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: June 2, 2014
(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 material pursuant to Rule 14a14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement material pursuant to Rule 13e-4(c) under the Exchange Act (17 CFE 240.13e-4(c)) |
| Item 2.02 | Results of Operations and Financial Condition. |
Equity LifeStyle Properties, Inc. (referred to herein as “we,” “us,” and “our”) hereby reconfirms previously issued guidance for our normalized funds from operations (“Normalized FFO”) per share (fully diluted), for the three months ending June 30, 2014 and year ending December 31, 2014, to be between $0.58 and $0.64 and $2.67 and $2.77, respectively.
We also reconfirm previously issued guidance for our funds from operations (“FFO”) per share (fully diluted), for the three months ending June 30, 2014 and year ending December 31, 2014, to be between $0.58 and $0.64 and $2.66 and $2.76, respectively.
We also reconfirm previously issued guidance for our net income per share (fully diluted), for the three months ending June 30, 2014 and year ending December 31, 2014, to be between $0.25 and $0.31 and $1.36 and $1.46, respectively.
The projected 2014 per share amounts represent a range of possible outcomes and the mid-point of each range reflects management’s best estimate of the most likely outcome. Actual figures could vary materially from these amounts if any of our assumptions are incorrect.
| Item 7.01 | Regulation FD Disclosure. |
At REIT Week 2014: NAREIT’s Investor Forum to be held between June 3, 2014 and June 5, 2014, officers of the Company will participate in one-on-one sessions with analysts and investors and will refer to a printed presentation. A copy of this presentation is attached hereto as Exhibit 99.1 and is incorporated herein by reference. The presentation will be posted on our website, www.equitylifestyle.com, on June 2, 2014. Included in this presentation is a discussion of our business and certain financial information regarding 2014.
In accordance with General Instruction B.2. of Form 8-K, the information included in this Current Report on Form 8-K 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. We disclaim any intention or obligation to update or revise this information.
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 our expectations, goals or intentions regarding the future, and the expected effect of our recent acquisitions. These forward-looking statements are subject to numerous assumptions, risks and uncertainties, including, but not limited to:
| • | our ability to control costs, real estate market conditions, the actual rate of decline in customers, the actual use of sites by customers and our success in acquiring new customers at our properties (including those that we may acquire); |
| • | our ability to maintain historical or increase future rental rates and occupancy with respect to properties currently owned or that we may acquire; |
| • | our ability to retain and attract customers renewing, upgrading and entering right-to-use contracts; |
| • | our assumptions about rental and home sales markets; |
| • | our assumptions and guidance concerning 2014 estimated net income, FFO and Normalized FFO; |
| • | our 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 recent acquisitions and our estimates regarding the future performance of recent acquisitions; |
| • | the completion of future transactions in their entirety and, if any, and timing and effective integration with respect thereto; |
| • | unanticipated costs or unforeseen liabilities associated with 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;” |
| • | the outcome of the case currently pending in the California Superior Court for Santa Clara County, Case No. 109CV140751, involving our California Hawaiian manufactured home property including any post-trial proceedings in the trial court or on appeal; and |
| • | other risks indicated from time to time in our 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. We are under no obligation to, and expressly disclaim any obligation to, update or alter our forward-looking statements whether as a result of such changes, new information, subsequent events or otherwise.
We own or have an interest in 379 quality properties in 32 states and British Columbia consisting of 140,333 sites. We are 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 | |
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/ Paul Seavey | |
| Paul Seavey | ||
| Executive Vice President, Chief Financial Officer and Treasurer | ||
Date: June 2, 2014
Exhibit 99.1
Equity LifeStyle Properties ELS
Our Story One containing of the nation’s over 140,000 largest sites real in estate 32 states networks and British with 379 Columbia properties Unique business model Own the land costs Low maintenance costs/customer turnover Lease developed sites High-quality real estate locations More than 80 properties with lake, river or ocean frontage More than 100 properties within 10 miles of coastal United States Property locations are strongly correlated with population migration Property locations in retirement and vacation destinations Stable, predictable financial performance and fundamentals Balance sheet flexibility In business for more than 40 years ELS 1
Property Locations WA OR ID CA NV UT AZ WY MT ND NE KS OK TX MN WI IA MO AR IA MS IL MI IN OH KY TN AL CA FL SC WV VA NC PA NY ME VT NH MA RI CT NJ DE MD ELS 2
Steady, Predictable Revenue Streams Property Operating Revenue Buckets(1) Property/Site composition Transient 4.6% 201 home manufactured/resort communities Seasonal 3.3% 71,500 sites Annual resorts Right to Use 178 RV resorts 8.1% 68,800 sites Annuals 25,000 Seasonal 9,400 Annual RV Transient 10,300 14.1% Membership sites 24,100 Annual MH 69.9% Note: 1) Property revenue buckets reflect Company’s estimated 2014 property operating revenues, derivable from our guidance furnished with the SEC as Exhibit 99.1 to the Form 8-K filed on All Annual Revenue = 92.0% April 21, 2014 (“ELS Reports First Quarter Results”). 3 ELS
Our Customers Customers own the units they place on our sites Manufactured homes Resort cottages (park models) Recreational vehicles We offer a lifestyle and a variety of product options to meet our customers’ needs term relationships with our customers We seek to create long- Manufactured RV Site ELS Home RV Resort Cottage 4
Favorable Customer Demographics The population of people age 55 and older is expected to grow 26% from 2015 to 2030. U.S. Population Over Age 55 (in millions) RV Owners 8M - 9M RV owners Over 230K RV sales in 2013 Average of 42K RV owners within 100 miles of each ELS resort ELS 120,000,000 100,000,000 80,000,000 60,000,000 40,000,000 20,000,000 0 2015 2020 2025 2030 sum of 55-59 sum of 60-64 sum of 65-69 sum of 70-74 sum of 75+ Note: Sources: University of Michigan’s Survey Research Center 2005, Acxiom 2009, Statistical Surveys 2011, US Census 2008, US Census 2012. 5
Track Record Item IPO Year - 1993 2014 Properties 41 379 Sites 12,312 140,333 States 16 32 FFO Per Share (1) $0.47 $2.71 Normalized FFO Per Share (1) $0.47 $2.72 Common Stock Price (2) $6.44 $41.87 Enterprise Value (3) $296 million $6.1 billion Dividend Paid Cumulative (4) - $16.80 Cumulative Total Return (5) - 1,612% S&P 500 Total Return (5) - 546% Note: 1) See page 18 for definition of FFO and Normalized FFO. The 1993 amount was determined from amounts presented in the 1996 Form 10-K. The 2014 FFO Per Share and Normalized FFO Per Share amounts are the midpoint of the estimated 2014 FFO Per Share and Normalized FFO Per Share ranges disclosed in our guidance furnished with the SEC as Exhibit 99.1 to the Form 8-K filed on April 21, 2014. 2) The 1993 stock price is adjusted for the stock split; the 2014 price is the closing price as of April 30, 2014. 3) The 2014 enterprise value is as of April 30, 2014. See page 9. 4) Source: SNL Financial. Includes dividends paid from IPO date of February 25,1993 through April 30, 2014 and adjusted for the stock split. 5) Source: SNL Financial from IPO through April 30, 2014 (calculation assumes common dividend reinvestment). Equity Lifestyle Properties, Inc. - 5 Years Total Return (%) 200.00 150.00 100.00 50.00 0.00 Apr-09 Oct-09 Apr-10 Oct-10 Apr-11 Oct-11 Apr-12 Oct-12 Apr-13 Oct-13 Apr-14 (50.00) ELS (139.76%) SNL US REIT Equity (181.31%) S&P 500 (140.02%) 5-Year Total Return Performance Equity Lifestyle Properties, Inc. - 10 Years Total Return (%) 250.00 200.00 150.00 100.00 50.00 0.00 (50.00) Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13 Apr-14 ELS (218.08%) SNL US REIT Equity (180.20%) S&P 500 (109.32%) 10-Year Total Return Performance 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. els 6
Consistent REIT Industry Apartments ELS Industry Average - 2.3% Apartments Average - 2.6% ELS Average - 3.7% 10.0% Same Store 9.5% 9.0% 8.5% NOI Growth and 8.0% 7.5% Outperformance 7.0% 6.5% 6.0% 5.5% 5.0% 4.5% 4.0% 3.5% Q3 1998-Q1 2014(1) 3.0% 2.5% 2.0% 1.5% Same Store NOI Averages: 1.0% 0.5% ELS 3.7% 0.0% -0.5% REITs 2.3% -1.0% -1.5% Apartments 2.6% -2.0% -2.5% -3.0% -3.5% -4.0% -4.5% -5.0% ELS has maintained -5.5% -6.0% positive same store -6.5% -7.0% NOI growth in all -7.5% -8.0% quarters since at 3Q98 1Q99 3Q99 1Q00 3Q00 1Q01 3Q011Q02 3Q02 1Q033Q031Q04 3Q04 1Q05 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q103Q101Q113Q111Q12 3Q12 1Q13 3Q13 1Q14 least Q3 ‘98. Note: 1) Source for Same Store NOI data: Citi Investment Research, May 2014. 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, multifamily, student housing, manufactured homes, self storage, office, industrial, mixed office and specialty. els 7
ELS vs. Multifamily (1) Same Store NOI Indexed Growth Same Store NOI Indexed Growth NOI ELS growth compounded rates significantly Same Store 170 outperformed the REIT Multifamily industry since 1999 160 150 140 FFO Multiples ELS Multifamily (4) 130 120 1996-2001 (3) 13.2x 10.7x 110 2002-2012 (3) 16.8x 16.8x 100 2013 17.3x 17.0x 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 20092010 2011 2012 2013 Multi-family Index (2) ELS Index (2) Note: 1) Source: Citi Investment Research, May 2014. Same Store Indexed Growth assumes initial investment of $100 multiplied by the annual same store NOI growth rate. 2) Source: Citi Investment Research, May 2014. Averages equal annualized quarterly same store NOI averages collected by Citi. 3) Source: SNL Financial. Average FFO Multiple for the period calculated on trailing 12-month basis. Multiple equals stock price divided by t-12 month FFO per share. 4) The Multi-family Index FFO multiples include only US companies that report FFO. 8 els
Capital Structure As of April 30, 2014 (in millions) Total enterprise value is $6.1 billion Debt to enterprise value is 35.8% $380 million available line of credit Note: 1) Stock price as of April 30, 2014. 9 OPU’s $318.8, 5.2% Term Loan $200.0, 3.3% Preferred $136.1, 2.2% Mortgage Debt $1,995.4 32.5% Common(1) $3,488.9 56.8% els 9
Performance Update 197 Manufactured Home Communities(1) 177 RV Resorts(1) (2) occupancy of 92% Core resort income Core growth for the month Core (3) occupancy has grown 18 consecutive ended 4/30/2014 is 6.8% quarters through 3/31/2014 Annual growth rate for the month ended Core community base rental income growth is 5. (3) 4/30/2014 4% for the month ended 4/30/2014 is 3.0%(3) Note: 1) Excludes joint venture sites. 2) Core Portfolio is defined as properties acquired prior to December 31, 2012. The Core Portfolio may change from time-to-time depending on acquisitions, dispositions and significant transactions or unique situations. 3) Compared to the month ended April 30, 2013. 10 els
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: The under forward the heading -looking “Risk statements Factors” contained in our 2013 in this Annual presentation Report are on subject Form 10 to- certain K and our economic Quarterly risks Report and uncertainties on Form 10 described -Q for the quarter no obligation ended to March update 31, or 2014 supplement . See Form forward 8-K filed -looking April 21, statements 2014 for the that full become text of our untrue forward because -looking of statements subsequent . We events assume . All projections are based on 2014 budgets, reforecasts and proforma expectations on recent investments. Non GAAP Financial Measures Net Income to FFO and Normalized FFO Reconciliation (in millions) Computation of funds from operations 2010 2011 2012 2013 2014(1) Net income available for common shares $38.4 $22.8 $54.8 $106.9 $118.4 Income allocated to common OP units 5.9 3.1 5.1 9.7 10.8 Series B Redeemable Preferred Stock Dividends - 0.5 -Deferral of right-to-use contract revenue and commissions, net 9.4 7.1 3.5 3.3 2.8 Depreciation on real estate assets and other 69.3 81.2 100.0 102.7 101.0 Depreciation on rental homes 2.8 4.3 6.1 6.5 11.0 Depreciation on discontinued operations 1.5 -Amortization of in-place leases - 28.5 45.1 1.9 4.0 (Gain) loss on real estate 0.2 - (4.6) (41.5) - Funds from operations 126.0 147.4 210.0 191.0 248.0 - - (0.5) 1.4 (0.1) Change in fair value of contingent consideration asset Transaction costs 0.4 18.5 0.2 2.0 0.5 Loss from early extinguishment of debt - 0.5 37.9 -Goodwill impairment 3.6 - Normalized funds from operations $130.0 $165.9 $210.2 $232.3 $248.4 Note: 1) The 2014 amount is the midpoint of an estimated range. See our guidance furnished with the SEC as Exhibit 99.1 to the Form 8-K filed on April 21, 2014. 11 els
Non GAAP Funds from Operations (“FFO”) is a non-GAAP financial measure. We believe 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 Financial 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 Measures to these indicators in evaluating liquidity or operating performance. We define FFO as net income, computed in accordance with GAAP, excluding gains and actual or estimated losses from sales of properties, plus real estate related depreciation and amortization, impairments, if any, 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. We receive up-front non-refundable payments from the entry of right-to-use contracts. In accordance with GAAP, the up-front 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 non-refundable right-to-use payments, we believe that it is appropriate to adjust for the impact of the deferral activity in our calculation of FFO. Normalized Funds from Operations (“Normalized FFO”) is a non-GAAP measure. We define Normalized FFO as FFO excluding the following non-operating income and expense items: a) the financial impact of contingent consideration; b) gains and losses from early debt extinguishment, including prepayment penalties and defeasance costs; c) property acquisition and other transaction costs related to mergers and acquisitions; and d) other miscellaneous non-comparable items. We believe that FFO and Normalized FFO are helpful to investors as supplemental measures of the performance of an equity REIT. We believe that by excluding the effect of depreciation, amortization and actual or estimated 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. We further believe that Normalized FFO provides useful information to investors, analysts and our management because it allows them to compare our operating performance to the operating performance of other real estate companies and between periods on a consistent basis without having to account for differences not related to our operations. For example, we believe that excluding the early extinguishment of debt, property acquisition and other transaction costs related to mergers and acquisitions and the change in fair value of our contingent consideration asset from Normalized FFO allows investors, analysts and our management to assess the sustainability of operating performance in future periods because these costs do not affect the future operations of the properties. In some cases, we provide information about identified non-cash components of FFO and Normalized FFO because it allows investors, analysts and our management to assess the impact of those items. Investors should review FFO and Normalized 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. We compute FFO in accordance with our 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 we do. Normalized FFO presented herein is not necessarily comparable to normalized FFO presented by other real estate companies due to the fact that not all real estate companies use the same methodology for computing this amount. FFO and Normalized FFO 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. 12 els
Equity LifeStyle Properties Two North Riverside Plaza, Chicago, Illinois 60606 800-247-5279 | www.EquityLifeStyle.com