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): February 28, 2017
EQUITY LIFESTYLE PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
| Maryland | 1-11718 | 36-3857664 | ||
| (State or other jurisdiction of incorporation or organization) |
(Commission File No.) |
(IRS Employer Identification Number) | ||
| Two North Riverside Plaza, Chicago, Illinois | 60606 | |||
| (Address of principal executive offices) | (Zip Code) | |||
(312) 279-1400
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.02 | Results of Operations and Financial Condition |
Equity LifeStyle Properties, Inc. (referred to herein as “we,” “us,” and “our”) hereby reaffirms previously issued guidance for our Net Income per Common Share (fully diluted), for the three months ending March 31, 2017 and year ending December 31, 2017, to be between $0.60 and $0.66 and $2.11 and $2.21, respectively.
We also reaffirm previously issued guidance for our Funds from Operations (“FFO”) per Common Share (fully diluted), for the three months ending March 31, 2017 and year ending December 31, 2017, to be between $0.95 and $1.01 and $3.48 and $3.58, respectively.
We also reaffirm previously issued guidance for our Normalized Funds from Operations (“Normalized FFO”) per Common Share (fully diluted) for the three months ending March 31, 2017 and year ending December 31, 2017, to be between $0.95 and $1.01 and $3.48 and $3.58, respectively.
The projected 2017 per Common 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 |
From time to time, we will meet with analysts and investors and present a slide presentation. A copy of this slide presentation is attached hereto as Exhibit 99.1 and is incorporated herein by reference. The presentation will be posted on our website, www.equitylifestyleproperties.com, on February 28, 2017. Included in this presentation is a discussion of our business and certain financial information regarding 2017 guidance.
In accordance with General Instruction B.2. of Form 8-K, the information included in items 2.02 and 7.01 of this Current Report of Form 8-K, including Exhibit 99.1, 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 such information be deemed incorporated by reference in any registration statement filed by Equity Lifestyle Properties, Inc. 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 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 and guidance concerning 2017 estimated net income, FFO and Normalized FFO; |
| • | our assumptions about rental and home sales markets; |
| • | our ability to manage counter-party risk; |
| • | in the age-qualified Properties, home sales results could be impacted by the ability of potential home buyers 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 or actions brought against us, including those disclosed in our filings with the Securities and Exchange Commission; 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.
Equity LifeStyle Properties, Inc. is a fully integrated owner and operator of lifestyle-oriented properties and owns or has an interest in 391 quality properties in 32 states and British Columbia consisting of 146,610 sites. We are a self-administered, self-managed, real estate investment trust with headquarters in Chicago.
| Item 9.01 | Financial Statements and Exhibits |
(d) Exhibits
Exhibit 99.1 Investor Presentation
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.
| EQUITY LIFESTYLE PROPERTIES, INC. | ||
| By: | /s/ Paul Seavey | |
| Paul Seavey | ||
| Executive Vice President, | ||
| Chief Financial Officer and Treasurer | ||
Date: February 28, 2017
Exhibit 99.1
Equity LifeStyle Properties els
Our Story One of the nation’s largest real estate networks with 391 properties containing 146,610 sites in 32 states and British Columbia Unique business model uOwn the land uLow maintenance costs/customer turnover costs uLease developed sites High-quality real estate locations uMore than 80 properties with lake, river or ocean frontage uMore than 100 properties within 10 miles of coastal United States uProperty locations are strongly correlated with population migration uProperty locations in retirement and vacation destinations Stable, predictable financial performance and fundamentals uBalance sheet flexibility In business for more than 40 years 1 els
Property Locations 4 3 2 WA ME ND MN 4 MT 3 OR VT WI NY WY 4 MI NH ID 4 CA SD 2 2 3 MA NV 3 RI 7 NE IA 5 PA 6 6 6 IN OH UT CO IL 6 NJ 9 2 2 16 WV DE 4 7 KS AZ MO KY VA 11 NM NC 4 TN 6 26 OK AR 6 SC MS TX AL GA LA FL 8 6 18 11 37 15 4 14 9 10 2 els
Steady,Predictable Revenue Streams Property Operating Revenue Buckets(1) Property/Site composition Transient 5.9% home 203 manufactured/resort communities Seasonal 4.1% u 72,600 sites Annual Right to Use 188 RV resorts 6.7% u 74,000 sites u Annuals 27,300 Annual RV u Seasonal 11,600 15.4% u Transient 11,000 uMembership sites 24,100 Annual MH 67.9% Note: (1) Property revenue buckets reflect estimated 2017 property operating revenues, derivable from our guidance furnished with the SEC as Exhibit 99.1 to the Form 8-K filed on January 23, 2017 (“ELS Reports Fourth Quarter Results”). All Annual Revenue = 90.0% 3 els
Our Lifestyle Options Customers own the units they place on our sites u Manufactured homes u Resort cottages (park models) u Recreational vehicles We offer a lifestyle and a variety of product options to meet our customers’ needs • We seek to create long-term relationships with our customers RV Site Manufactured Home RV Resort Cottage 4 els
Favorable Customer Demographics The population of people age 55 and older is expected to grow 24% from 2017 to 2032 • Roughly 10,000 Baby Boomers will turn 65 every day through 2030 U.S. Population Over Age 55 (in millions) 120 100 80 New Residents 60 MH u Average age: 59 years RV u Average age: 55 years 40 20 0 2017 2022 2027 2032 Note: Sources: US Census 2014, Acxiom 2014, Pew Research Center 2010. 5 Sum of 55-59 Sum of 60-64 Sum of 65-69 Sum of 75+ els
Track Record 10-Year Total Return Performance 300 Equity Lifestyle Proper1es, Inc. - -- 10 Years Total Return (%) 250 200 IPO Year—1993 2017 150 Item 100 Properties 41 391 50 0 Sites 12,312 146,610 - --50 - --100 States 16 32 1/31/07 1/31/08 1/31/09 1/31/10 1/31/11 1/31/12 1/31/13 1/31/14 1/31/15 1/31/16 1/31/17 Net Income Per Share $0.35 $2.16 ELS (+238%) S&P 500 (+96%) SNL US REIT Equity (+58%) FFO Per Share (1) $0.47 $3.53 Normalized FFO Per Share (1) $0.47 $3.53 Total Return Performance Since IPO Common Stock Price (2) $6.44 $73.94 Enterprise Value (3) $296 million $9.1 billion Equity Lifestyle Proper1es, Inc. Total Return (%) Since IPO 4,000 Dividend Paid Cumulative (4)—$20.97 3,500 3,000 (5) Cumulative Total Return—3,145% 2,500 S&P 500 Total Return (5)—728% 2,000 1,500 1,000 500 Note: 0 (1) See pages 12 and 13 for the reconciliation and definition of FFO and Normalized FFO. The 1993 amount was - --500 determined from amounts presented in the 1996 Form 10-K. The 2017 amounts are the midpoint of an estimate range. 2/25/93 2/25/95 2/25/97 2/25/99 2/25/01 2/25/03 2/25/05 2/25/07 2/25/09 2/25/11 2/25/13 2/25/15 See our guidance furnished with the SEC as Exhibit 99.1 to the Form 8-K filed on January 23, 2017. ELS (+3,145%) S&P 500 (+728%) SNL US REIT Equity (+1,050%) (2) The 1993 stock price is adjusted for stock splits; the 2017 price is the closing price as of January 31, 2017. (3) The 2017 enterprise value is as of January 31, 2017. See page 9. (4) Source: SNL Financial. Includes dividends paid from IPO date of February 25,1993 through Notes: January 31, 2017 and adjusted for stock splits. Source: SNL Financial (5) Source: SNL Financial from IPO through January 31, 2017 (calculation assumes common dividend reinvestment). (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. (3) Stock price date from IPO as of January 31, 2017. 6 els
Consistent Same Store NOI Growth and Outperformance ELS positive has same maintained store NOI quarters growth since in all at least Q3 1998. 0%1%2%3%4%5%6%7%8%9%10% -1% -2% -3% -4% -5% -6% -7% -8% REIT Industry Apartments ELS Els Average 3.9% Apartments Average 3.2% Industry Average 3.0% 98 99 99 00 00 01 01 02 02 03 03 04 04 0505 06 06 07 07 08 08 09 09 10 10 1111 12 12 13 13 14 14 15 15 16 16 3Q 1Q3Q1Q3Q 1Q 3Q 1Q 3Q1Q3Q1Q3Q 1Q 3Q 1Q3Q 1Q 3Q1Q 3Q 1Q 3Q1Q3Q1Q3Q 1Q 3Q1Q3Q1Q 3Q 1Q 3Q1Q3Q Note: (1) Source for Same Store NOI data: Citi Investment Research, December 2016. 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. 7 els
Comparison of ELS to MH Industry NFFO per share Indexed Growth $240 $220 ELS compounded NFFO(1) per share growth rates outperformed the $200 REIT MH Industry since 2006. $180 $160 $140 $120 $100 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 ELS NFFO Per Share(2) MH Industry NFFO Per Share(2) Note: (1) See pages 12 and 13 for the reconciliation and definition of Normalized FFO. (2) Source: SNL Financial as of January 31, 2017. NFFO per share Indexed Growth assumes initial investment of $100 multiplied by the Normalized FFO per share growth rate. 8 els
Dividend Dividend per Share $2.50 2017—$1.95/share(1) $2.00 $1.95 u 15% increase $0.15 $1.95 g $1.70 u 7% FFO growth $1.50 $1.50 $1.30 $1.00 Historical growth $1.00 $0.88 $0.75 (2) u 10 year CAGR of 27% $0.60 $0.55 $0.50 $0.40 $0.30 $0.15 $0.00 Tax treatment of dividend(3) 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 ELS REIT average u89% Ordinary Income u68% Ordinary Income u11% Return of Capital u11% Capital Gains u21% Return of Capital Note: (1) On November 8, 2016, our Board approved setting the annual dividend rate for 2017 at $1.95 per common share. (2) Compound average growth rate through 2016. (3) Tax treatment of dividend in 2016. 9 els
Capital Structure As of January 31, 2017 (in millions) Total enterprise value is $9.1 billion Debt to enterprise value is 23.2% Loan Maturity as of December 31, 2016 $350,000 $400 million available line of credit $300,000 OPU’s $444.4, 4.9% Term Loan $200.0, 2.2% thousands) $250,000 Preferred $136.1, 1.4%(in Debt $200,000 $150,000 Common(1) $100,000 Mortgage Debt $70 6,409 .5%.8 $1,906.5 Outstanding $50,000 21.0% $0 ‘21 ‘23 ‘25 ‘28 ‘31 ‘34 ‘36 ‘38 ‘39 ‘40 ‘41 ‘17 ‘18 ‘19 ‘20 ‘22 Year Fully Amortizing Secured Secured Unsecured Note: (1) Stock price as of January 31, 2017. 10 els
Performance Update 199 Manufactured Home Communities(1) 187 RV Resorts(1) u Core(2) of 01/31/2017 occupancy of 94% as u Core resort base rental income u Core occupancy has grown 29 consecutive growth for the month ended quarters through 12/31/2016 01/31/2016 is 2.4%(3) u Core community base rental income growth u Core rental income growth rate for the month ended 01/31/2017 is 4.8%(3) from annuals for the month ended 01/31/2017 is 5.0%(3) Note: (1) Excludes joint venture properties. (2) Core Portfolio is defined as properties acquired prior to December 31, 2015. 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 January 31, 2016. 11 els
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: the The heading forward -“Risk looking Factors” statements in our contained 2016 Annual in this Report presentation on Form are 10 -subject K. See to Form certain 8-K economic filed January risks 23, and 2017 uncertainties for the full described text of our under forward -looking All statements projections . We are assume based no on obligation 2017 budgets, to update reforecasts or supplement and pro forward forma expectations -looking statements on recent that investments become untrue . because of subsequent events. Non-GAAP Financial Measures Net Income to FFO and Normalized FFO Reconciliation (in millions) Computation of Funds From Operations (FFO) 2012 2013 2014 2015 2016 2017 (1) Net income available for common stockholders $54.8 $106.9 $118.7 $130.1 $164.0 $185.3 Income allocated to common OP units 5.1 9.7 10.5 11.1 13.9 15.5 Right-to-use contract revenue and commissions deferred, net 3.5 3.3 2.9 2.7 2.9 2.9 Depreciation on real estate assets and other 100.0 102.7 101.2 104.0 108.0 110.3 Depreciation on rental homes 6.1 6.5 10.9 10.7 10.7 10.7 Depreciation on discontinued operations — 1.5 —— — -Amortization of in-place leases 45.1 1.9 4.0 2.4 3.4 3.4 Gain on real estate (4.6) (41.5) (1.5)— — - FFO available for common stock and OP unit holders 210.0 191.0 246.7 261.0 302.9 328.1 Change in fair value of contingent consideration asset (0.5) 1.4 (0.1) — — -Transaction costs 0.2 2.0 1.6 1.1 1.2 -Loss from early extinguishment of debt 0.5 37.9 5.1 16.9 — -Litigation settlement, net — —— — 2.4 - Normalized FFO available for common stocks and OP unit holders $210.2 $232.3 $253.3 $279.0 $306.5 $328.1 Note: (1) The 2017 amounts are the midpoint of an estimate range. See our guidance furnished with the SEC as Exhibit 99.1 to the Form 8-K filed on January 23, 2017. 12 els
Non-GAAP Financial Measures This discussed document in the contains paragraphs certain below non. -We GAAP believe measures investors used should by management review Funds that from we believe Operations are helpful (“FFO”), in and understanding Normalized our Funds business, from Operations as further an (“Normalized equity REIT’s FFO”), operating along with performance GAAP net . Our income definitions and cash and flow calculations from operating of these activities, non-GAAP investing financial activities and operating and financing measures activities, and other when terms evaluating may differ measures from do the not definitions represent and cash methodologies generated from used operating by other activities REITs and, in accordance accordingly, with may GAAP, not be nor comparable do they represent . These non cash -GAAP available financial to pay and distributions operating to and cash should flow not from be operating considered activities, as an alternative determined to in net accordance income, determined with GAAP, in as accordance a measure with of our GAAP, liquidity, as an nor indication is it indicative of our of financial funds available performance, to fund or our cash needs, including our ability to make cash distributions. losses FUNDS from FROM sales OPERATIONS of properties, (FFO) plus real . We estate define related FFO as depreciation net income, and computed amortization, in accordance impairments, with if GAAP, any, and excluding after adjustments gains and actual for unconsolidated or estimated compute partnerships FFO and in accordance joint ventures with . Adjustments our interpretation for unconsolidated of standards established partnerships by and the joint National ventures Association are calculated of Real to Estate reflect Investment FFO on the Trusts same (“NAREIT”), basis. We interpret which may the not current be comparable NAREIT definition to FFO differently reported than by other we do REITs . We that receive do not up- front define non the -refundable term in accordance payments from with the the entry current of NAREIT right-to- use definition contracts or that . In Although accordance the with NAREIT GAAP, definition the upfront of FFO non does -refundable not address payments the treatment and related of commissions non-refundable are right deferred -to- use and payments, amortized we over believe the estimated that it is appropriate customer life to. adjust for the impact of the deferral activity in our calculation of FFO. widely We believe used FFO, measure as defined of operating by the Board performance of Governors for equity of NAREIT, REITs, itis does generally not represent a measure cash of performance flow from operations for an equity or net REIT income . While FFO as defined is a relevant by GAAP, and and it should not be considered as an alternative to these indicators in evaluating liquidity or operating performance. income NORMALIZED and expense FUNDS items: FROM a) the financial OPERATIONS impact of (NORMALIZED contingent consideration; FFO). We b)define gains Normalized and losses from FFO early as FFO debt excluding extinguishment, the following including non prepayment -operating non penalties -comparable and defeasance items. Normalized costs; c) FFO property presented acquisition herein and is not other necessarily transaction comparable costs related to Normalized to mergers FFO and presented acquisitions; by other and d) real other estate miscellaneous companies due to the fact that not all real estate companies use the same methodology for computing this amount. 13 els
Equity LifeStyle Properties Two North Riverside Plaza, Chicago, Illinois 60606 800-247-5279 | www.EquityLifeStyle.com 2/17