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8-K Item 2.02 2Q15 Results of Operations


 
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 (Date of earliest event reported): July 20, 2015


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):

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o  Pre-commencement material pursuant to Rule 14a14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o  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

On July 20, 2015, Equity LifeStyle Properties, Inc. (referred to herein as “we,” “us,” and “our”) issued a news release announcing our results of operations for the three and six months ended June 30, 2015.

The news release also contains detailed guidance assumptions on our projections for 2015. We project our normalized funds from operations (“Normalized FFO”) per common share (fully diluted) and funds from operations (“FFO”) per common share (fully diluted) for the three months ending September 30, 2015 to be between $0.73 and $0.79. We project our Normalized FFO and FFO per common share (fully diluted) for the year ending December 31, 2015 to be between $2.97 and $3.07 and $2.78 and $2.88, respectively.
 
We also project our net income per common share (fully diluted) for the three months ended September 30, 2015 and year ending December 31, 2015, to be between $0.40 and $0.46 and $1.48 and $1.58, respectively.

The projected 2015 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. The news release is furnished as Exhibit 99.1 to this report on Form 8-K. The news release was also posted on our website, www.equitylifestyle.com, on July 20, 2015.

The information contained in Items 2.02 and 9.01 of this report on Form 8-K, including Exhibit 99.1, shall not be deemed “filed” with the Securities and Exchange Commission nor incorporated by reference in any registration statement filed by Equity LifeStyle Properties, Inc. under the Securities Act of 1933, as amended.

This 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 2015 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, 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 pending or future lawsuits filed against us, including those disclosed in our filings with the Securities and Exchange Commission, by tenant groups seeking to limit rent increases and/or seeking large damage awards for our alleged failure to properly maintain certain properties or other tenant related matters, such as the case currently pending in the California Court of Appeal, Sixth Appellate District, Case No. H041913, involving our California Hawaiian manufactured home property, including any further proceedings on appeal or in the trial court; 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 are a fully integrated owner and operator of lifestyle-oriented properties and own or have an interest in 387 quality properties in 32 states and British Columbia consisting of 143,845 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

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.

99.1
Equity LifeStyle Properties, Inc. press release dated July 20, 2015, “ELS Reports Second Quarter Results”












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: July 21, 2015



Earnings Press Release 2Q15

N E W S R E L E A S E


FOR IMMEDIATE RELEASE
July 20, 2015


                                                        
ELS REPORTS SECOND QUARTER RESULTS
Continued Strong Core Performance

CHICAGO, IL – July 20, 2015 Equity LifeStyle Properties, Inc. (NYSE: ELS) (referred to herein as “we,” “us,” and “our”) today announced results for the quarter and six months ended June 30, 2015. All per share results are reported on a fully diluted basis unless otherwise noted.
Financial Results for the Quarter Ended June 30, 2015
Normalized Funds from Operations (“Normalized FFO”) available for common stockholders and Funds from Operations (“FFO”) available for common stockholders each increased $6.9 million, or $0.07 per common share, to $64.5 million, or $0.70 per common share, compared to $57.6 million, or $0.63 per common share, for the same period in 2014. Net income available for common stockholders increased $6.3 million, or $0.08 per common share, to $31.8 million, or $0.38 per common share, compared to $25.5 million, or $0.30 per common share, for the same period in 2014.
Portfolio Performance
For the quarter ended June 30, 2015, property operating revenues, excluding deferrals, increased $9.9 million to $188.5 million compared to $178.6 million for the same period in 2014. For the six months ended June 30, 2015, property operating revenues, excluding deferrals, increased $20.7 million to $385.8 million compared to $365.1 million for the same period in 2014. For the quarter ended June 30, 2015, income from property operations, excluding deferrals and property management, increased $5.8 million to $106.5 million compared to $100.7 million for the same period in 2014. For the six months ended June 30, 2015, income from property operations, excluding deferrals and property management, increased $14.3 million to $225.9 million compared to $211.6 million for the same period in 2014.
For the quarter ended June 30, 2015, Core property operating revenues increased approximately 4.4 percent and Core income from property operations, excluding deferrals and property management, increased approximately 5.0 percent compared to the same period in 2014. For the six months ended June 30, 2015, Core property operating revenues increased approximately 4.3 percent and Core income from property operations, excluding deferrals and property management, increased approximately 5.5 percent compared to the same period in 2014.
Balance Sheet Activity
During the second quarter, we paid off a maturing mortgage loan of approximately $35.4 million with a stated interest rate of 5.9 percent per annum, which was secured by three RV resorts.
Investment Activity
On June 26, 2015, we closed on the acquisition of Miami Everglades, a 303-site RV Resort located in Miami, Florida. The total purchase price of $11.6 million was funded with available cash.
    
About Equity LifeStyle Properties
We are a self-administered, self-managed real estate investment trust (“REIT”) with headquarters in Chicago.
As of July 20, 2015, we own or have an interest in 387 quality properties in 32 states and British Columbia consisting of 143,845 sites.

 
i
 





For additional information, please contact our Investor Relations Department at (800) 247-5279 or at investor_relations@equitylifestyle.com.
Conference Call
A live webcast of our conference call discussing these results will take place tomorrow, Tuesday, July 21, 2015, at 10:00 a.m. Central Time. Please visit the Investor Information section at www.equitylifestyle.com for the link. A replay of the webcast will be available for two weeks at this site.
Reporting Calendar
Quarterly financial results and related earnings conference calls for the next two quarters are expected to occur as follows:
 
 
Release Date
 
Earnings Call
Third Quarter 2015
 
Monday, October 19, 2015
 
Tuesday, October 20, 2015 10:00 a.m. CT
Fourth Quarter 2015
 
Monday, January 25, 2016
 
Tuesday, January 26, 2016 10:00 a.m. CT
First Quarter 2016
 
Monday April 18, 2016
 
Tuesday, April 19, 2016 10:00 a.m. CT
Forward-Looking Statements
In addition to historical information, this press release includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. When used, words such as “anticipate,” “expect,” “believe,” “project,” “intend,” “may be” and “will be” and similar words or phrases, or the negative thereof, unless the context requires otherwise, are intended to identify forward-looking statements and may include, without limitation, information regarding our expectations, goals or intentions regarding the future, and the expected effect of our 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 2015 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, 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 pending or future lawsuits filed against us, including those disclosed in our filings with the Securities and Exchange Commission, by tenant groups seeking to limit rent increases and/or seeking large damage awards for our alleged failure to properly maintain certain properties or other tenant related matters, such as the case currently pending in the California Court of Appeal, Sixth Appellate District,

 
ii
 





Case No. H041913, involving our California Hawaiian manufactured home property, including any further proceedings on appeal or in the trial court; 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.







    


 
iii
 





Investor Information



Equity Research Coverage (1)
Robert W. Baird & Company
Cantor Fitzgerald
Wells Fargo Securities
Drew T. Babin
Gaurav Mehta
Todd Stender
215-553-7816
212-915-1221
562-637-1371
dbabin@rwbaird.com
gmehta@cantor.com
todd.stender@wellsfargo.com
 
 
 
BMO Capital Markets
Citi Research
 
Paul Adornato
Michael Bilerman/ Nick Joseph
 
212-885-4170
212-816-1383
 
paul.adornato@bmo.com
michael.bilerman@citi.com
 
 
nicholas.joseph@citi.com
 
 
 
 
Bank of America Merrill Lynch Global Research
Green Street Advisors
 
Jana Galan
David Bragg/ Ryan Burke
 
646-855-3081
949-640-8780
 
jana.galan@baml.com
dbragg@greenstreetadvisors.com
 
 
rburke@greenstreetadvisors.com
 




























______________________
1.
Any opinions, estimates or forecasts regarding our performance made by these analysts or agencies do not represent our opinions, forecasts or predictions. We do not by reference to these firms imply our endorsement of or concurrence with such information, conclusions or recommendations.

2Q 2015 Supplemental information
1 
Equity LifeStyle Properties, Inc.


Financial Highlights

(In millions, except shares outstanding and per share data, unaudited)
 
As of and for the Three Months Ended
 
June 30, 2015
March 31, 2015
December 31, 2014
September 30, 2014
June 30, 2014
Operating Information
 
 
 
 
 
Total revenues
$
201.5

$
208.4

$
190.3

$
200.8

$
189.0

Net income
$
36.8

$
31.8

$
34.3

$
30.3

$
30.0

Net income available for common shares
$
31.8

$
27.2

$
29.4

$
25.7

$
25.5

Normalized EBITDA (1)
$
92.9

$
106.1

$
91.2

$
93.3

$
88.2

FFO (1)(2)
$
64.5

$
59.1

$
60.3

$
57.4

$
57.6

Normalized FFO (1)(2)
$
64.5

$
76.5

$
60.8

$
63.1

$
57.6

Funds available for distribution (FAD) (1)(2)
$
53.6

$
69.1

$
53.2

$
57.1

$
50.6

 
 
 
 
 

Shares Outstanding and Per Share Data
 
 
 
 

Common stock and OP units, end of the period
91,498

91,462

91,112

91,138

91,129

Weighted average shares outstanding - fully diluted
91,851

91,777

91,644

91,528

91,420

Net income per share - fully diluted
$
0.38

$
0.32

$
0.35

$
0.31

$
0.30

FFO per share - fully diluted
$
0.70

$
0.64

$
0.66

$
0.63

$
0.63

Normalized FFO per share - fully diluted
$
0.70

$
0.83

$
0.66

$
0.69

$
0.63

FAD per share - fully diluted
$
0.58

$
0.75

$
0.58

$
0.62

$
0.55

Dividends per common share
$
0.375

$
0.375

$
0.325

$
0.325

$
0.325

 
 
 
 
 
 
Balance Sheet
 
 
 
 
 
Total assets
$
3,448

$
3,469

$
3,446

$
3,451

$
3,430

Total liabilities
$
2,466

$
2,490

$
2,467

$
2,475

$
2,455

 
 
 
 
 
 
Market Capitalization
 
 
 
 
 
Total debt
$
2,167

$
2,212

$
2,212

$
2,206

$
2,185

Total market capitalization (3)
$
7,114

$
7,374

$
7,045

$
6,203

$
6,345

 
 
 
 
 
 
Ratios
 
 
 
 
 
Total debt / total market capitalization
30.5
%
30.0
%
31.4
%
35.6
%
34.4
%
Total debt + preferred stock / total market capitalization
32.4
%
31.8
%
33.3
%
37.8
%
36.6
%
Total debt / Normalized EBITDA (4)
5.7

5.8

5.9

5.9

5.9

Interest coverage (5)
3.7

4.1

3.4

3.5

3.3

Fixed charges + preferred distributions coverage (6)
3.3

3.6

3.0

3.1

3.0






______________________
1.
See page 17-18 for non-GAAP measure definitions of Normalized EBITDA, FFO, Normalized FFO and FAD.
2.
See page 6 for a reconciliation of Net income available for Common Shares to FFO, Normalized FFO and FAD.
3.
See page 15 for market capitalization calculation as of June 30, 2015.
4.
Represents trailing twelve months Normalized EBITDA. We believe trailing twelve months Normalized EBITDA provides additional information for determining our ability to meet future debt service requirements.
5.
Interest coverage is calculated by dividing Normalized EBITDA for the period by the interest expense incurred.
6.
See page 18 for a definition of fixed charges. This ratio is calculated by dividing Normalized EBITDA for the period by the sum of fixed charges and preferred stock dividends.

2Q 2015 Supplemental information
2 
Equity LifeStyle Properties, Inc.


Second Quarter 2015 - Selected Financial Data

(In millions, except shares outstanding and per share data, unaudited)
 
Quarter Ended
 
June 30, 2015
Income from property operations, excluding deferrals and property management - 2015 Core (1)
$
105.1

Income from property operations, excluding deferrals and property management - Acquisitions (2)
1.4

Property management and general and administrative (excluding transaction costs)
(18.6
)
Other income and expenses
5.1

Financing costs and other
(28.5
)
Normalized FFO (3)
64.5

Transaction costs
(0.1
)
Early debt retirement
0.1

FFO (3)
$
64.5

 
 
Normalized FFO per share - fully diluted
$
0.70

FFO per share - fully diluted
$
0.70

 
 
 
 
Normalized FFO (3)
$
64.5

Non-revenue producing improvements to real estate
(10.8
)
FAD (3)
$
53.7

 
 
FAD per share - fully diluted
$
0.58

 
 
Weighted average shares outstanding - fully diluted
91.9

 
 

















______________________
1.
See page 17-18 for definitions of Core and Income from property operations, excluding deferrals and property management. See page 8 for details of the 2015 Core Income from Property Operations, excluding deferrals and property management.
2.
See page 18 for definition of Acquisition properties. See page 9 for details of the Income from Property Operations, excluding deferrals and property management for the Acquisition properties.
3.
See page 6 for a reconciliation of Net income available for Common Shares to FFO, Normalized FFO and FAD. See definitions of FFO, Normalized FFO and FAD on page 17.


2Q 2015 Supplemental information
3 
Equity LifeStyle Properties, Inc.


Balance Sheet

(In thousands, except share and per share data)
 
June 30,
2015
 
December 31,
2014
 
(unaudited)
 
Assets
 
 
 
Investment in real estate:
 
 
 
Land
$
1,100,490

 
$
1,091,550

Land improvements
2,763,483

 
2,734,304

Buildings and other depreciable property
576,456

 
562,059

 
4,440,429

 
4,387,913

Accumulated depreciation
(1,226,027
)
 
(1,169,492
)
Net investment in real estate
3,214,402

 
3,218,421

Cash
84,945

 
73,714

Notes receivable, net
35,464

 
37,137

Investment in joint ventures
17,963

 
13,512

Deferred financing costs, net
24,800

 
21,833

Deferred commission expense
29,960

 
28,589

Escrow deposits, goodwill, and other assets, net
39,974

 
53,133

Total Assets
$
3,447,508

 
$
3,446,339

Liabilities and Equity
 
 
 
Liabilities:
 
 
 
Mortgage notes payable
$
1,966,517

 
$
2,012,246

Term loan
200,000

 
200,000

Unsecured lines of credit

 

Accrued payroll and other operating expenses
86,863

 
64,520

Deferred revenue – upfront payments from right-to-use contracts
76,402

 
74,174

Deferred revenue – right-to-use annual payments
13,282

 
9,790

Accrued interest payable
8,705

 
9,496

Rents and other customer payments received in advance and security deposits
79,748

 
67,463

Distributions payable
34,312

 
29,623

Total Liabilities
2,465,829

 
2,467,312

Equity:
 
 
 
Stockholders’ Equity:
 
 
 
Preferred stock, $0.01 par value 9,945,539 shares authorized as of June 30, 2015 and 9,765,900 shares authorized as of December 31, 2014; none issued and outstanding. As of December 31, 2014 includes 179,639 authorized shares 6% Series D Cumulative Preferred stock authorized, none issued and outstanding.

 

6.75% Series C Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value, 54,461 shares authorized and 54,458 issued and outstanding as of June 30, 2015 and December 31, 2014 at liquidation value
136,144

 
136,144

Common stock, $0.01 par value 200,000,000 shares authorized as of June 30, 2015 and December 31, 2014; 84,276,055 and 83,879,779 shares issued and outstanding as of June 30, 2015 and December 31, 2014, respectively
840

 
838

Paid-in capital
1,037,290

 
1,029,601

Distributions in excess of accumulated earnings
(258,454
)
 
(254,209
)
Accumulated other comprehensive loss
(1,034
)
 
(381
)
Total Stockholders’ Equity
914,786

 
911,993

Non-controlling interests – Common OP Units
66,893

 
67,034

Total Equity
981,679

 
979,027

Total Liabilities and Equity
$
3,447,508

 
$
3,446,339



2Q 2015 Supplemental information
4 
Equity LifeStyle Properties, Inc.


Consolidated Income Statement

(In thousands, unaudited)
 
Quarters Ended
 
Six months ended
 
June 30,
 
June 30,
 
2015
 
2014
 
2015
 
2014
Revenues:
 
 
 
 
 
 
 
Community base rental income
$
110,073

 
$
106,502

 
$
219,343

 
$
212,547

Rental home income
3,559

 
3,746

 
7,113

 
7,503

Resort base rental income
41,427

 
36,888

 
93,072

 
81,837

Right-to-use annual payments
10,945

 
11,241

 
21,926

 
22,455

Right-to-use contracts current period, gross
3,578

 
3,263

 
6,375

 
6,344

Right-to-use upfront payments, deferred, net
(1,455
)
 
(1,168
)
 
(2,228
)
 
(2,315
)
Utility and other income
18,901

 
16,919

 
37,983

 
34,490

Gross revenues from home sales
9,526

 
6,560

 
16,463

 
11,738

Brokered resale revenue and ancillary services revenues, net
1,012

 
568

 
2,994

 
2,367

Interest income
1,736

 
1,878

 
3,556

 
4,575

Income from other investments, net
2,178

 
2,628

 
3,297

 
4,229

    Total revenues
201,480

 
189,025

 
409,894

 
385,770

 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
Property operating and maintenance
64,178

 
61,217

 
125,295

 
119,913

Rental home operating and maintenance
1,689

 
1,639

 
3,358

 
3,547

Real estate taxes
12,652

 
12,157

 
25,246

 
24,642

Sales and marketing, gross
3,512

 
2,869

 
6,034

 
5,432

Right-to-use contract commissions, deferred, net
(764
)
 
(710
)
 
(1,007
)
 
(1,265
)
Property management
11,099

 
10,451

 
22,389

 
21,083

Depreciation on real estate assets and rental homes
28,335

 
27,762

 
56,451

 
55,403

Amortization of in-place leases
669

 
1,401

 
1,334

 
2,716

Cost of home sales
9,093

 
6,155

 
15,817

 
11,523

Home selling expenses
720

 
628

 
1,525

 
1,197

General and administrative (1)
7,541

 
6,794

 
14,947

 
12,555

Property rights initiatives and other
694

 
1,001

 
1,247

 
1,312

Early debt retirement
(69
)
 

 
16,922

 

Interest and related amortization
26,145

 
28,265

 
53,421

 
56,313

    Total expenses
165,494

 
159,629

 
342,979

 
314,371

Income before equity in income of unconsolidated joint ventures
35,986

 
29,396

 
66,915

 
71,399

Equity in income of unconsolidated joint ventures
840

 
644

 
1,724

 
2,531

Consolidated net income
36,826

 
30,040

 
68,639

 
73,930

 
 
 
 
 
 
 
 
Income allocated to non-controlling interest-Common OP Units
(2,724
)
 
(2,229
)
 
(5,054
)
 
(5,710
)
Series C Redeemable Perpetual Preferred Stock Dividends
(2,316
)
 
(2,328
)
 
(4,613
)
 
(4,638
)
Net income available for Common Shares
$
31,786

 
$
25,483

 
$
58,972

 
$
63,582















_________________________________________
1.
Includes transaction costs, see Reconciliation of Net Income to FFO, Normalized FFO and FAD on page 6.

2Q 2015 Supplemental information
5 
Equity LifeStyle Properties, Inc.


Reconciliation of Net Income to FFO, Normalized FFO and FAD

(In thousands, except shares outstanding and per share data, unaudited)
 
Quarters Ended
 
Six months ended
 
June 30,
 
June 30,
 
2015
 
2014
 
2015
 
2014
    Net income available for Common Shares
$
31,786

 
$
25,483

 
$
58,972

 
$
63,582

Income allocated to common OP Units
2,724

 
2,229

 
5,054

 
5,710

Right-to-use contract upfront payments, deferred, net (1)
1,455

 
1,168

 
2,228

 
2,315

Right-to-use contract commissions, deferred, net (2)
(764
)
 
(710
)
 
(1,007
)
 
(1,265
)
Depreciation on real estate assets
25,654

 
24,997

 
51,064

 
49,889

Depreciation on rental homes 
2,681

 
2,765

 
5,387

 
5,514

Amortization of in-place leases
669

 
1,401

 
1,334

 
2,716

Depreciation on unconsolidated joint ventures
282

 
235

 
525

 
462

   FFO available for Common Shares(3)
$
64,487

 
$
57,568

 
$
123,557

 
$
128,923

Change in fair value of contingent consideration asset (4)

 

 

 
(65
)
Transaction costs (5)
50

 
41

 
482

 
531

Early debt retirement
(69
)
 

 
16,922

 

   Normalized FFO available for Common Shares(3)
64,468

 
57,609

 
140,961

 
129,389

Non-revenue producing improvements to real estate
(10,822
)
 
(6,991
)
 
(18,265
)
 
(11,303
)
   FAD available for Common Shares (3)
$
53,646

 
$
50,618

 
$
122,696

 
$
118,086

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income available per Common Share - Basic
$
0.38

 
$
0.31

 
$
0.70

 
$
0.76

Net income available per Common Share - Fully Diluted
$
0.38

 
$
0.30

 
$
0.70

 
$
0.76

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FFO per Common Share - Basic
$
0.71

 
$
0.63

 
$
1.35

 
$
1.42

FFO per Common Share - Fully Diluted
$
0.70

 
$
0.63

 
$
1.35

 
$
1.41

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Normalized FFO per Common Share - Basic
$
0.71

 
$
0.63

 
$
1.55

 
$
1.43

Normalized FFO per Common Share - Fully Diluted
$
0.70

 
$
0.63

 
$
1.54

 
$
1.42

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FAD per Common Share - Basic
$
0.59

 
$
0.56

 
$
1.35

 
$
1.30

FAD per Common Share - Fully Diluted
$
0.58

 
$
0.55

 
$
1.34

 
$
1.29

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average Common Shares - Basic
84,031

 
83,234

 
83,996

 
83,175

Average Common Shares and OP Units - Basic
91,252

 
90,764

 
91,219

 
90,757

Average Common Shares and OP Units - Fully Diluted
91,851

 
91,420

 
91,829

 
91,411











______________________________
1.
We are required by GAAP to defer, over the estimated customer life, recognition of non-refundable upfront payments from sales of new and upgrade right-to-use contracts. The customer life is currently estimated to be 31 years and is based upon our experience operating the membership platform since 2008. The amount shown represents the deferral of a substantial portion of current period upgrade sales, offset by amortization of prior period sales.
2.
We are required by GAAP to defer recognition of commissions paid related to the entry of right-to-use contracts. The deferred commissions will be amortized using the same method as used for the related non-refundable upfront payments from the entry of right-to-use contracts and upgrade sales. The amount shown represents the deferral of a substantial portion of current period commissions on those contracts, offset by the amortization of prior period commissions.
3.
See page 17 for non-GAAP measure definitions of FFO, Normalized FFO and FAD.
4.
Included in Income from other investments, net on the Consolidated Income Statement on page 5.
5.
Included in general and administrative on the Consolidated Income Statement on page 5.

2Q 2015 Supplemental information
6 
Equity LifeStyle Properties, Inc.


Consolidated Income from Property Operations (1)

(In millions, except home site and occupancy figures, unaudited)
 
Quarters Ended
 
Six months ended
 
June 30,
 
June 30,
 
2015
 
2014
 
2015
 
2014
Community base rental income (2)
$
110.1

 
$
106.5

 
$
219.3

 
$
212.5

Rental home income
3.6

 
3.7

 
7.1

 
7.5

Resort base rental income (3)
41.4

 
36.9

 
93.1

 
81.8

Right-to-use annual payments
10.9

 
11.2

 
21.9

 
22.5

Right-to-use contracts current period, gross
3.6

 
3.3

 
6.4

 
6.3

Utility and other income
18.9

 
17.0

 
38.0

 
34.5

    Property operating revenues
188.5

 
178.6

 
385.8

 
365.1

 
 
 

 
 
 
 
Property operating, maintenance and real estate taxes
76.8

 
73.4

 
150.5

 
144.6

Rental home operating and maintenance
1.7

 
1.6

 
3.4

 
3.5

Sales and marketing, gross
3.5

 
2.9

 
6.0

 
5.4

    Property operating expenses
82.0

 
77.9

 
159.9

 
153.5

Income from property operations, excluding deferrals and property management (1)
$
106.5

 
$
100.7

 
$
225.9

 
$
211.6

 
 
 
 
 
 
 
 
Manufactured home site figures and occupancy averages:
 
 
 
 
 
 
 
Total sites
70,130

 
69,951

 
70,106

 
69,957

Occupied sites
64,780

 
64,377

 
64,691

 
64,343

Occupancy %
92.4
%
 
92.0
%
 
92.3
%
 
92.0
%
Monthly base rent per site
$
566

 
$
551

 
$
565

 
$
551

 
 
 
 
 
 
 
 
Resort base rental income:
 
 
 
 
 
 
 
Annual
$
28.5

 
$
25.7

 
$
56.5

 
$
50.7

Seasonal
3.7

 
3.2

 
18.7

 
16.0

Transient
9.2

 
8.0

 
17.9

 
15.1

     Total resort base rental income
$
41.4

 
$
36.9

 
$
93.1

 
$
81.8











 


_________________________
1.
See page 5 for a complete Income Statement and page 17-18 for a definition and reconciliation of Income from property operations, excluding deferrals and property management.
2.
See the manufactured home site figures and occupancy averages below within this table.
3.
See resort base rental income detail included below within this table.

2Q 2015 Supplemental information
7 
Equity LifeStyle Properties, Inc.


2015 Core Income from Property Operations (1)

(In millions, except home site and occupancy figures, unaudited)
 
Quarters Ended
 
 
 
Six months ended
 
 
 
June 30,
 
%
 
June 30,
 
%
 
2015
 
2014
 
Change (2)
 
2015
 
2014
 
Change (2)
Community base rental income (3)
$
110.0

 
$
106.5

 
3.2
 %
 
$
219.2

 
$
212.5

 
3.1
 %
Rental home income
3.6

 
3.7

 
(5.0
)%
 
7.1

 
7.5

 
(5.2
)%
Resort base rental income (4)
38.8

 
36.1

 
7.7
 %
 
87.0

 
80.4

 
8.3
 %
Right-to-use annual payments
10.9

 
11.2

 
(2.6
)%
 
21.9

 
22.5

 
(2.4
)%
Right-to-use contracts current period, gross
3.6

 
3.3

 
9.7
 %
 
6.4

 
6.3

 
0.5
 %
Utility and other income
18.6

 
16.8

 
10.9
 %
 
37.5

 
34.4

 
9.0
 %
    Property operating revenues
185.5

 
177.6

 
4.4
 %
 
379.1

 
363.6

 
4.3
 %
 
 
 
 
 
 
 
 
 
 
 
 
Property operating, maintenance and real estate taxes
75.2

 
73.0

 
3.0
 %
 
147.5

 
144.1

 
2.4
 %
Rental home operating and maintenance
1.7

 
1.6

 
3.0
 %
 
3.4

 
3.5

 
(5.4
)%
Sales and marketing, gross
3.5

 
2.9

 
22.4
 %
 
6.0

 
5.4

 
11.0
 %
    Property operating expenses
80.4

 
77.5

 
3.7
 %
 
156.9

 
153.0

 
2.5
 %
Income from property operations, excluding deferrals and property management (1)
$
105.1

 
$
100.1

 
5.0
 %
 
$
222.2

 
$
210.6

 
5.5
 %
Occupied sites (5)
64,749

 
64,443

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Core manufactured home site figures and occupancy averages:
 
 
 
 
 
 
Total sites
69,852

 
69,823

 

 
69,853

 
69,829

 
 
Occupied sites
64,642

 
64,377

 
 
 
64,575

 
64,343

 
 
Occupancy %
92.5
%
 
92.2
%
 
 
 
92.4
%
 
92.1
%
 
 
Monthly base rent per site
$
567

 
$
551

 
 
 
$
566

 
$
551

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Resort base rental income:
 
 
 
 
 
 
 
 
 
 
 
Annual
$
26.4

 
$
24.9

 
5.7
 %
 
$
52.1

 
$
49.3

 
5.7
 %
Seasonal
3.5

 
3.3

 
10.6
 %
 
17.6

 
16.0

 
10.5
 %
Transient
8.9

 
7.9

 
12.6
 %
 
17.3

 
15.1

 
14.5
 %
        Total resort base rental income
$
38.8

 
$
36.1

 
7.7
 %
 
$
87.0

 
$
80.4

 
8.3
 %











____________________________
1.
See page 17 for definitions of Core and Income from property operations, excluding deferrals and property management.
2.
Calculations prepared using actual results without rounding.
3.
See the Core manufactured home site figures and occupancy averages included below within this table.
4.
See resort base rental income detail included below within this table.
5.
Occupied sites as of the end of the period shown. Occupied sites have increased by 208 from 64,541 at December 31, 2014.

2Q 2015 Supplemental information
8 
Equity LifeStyle Properties, Inc.


Acquisitions - Income from Property Operations (1)

(In millions, unaudited)
 
Quarter Ended
 
Six months ended
 
June 30,
2015
 
June 30,
2015
Community base rental income
$
0.1

 
$
0.2

Resort base rental income
2.6

 
6.0

Utility income and other property income
0.3

 
0.5

  Property operating revenues
3.0

 
6.7

 
 
 
 
  Property operating expenses
1.6

 
3.0

Income from property operations, excluding deferrals and property management
$
1.4

 
$
3.7








































______________________
1.
See page 18 for definition of Acquisition properties.

2Q 2015 Supplemental information
9 
Equity LifeStyle Properties, Inc.


Income from Rental Home Operations

(In millions, except occupied rentals, unaudited)
 
Quarters Ended
 
Six months ended
 
June 30,
 
June 30,
 
2015
 
2014
 
2015
 
2014
Manufactured homes:
 
 
 
 
 
 
 
New home
$
5.2

 
$
5.8

 
$
10.3

 
$
11.6

Used home
7.6

 
7.8

 
15.5

 
15.7

   Rental operations revenues (1)
12.8

 
13.6

 
25.8

 
27.3

Rental operations expense
1.7

 
1.6

 
3.4

 
3.5

   Income from rental operations, before depreciation
11.1

 
12.0

 
22.4

 
23.8

Depreciation on rental homes
2.7

 
2.8

 
5.4

 
5.5

   Income from rental operations, after depreciation
$
8.4

 
$
9.2

 
$
17.0

 
$
18.3

 
 
 
 
 
 
 
 
Occupied rentals: (2)
 
 
 
 
 
 
 
New
2,062

 
2,081

 
 
 
 
Used
2,981

 
3,414

 
 
 
 
   Total occupied rental sites
5,043

 
5,495

 

 


 
As of
 
June 30, 2015
 
June 30, 2014
Cost basis in rental homes: (3)
Gross
 
Net of Depreciation
 
Gross
 
Net of Depreciation
New
$
108.9

 
$
89.1

 
$
111.8

 
$
96.4

Used
60.8

 
42.4

 
65.6

 
53.6

  Total rental homes
$
169.7

 
$
131.5

 
$
177.4

 
$
150.0















____________________________
1.
For the quarters ended June 30, 2015 and 2014, approximately $9.2 million and $9.9 million, respectively, are included in the Community base rental income in the Consolidated Income from Property Operations table on page 7. For the six months ended June 30, 2015 and 2014, approximately $18.6 million and $19.8 million, respectively, are included in the Community base rental income in the Consolidated Income from Property Operations table on page 7. The remainder of the rental operations revenue is included in the Rental home income in the Consolidated Income from Property Operations table on page 7.
2.
Occupied rentals as of the end of the period shown in our Core portfolio. For the quarters ended June 30, 2015 and 2014, includes 65 and six homes rented through our Echo joint venture, respectively. For the six months ended June 30, 2015 and 2014, the rental home investment associated with our ECHO JV totals approximately $2.1 million and $0.2 million.
3.
Includes both occupied and unoccupied rental homes. New home cost basis does not include the costs associated with our Echo joint venture. At June 30, 2015 and 2014, our investment in the Echo joint venture was $10.4 million and $5.2 million, respectively.

2Q 2015 Supplemental information
10 
Equity LifeStyle Properties, Inc.


Total Sites and Home Sales

(In thousands, except sites and home sale volumes, unaudited)
Summary of Total Sites as of June 30, 2015
 
 
Sites
Community sites
70,100

Resort sites:
 
    Annuals
25,700

    Seasonal
10,400

    Transient
10,400

Membership (1)
24,100

Joint Ventures (2)
3,100

Total
143,800


Home Sales - Select Data
 
 
 
 
 
 
 
 
Quarters Ended
 
Six months ended
 
June 30,
 
June 30,
 
2015
 
2014
 
2015
 
2014
Total New Home Sales Volume (3)
143

 
86

 
229

 
131

     New Home Sales Volume - ECHO joint venture
49

 
28

 
88

 
42

New Home Sales Gross Revenues(3)
$
5,355

 
$
3,726

 
$
8,285

 
$
5,720

 
 
 
 
 
 
 
 
Used Home Sales Volume
436

 
340

 
817

 
720

Used Home Sales Gross Revenues
$
4,171

 
$
2,834

 
$
8,178

 
$
6,018

 
 
 
 
 
 
 
 
Brokered Home Resales Volume
261

 
243

 
466

 
469

Brokered Home Resale Revenues, net
$
356

 
$
285

 
$
651

 
$
580




















__________________________
1.
Sites primarily utilized by approximately 98,200 members. Includes approximately 5,300 sites rented on an annual basis.
2.
Joint venture income is included in the Equity in income from unconsolidated joint ventures in the Consolidated Income Statement on page 5.
3.
Total new home sales volume includes home sales from our Echo joint venture. New home sales gross revenues does not include the revenues associated with our Echo joint venture.

2Q 2015 Supplemental information
11 
Equity LifeStyle Properties, Inc.


2015 Guidance - Selected Financial Data (1)

Our guidance acknowledges the existence of volatile economic conditions, which may impact our current guidance assumptions. Factors impacting 2015 guidance include, but are not limited to the following: (i) the mix of site usage within the portfolio; (ii) yield management on our short-term resort sites; (iii) scheduled or implemented rate increases on community and resort sites; (iv) scheduled or implemented rate increases in annual payments under right-to-use contracts; (v) occupancy changes; (vi) our ability to retain and attract customers renewing or entering right-to-use contracts; (vii) our ability to integrate and operate recent acquisitions in accordance with our estimates; (viii) completion of pending transactions in their entirety and on assumed schedule; and (ix) ongoing legal matters and related fees.

(In millions, except per share data, unaudited)
 
Quarter Ended
 
Year Ended
 
September 30, 2015
 
December 31, 2015
Income from property operations, excluding deferrals and property management - 2015 Core (2)
$
110.7

 
$
442.4

Income from property operations - Acquisitions (3)
1.3

 
6.6

Property management and general and administrative
(18.6
)
 
(73.5
)
Other income and expenses
4.7

 
16.9

Financing costs and other
(28.5
)
 
(114.9
)
Normalized FFO(4)
69.6

 
277.5

Transaction costs

 
(0.5
)
Early debt retirement

 
(16.9
)
FFO (4)
69.6

 
260.1

    Depreciation on real estate and other
(26.6
)
 
(105.7
)
    Depreciation on rental homes
(2.6
)
 
(10.7
)
    Deferral of right-to-use contract sales revenue and commission, net
(1.0
)
 
(3.1
)
    Income allocated to OP units
(3.1
)
 
(11.1
)
Net income available to common shares
$
36.3

 
$
129.5

 
 
 
 
Normalized FFO per share - fully diluted
$0.73 - $0.79

 
$2.97 - $3.07

FFO per share - fully diluted
$0.73 - $0.79

 
$2.78 - $2.88

Net income per common share - fully diluted (5)
$0.40 - $0.46

 
$1.48 - $1.58

 
 
 
 
Weighted average shares outstanding - fully diluted
91.9

 
91.9









_____________________________________
1.
Each line item represents the mid-point of a range of possible outcomes and reflects management’s estimate of the most likely outcome. Actual Normalized FFO, Normalized FFO per share, FFO, FFO per share, Net Income and Net Income per share could vary materially from amounts presented above if any of our assumptions are incorrect.
2.
See page 13 for 2015 Core Guidance Assumptions. Amount represents 2014 income from property operations, excluding deferrals and property management, from the 2015 Core properties of $105.4 million multiplied by an estimated growth rate of 5.0% and $419.9 million multiplied by an estimated growth rate of 5.4% for the quarter ended September 30, 2015 and the year ended December 31, 2015, respectively.
3.
See page 13 for the 2015 Assumptions regarding the Acquisition properties.
4.
See page 17 for definitions of Normalized FFO and FFO.
5.
Net income per fully diluted common share is calculated before Income allocated to common OP Units.

2Q 2015 Supplemental information
12 
Equity LifeStyle Properties, Inc.


2015 Core Guidance Assumptions(1) 
(In millions, unaudited)
 
Quarter Ended
 
Third Quarter 2015
 
Year Ended
 
 2015
 
September 30,
2014
 
Growth Factors (2)
 
December 31,
2014
 
Growth Factors (2)
Community base rental income
$
107.0

 
3.4
 %
 
$
426.9

 
3.2
 %
Rental home income
3.7

 
(7.0
)%
 
14.8

 
(6.2
)%
Resort base rental income (3)
43.3

 
6.0
 %
 
159.9

 
7.1
 %
Right-to-use annual payments
11.4

 
(2.4
)%
 
44.9

 
(1.6
)%
Right-to-use contracts current period, gross
4.2

 
5.3
 %
 
13.9

 
3.5
 %
Utility and other income
18.5

 
3.1
 %
 
69.9

 
5.7
 %
    Property operating revenues
188.1

 
3.4
 %
 
730.3

 
3.8
 %
 
 
 
 
 
 
 
 
Property operating, maintenance, and real estate taxes
77.7

 
1.2
 %
 
290.6

 
1.9
 %
Rental home operating and maintenance
1.8

 
(3.1
)%
 
7.4

 
(5.2
)%
Sales and marketing, gross
3.2

 
8.1
 %
 
12.4

 
2.5
 %
    Property operating expenses
82.7

 
1.4
 %
 
310.4

 
1.8
 %
Income from property operations, excluding deferrals and property management
$
105.4

 
5.0
 %
 
$
419.9

 
5.4
 %
 
 
 

 
 
 
 
Resort base rental income:
 
 
 
 
 
 
 
Annual
$
25.3

 
5.9
 %
 
$
100.5

 
5.8
 %
Seasonal
3.3

 
6.5
 %
 
24.9

 
8.5
 %
Transient
14.7

 
6.0
 %
 
34.5

 
9.6
 %
    Total resort base rental income
$
43.3

 
6.0
 %
 
$
159.9

 
7.1
 %


2015 Assumptions Regarding Acquisition Properties (1)
(In millions, unaudited)
 
Quarter Ended
 
Year Ended
 
September 30, 2015 (4)
 
December 31, 2015 (4)
Community base rental income
$
0.1

 
$
0.5

Resort base rental income
3.1

 
12.0

Utility income and other property income
0.3

 
1.0

  Property operating revenues
3.5

 
13.5

 
 
 
 
Property operating, maintenance, and real estate taxes
2.2

 
6.9

  Property operating expenses
2.2

 
6.9

Income from property operations, excluding deferrals and property management
$
1.3

 
$
6.6






_______________________________
1.
Refer to page 18 for definition of Core and Acquisition properties.
2.
Management’s estimate of the growth of property operations in the 2015 Core properties compared to actual 2014 performance. Represents our estimate of the mid-point of a range of possible outcomes. Calculations prepared using actual results without rounding. Actual growth could vary materially from amounts presented above if any of our assumptions are incorrect.
3.
See Resort base rental income table included below within this table.
4.
Each line item represents our estimate of the mid-point of a possible range of outcomes and reflects management’s best estimate of the most likely outcome for the Acquisition properties. Actual income from property operations for the Acquisition properties could vary materially from amounts presented above if any of our assumptions are incorrect.

2Q 2015 Supplemental information
13 
Equity LifeStyle Properties, Inc.



Right-To-Use Memberships - Select Data

(In thousands, except member count, number of Thousand Trail Camping Pass, number of annuals and number of upgrades, unaudited)
 
Year Ended December 31,
 
2011
 
2012
 
2013
 
2014
 
2015 (1)
Member Count (2)
99,567

 
96,687

 
98,277

 
96,130

 
98,600

Thousand Trails Camping Pass (TTC) Origination (3)
7,404

 
10,198

 
15,607

 
18,187

 
23,600

    TTC Sales
7,404

 
8,909

 
9,289

 
10,014

 
12,400

    RV Dealer TTC Activations

 
1,289

 
6,318

 
8,173

 
11,200

Number of annuals (4)
3,555

 
4,280

 
4,830

 
5,142

 
5,400

Number of upgrades (5)
3,930

 
3,069

 
2,999

 
2,978

 
3,060

 
 
 
 
 
 
 
 
 
 
Right-to-use annual payments (6)
$
49,122

 
$
47,662

 
$
47,967

 
$
44,860

 
$
44,150

Resort base rental income from annuals
$
8,069

 
$
9,585

 
$
11,148

 
$
12,491

 
$
13,840

Resort base rental income from seasonals/transients
$
10,852

 
$
11,042

 
$
12,692

 
$
13,894

 
$
15,100

Upgrade contract initiations (7)
$
18,456

 
$
14,025

 
$
13,815

 
$
13,892

 
$
14,380

Utility and other income
$
2,444

 
$
2,407

 
$
2,293

 
$
2,455

 
$
2,430

 
 
 
 
 
 
 
 
 
 

























________________________________
1.
Guidance estimate. Each line item represents our estimate of the mid-point of a possible range of outcomes and reflects management’s best estimate of the most likely outcome. Actual figures could vary materially from amounts presented above if any of our assumptions are incorrect.
2.
Members have entered into right-to-use contracts with us that entitle them to use certain properties on a continuous basis for up to 21 days.
3.
TTCs allow access to any of five geographic areas in the United States.
4.
Members who rent a specific site for an entire year in connection with their right-to-use contract.
5.
Existing customers that have upgraded agreements are eligible for longer stays, can make earlier reservations, may receive discounts on rental units, and may have access to additional properties. Upgrades require a non-refundable upfront payment.
6.
The years ended December 31, 2012 and December 31, 2013, include $0.1 million and $2.1 million, respectively, of revenue recognized related to our right-to-use annual memberships activated through our dealer program. During the third quarter of 2013, we changed the accounting treatment of revenues and expenses associated with the RV dealer program to recognize as revenue only the cash received from members generated by the program.
7.
Revenues associated with contract upgrades, included in Right-to-use contracts current period, gross, on our Consolidated Income Statement on page 5.

2Q 2015 Supplemental information
14 
Equity LifeStyle Properties, Inc.


Market Capitalization

(In millions, except share and OP Unit data, unaudited)
Capital Structure as of June 30, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Common Stock/Units
% of Total
Total
% of Total
% of Total
 
 
 
 
 
 
 
 
Secured Debt
 
 
$
1,967

90.8
%
 
 
Unsecured Debt
 
 
200

9.2
%
 
 
Total Debt
 
 
$
2,167

100.0
%
30.5
%
 
 
 
 
 
 
 
 
Common Stock
84,276,055

92.1
%
 
 
 
 
OP Units
7,221,602

7.9
%
 
 
 
 
Total Common Stock and OP Units
91,497,657

100.0
%
 
 
 
 
Common Stock price at June 30, 2015
$
52.58

 
 
 
 
 
Fair Value of Common Stock
 
 
$
4,811

97.2
%
 
 
Perpetual Preferred Equity
 
 
136

2.7
%
 
 
Total Equity
 
 
$
4,947

100.0
%
69.5
%
 
 
 
 
 
 
 
 
Total Market Capitalization
 
 
$
7,114

 
100.0
%
 
 
 
 
 
 
 
 
Perpetual Preferred Equity as of June 30, 2015
 
 
 
 
 
 
 
 
 
 
 
 
Series
Callable Date
 
Outstanding Shares
Liquidation Value
Annual Dividend Per Share
Annual Dividend Value
6.75% Series C
9/7/2017
 
54,458
$136
$168.75
$
9.2



























2Q 2015 Supplemental information
15 
Equity LifeStyle Properties, Inc.


Debt Maturity Schedule

Debt Maturity Schedule as of June 30, 2015
(In thousands, unaudited)

Year
 
Secured Debt
 
Weighted Average Interest Rate
 
Unsecured Debt
 
Weighted Average Interest Rate
 
Total Debt
 
% of Total Debt
 
Weighted Average Interest Rate
 
2015
 
$

 
%
 
$

 

 
$

 
%
 
%
 
2016
 
80,578

 
5.79
%
 

 

 
80,578

 
3.74
%
 
5.79
%
 
2017
 
58,219

 
5.80
%
 

 

 
58,219

 
2.70
%
 
5.80
%
 
2018
 
204,972

 
5.97
%
 

 

 
204,972

 
9.51
%
 
5.97
%
 
2019
 
206,576

 
6.27
%
 

 

 
206,576

 
9.58
%
 
6.27
%
 
2020
 
125,168

 
6.13
%
 
200,000

 
2.39
%
 
325,168

 
15.08
%
 
3.83
%
 
2021
 
194,979

 
5.02
%
 

 

 
194,979

 
9.04
%
 
5.02
%
 
2022
 
155,672

 
4.59
%
 

 

 
155,672

 
7.22
%
 
4.59
%
 
2023
 
115,015

 
5.15
%
 

 

 
115,015

 
5.33
%
 
5.15
%
 
Thereafter
 
814,717

 
4.18
%
 

 

 
814,717

 
37.79
%
 
4.18
%
 
Total
 
$
1,955,896

 
5.00
%
 
$
200,000

 
2.39
%
 
$
2,155,896

 
100.0
%
 
4.76
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note Premiums
 
10,621

 
 
 

 
 
 
10,621

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Debt
 
$
1,966,517

 
4.72
%
(1) 
$
200,000

 
2.39
%
 
$
2,166,517

 
 
 
4.51
%
(1) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average Years to Maturity
 
11.5
 
 
 
4.6
 
 
 
10.8
 
 
 
 
 




























______________________
1.     Effective interest rate including amortization of note premiums.


2Q 2015 Supplemental information
16 
Equity LifeStyle Properties, Inc.


Non-GAAP Financial Measures Definitions and Other Terms

This document contains certain non-GAAP measures we believe are helpful in understanding our business, as further discussed in the paragraphs below. Investors should review Funds from Operations (“FFO”), Normalized Funds from Operations (“Normalized FFO”) and Funds available for distribution (“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. We compute FFO in accordance with our interpretation of standards established by the National Association of Real Estate Investment Trusts (“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, Normalized 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.

FFO. 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 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 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.

We believe FFO, as defined by 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 performance.
Normalized FFO. 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.
FAD. We define FAD as Normalized FFO less non-revenue producing capital expenditures.
Income from Property Operations, excluding deferrals and property management. We define Income from property operations, excluding deferrals and property management as rental income, utility income and right-to-use income less property and maintenance expenses, real estate tax, sales and marketing expenses, property management and the GAAP deferral of right-to-use contract upfront payments and related commissions, net. We believe that this non-GAAP financial measure is helpful to investors and analysts as a direct measure of the actual operating results of our manufactured home and RV properties.



2Q 2015 Supplemental information
17 
Equity LifeStyle Properties, Inc.


The following table reconciles Income before equity in income of unconsolidated joint ventures to Income from property operations(amounts in thousands):
 
 
Quarters Ended
 
Six months ended
 
 
June 30,
 
June 30,
 
 
2015
 
2014
 
2015
 
2014
Income before equity in income of unconsolidated joint ventures
 
$
35,986

 
$
29,396

 
$
66,915

 
$
71,399

Right-to-use upfront payments, deferred, net
 
1,455

 
1,168

 
2,228

 
2,315

Gross revenues from home sales
 
(9,526
)
 
(6,560
)
 
(16,463
)
 
(11,738
)
Brokered resale revenues and ancillary services revenues, net
 
(1,012
)
 
(568
)
 
(2,994
)
 
(2,367
)
Interest income
 
(1,736
)
 
(1,878
)
 
(3,556
)
 
(4,575
)
Income from other investments, net
 
(2,178
)
 
(2,628
)
 
(3,297
)
 
(4,229
)
Right-to-use contract commissions, deferred, net
 
(764
)
 
(710
)
 
(1,007
)
 
(1,265
)
Property management
 
11,099

 
10,451

 
22,389

 
21,083

Depreciation on real estate and rental homes
 
28,335

 
27,762

 
56,451

 
55,403

Amortization of in-place leases
 
669

 
1,401

 
1,334

 
2,716

Cost of homes sales
 
9,093

 
6,155

 
15,817

 
11,523

Home selling expenses
 
720

 
628

 
1,525

 
1,197

General and administrative
 
7,541

 
6,794

 
14,947

 
12,555

Property rights initiatives and other
 
694

 
1,001

 
1,247

 
1,312

Early debt retirement
 
(69
)
 

 
16,922

 

Interest and related amortization
 
26,145

 
28,265

 
53,421

 
56,313

Income from property operations, excluding deferrals and property management
 
$
106,452

 
$
100,677

 
$
225,879

 
$
211,642

Right-to-use contracts, deferred and sales and marketing, deferred, net
 
(691
)
 
(458
)
 
(1,221
)
 
(1,050
)
Property management
 
(11,099
)
 
(10,451
)
 
(22,389
)
 
(21,083
)
Income from property operations
 
$
94,662

 
$
89,768

 
$
202,269

 
$
189,509

Earnings before interest, tax, depreciation and amortization (EBITDA) and Normalized EBITDA. We define EBITDA as net income or loss before interest income and expense, income taxes, depreciation and amortization. We define Normalized EBITDA as EBITDA 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. The following table reconciles Income before equity in income of unconsolidated joint ventures to EBITDA and Normalized EBITDA (amounts in thousands):
 
 
Quarters Ended
 
Six months ended
 
 
June 30,
 
June 30,
 
 
2015
 
2014
 
2015
 
2014
Income before equity in income of unconsolidated joint ventures
 
$
35,986

 
$
29,396

 
$
66,915

 
$
71,399

Right-to-use contract upfront payments, deferred, net
 
1,455

 
1,168

 
2,228

 
2,315

Right-to-use contract commissions, deferred, net
 
(764
)
 
(710
)
 
(1,007
)
 
(1,265
)
Depreciation on real estate assets and rental homes
 
28,335

 
27,762

 
56,451

 
55,403

Amortization of in-place leases
 
669

 
1,401

 
1,334

 
2,716

Depreciation on corporate assets
 
269

 
220

 
538

 
429

Interest and related amortization
 
26,145

 
28,265

 
53,421

 
56,313

Equity in income from unconsolidated joint ventures
 
840

 
644

 
1,724

 
2,531

EBITDA
 
$
92,935

 
$
88,146

 
$
181,604

 
$
189,841

Change in fair value of contingent consideration asset
 

 

 

 
(65
)
Transaction costs
 
50

 
41

 
482

 
531

Early debt retirement
 
(69
)
 

 
16,922

 

Normalized EBITDA
 
$
92,916

 
$
88,187

 
$
199,008

 
$
190,307

Core. The Core properties include properties we expect to own and operate during all of 2014 and 2015.
Acquisitions. The Acquisition properties include seven properties acquired during 2014 and two properties acquired during 2015.
Non-Revenue Producing Improvements. Represents capital expenditures that will not directly result in increased revenue or expense savings and are primarily comprised of common area improvements, furniture, and mechanical improvements.
Fixed Charges. Fixed charges consist of interest expense, amortization of note premiums and debt issuance costs.

2Q 2015 Supplemental information
18 
Equity LifeStyle Properties, Inc.