. In 2007, the Company expects its Core portfolio to operate in line with its historical growth patterns. However, the Company expects cost pressures, primarily related to insurance and utilities, to continue to impact performance. Short-term interest rates have increased almost 1.0 percent in the last six months and approximately 2.0 percent in the last twelve months. 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 294 quality properties in 30 states and British Columbia consisting of 108,440 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 July 18, 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 SIX MONTHS ENDED JUNE 30, JUNE 30, JUNE 30, JUNE 30, 2006 2005 2006 2005 --------- --------- --------- --------- PROPERTY OPERATIONS(1): Community base rental income........................... $ 56,409 $ 53,041 $ 111,739 $ 105,960 Resort base rental income.............................. 19,999 15,223 46,907 39,794 Utility and other income............................... 7,769 6,936 15,913 14,634 --------- --------- --------- --------- Property operating revenues......................... 84,177 75,200 174,559 160,388 Property operating and maintenance..................... 29,544 24,510 57,261 50,804 Real estate taxes...................................... 6,753 6,286 13,351 12,446 Property management.................................... 4,374 3,966 9,226 7,615 --------- --------- --------- --------- Property operating expenses......................... 40,671 34,762 79,838 70,865 --------- --------- --------- --------- Income from property operations..................... 43,506 40,438 94,721 89,523 HOME SALES OPERATIONS: Gross revenues from inventory home sales............... 18,068 17,450 30,001 27,687 Cost of inventory home sales........................... (15,793) (15,623) (26,104) (24,570) --------- --------- --------- --------- Gross profit from inventory home sales.............. 2,275 1,827 3,897 3,117 Brokered resale revenues, net.......................... 618 813 1,275 1,417 Home selling expenses.................................. (2,449) (2,224) (4,923) (4,262) Ancillary services revenues, net....................... 199 (13) 2,002 1,710 --------- --------- --------- --------- Income from home sales and other.................... 643 403 2,251 1,982 OTHER INCOME AND EXPENSES: Interest income........................................ 555 312 840 683 Income from other investments, net..................... 4,779 4,347 9,283 8,396 Equity in income of unconsolidated joint ventures...... 854 3,401 2,605 4,544 General and administrative............................. (3,578) (3,815) (6,801) (6,685) Rent control initiatives............................... (204) (43) (298) (613) --------- --------- --------- --------- Operating income (EBITDA)........................... 46,555 45,043 102,601 97,830 Interest and related amortization...................... (26,261) (25,003) (50,886) (50,002) Income from discontinued operations.................... 193 554 437 1,173 Depreciation on corporate assets....................... (102) (223) (211) (439) Income allocated to Preferred OP Units................. (4,038) (3,056) (8,068) (5,912) --------- --------- --------- --------- FUNDS FROM OPERATIONS (FFO)......................... $ 16,347 $ 17,315 $ 43,873 $ 42,650 Depreciation on real estate and other costs............ (15,101) (13,761) (29,475) (27,259) Depreciation on unconsolidated joint ventures.......... (559) (398) (1,006) (824) Depreciation on discontinued operations................ --- --- --- (329) Gain on sale of properties............................. 852 --- 852 --- Income allocated to Common OP Units.................... (320) (669) (2,963) (3,042) --------- --------- --------- --------- NET INCOME AVAILABLE TO COMMON SHARES............... $ 1,219 $ 2,487 $ 11,281 $ 11,196 ========= ========= ========= ========= NET INCOME PER COMMON SHARE -- BASIC..................... $ 0.05 $ 0.11 $ 0.48 $ 0.49 NET INCOME PER COMMON SHARE -- FULLY DILUTED............. $ 0.05 $ 0.11 $ 0.47 $ 0.48 --------- --------- --------- --------- FFO PER COMMON SHARE -- BASIC............................ $ 0.55 $ 0.59 $ 1.48 $ 1.45 FFO PER COMMON SHARE -- FULLY DILUTED.................... $ 0.54 $ 0.58 $ 1.45 $ 1.42 --------- --------- --------- --------- Average Common Shares -- Basic........................... 23,384 23,042 23,358 23,008 Average Common Shares and OP Units -- Basic.............. 29,585 29,356 29,562 29,333 Average Common Shares and OP Units -- Fully Diluted...... 30,205 29,974 30,197 29,934 --------- --------- --------- --------- - ---------------------- (1) Certain reclassifications have been made to prior periods in order to conform with current period presentation.
EQUITY LIFESTYLE PROPERTIES, INC. (UNAUDITED) AS OF AS OF JUNE 30, DECEMBER 31, TOTAL COMMON SHARES AND OP UNITS OUTSTANDING: 2006 2005 ----------------- ----------------- Total Common Shares Outstanding................ 23,393,229 23,295,956 Total Common OP Units Outstanding.............. 6,197,212 6,207,471 SELECTED BALANCE SHEET DATA: JUNE 30, DECEMBER 31, 2006 2005 (amounts in 000s) (amounts in 000s) ----------------- ----------------- Total real estate, net......................... $ 1,885,657 $ 1,774,242 Cash and cash equivalents...................... $ 945 $ 610 Total assets (1)............................... $ 2,058,069 $ 1,948,874 Mortgage notes payable......................... $ 1,573,682 $ 1,500,581 Unsecured debt................................. $ 148,000 $ 137,700 Total liabilities.............................. $ 1,806,293 $ 1,706,979 Minority interest.............................. $ 212,033 $ 209,379 Total stockholders' equity..................... $ 42,747 $ 32,516 MANUFACTURED HOME SITE FIGURES AND QUARTERS ENDED SIX MONTHS ENDED OCCUPANCY AVERAGES: (2) JUNE 30, JUNE 30, JUNE 30, JUNE 30, 2006 2005 2006 2005 ------- ------- ------- ------- Total Sites............................ 44,106 42,754 43,494 42,746 Occupied Sites......................... 39,672 38,581 39,194 38,660 Occupancy %............................ 89.9% 90.2% 90.1% 90.4% Monthly Base Rent Per Site............. $473.96 $458.27 $475.15 $456.80 Core Monthly Base Rent Per Site........ $479.44 $458.27 $477.69 $456.80 QUARTERS ENDED SIX MONTHS ENDED HOME SALES: (2) JUNE 30, JUNE 30, JUNE 30, JUNE 30, ($ in thousands) 2006 2005 2006 2005 ------- ------- ------- ------- New Home Sales Volume (3).............. 208 186 354 313 New Home Sales Gross Revenues.......... $17,351 $16,253 $28,688 $25,856 Used Home Sales Volume (4)............. 104 92 180 138 Used Home Sales Gross Revenues......... $ 717 $ 1,197 $ 1,313 $ 1,831 Brokered Home Resale Volume............ 377 439 744 808 Brokered Home Resale Revenues, net..... $ 618 $ 813 $ 1,275 $ 1,417 (1) Includes hurricane related costs recoverable from insurance providers of $3.2 million. (2) Results of continuing operations. (3) Quarter and six months ended June 30, 2006 includes 15 and 29 third-party dealer sales, respectively. Quarter and six months ended June 30, 2005 includes 4 and 13 third-party dealer sales, respectively. (4) Quarter and six months ended June 30, 2006 include two third-party dealer sales. There were no third-party dealer sales of used homes for the six months ended June 30, 2005.
EQUITY LIFESTYLE PROPERTIES, INC. (UNAUDITED) ANNUAL REVENUE RANGES: TOTAL SITES AS OF APPROXIMATE ANNUAL REVENUE RANGE (1) 6/30/06 3/31/06 12/31/05 2006 (rounded to 000s) (rounded to 000s) (rounded to 000s) ----------------- ----------------- ----------------- ------------------ Community sites (2) 45,700 46,200 44,900 $5,700 - $5,800 (3) Resort sites: Annuals.................. 18,800 18,700 15,500 $3,000 - $3,200 Seasonal................. 8,000 8,000 8,000 $1,900 - $2,000 Transient................ 7,200 7,000 6,500 $2,600 - $2,800 Membership (4)........... 20,100 17,900 17,900 Joint Ventures (5)......... 8,600 8,500 13,500 -------- -------- -------- 108,400 106,300 106,300 ======== ======== ======== (1) All ranges exclude utility and other income. (2) Quarter ended June 30, 2006 includes 1,581 sites from discontinued operations. Quarters ended March 31, 2006 and December 31, 2005 include 2,076 sites from discontinued operations. (3) Based on occupied sites. Average occupancy for the six months ended June 30, 2006 was approximately 90.1%. (4) All sites are currently leased to Privileged Access with an annual rent of approximately $18.2 million. (5) Joint Venture income is included in Equity in income from unconsolidated joint ventures. FUNDS AVAILABLE FOR DISTRIBUTION (FAD): QUARTERS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, JUNE 30, JUNE 30, 2006 2005 2006 2005 -------- -------- -------- -------- Funds from operations.................................... $ 16,347 $ 17,315 $ 43,873 $ 42,650 Non-revenue producing improvements to real estate........ (2,777) (3,044) (5,436) (5,333) -------- -------- -------- -------- Funds available for distribution....................... $ 13,570 $ 14,271 $ 38,437 $ 37,317 ======== ======== ======== ======== FAD per Common Share -- Basic............................ $ 0.46 $ 0.49 $ 1.30 $ 1.27 FAD per Common Share -- Fully Diluted.................... $ 0.45 $ 0.48 $ 1.27 $ 1.25 -------- -------- -------- -------- EARNINGS AND FFO PER COMMON SHARE GUIDANCE (unaudited) FULL YEAR 2006 LOW HIGH -------- -------- Projected net income per common share - fully diluted........... $ 0.61 $ 0.65 Projected depreciation and amortization......................... 1.93 1.93 Income allocated to Common OP Units............................. 0.16 0.17 -------- -------- Projected FFO available to common shareholders.................. $ 2.70 $ 2.75 ======== ======== 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 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 performance. FFO is defined as net income, computed in accordance with GAAP, excluding gains or 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 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 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 computes FFO in accordance with 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 we do. Funds available for distribution ("FAD") is a non-GAAP financial measure. FAD is defined as FFO less non-revenue producing capital expenditures. Investors should review FFO and FAD, along with GAAP net income and cash flow from operating activities, investing activities and financing activities, when evaluating an equity REIT's operating performance. FFO and FAD do not represent cash generated from operating activities in accordance with GAAP, nor do they 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 our financial performance, or to cash flow from operating activities, determined in accordance with GAAP, as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make cash distributions.
EXHIBIT 99.2 CONTACT: Michael Berman FOR IMMEDIATE RELEASE (312) 279-1496 July 17, 2006 ELS CEO COMMENTS ON SECOND QUARTER RESULTS CHICAGO, IL -- JULY 17, 2006 -- Equity LifeStyle Properties, Inc. (NYSE: ELS) announced comments on the Company's second quarter performance. The comments reflect the prepared remarks of Thomas Heneghan, President and CEO of the Company. The remarks should be read in conjunction with the second quarter earnings release issued separately today. "We believe our business will continue to benefit from a positive operating environment due to the quality of our real estate locations and the demographic trends occurring in the United States. Our year-to-date core property revenue growth of approximately 4.2 percent reflects this environment. More importantly, this revenue growth was generated by underlying factors that lead to value creation over the long-term and were negatively impacted by what we believe will be short-term influences. Our goal of creating long-term predictable revenue streams from our assets is being executed with success at the operating level. A breakdown of our year-to-date growth reflects this effort. Our total core revenues from annual customers have increased approximately 4.6 percent year-to-date, despite a continued impact on occupancy from the hurricanes in Florida over the last few years. These revenues account for almost 80 percent of our total core property operating revenues. This growth is occurring in both our community and resort properties. Our revenues from seasonal customers has increased almost 9 percent on a year-to-date basis. These revenues account for approximately 7 percent of our total core property operating
revenues. It is important to note that these seasonal revenues are highly recurring revenue streams although they are generated primarily from Thanksgiving through Easter each year. In addition, recently established customer loyalty programs have been well received and enhance the recurring nature of this "seasonal" revenue. Combined, these core annual and seasonal revenues and the associated utility and other income represent in excess of 93 percent of total core property operating revenues and have increased almost 5 percent on a year-to-date basis. Our most volatile revenue stream relates to the transient activity occurring at approximately 7 percent of our total sites. These customers are active RV'ers enjoying an on the road vacation experience. Over time, many of these customers choose to become seasonal and annual customers as their lifestyle evolves. As a result, we view these customers as an important component of our customer base. However, in 2004 as part of a portfolio acquisition, we acquired a 541-site resort property in Orlando, Florida catering exclusively to the transient customer. This property accounts for approximately one-third of our transient revenues. We have taken steps to introduce long-term revenue at this property that have negatively impacted its top line revenue growth, which was down 8 percent on a year-to-date basis. We have initiated a cottage sales program and through June 30th, have converted almost 5 percent of the sites to annual sites at rents of approximately $6,000 per year. Our current plan is to convert up to 125 sites to this cottage program. In addition, the property operates a rental unit program on approximately 130 sites, which have recently been leased to Privileged Access. These steps to introduce long-term revenues will negatively impact year-to-year comparisons of our transient revenue. Our sales operation has contributed to our ability to drive top line revenue growth and will continue to be an important part of our business. However, rising short-term interest rates increase the carrying cost of our inventory levels and we will need to balance our sales goals in light of this higher carrying cost. Cost pressures related primarily to utility costs and insurance have impacted our operating expenses. With respect to utility costs, we believe much of this cost can be passed through to customers. We have historically done this with success at many of our properties;
however, some of our recent acquisitions have not yet unbundled their utilities. As a result, increasing utility costs have negatively impacted the year-to-date increase in core net operating income. Recent natural disasters have impacted the insurance markets, creating uncertainty with respect to the amount, terms and cost of property and casualty insurance. Our policy renewal earlier this year reflected a 50 percent increase in property and casualty premiums. We will evaluate our future insurance needs in light of this changing environment, which could potentially lead to higher retained insurance exposures. Our Florida properties have directly experienced five significant hurricanes over the last few years. However, the outstanding performance of our residents, employees and the new home product demonstrates the inherent stability of our business. We currently have approximately $140 million in short-term debt out of a total of approximately $1.7 billion in outstanding debt. Through various refinancing activities over the last few years we have reduced our exposure to rising interest rates, having fixed our overall interest rate on our long-term secured debt at approximately 6 percent, with no significant maturity before 2008. In addition, the quality of our cash flow was acknowledged by our recent renewal of unsecured debt facilities. We increased our financial flexibility while lowering our credit-spread by approximately 35 basis points. Nevertheless, the increase in short-term interest rates from the beginning of the year will impact our short-term borrowing costs beginning in 2007 as our current LIBOR contract matures. Our strategic initiatives continue to include efforts to increase our investment in high quality real estate locations, in part by reallocating our capital away from affordable housing investments. We also continue to evaluate our excess land holdings and alternative use opportunities. These opportunities generally fall into one of four categories: develop, sell, lease or joint venture. We believe we are prudently evaluating the various options. In connection with this strategic perspective, the recent change in the ownership of our lessee for the Thousand Trails properties is already creating a more positive environment. In addition to improving on the results of the Thousand Trails business, Privileged Access has also begun leasing an additional seven membership properties acquired during the second quarter and
has entered into the lease of 130 sites at our Orlando, Florida property. Privileged Access is expected to introduce a flexible use product using resort cottages at this location. We are very comfortable with our portfolio and the high quality of our real estate holdings. We view many of our assets as scarce properties that would be difficult and in some cases impossible to replace. We also believe we are creating an operating platform that will allow us to maximize the cash flow potential of our assets in a use consistent with our business." 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 294 quality properties in 30 states and British Columbia consisting of 108,440 sites. We are a self-administered, self-managed, real estate investment trust (REIT) with headquarters in Chicago. A webcast of these remarks will be available on the Company's website prior to the live webcast of Equity LifeStyle Properties, Inc.'s conference call discussing these second quarter
results. The live webcast will be available via our website in the Investor Info section at www.equitylifestyle.com at 10:00 a.m. Central Time on July 18, 2006. The conference call will be limited to questions and answers from interested parties. ###