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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): April 17, 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):

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 communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 






Item 2.02    Results of Operations and Financial Condition

On April 17, 2017, Equity LifeStyle Properties, Inc. (referred to herein as “we,” “us,” and “our”) issued a news release announcing our results of operations for the three months ended March 31, 2017.

The news release also contains detailed guidance assumptions on our projections for 2017. We project our Net income per Common Share (fully diluted) for the three months ending June 30, 2017 and year ending December 31, 2017, to be between $0.44 and $0.50 and $2.14 and $2.24, respectively.

We also project our Funds from Operations (“FFO”) per Common Share (fully diluted) for the three months ending June 30, 2017 and year ending December 31, 2017 to be between $0.77 and $0.83 and $3.50 and $3.60, respectively. We project our Normalized Funds from Operations (“Normalized FFO”) per Common Share (fully diluted) for the three months ending June 30, 2017 and year ending December 31, 2017 to be between $0.77 and $0.83 and $3.51 and $3.61, 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 results 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.equitylifestyleproperties.com, on April 17, 2017.

In accordance with General Instruction B.2. of Form 8-K, the information included in Items 2.02 and 9.01 of this Report on 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.

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 about rental and home sales markets;
our assumptions and guidance concerning 2017 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 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.
For further information on these and other factors that could impact us and the statements contained herein, refer to our filings with the Securities and Exchange Commission, including “Risk Factors” in our most recent Annual Report on Form 10-K and subsequent quarterly reports.

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 391 quality properties in 32 states and British Columbia consisting of 146,626 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






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             /s
Paul Seavey
Executive Vice President, Chief Financial Officer and Treasurer

Date: April 18, 2017



Document


N E W S R E L E A S E

https://cdn.kscope.io/45cf79b5cf7f6ed8f1f8c61b91e660cf-elscorplogocenteredbluea04.jpg                

CONTACT: Paul Seavey                             FOR IMMEDIATE RELEASE
(800) 247-5279                          April 17, 2017


                                                        
ELS REPORTS FIRST QUARTER RESULTS
Continued Strong Performance

CHICAGO, IL – April 17, 2017 Equity LifeStyle Properties, Inc. (NYSE: ELS) (referred to herein as “we,” “us,” and “our”) today announced results for the quarter ended March 31, 2017. All per share results are reported on a fully diluted basis unless otherwise noted.
Financial Results for the Quarter Ended March 31, 2017
For the quarter ended March 31, 2017, total revenues increased $12.3 million, or 5.6 percent, to $232.4 million compared to $220.1 million for the same period in 2016. Net income available for Common Stockholders increased $6.3 million, or $0.05 per Common Share, to $56.9 million, or $0.65 per Common Share, compared to $50.6 million, or $0.60 per Common Share, for the same period in 2016.
Non-GAAP Financial Measures and Portfolio Performance
For the quarter ended March 31, 2017, Funds from Operations (“FFO”) available for Common Stock and OP Unit holders increased $8.5 million, or $0.08 per Common Share, to $93.1 million or $1.00 per Common Share, compared to $84.6 million, or $0.92 per Common Share, for the same period in 2016.
For the quarter ended March 31, 2017 Normalized Funds from Operations (“Normalized FFO”) available for Common Stock and OP Unit holders increased $8.4 million, or $0.08 per Common Share, to $93.2 million, or $1.00 per Common Share, compared to $84.8 million, or $0.92 per Common Share, for the same period in 2016.
For the quarter ended March 31, 2017, property operating revenues, excluding deferrals, increased $14.6 million to $222.0 million compared to $207.4 million for the same period in 2016. For the quarter ended March 31, 2017, income from property operations, excluding deferrals and property management, increased $8.4 million to $135.6 million compared to $127.2 million for the same period in 2016.
For the quarter ended March 31, 2017, Core property operating revenues, excluding deferrals, increased approximately 4.3 percent and Core income from property operations, excluding deferrals and property management, increased approximately 3.8 percent compared to the same period in 2016.
Balance Sheet Activity
During the quarter, we paid off one loan of approximately $21.1 million using available cash, with an interest rate of 5.76% per annum, secured by one manufactured home community.
About Equity LifeStyle Properties
We are a self-administered, self-managed real estate investment trust (“REIT”) with headquarters in Chicago.
As of April 17, 2017, we own or have an interest in 391 quality properties in 32 states and British Columbia consisting of 146,626 sites.
For additional information, please contact our Investor Relations Department at (800) 247-5279 or at investor_relations@equitylifestyle.com.

 
i 
 




Conference Call
A live webcast of our conference call discussing these results will take place tomorrow, Tuesday, April 18, 2017, at 10:00 a.m. Central Time. Please visit the Investor Information section at www.equitylifestyleproperties.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 three quarters are expected to occur as follows:
 
 
Release Date
 
Earnings Call
Second Quarter 2017
 
Monday, July 17, 2017
 
Tuesday, July 18, 2017 10:00 a.m. CT
Third Quarter 2017
 
Monday, October 16, 2017
 
Tuesday, October 17, 2017 10:00 a.m. CT
Fourth Quarter 2017
 
Monday, January 29, 2018
 
Tuesday, January 30, 2018 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 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 2017 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 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.
For further information on these and other factors that could impact us and the statements contained herein, refer to our filings with the Securities and Exchange Commission, including “Risk Factors” in our most recent Annual Report on Form 10-K and subsequent quarterly reports.

 
ii 
 




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
BMO Capital Markets
Green Street Advisors
Drew T. Babin
Paul Adornato
Ryan Burke/Ryan Lumb
215-553-7816
212-885-4170
949-640-8780
dbabin@rwbaird.com
paul.adornato@bmo.com
rburke@greenstreetadvisors.com
 
 
rlumb@greenstreetadvisors.com
Cantor Fitzgerald
Citi Research
 
Gaurav Mehta
Michael Bilerman/ Nick Joseph
Wells Fargo Securities
212-915-1221
212-816-1383
Todd Stender
gmehta@cantor.com
michael.bilerman@citi.com
562-637-1371
 
nicholas.joseph@citi.com
todd.stender@wellsfargo.com
 
 
 
Bank of America Merrill Lynch Global Research
Evercore ISI
 
Jeffrey Spector
Steve Sakwa/ Gwen Clark
 
646-855-1363
212-446-5600
 
jeff.spector@baml.com
steve.sakwa@evercoreisi.com
 
 
gwen.clark@evercoreisi.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.

1Q 2017 Supplemental information
1 
Equity LifeStyle Properties, Inc.



Financial Highlights

(In millions, except Stock and OP Units outstanding and per share data, unaudited)
 
As of and for the Three Months Ended
 
March 31, 2017
December 31,
2016
September 30, 2016
June 30, 2016
March 31, 2016
Operating Information
 
 
 
 
 
Total revenues
$
232.4

$
214.0

$
226.2

$
210.1

$
220.1

Net income
$
63.1

$
42.4

$
46.8

$
40.8

$
57.2

Net income available for Common Stockholders
$
56.9

$
37.0

$
41.0

$
35.5

$
50.6

Adjusted EBITDA (1)
$
118.9

$
101.4

$
103.4

$
95.9

$
111.3

FFO available for Common Stock and OP Unit holders(1)(2)
$
93.1

$
72.5

$
76.9

$
68.9

$
84.6

Normalized FFO available for Common Stock and OP Unit holders(1)(2)
$
93.2

$
75.2

$
77.2

$
69.3

$
84.8

Funds available for distribution (FAD) available for Common Stock and OP Unit holders(1)(2)
$
86.0

$
65.8

$
67.2

$
58.4

$
77.4

 
 
 
 
 
 
Stock Outstanding (In thousands)
 and Per Share Data
 
 
 
 
 
Common Stock and OP Units, end of the period
92,780

92,699

92,507

92,499

91,802

Weighted average Common Stock and OP Unit outstanding - fully diluted
93,011

92,965

92,910

92,264

92,041

Net income per Common Share - fully diluted
$
0.65

$
0.43

$
0.48

$
0.42

$
0.60

FFO per Common Share - fully diluted
$
1.00

$
0.78

$
0.83

$
0.75

$
0.92

Normalized FFO per Common Share - fully diluted
$
1.00

$
0.81

$
0.83

$
0.75

$
0.92

Dividends per Common Share
$
0.488

$
0.425

$
0.425

$
0.425

$
0.425

 
 
 
 
 
 
Balance Sheet
 
 
 
 
 
Total assets
$
3,471

$
3,479

$
3,470

$
3,486

$
3,415

Total liabilities 
$
2,371

$
2,397

$
2,396

$
2,420

$
2,400

 
 
 
 
 
 
Market Capitalization
 
 
 
 
 
Total debt
$
2,078

$
2,110

$
2,111

$
2,134

$
2,125

Total market capitalization (3)
$
9,364

$
8,930

$
9,387

$
9,675

$
8,938

 
 
 
 
 
 
Ratios
 
 
 
 
 
Total debt / total market capitalization
22.2
%
23.6
%
22.5
%
22.1
%
23.8
%
Total debt + preferred stock / total market capitalization
23.6
%
25.2
%
23.9
%
23.5
%
25.3
%
Total debt / Adjusted EBITDA (4)
5.0

5.1

5.2

5.3

5.4

Interest coverage (5)
4.2

4.1

4.1

4.0

4.0

Fixed charges + preferred distributions coverage (6)
3.8

3.7

3.6

3.5

3.5





______________________
1.
See Non-GAAP Financial Measure Definitions and Other Terms at the end of the supplemental information for definitions of Adjusted EBITDA, FFO, Normalized FFO and FAD; and reconciliation of Adjusted EBITDA.
2.
See page 7 for a reconciliation of Net income available for Common Stockholders to non-GAAP financial measures FFO available for Common Stock and OP Unit holders, Normalized FFO available for Common Stock and OP Unit holders and FAD available for Common Stock and OP Unit holders.
3.
See page 16 for market capitalization calculation as of March 31, 2017.
4.
Represents trailing twelve months Adjusted EBITDA. We believe trailing twelve months Adjusted EBITDA provides additional information for determining our ability to meet future debt service requirements.
5.
Interest coverage is calculated by dividing trailing twelve months Adjusted EBITDA by the interest expense incurred during the same period.
6.
See Non-GAAP Financial Measure Definitions and Other Terms at the end of the supplemental information for a definition of fixed charges. This ratio is calculated by dividing trailing twelve months Adjusted EBITDA by the sum of fixed charges and preferred stock dividends during the same period.

1Q 2017 Supplemental information
2 
Equity LifeStyle Properties, Inc.



Balance Sheet

(In thousands, except share and per share data)

 
March 31,
2017
 
December 31,
2016
 
(unaudited)
 
Assets
 
 
 
Investment in real estate:
 
 
 
Land
$
1,163,987

 
$
1,163,987

Land improvements
2,903,564

 
2,893,759

Buildings and other depreciable property
635,248

 
627,590

 
4,702,799

 
4,685,336

Accumulated depreciation
(1,429,999
)
 
(1,399,531
)
Net investment in real estate
3,272,800

 
3,285,805

Cash
73,248

 
56,340

Notes receivable, net
34,239

 
34,520

Investment in unconsolidated joint ventures
19,187

 
19,369

Deferred commission expense
31,357

 
31,375

Escrow deposits, goodwill, and other assets, net (1)
40,210

 
51,578

Total Assets
$
3,471,041

 
$
3,478,987

Liabilities and Equity
 
 
 
Liabilities:
 
 
 
Mortgage notes payable
$
1,859,890

 
$
1,891,900

Term loan
199,431

 
199,379

Accrued expenses and accounts payable (1)
85,554

 
89,864

Deferred revenue – upfront payments from right-to-use contracts
82,264

 
81,484

Deferred revenue – right-to-use annual payments
13,316

 
9,817

Accrued interest payable
8,212

 
8,379

Rents and other customer payments received in advance and security deposits
77,398

 
76,906

Distributions payable
45,230

 
39,411

Total Liabilities
2,371,295

 
2,397,140

Equity:
 
 
 
Stockholders’ Equity:
 
 
 
Preferred stock, $0.01 par value, 9,945,539 shares authorized as of March 31, 2017 and December 31, 2016; 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 March 31, 2017 and December 31, 2016 at liquidation value
136,144

 
136,144

Common stock, $0.01 par value, 200,000,000 shares authorized as of March 31, 2017 and December 31, 2016; 86,841,775 and 85,529,386 shares issued and outstanding as of March 31, 2017 and December 31, 2016, respectively
866

 
854

Paid-in capital
1,117,628

 
1,103,048

Distributions in excess of accumulated earnings
(216,724
)
 
(231,276
)
Accumulated other comprehensive loss
(1
)
 
(227
)
Total Stockholders’ Equity
1,037,913

 
1,008,543

Non-controlling interests – Common OP Units
61,833

 
73,304

Total Equity
1,099,746

 
1,081,847

Total Liabilities and Equity
$
3,471,041

 
$
3,478,987

                                
1.
As of December 31, 2016, Escrow deposits, goodwill, and other assets, net includes insurance receivable of approximately $10.9 million, and Accrued expenses and accounts payable includes approximately $13.3 million litigation settlement payable related to resolution of the California lawsuits. These amounts were received and paid during the first quarter of 2017.


1Q 2017 Supplemental information
3 
Equity LifeStyle Properties, Inc.



Consolidated Income Statement

(In thousands, unaudited)

 
Quarters Ended
 
 
March 31,
 
 
2017
 
2016
 
Revenues:
 
 
 
 
Community base rental income
$
120,692

 
$
114,076

 
Rental home income
3,605

 
3,545

 
Resort base rental income
61,068

 
55,434

 
Right-to-use annual payments
11,252

 
11,054

 
Right-to-use contracts current period, gross
3,206

 
2,532

 
Right-to-use contract upfront payments, deferred, net
(775
)
 
(302
)
 
Utility and other income
22,126

 
20,793

 
Gross revenues from home sales
7,027

 
8,214

 
Brokered resale revenue and ancillary services revenues, net
1,661

 
1,418

 
Interest income
1,770

 
1,660

 
Income from other investments, net
757

 
1,723

 
    Total revenues
232,389

 
220,147

 
 
 
 
 
 
Expenses:
 
 
 
 
Property operating and maintenance
68,054

 
62,954

 
Rental home operating and maintenance
1,551

 
1,525

 
Real estate taxes
14,037

 
13,198

 
Sales and marketing, gross
2,690

 
2,493

 
Right-to-use contract commissions, deferred, net
(84
)
 
104

 
Property management
12,560

 
11,763

 
Depreciation on real estate assets and rental homes
30,109

 
28,656

 
Amortization of in-place leases
1,032

 
335

 
Cost of home sales
7,119

 
8,281

 
Home selling expenses
925

 
834

 
General and administrative
7,373

 
7,407

 
Property rights initiatives and other
219

 
654

 
Interest and related amortization
24,879

 
25,634

 
    Total expenses
170,464

 
163,838

 
Income before equity in income of unconsolidated joint ventures
61,925

 
56,309

 
Equity in income of unconsolidated joint ventures
1,150

 
881

 
Consolidated net income
63,075

 
57,190

 
 
 
 
 
 
Income allocated to non-controlling interest-Common OP Units
(3,890
)
 
(4,310
)
 
Series C Redeemable Perpetual Preferred Stock Dividends
(2,297
)
 
(2,297
)
 
Net income available for Common Stockholders
$
56,888

 
$
50,583

 












1Q 2017 Supplemental information
4 
Equity LifeStyle Properties, Inc.



























Non-GAAP Financial Measures





1Q 2017 Supplemental information
5 
Equity LifeStyle Properties, Inc.



First Quarter 2017 - Selected Non-GAAP Financial Measures

(In millions, except per share data, unaudited)

 
Quarter Ended
 
March 31, 2017
Income from property operations, excluding deferrals and property management - 2017 Core (1)
$
132.0

Income from property operations, excluding deferrals and property management - Acquisitions (2)
3.6

Property management and general and administrative (excluding transaction costs)
(19.8
)
Other income and expenses
4.6

Financing costs and other
(27.2
)
Normalized FFO available for Common Stock and OP Unit holders (3)
93.2

Transaction costs
(0.1
)
FFO available for Common Stock and OP Unit holders (3)
$
93.1

 
 
Normalized FFO per Common Share - fully diluted
$
1.00

FFO per Common Share - fully diluted
$
1.00

 
 
 
 
Normalized FFO available for Common Stock and OP Unit holders (3)
$
93.2

Non-revenue producing improvements to real estate
(7.2
)
FAD available for Common Stock and OP Unit holders (3)
$
86.0

 
 
Weighted average Common Stock and OP Units - fully diluted
93.0

 
 
















___________________
1.
See Non-GAAP Financial Measure Definitions and Other Terms at the end of the supplemental information for definitions of non-GAAP financial measures Income from property operations, excluding deferrals and property management, and Core, and reconciliation of income from property operations, excluding deferrals and property management to income before equity in income of unconsolidated joint ventures. See page 9 for details of the 2017 Core Income from Property Operations, excluding deferrals and property management.
2.
See Non-GAAP Financial Measure Definitions and Other Terms at the end of the supplemental information for a definition of Acquisition properties. See page 10 for details of the Income from Property Operations, excluding deferrals and property management for the Acquisitions.
3.
See page 7 for a reconciliation of Net income available for Common Stockholders to non-GAAP financial measures FFO available for Common Stock and OP Unit holders, Normalized FFO available for Common Stock and OP Unit holders and FAD available for Common Stock and OP Unit holders. See definitions of non-GAAP financial measures of FFO, Normalized FFO and FAD and Non-revenue producing improvements in Non-GAAP Financial Measure Definitions and Other Terms at the end of the supplemental information.

1Q 2017 Supplemental information
6 
Equity LifeStyle Properties, Inc.



Reconciliation of Net Income to Non-GAAP Financial Measures

(In thousands, except per share data, unaudited)

 
Quarters Ended
 
 
March 31,
 
 
2017
 
2016
 
   Net income available for Common Stockholders
$
56,888

 
$
50,583

 
Income allocated to Common OP Units
3,890

 
4,310

 
Right-to-use contract upfront payments, deferred, net (1)
775

 
302

 
Right-to-use contract commissions, deferred, net (2)
(84
)
 
104

 
Depreciation on real estate assets
27,452

 
26,008

 
Depreciation on rental homes 
2,657

 
2,647

 
Amortization of in-place leases
1,032

 
335

 
Depreciation on unconsolidated joint ventures
447

 
290

 
   FFO available for Common Stock and OP Unit holders (3)
93,057

 
84,579

 
Transaction costs (4)
104

 
200

 
   Normalized FFO available for Common Stock and OP Unit holders(3)
93,161

 
84,779

 
Non-revenue producing improvements to real estate
(7,160
)
 
(7,337
)
 
   FAD available for Common Stock and OP Unit holders (3)
$
86,001

 
$
77,442

 
 
 
 
 
 
Net income available per Common Share - Basic
$
0.66

 
$
0.60

 
Net income available per Common Share - Fully Diluted
$
0.65

 
$
0.60

 
 
 
 
 
 
FFO per Common Share & OP Units-Basic
$
1.00

 
$
0.92

 
FFO per Common Share & OP Units-Fully Diluted
$
1.00

 
$
0.92

 
 
 
 
 
 
Normalized FFO per Common Share & OP Units-Basic
$
1.01

 
$
0.93

 
Normalized FFO per Common Share & OP Units-Fully Diluted
$
1.00

 
$
0.92

 
 
 
 
 
 
Average Common Stock - Basic
86,048

 
84,321

 
Average Common Stock and OP Units - Basic
92,636

 
91,529

 
Average Common Stock and OP Units - Fully Diluted
93,011

 
92,041

 
 
 
 
 
 










_____________________________
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. For 2017, the customer life is estimated to be 40 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 Non-GAAP Financial Measure Definitions and Other Terms at the end of the supplemental information for non-GAAP financial measure definitions of FFO, Normalized FFO and FAD and for a definition of Non-revenue producing improvements.
4.
Included in general and administrative on the Consolidated Income Statement on page 4.

1Q 2017 Supplemental information
7 
Equity LifeStyle Properties, Inc.



Consolidated Income from Property Operations (1)

(In millions, except home site and occupancy figures, unaudited)

 
Quarters Ended
 
 
March 31,
 
 
2017
 
2016
 
Community base rental income (2)
$
120.7

 
$
114.1

 
Rental home income
3.6

 
3.5

 
Resort base rental income (3)
61.1

 
55.4

 
Right-to-use annual payments
11.3

 
11.1

 
Right-to-use contracts current period, gross
3.2

 
2.5

 
Utility and other income
22.1

 
20.8

 
    Property operating revenues
222.0

 
207.4

 
 
 
 
 
 
Property operating, maintenance and real estate taxes
82.1

 
76.2

 
Rental home operating and maintenance
1.6

 
1.5

 
Sales and marketing, gross
2.7

 
2.5

 
    Property operating expenses
86.4

 
80.2

 
Income from property operations, excluding deferrals and property management (1)
$
135.6

 
$
127.2

 
 
 
 
 
 
Manufactured home site figures and occupancy averages:
 
 
 
 
Total sites
70,992

 
70,114

 
Occupied sites
66,641

 
65,153

 
Occupancy %
93.9
%
 
92.9
%
 
Monthly base rent per site
$
604

 
$
584

 
 
 
 
 
 
Resort base rental income:
 
 
 
 
Annual
$
32.1

 
$
30.0

 
Seasonal
18.5

 
16.2

 
Transient
10.5

 
9.2

 
     Total resort base rental income
$
61.1

 
$
55.4

 











_________________________
1.
See page 4 for the Consolidated Income Statement and see Non-GAAP Financial Measure Definitions and Other Terms at the end of the supplemental information for non-GAAP measure definitions 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.


1Q 2017 Supplemental information
8 
Equity LifeStyle Properties, Inc.



2017 Core Income from Property Operations (1)

(In millions, except home site and occupancy figures, unaudited)

 
Quarters Ended
 
 
 
 
March 31,
 
%
 
 
2017
 
2016
 
Change (2)
 
Community base rental income (3)
$
119.6

 
$
114.1

 
4.8
%
 
Rental home income
3.6

 
3.5

 
1.7
%
 
Resort base rental income (4)
56.9

 
55.2

 
3.0
%
 
Right-to-use annual payments
11.3

 
11.1

 
1.8
%
 
Right-to-use contracts current period, gross
3.2

 
2.5

 
26.6
%
 
Utility and other income
21.6

 
20.8

 
4.2
%
 
    Property operating revenues
216.2

 
207.2

 
4.3
%
 
 
 
 
 
 
 
 
Property operating, maintenance and real estate taxes
79.9

 
76.0

 
5.1
%
 
Rental home operating and maintenance
1.6

 
1.5

 
1.7
%
 
Sales and marketing, gross
2.7

 
2.5

 
7.9
%
 
    Property operating expenses
84.2

 
80.0

 
5.2
%
 
Income from property operations, excluding deferrals and property management (1)
$
132.0

 
$
127.2

 
3.8
%
 
Occupied sites (5)
65,867

 
65,278

 
 
 
 
 
 
 
 
 
 
Core manufactured home site figures and occupancy averages:
 
Total sites
69,972

 
69,986

 
 
 
Occupied sites
65,753

 
65,153

 
 
 
Occupancy %
94.0
%
 
93.1
%
 
 
 
Monthly base rent per site
$
606

 
$
584

 
 
 
 
 
 
 
 
 
 
Resort base rental income:
 
 
 
 
 
 
Annual
$
31.3

 
$
29.9

 
4.6
%
 
Seasonal
16.4

 
16.1

 
1.4
%
 
Transient
9.2

 
9.2

 
0.5
%
 
     Total resort base rental income
$
56.9

 
$
55.2

 
3.0
%
 








___________________________
1.
See Non-GAAP Financial Measure Definitions and Other Terms at the end of the supplemental information for definitions of non-GAAP measures Income from property operations, excluding deferrals and property management, and Core.
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 141 from 65,726 at December 31, 2016.

1Q 2017 Supplemental information
9 
Equity LifeStyle Properties, Inc.



Acquisitions - Income from Property Operations (1)

(In millions, unaudited)

 
Quarter Ended
 
 
March 31,
2017
 
Community base rental income
$
1.1

 
Resort base rental income
4.2

 
Utility income and other property income
0.5

 
  Property operating revenues
5.8

 
 
 
 
  Property operating expenses
2.2

 
Income from property operations, excluding deferrals and property management
$
3.6

 





































______________________
1.
See Non-GAAP Financial Measure Definitions and Other Terms at the end of the supplemental information for a definition of Acquisitions.


1Q 2017 Supplemental information
10 
Equity LifeStyle Properties, Inc.



Income from Rental Home Operations

(In millions, except occupied rentals, unaudited)

 
Quarters Ended
 
 
March 31,
 
 
2017
 
2016
 
Manufactured homes:
 
 
 
 
New home
$
6.6

 
$
6.1

 
Used home
5.8

 
6.4

 
   Rental operations revenues (1)
12.4

 
12.5

 
Rental operations expense
1.6

 
1.5

 
   Income from rental operations, before depreciation
10.8

 
11.0

 
Depreciation on rental homes
2.7

 
2.6

 
   Income from rental operations, after depreciation
$
8.1

 
$
8.4

 
 
 
 
 
 
Occupied rentals: (2)
 
 
 
 
New
2,467

 
2,247

 
Used
2,297

 
2,716

 
   Total occupied rental sites
4,764

 
4,963

 

 
As of
 
March 31, 2017
 
March 31, 2016
Cost basis in rental homes: (3)
Gross
 
Net of Depreciation
 
Gross
 
Net of Depreciation
New
$
128.3

 
$
99.8

 
$
115.6

 
$
92.3

Used
50.0

 
21.6

 
56.5

 
33.6

  Total rental homes
$
178.3

 
$
121.4

 
$
172.1

 
$
125.9















__________________________
1.
For the quarters ended March 31, 2017 and 2016, approximately $8.8 million and $9.0 million, respectively, of the rental operations revenue are included in the Community base rental income in the Consolidated Income from Property Operations table on page 8. The remainder of the rental operations revenue is included in the Rental home income in the Consolidated Income from Property Operations table on page 8.
2.
Occupied rentals as of the end of the period shown in our Core portfolio. Included in the quarters ended March 31, 2017 and 2016 are 228 and 131 homes rented through our ECHO joint venture, respectively. For the three months ended March 31, 2017 and 2016, the rental home investment associated with our ECHO joint venture totals approximately $8.0 million and $4.3 million, respectively.
3.
Includes both occupied and unoccupied rental homes. New home cost basis does not include the costs associated with our ECHO joint venture. At March 31, 2017 and 2016, our investment in the ECHO joint venture was approximately $15.3 million and $15.4 million, respectively.


1Q 2017 Supplemental information
11 
Equity LifeStyle Properties, Inc.



Total Sites and Home Sales

(In thousands, except sites and home sale volumes, unaudited)

Summary of Total Sites as of March 31, 2017
 
 
Sites
Community sites
71,000

Resort sites:
 
    Annuals
26,600

    Seasonal
11,200

    Transient
10,500

Membership (1)
24,100

Joint Ventures (2)
3,200

Total
146,600


Home Sales - Select Data
 
 
 
 
 
Quarters Ended
 
 
March 31,
 
 
2017
 
2016
 
Total New Home Sales Volume (3)
120

 
121

 
     New Home Sales Volume - ECHO joint venture
37

 
34

 
New Home Sales Gross Revenues(3)
$
4,943

 
$
5,399

 
 
 
 
 
 
Total Used Home Sales Volume (3)
285

 
311

 
Used Home Sales Gross Revenues(3)
$
2,084

 
$
2,815

 
 
 
 
 
 
Brokered Home Resales Volume
168

 
186

 
Brokered Home Resale Revenues, net
$
242

 
$
279

 
















__________________________
1.
Sites primarily utilized by approximately 105,300 members. Includes approximately 5,700 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 4.
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.


1Q 2017 Supplemental information
12 
Equity LifeStyle Properties, Inc.




2017 Guidance - Selected Financial Data (1)

Our guidance acknowledges the existence of volatile economic conditions, which may impact our current guidance assumptions. Factors impacting 2017 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; (ix) ongoing legal matters and related fees; and (x) costs to restore property operations and potential revenues losses following storms or other unplanned events.

(In millions, except per share data, unaudited)

 
Quarter Ended
 
Year Ended
 
June 30, 2017
 
December 31, 2017
Income from property operations, excluding deferrals and property management - 2017 Core (2)
$
117.9

 
$
498.1

Income from property operations - Acquisitions (3)
1.5

 
8.4

Property management and general and administrative
(21.1
)
 
(80.7
)
Other income and expenses
3.3

 
13.5

Financing costs and other
(27.1
)
 
(108.3
)
Normalized FFO available for Common Stock and OP Unit holders (4)
74.5

 
331.0

Transaction costs

 
(0.1
)
FFO available for Common Stock and OP Unit holders (4)
74.5

 
330.9

    Depreciation on real estate and other
(28.7
)
 
(113.2
)
    Depreciation on rental homes
(2.6
)
 
(10.6
)
    Deferral of right-to-use contract sales revenue and commission, net
0.4

 
(3.4
)
    Income allocated to non-controlling interest-Common OP Units
(2.8
)
 
(13.0
)
Net income available for Common Stockholders
$
40.8

 
$
190.7

 
 
 
 
 
 
 
 
Net income per Common Share - fully diluted (5)
$0.44 - $0.50

 
$2.14 - $2.24

FFO per Common Share - fully diluted
$0.77 - $0.83

 
$3.50 - $3.60

Normalized FFO per Common Share - fully diluted
$0.77 - $0.83

 
$3.51 - $3.61

 
 
 
 
Weighted average Common Stock outstanding - fully diluted
93.1

 
93.1





_____________________________________
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 available for Common Stock and OP Unit holders, Normalized FFO per Common Share, FFO available for Common Stock and OP Unit holders, FFO per Common Share, Net income available for Common Stockholders and Net income per Common Share could vary materially from amounts presented above if any of our assumptions is incorrect.
2.
See page 14 for 2017 Core Guidance Assumptions. Amount represents 2016 income from property operations, excluding deferrals and property management, from the 2017 Core properties of $113.0 million multiplied by an estimated growth rate of 4.4% and $476.1 million multiplied by an estimated growth rate of 4.6% for the quarter ended June 30, 2017 and the year ended December 31, 2017, respectively.
3.
See page 14 for the 2017 Assumptions regarding the Acquisition properties.
4.
See Non-GAAP Financial Measure Definitions and Other Terms at the end of the supplemental information for definitions of Normalized FFO and FFO.
5.
Net income per fully diluted Common Share is calculated before Income allocated to non-controlling interest-Common OP Units.

1Q 2017 Supplemental information
13 
Equity LifeStyle Properties, Inc.



2017 Core Guidance Assumptions (1) 
(In millions, unaudited)
 
Quarter Ended
 
Second Quarter 2017
 
Year Ended
 
2017
 
June 30, 2016
 
Growth Factors (2)
 
December 31, 2016
 
Growth Factors (2)
Community base rental income
$
115.2

 
4.6
 %
 
$
462.3

 
4.5
 %
Rental home income
3.5

 
0.2
 %
 
14.1

 
0.3
 %
Resort base rental income (3)
44.2

 
5.7
 %
 
196.8

 
4.5
 %
Right-to-use annual payments
11.2

 
1.2
 %
 
45.0

 
0.5
 %
Right-to-use contracts current period, gross
3.1

 
11.2
 %
 
12.3

 
1.7
 %
Utility and other income
19.4

 
(0.1
)%
 
80.9

 
(1.0
)%
    Property operating revenues
196.6

 
4.2
 %
 
811.4

 
3.6
 %
 
 
 
 
 
 
 
 
Property operating, maintenance, and real estate taxes
79.1

 
4.0
 %
 
317.3

 
2.3
 %
Rental home operating and maintenance
1.6

 
1.6
 %
 
6.9

 
(5.8
)%
Sales and marketing, gross
2.9

 
4.4
 %
 
11.1

 
3.8
 %
    Property operating expenses
83.6

 
4.0
 %
 
335.3

 
2.2
 %
Income from property operations, excluding deferrals and property management
 
$
113.0

 
4.4
 %
 
$
476.1

 
4.6
 %
 
 
 
 
 
 
 
 
Resort base rental income:
 
 
 
 
 
 
 
Annual
$
30.1

 
5.4
 %
 
$
122.3

 
5.2
 %
Seasonal
3.9

 
3.0
 %
 
30.2

 
2.1
 %
Transient
10.2

 
7.5
 %
 
44.3

 
4.3
 %
    Total resort base rental income
$
44.2

 
5.7
 %
 
$
196.8

 
4.5
 %


2017 Assumptions Regarding Acquisition Properties (1) 
(In millions, unaudited)

 
Quarter Ended
 
Year Ended
 
June 30, 2017 (4)
 
December 31, 2017 (4)
Community base rental income
$
1.2

 
$
4.6

Resort base rental income
2.4

 
11.5

Utility income and other property income
0.2

 
1.3

  Property operating revenues
3.8

 
17.4

 
 
 
 
Property operating, maintenance, and real estate taxes
2.3

 
9.0

  Property operating expenses


 


Income from property operations, excluding deferrals and property management
$
1.5

 
$
8.4



_____________________________________
1.
See Non-GAAP Financial Measure Definitions and Other Terms at the end of the supplemental information for a definition of Core and Acquisition properties.
2.
Management’s estimate of the growth of property operations in the 2017 Core Properties compared to actual 2016 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 is 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 is incorrect.

1Q 2017 Supplemental information
14 
Equity LifeStyle Properties, Inc.



Right-To-Use Memberships - Select Data

(In thousands, except member count, number of Thousand Trails Camping Pass, number of annuals and number of upgrades, unaudited)

 
Year Ended December 31,
 
2013
 
2014
 
2015
 
2016
 
2017 (1)
Member Count (2)
98,277

 
96,130

 
102,413

 
104,728

 
105,500

Thousand Trails Camping Pass (TTC) Origination (3)
15,607

 
18,187

 
25,544

 
29,576

 
30,100

    TTC Sales
9,289

 
10,014

 
11,877

 
12,856

 
13,100

    RV Dealer TTC Activations
6,318

 
8,173

 
13,667

 
16,720

 
17,000

Number of annuals (4)
4,830

 
5,142

 
5,470

 
5,756

 
6,000

Number of upgrade sales (5)
2,999

 
2,978

 
2,687

 
2,477

 
2,600

 
 
 
 
 
 
 
 
 
 
Right-to-use annual payments (6)
$
47,967

 
$
44,860

 
$
44,441

 
$
45,036

 
$
45,300

Resort base rental income from annuals
$
11,148

 
$
12,491

 
$
13,821

 
$
15,413

 
$
16,800

Resort base rental income from seasonals/transients
$
12,692

 
$
13,894

 
$
15,795

 
$
17,344

 
$
17,800

Upgrade contract initiations (7)
$
13,815

 
$
13,892

 
$
12,783

 
$
12,312

 
$
12,500

Utility and other income
$
2,293

 
$
2,455

 
$
2,430

 
$
2,442

 
$
2,400

 
 
 
 
 
 
 
 
 
 
























________________________________
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 is 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 year ended December 31, 2013 includes $2.1 million 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 4.

1Q 2017 Supplemental information
15 
Equity LifeStyle Properties, Inc.



Market Capitalization

(In millions, except share and OP Unit data, unaudited)

Capital Structure as of March 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Common Stock/Units
% of Total Common Stock/Units
Total
% of Total
% of Total Market Capitalization
 
 
 
 
 
 
 
 
Secured Debt
 
 
$
1,878

90.4
%
 
 
Unsecured Debt
 
 
200

9.6
%
 
 
Total Debt (1)
 
 
$
2,078

100.0
%
22.2
%
 
 
 
 
 
 
 
 
Common Stock
86,841,775

93.6
%
 
 
 
 
OP Units
5,938,204

6.4
%
 
 
 
 
Total Common Stock and OP Units
92,779,979

100.0
%
 
 
 
 
Common Stock price at March 31, 2017
$
77.06

 
 
 
 
 
Fair Value of Common Stock
 
 
$
7,150

98.1
%
 
 
Perpetual Preferred Stock
 
 
136

1.9
%
 
 
Total Equity
 
 
$
7,286

100.0
%
77.8
%
 
 
 
 
 
 
 
 
Total Market Capitalization
 
 
$
9,364

 
100.0
%
 
 
 
 
 
 
 
 
Perpetual Preferred Stock as of March 31, 2017
 
 
 
 
 
 
 
 
 
 
 
Series
Callable Date
 
Outstanding Stock
Liquidation Value
Annual Dividend Per Share
Annual Dividend Value
6.75% Series C
9/7/2017
 
54,458
$
136

$
168.8

$
9.2






















_________________

1.    Excludes deferred financing costs of approximately $18.4 million.


1Q 2017 Supplemental information
16 
Equity LifeStyle Properties, Inc.



Debt Maturity Schedule

Debt Maturity Schedule as of March 31, 2017
(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
 
2017
 
13,177

 
6.00
%
 

 

 
13,177

 
0.64
%
 
6.00
%
 
2018
 
198,222

 
5.97
%
 

 

 
198,222

 
9.56
%
 
5.97
%
 
2019
 
200,167

 
6.27
%
 

 

 
200,167

 
9.66
%
 
6.27
%
 
2020
 
121,283

 
6.13
%
 
200,000

 
2.39
%
 
321,283

 
15.50
%
 
3.80
%
 
2021
 
189,525

 
5.01
%
 

 

 
189,525

 
9.14
%
 
5.01
%
 
2022
 
149,310

 
4.59
%
 

 

 
149,310

 
7.20
%
 
4.59
%
 
2023
 
110,645

 
5.11
%
 

 

 
110,645

 
5.34
%
 
5.11
%
 
2024
 

 
%
 

 

 

 
%
 
%
 
2025
 
107,236

 
3.45
%
 

 

 
107,236

 
5.17
%
 
3.45
%
 
2026
 

 
%
 

 

 

 
%
 
%
 
Thereafter
 
783,303

 
4.27
%
 

 

 
783,303

 
37.79
%
 
4.27
%
 
Total
 
$
1,872,868

 
4.90
%
 
$
200,000

 
2.39
%
 
$
2,072,868

 
100.0
%
 
4.66
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note Premiums
 
4,809

 
 
 

 
 
 
4,809

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Debt
 
1,877,677

 
 
 
200,000

 
 
 
2,077,677

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deferred Financing Costs
 
(17,787
)
 
 
 
(569
)
 
 
 
(18,356
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Debt, net
 
1,859,890

 
4.94
%
(1) 
199,431

 
2.50
%
 
$
2,059,321

 
 
 
4.71
%
(1) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average Years to Maturity
 
11.0
 
 
 
2.8
 
 
 
10.2
 
 
 
 
 






















______________________
1.     Reflects effective interest rate including amortization of note premiums and amortization of deferred loan cost for secured and total debt and stated interest rate for unsecured debt.


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Equity LifeStyle Properties, Inc.



Non-GAAP Financial Measures Definitions and Other Terms

This document contains certain non-GAAP measures used by management that we believe are helpful in understanding our business, as further discussed in the paragraphs below. We believe investors should review Funds from Operations (“FFO”), Normalized Funds from Operations (“Normalized FFO”), Funds Available for Distribution (“FAD”) and Adjusted Earnings Before Interest, Tax, Depreciation and Amortization (“Adjusted EBITDA”), along with GAAP net income and cash flow from operating activities, investing activities and financing activities, when evaluating an equity REIT’s operating performance. Our definitions and calculations of these non-GAAP financial and operating measures and other terms may differ from the definitions and methodologies used by other REITs and, accordingly, may not be comparable. These non-GAAP financial and operating measures 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.
FUNDS FROM OPERATIONS (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 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. 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 the Board of Governors of NAREIT, is generally a 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 FUNDS FROM OPERATIONS (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. 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.
FUNDS AVAILABLE FOR DISTRIBUTION (FAD). We define FAD as Normalized FFO less non-revenue producing capital expenditures.
We believe that FFO, Normalized FFO and FAD are helpful to investors as supplemental measures of the performance of an equity REIT. We believe that by excluding the effect of depreciation, amortization, impairments, if any, 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 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.
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 operating 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 measure of the operating results of our manufactured home and RV communities.

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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
 
 
 
 
March 31,
 
 
 
 
2017
 
2016
 
 
Income before equity in income of unconsolidated joint ventures
 
$
61,925

 
$
56,309

 
 
Right-to-use upfront payments, deferred, net
 
775

 
302

 
 
Gross revenues from home sales
 
(7,027
)
 
(8,214
)
 
 
Brokered resale revenues and ancillary services revenues, net
 
(1,661
)
 
(1,418
)
 
 
Interest income
 
(1,770
)
 
(1,660
)
 
 
Income from other investments, net
 
(757
)
 
(1,723
)
 
 
Right-to-use contract commissions, deferred, net
 
(84
)
 
104

 
 
Property management
 
12,560

 
11,763

 
 
Depreciation on real estate and rental homes
 
30,109

 
28,656

 
 
Amortization of in-place leases
 
1,032

 
335

 
 
Cost of homes sales
 
7,119

 
8,281

 
 
Home selling expenses
 
925

 
834

 
 
General and administrative
 
7,373

 
7,407

 
 
Property rights initiatives and other
 
219

 
654

 
 
Interest and related amortization
 
24,879

 
25,634

 
 
Income from property operations, excluding deferrals and property management
 
135,617

 
127,264

 
 
Right-to-use contracts, deferred and sales and marketing, deferred, net
 
(691
)
 
(406
)
 
 
Property management
 
(12,560
)
 
(11,763
)
 
 
Income from property operations
 
$
122,366

 
$
115,095

 
 
EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND AMORTIZATION (EBITDA) AND ADJUSTED EBITDA. EBITDA is defined as net income or loss before interest income and expense, income taxes, depreciation and amortization. We define Adjusted 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; d) GAAP deferral of right-to-use contract upfront payments and related commissions, net; e) impairments, if any; and f) other miscellaneous non-comparable items. EBITDA and Adjusted EBITDA provide us with an understanding of one aspect of earnings before the impact of investing and financing charges. We believe that EBITDA and Adjusted EBITDA may be useful to an investor in evaluating our operating performance and liquidity because the measures are widely used to measure a company’s operating performance and they are used by rating agencies and other parties, including lenders, to evaluate our creditworthiness.
The following table reconciles Consolidated net income to EBITDA and Adjusted EBITDA (amounts in thousands):
 
 
Quarters Ended
 
 
 
 
March 31,
 
 
 
 
2017
 
2016
 
 
Consolidated net income
 
$
63,075

 
$
57,190

 
 
Interest Income
 
(1,770
)
 
(1,660
)
 
 
Depreciation on real estate assets and rental homes
 
30,109

 
28,656

 
 
Amortization of in-place leases
 
1,032

 
335

 
 
Depreciation on corporate assets
 
289

 
279

 
 
Depreciation on unconsolidated joint ventures
 
447

 
290

 
 
Interest and related amortization
 
24,879

 
25,634

 
 
EBITDA
 
118,061

 
110,724

 
 
Right-to-use contract upfront payments, deferred, net
 
775

 
302

 
 
Right-to-use contract commissions, deferred, net
 
(84
)
 
104

 
 
Transaction costs
 
104

 
200

 
 
Adjusted EBITDA
 
$
118,856

 
$
111,330

 
 
CORE. The Core properties include properties we owned and operated during all of 2016 and 2017. We believe Core is a measure that is useful to investors for annual comparison as it removes the fluctuations associated with acquisitions, dispositions and significant transactions or unique situations.
ACQUISITIONS. The Acquisition properties include all properties that were not owned and operated in 2016 and 2017. This includes, but is not limited to, four properties acquired during 2016 and Tropical Palms RV Resort.

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Equity LifeStyle Properties, Inc.



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.


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Equity LifeStyle Properties, Inc.