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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): July 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)
 
(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))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o





 





Item 2.02    Results of Operations and Financial Condition

On July 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 and six months ended June 30, 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 September 30, 2017 and year ending December 31, 2017, to be between $0.52 and $0.58 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 September 30, 2017 and year ending December 31, 2017 to be between $0.86 and $0.92 and $3.52 and $3.62, respectively. We project our Normalized Funds from Operations (“Normalized FFO”) per Common Share (fully diluted) for the three months ending September 30, 2017 and year ending December 31, 2017 to be between $0.86 and $0.92 and $3.52 and $3.62, 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 July 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 393 quality properties in 32 states and British Columbia consisting of 147,107 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 17, 2017, “ELS Reports Second Quarter Results”






SIGNATURE


Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.
EQUITY LIFESTYLE PROPERTIES, INC.

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

Date: July 18, 2017



Document


N E W S R E L E A S E
https://cdn.kscope.io/cb64a3202103b7bacc0f03af57f37e97-elscorplogocenteredbluea09.jpg                

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


                                                        
ELS REPORTS SECOND QUARTER RESULTS
Continued Strong Performance

CHICAGO, IL – July 17, 2017 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, 2017. All per share results are reported on a fully diluted basis unless otherwise noted.
Financial Results for the Quarter and Six Months Ended June 30, 2017
For the quarter ended June 30, 2017, total revenues increased $11.2 million, or 5.3 percent, to $221.3 million compared to $210.1 million for the same period in 2016. Net income available for Common Stockholders for the quarter ended June 30, 2017 increased $4.0 million, or $0.03 per Common Share, to $39.5 million, or $0.45 per Common Share, compared to $35.5 million, or $0.42 per Common Share, for the same period in 2016.

For the six months ended June 30, 2017, total revenues increased $23.5 million, or 5.5 percent, to $453.7 million compared to $430.2 million for the same period in 2016. Net income available for Common Stockholders for the six months ended June 30, 2017 increased $10.3 million, or $0.10 per Common Share, to $96.4 million, or $1.11 per Common Share, compared to $86.1 million, or $1.01 per Common Share, for the same period in 2016.
Non-GAAP Financial Measures and Portfolio Performance
For the quarter ended June 30, 2017, Funds from Operations (“FFO”) available for Common Stock and OP Unit holders increased $6.0 million, or $0.06 per Common Share, to $74.9 million or $0.81 per Common Share, compared to $68.9 million, or $0.75 per Common Share, for the same period in 2016. For the six months ended June 30, 2017, FFO available for Common Stock and OP Unit holders increased $14.5 million, or $0.14 per Common Share, to $168.0 million or $1.81 per Common Share, compared to $153.5 million, or $1.67 per Common Share, for the same period in 2016.

For the quarter ended June 30, 2017, Normalized Funds from Operations (“Normalized FFO”) available for Common Stock and OP Unit holders increased $5.8 million, or $0.06 per Common Share, to $75.1 million, or $0.81 per Common Share, compared to $69.3 million, or $0.75 per Common Share, for the same period in 2016. For the six months ended June 30, 2017, Normalized FFO available for Common Stock and OP Unit holders increased $14.2 million, or $0.14 per Common Share, to $168.3 million, or $1.81 per Common Share, compared to $154.1 million, or $1.67 per Common Share, for the same period in 2016.

For the quarter ended June 30, 2017, property operating revenues, excluding deferrals, increased $14.0 million to $211.4 million compared to $197.4 million for the same period in 2016. For the six months ended June 30, 2017, property operating revenues, excluding deferrals, increased $28.5 million to $433.4 million compared to $404.9 million for the same period in 2016. For the quarter ended June 30, 2017, income from property operations, excluding deferrals and property management, increased $6.6 million to $120.0 million compared to $113.4 million for the same period in 2016. For the six months ended June 30, 2017, income from property operations, excluding deferrals and property management, increased $15.0 million to $255.7 million compared to $240.7 million for the same period in 2016.

 
i 
 




For the quarter ended June 30, 2017, Core property operating revenues, excluding deferrals, increased approximately 5.5 percent and Core income from property operations, excluding deferrals and property management, increased approximately 4.8 percent compared to the same period in 2016. For the six months ended June 30, 2017, Core property operating revenues, excluding deferrals, increased approximately 4.9 percent and Core income from property operations, excluding deferrals and property management, increased approximately 4.3 percent compared to the same period in 2016.
Investment Activity
During the quarter, we completed the acquisition of Paradise Park Largo, a 108-site manufactured home community located in Largo, Florida. The purchase price of approximately $8.0 million was funded with available cash, loan assumption of $3.6 million, and new loan proceeds of $2.3 million.
During the quarter, we entered into a joint venture agreement to purchase Crosswinds Mobile Home Park, a 376-site manufactured home community located in St. Petersburg, Florida. Our ownership interest is 49% and the purchase price of the Property was $18.4 million.
About Equity LifeStyle Properties
We are a self-administered, self-managed real estate investment trust (“REIT”) with headquarters in Chicago.
As of July 17, 2017, we own or have an interest in 393 quality properties in 32 states and British Columbia consisting of 147,107 sites.
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 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
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
First Quarter 2018
 
Monday, April 23, 2018
 
Tuesday, April 24, 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;

 
ii 
 




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

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



Financial Highlights

(In millions, except Common Stock and OP Units outstanding and per share data, unaudited)
 
As of and for the Three Months Ended
 
June 30, 2017
March 31,
2017
December 31, 2016
September 30, 2016
June 30, 2016
Operating Information
 
 
 
 
 
Total revenues
$
221.3

$
232.4

$
214.0

$
226.2

$
210.1

Net income
$
44.5

$
63.1

$
42.4

$
46.8

$
40.8

Net income available for Common Stockholders
$
39.5

$
56.9

$
37.0

$
41.0

$
35.5

Adjusted EBITDA (1)
$
100.8

$
118.9

$
101.4

$
103.4

$
95.9

FFO available for Common Stock and OP Unit holders(1)(2)
$
74.9

$
93.1

$
72.5

$
76.9

$
68.9

Normalized FFO available for Common Stock and OP Unit holders(1)(2)
$
75.1

$
93.2

$
75.2

$
77.2

$
69.3

Funds available for distribution (FAD) available for Common Stock and OP Unit holders(1)(2)
$
63.5

$
86.0

$
65.8

$
67.2

$
58.4

 
 
 
 
 
 
Common Stock Outstanding (In thousands)
 and Per Share Data
 
 
 
 
 
Common Stock and OP Units, end of the period
92,840

92,780

92,699

92,507

92,499

Weighted average Common Stock and OP Units outstanding - fully diluted
93,063

93,011

92,965

92,910

92,264

Net income per Common Share - fully diluted
$
0.45

$
0.65

$
0.43

$
0.48

$
0.42

FFO per Common Share - fully diluted
$
0.81

$
1.00

$
0.78

$
0.83

$
0.75

Normalized FFO per Common Share - fully diluted
$
0.81

$
1.00

$
0.81

$
0.83

$
0.75

Dividends per Common Share
$
0.488

$
0.488

$
0.425

$
0.425

$
0.425

 
 
 
 
 
 
Balance Sheet
 
 
 
 
 
Total assets
$
3,485

$
3,471

$
3,479

$
3,470

$
3,486

Total liabilities 
$
2,386

$
2,371

$
2,397

$
2,396

$
2,420

 
 
 
 
 
 
Market Capitalization
 
 
 
 
 
Total debt
$
2,072

$
2,078

$
2,110

$
2,111

$
2,134

Total market capitalization (3)
$
10,224

$
9,364

$
8,930

$
9,387

$
9,675

 
 
 
 
 
 
Ratios
 
 
 
 
 
Total debt / total market capitalization
20.3
%
22.2
%
23.6
%
22.5
%
22.1
%
Total debt + preferred stock / total market capitalization
21.6
%
23.6
%
25.2
%
23.9
%
23.5
%
Total debt / Adjusted EBITDA (4)
4.9

5.0

5.1

5.2

5.3

Interest coverage (5)
4.3

4.2

4.1

4.1

4.0

Fixed charges + preferred distributions coverage (6)
3.9

3.8

3.7

3.6

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 Consolidated net income to 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 June 30, 2017.
4.
Calculated using 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.

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



Balance Sheet

(In thousands, except share and per share data)

 
June 30,
2017
 
December 31,
2016
 
(unaudited)
 
Assets
 
 
 
Investment in real estate:
 
 
 
Land
$
1,167,510

 
$
1,163,987

Land improvements
2,922,201

 
2,893,759

Buildings and other depreciable property
641,931

 
627,590

 
4,731,642

 
4,685,336

Accumulated depreciation
(1,459,931
)
 
(1,399,531
)
Net investment in real estate
3,271,711

 
3,285,805

Cash
67,740

 
56,340

Notes receivable, net
48,253

 
34,520

Investment in unconsolidated joint ventures
21,766

 
19,369

Deferred commission expense
31,453

 
31,375

Escrow deposits, goodwill, and other assets, net (1)
44,435

 
51,578

Total Assets
$
3,485,358

 
$
3,478,987

Liabilities and Equity
 
 
 
Liabilities:
 
 
 
Mortgage notes payable
$
1,855,028

 
$
1,891,900

Term loan
199,483

 
199,379

Accrued expenses and accounts payable (1)
93,451

 
89,864

Deferred revenue – upfront payments from right-to-use contracts
83,580

 
81,484

Deferred revenue – right-to-use annual payments
12,559

 
9,817

Accrued interest payable
8,044

 
8,379

Rents and other customer payments received in advance and security deposits
88,543

 
76,906

Distributions payable
45,259

 
39,411

Total Liabilities
2,385,947

 
2,397,140

Equity:
 
 
 
Stockholders’ Equity:
 
 
 
Preferred stock, $0.01 par value, 9,945,539 shares authorized as of June 30, 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 June 30, 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 June 30, 2017 and December 31, 2016; 87,004,507 and 85,529,386 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively
868

 
854

Paid-in capital
1,121,307

 
1,103,048

Distributions in excess of accumulated earnings
(219,641
)
 
(231,276
)
Accumulated other comprehensive income (loss)
30

 
(227
)
Total Stockholders’ Equity
1,038,708

 
1,008,543

Non-controlling interests – Common OP Units
60,703

 
73,304

Total Equity
1,099,411

 
1,081,847

Total Liabilities and Equity
$
3,485,358

 
$
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.


2Q 2017 Supplemental information
3 
Equity LifeStyle Properties, Inc.



Consolidated Income Statement

(In thousands, unaudited)

 
Quarters Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2017
 
2016
 
2017
 
2016
Revenues:
 
 
 
 
 
 
 
Community base rental income
$
121,964

 
$
115,385

 
$
242,656

 
$
229,461

Rental home income
3,632

 
3,543

 
7,237

 
7,088

Resort base rental income
50,055

 
44,732

 
111,123

 
100,166

Right-to-use annual payments
11,350

 
11,187

 
22,602

 
22,241

Right-to-use contracts current period, gross
3,798

 
3,086

 
7,004

 
5,618

Right-to-use contract upfront payments, deferred, net
(1,321
)
 
(798
)
 
(2,096
)
 
(1,100
)
Utility and other income
20,650

 
19,523

 
42,776

 
40,316

Gross revenues from home sales
7,833

 
9,130

 
14,860

 
17,344

Brokered resale revenue and ancillary services revenues, net
444

 
398

 
2,105

 
1,816

Interest income
1,798

 
1,625

 
3,568

 
3,285

Income from other investments, net
1,109

 
2,270

 
1,866

 
3,993

    Total revenues
221,312

 
210,081

 
453,701

 
430,228

 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
Property operating and maintenance
72,901

 
66,647

 
140,955

 
129,601

Rental home operating and maintenance
1,657

 
1,581

 
3,208

 
3,106

Real estate taxes
13,943

 
12,869

 
27,980

 
26,067

Sales and marketing, gross
2,894

 
2,931

 
5,584

 
5,424

Right-to-use contract commissions, deferred, net
(112
)
 
(116
)
 
(196
)
 
(12
)
Property management
13,023

 
12,044

 
25,583

 
23,807

Depreciation on real estate assets and rental homes
30,247

 
29,029

 
60,357

 
57,684

Amortization of in-place leases
958

 
428

 
1,990

 
763

Cost of home sales
7,895

 
9,481

 
15,014

 
17,762

Home selling expenses
929

 
805

 
1,854

 
1,639

General and administrative
8,461

 
8,255

 
15,834

 
15,663

Other expenses, including property rights initiatives
271

 
527

 
490

 
1,181

Interest and related amortization
24,822

 
25,561

 
49,701

 
51,195

    Total expenses
177,889

 
170,042

 
348,354

 
333,880

Income before equity in income of unconsolidated joint ventures
43,423

 
40,039

 
105,347

 
96,348

Equity in income of unconsolidated joint ventures
1,040


765


2,190


1,646

Consolidated net income
44,463

 
40,804

 
107,537

 
97,994

 
 
 
 
 
 
 
 
Income allocated to non-controlling interest-Common OP Units
(2,649
)
 
(2,998
)
 
(6,539
)
 
(7,308
)
Series C Redeemable Perpetual Preferred Stock Dividends
(2,316
)

(2,316
)

(4,613
)

(4,613
)
Net income available for Common Stockholders
$
39,498


$
35,490


$
96,385


$
86,073













2Q 2017 Supplemental information
4 
Equity LifeStyle Properties, Inc.



























Non-GAAP Financial Measures





2Q 2017 Supplemental information
5 
Equity LifeStyle Properties, Inc.



Second Quarter 2017 - Selected Non-GAAP Financial Measures

(In millions, except per share data, unaudited)

 
Quarter Ended
 
June 30, 2017
Income from property operations, excluding deferrals and property management - 2017 Core (1)
$
118.4

Income from property operations, excluding deferrals and property management - Acquisitions (2)
1.6

Property management and general and administrative (excluding transaction costs)
(21.3
)
Other income and expenses
3.5

Financing costs and other
(27.1
)
Normalized FFO available for Common Stock and OP Unit holders (3)
75.1

Transaction costs
(0.2
)
FFO available for Common Stock and OP Unit holders (3)
$
74.9

 
 
Normalized FFO per Common Share - fully diluted
$
0.81

FFO per Common Share - fully diluted
$
0.81

 
 
 
 
Normalized FFO available for Common Stock and OP Unit holders (3)
$
75.1

Non-revenue producing improvements to real estate
(11.6
)
FAD available for Common Stock and OP Unit holders (3)
$
63.5

 
 
Weighted average Common Stock and OP Units - fully diluted
93.1

 
 















___________________
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.

2Q 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
 
Six Months Ended
 
June 30,
 
June 30,
 
2017
 
2016
 
2017
 
2016
   Net income available for Common Stockholders
$
39,498

 
$
35,490

 
$
96,385

 
$
86,073

Income allocated to Common OP Units
2,649

 
2,998

 
6,539

 
7,308

Right-to-use contract upfront payments, deferred, net (1)
1,321

 
798

 
2,096

 
1,100

Right-to-use contract commissions, deferred, net (2)
(112
)
 
(116
)
 
(196
)
 
(12
)
Depreciation on real estate assets
27,608

 
26,362

 
55,061

 
52,370

Depreciation on rental homes 
2,639

 
2,667

 
5,296

 
5,314

Amortization of in-place leases
958

 
428

 
1,990

 
763

Depreciation on unconsolidated joint ventures
364

 
305

 
811

 
595

   FFO available for Common Stock and OP Unit holders (3)
74,925

 
68,932

 
167,982

 
153,511

Transaction costs (4)
220

 
398

 
324

 
598

   Normalized FFO available for Common Stock and OP Unit holders(3)
75,145

 
69,330

 
168,306

 
154,109

Non-revenue producing improvements to real estate
(11,648
)
 
(10,980
)
 
(18,808
)
 
(18,317
)
   FAD available for Common Stock and OP Unit holders (3)
$
63,497

 
$
58,350

 
$
149,498

 
$
135,792

 
 
 
 
 
 
 
 
Net income available per Common Share - Basic
$
0.46

 
$
0.42

 
$
1.12

 
$
1.02

Net income available per Common Share - Fully Diluted
$
0.45

 
$
0.42

 
$
1.11

 
$
1.01

 
 
 
 
 
 
 
 
FFO per Common Share & OP Units-Basic
$
0.81

 
$
0.75

 
$
1.81

 
$
1.68

FFO per Common Share & OP Units-Fully Diluted
$
0.81

 
$
0.75

 
$
1.81

 
$
1.67

 
 
 
 
 
 
 
 
Normalized FFO per Common Share & OP Units-Basic
$
0.81

 
$
0.76

 
$
1.82

 
$
1.68

Normalized FFO per Common Share & OP Units-Fully Diluted
$
0.81

 
$
0.75

 
$
1.81

 
$
1.67

 
 
 
 
 
 
 
 
Average Common Stock - Basic
86,763

 
84,516

 
86,408

 
84,419

Average Common Stock and OP Units - Basic
92,649

 
91,721

 
92,643

 
91,625

Average Common Stock and OP Units - Fully Diluted
93,063

 
92,264

 
93,041

 
92,163











_____________________________
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.

2Q 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
 
Six Months Ended
 
June 30,
 
June 30,
 
2017
 
2016
 
2017
 
2016
Community base rental income (2)
$
122.0

 
$
115.4

 
$
242.7

 
$
229.5

Rental home income
3.6

 
3.5

 
7.2

 
7.1

Resort base rental income (3)
50.1

 
44.8

 
111.1

 
100.2

Right-to-use annual payments
11.3

 
11.2

 
22.6

 
22.2

Right-to-use contracts current period, gross
3.8

 
3.1

 
7.0

 
5.6

Utility and other income
20.6

 
19.4

 
42.8

 
40.3

    Property operating revenues
211.4

 
197.4

 
433.4

 
404.9

 
 
 
 
 
 
 
 
Property operating, maintenance and real estate taxes
86.8

 
79.5

 
168.9

 
155.7

Rental home operating and maintenance
1.7

 
1.6

 
3.2

 
3.1

Sales and marketing, gross
2.9

 
2.9

 
5.6

 
5.4

    Property operating expenses
91.4

 
84.0

 
177.7

 
164.2

Income from property operations, excluding deferrals and property management (1)
$
120.0

 
$
113.4

 
$
255.7

 
$
240.7

 
 
 
 
 
 
 
 
Manufactured home site figures and occupancy averages:
 
 
 
 
 
 
 
Total sites
71,043

 
70,409

 
71,017

 
70,262

Occupied sites
66,822

 
65,607

 
66,732

 
65,380

Occupancy %
94.0
%
 
93.2
%
 
93.9
%
 
93.1
%
Monthly base rent per site
$
608

 
$
586

 
$
606

 
$
585

 
 
 
 
 
 
 
 
Resort base rental income:
 
 
 
 
 
 
 
Annual
$
32.9

 
$
30.4

 
$
65.0

 
60.4

Seasonal
4.9

 
4.1

 
23.4

 
20.3

Transient
12.3

 
10.3

 
22.7

 
19.5

     Total resort base rental income
$
50.1

 
$
44.8

 
$
111.1

 
$
100.2










_________________________
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.


2Q 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
 
 
 
Six Months Ended
 
 
 
June 30,
 
%
 
June 30,
 
%
 
2017
 
2016
 
Change (2)
 
2017
 
2016
 
Change (2)
Community base rental income (3)
$
120.7

 
$
115.2

 
4.8
 %
 
$
240.3

 
$
229.3

 
4.8
%
Rental home income
3.6

 
3.5

 
2.5
 %
 
7.2

 
7.1

 
2.1
%
Resort base rental income (4)
47.8

 
44.2

 
8.1
 %
 
104.6

 
99.4

 
5.3
%
Right-to-use annual payments
11.3

 
11.2

 
1.5
 %
 
22.6

 
22.2

 
1.6
%
Right-to-use contracts current period, gross
3.8

 
3.1

 
23.1
 %
 
7.0

 
5.6

 
24.7
%
Utility and other income
20.3

 
19.5

 
4.4
 %
 
42.0

 
40.2

 
4.4
%
    Property operating revenues
207.5

 
196.7

 
5.5
 %
 
423.7

 
403.8

 
4.9
%
 
 
 
 
 
 
 
 
 
 
 
 
Property operating, maintenance and real estate taxes
84.5

 
79.2

 
7.3
 %
 
164.4

 
155.1

 
6.0
%
Rental home operating and maintenance
1.7

 
1.6

 
4.8
 %
 
3.2

 
3.1

 
3.3
%
Sales and marketing, gross
2.9

 
2.9

 
(1.3
)%
 
5.6

 
5.4

 
2.9
%
    Property operating expenses
89.1

 
83.7

 
6.5
 %
 
173.2

 
163.7

 
5.9
%
Income from property operations, excluding deferrals and property management (1)
$
118.4

 
$
113.0

 
4.8
 %
 
$
250.5

 
$
240.1

 
4.3
%
Occupied sites (5)
65,981

 
65,406

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Core manufactured home site figures and occupancy averages:
 
 
 
 
 
 
Total sites
69,987

 
69,984

 
 
 
69,979

 
69,985

 
 
Occupied sites
65,898

 
65,312

 
 
 
65,826

 
65,233

 
 
Occupancy %
94.2
%
 
93.3
%
 
 
 
94.1
%
 
93.2
%
 
 
Monthly base rent per site
$
611

 
$
588

 
 
 
$
608

 
$
586

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Resort base rental income:
 
 
 
 
 
 
 
 
 
 
 
Annual
$
31.9

 
$
30.1

 
6.0
 %
 
$
63.1

 
$
60.0

 
5.3
%
Seasonal
4.5

 
4.0

 
13.7
 %
 
20.9

 
20.1

 
3.8
%
Transient
11.4

 
10.1

 
12.3
 %
 
20.6

 
19.3

 
6.7
%
     Total resort base rental income
$
47.8

 
$
44.2

 
8.1
 %
 
$
104.6

 
$
99.4

 
5.3
%








___________________________
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 255 from 65,726 at December 31, 2016.

2Q 2017 Supplemental information
9 
Equity LifeStyle Properties, Inc.



Acquisitions - Income from Property Operations (1)

(In millions, unaudited)

 
Quarter Ended
 
Six Months Ended
 
June 30,
2017
 
June 30,
2017
Community base rental income
$
1.3

 
$
2.4

Resort base rental income
2.3

 
6.5

Utility income and other property income
0.3

 
0.8

  Property operating revenues
3.9

 
9.7

 
 
 
 
  Property operating expenses
2.3

 
4.5

Income from property operations, excluding deferrals and property management
$
1.6

 
$
5.2






































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


2Q 2017 Supplemental information
10 
Equity LifeStyle Properties, Inc.



Income from Rental Home Operations

(In millions, except occupied rentals, unaudited)

 
Quarters Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2017
 
2016
 
2017
 
2016
Manufactured homes:
 
 
 
 
 
 
 
New home
$
7.0

 
$
6.3

 
$
13.6

 
$
12.5

Used home
5.5

 
6.3

 
11.3

 
12.7

   Rental operations revenues (1)
12.5

 
12.6

 
24.9

 
25.2

Rental operations expense
1.7

 
1.6

 
3.2

 
3.1

   Income from rental operations
10.8

 
11.0

 
21.7

 
22.1

Depreciation on rental homes
2.6

 
2.7

 
5.3

 
5.3

   Income from rental operations, net of depreciation(4)
$
8.2

 
$
8.3

 
$
16.4

 
$
16.8

 
 
 
 
 
 
 
 
Occupied rentals: (2)
 
 
 
 
 
 
 
New
2,517

 
2,267

 
 
 
 
Used
2,157

 
2,595

 
 
 
 
   Total occupied rental sites
4,674

 
4,862

 
 
 
 

 
As of
 
June 30, 2017
 
June 30, 2016
Cost basis in rental homes: (3)
Gross
 
Net of Depreciation
 
Gross
 
Net of Depreciation
New
$
129.9

 
$
100.1

 
$
120.7

 
$
96.2

Used
48.2

 
18.5

 
54.7

 
30.4

  Total rental homes
$
178.1

 
$
118.6

 
$
175.4

 
$
126.6














__________________________
1.
For the quarters ended June 30, 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 in our Core portfolio. Included in the quarters ended June 30, 2017 and 2016 are 262 and 143 homes rented through our ECHO joint venture, respectively. For the six months ended June 30, 2017 and 2016, the rental home investment associated with our ECHO joint venture totals approximately $8.8 million and $5.4 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 both June 30, 2017 and 2016, our investment in the ECHO joint venture was approximately $15.4 million.
4.
See Non-GAAP Financial Measure Definitions and Other Terms at the end of the supplemental information for the Non-GAAP measure definition of Income from rental operations, net of depreciation.

2Q 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 June 30, 2017
 
 
Sites
Community sites
71,100

Resort sites:
 
    Annuals
26,600

    Seasonal
11,200

    Transient
10,500

Membership (1)
24,100

Joint Ventures (2)
3,600

Total
147,100


Home Sales - Select Data
 
 
 
 
 
 
 
 
Quarters Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2017
 
2016
 
2017
 
2016
Total New Home Sales Volume (3)
120

 
180

 
240

 
301

     New Home Sales Volume - ECHO joint venture
41

 
63

 
78

 
97

New Home Sales Gross Revenues(3)
$
4,548

 
$
6,044

 
$
9,491

 
$
11,443

 
 
 
 
 
 
 
 
Total Used Home Sales Volume
338

 
342

 
623

 
653

Used Home Sales Gross Revenues
$
3,285

 
$
3,086

 
$
5,369

 
$
5,901

 
 
 
 
 
 
 
 
Brokered Home Resales Volume
252

 
217

 
420

 
403

Brokered Home Resale Revenues, net
$
346

 
$
329

 
$
588

 
$
608

















__________________________
1.
Sites primarily utilized by approximately 107,500 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.


2Q 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 revenue losses following storms or other unplanned events.

(In millions, except per share data, unaudited)

 
Quarter Ended
 
Year Ended
 
September 30, 2017
 
December 31, 2017
Income from property operations, excluding deferrals and property management - 2017 Core (2)
$
125.6

 
$
499.1

Income from property operations - Acquisitions (3)
1.5

 
8.8

Property management and general and administrative
(20.4
)
 
(81.0
)
Other income and expenses
3.8

 
13.8

Financing costs and other
(27.2
)
 
(108.3
)
Normalized FFO available for Common Stock and OP Unit holders (4)
83.3

 
332.4

Transaction costs

 
(0.3
)
FFO available for Common Stock and OP Unit holders (4)
83.3

 
332.1

    Depreciation on real estate and other
(28.2
)
 
(114.1
)
    Depreciation on rental homes
(2.6
)
 
(10.6
)
    Deferral of right-to-use contract sales revenue and commission, net
(0.9
)
 
(3.4
)
    Income allocated to non-controlling interest-Common OP Units
(3.2
)
 
(12.8
)
Net income available for Common Stockholders
$
48.4

 
$
191.2

 
 
 
 
 
 
 
 
Net income per Common Share - fully diluted (5)
$0.52 - $0.58

 
$2.14 - $2.24

FFO per Common Share - fully diluted
$0.86 - $0.92

 
$3.52 - $3.62

Normalized FFO per Common Share - fully diluted
$0.86 - $0.92

 
$3.52 - $3.62

 
 
 
 
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 $118.2 million multiplied by an estimated growth rate of 6.3% and $476.1 million multiplied by an estimated growth rate of 4.8% 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.

2Q 2017 Supplemental information
13 
Equity LifeStyle Properties, Inc.



2017 Core Guidance Assumptions (1) 
(In millions, unaudited)
 
Quarter Ended
 
Third Quarter 2017
 
Year Ended
 
2017
 
September 30, 2016
 
Growth Factors (2)
 
December 31, 2016
 
Growth Factors (2)
Community base rental income
$
116.1

 
4.8
 %
 
$
462.3

 
4.7
 %
Rental home income
3.5

 
5.1
 %
 
14.1

 
3.0
 %
Resort base rental income (3)
53.3

 
6.1
 %
 
196.8

 
5.2
 %
Right-to-use annual payments
11.3

 
0.8
 %
 
45.0

 
0.8
 %
Right-to-use contracts current period, gross
3.7

 
(9.9
)%
 
12.3

 
5.5
 %
Utility and other income
21.0

 
0.7
 %
 
80.9

 
1.6
 %
    Property operating revenues
208.9

 
4.2
 %
 
811.4

 
4.3
 %
 
 
 
 
 
 
 
 
Property operating, maintenance, and real estate taxes
85.8

 
1.6
 %
 
317.3

 
3.7
 %
Rental home operating and maintenance
1.8

 
(2.2
)%
 
6.9

 
(1.6
)%
Sales and marketing, gross
3.1

 
 %
 
11.1

 
2.1
 %
    Property operating expenses
90.7

 
1.5
 %
 
335.3

 
3.5
 %
Income from property operations, excluding deferrals and property management
 
$
118.2

 
6.3
 %
 
$
476.1

 
4.8
 %
 
 
 
 
 
 
 
 
Resort base rental income:
 
 
 
 
 
 
 
Annual
$
30.9

 
5.6
 %
 
$
122.3

 
5.3
 %
Seasonal
3.8

 
10.0
 %
 
30.2

 
4.4
 %
Transient
18.6

 
6.0
 %
 
44.3

 
5.5
 %
    Total resort base rental income
$
53.3

 
6.1
 %
 
$
196.8

 
5.2
 %


2017 Assumptions Regarding Acquisition Properties (1) 
(In millions, unaudited)
 
Quarter Ended
 
Year Ended
 
September 30, 2017 (4)
 
December 31, 2017 (4)
Community base rental income
$
1.4

 
$
5.1

Resort base rental income
2.2

 
11.4

Utility income and other property income
0.3

 
1.5

  Property operating revenues
3.9

 
18.0

 
 
 
 
Property operating, maintenance, and real estate taxes
2.4

 
9.2

  Property operating expenses


 


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

 
$
8.8


_____________________________________
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.

2Q 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

 
106,500

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

 
18,187

 
25,544

 
29,576

 
31,000

    TTC Sales
9,289

 
10,014

 
11,877

 
12,856

 
13,400

    RV Dealer TTC Activations
6,318

 
8,173

 
13,667

 
16,720

 
17,600

Number of annuals (4)
4,830

 
5,142

 
5,470

 
5,756

 
5,900

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

 
$
45,400

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

 
$
18,000

Upgrade contract initiations (7)
$
13,815

 
$
13,892

 
$
12,783

 
$
12,312

 
$
13,000

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.

2Q 2017 Supplemental information
15 
Equity LifeStyle Properties, Inc.



Market Capitalization

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

Capital Structure as of June 30, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Common Stock/Units
% of Total Common Stock/Units
Total
% of Total
% of Total Market Capitalization
 
 
 
 
 
 
 
 
Secured Debt
 
 
$
1,872

90.3
%
 
 
Unsecured Debt
 
 
200

9.7
%
 
 
Total Debt (1)
 
 
$
2,072

100.0
%
20.3
%
 
 
 
 
 
 
 
 
Common Stock
87,004,507

93.7
%
 
 
 
 
OP Units
5,835,253

6.3
%
 
 
 
 
Total Common Stock and OP Units
92,839,760

100.0
%
 
 
 
 
Common Stock price at June 30, 2017
$
86.34

 
 
 
 
 
Fair Value of Common Stock and OP Units
 
 
$
8,016

98.3
%
 
 
Perpetual Preferred Stock
 
 
136

1.7
%
 
 
Total Equity
 
 
$
8,152

100.0
%
79.7
%
 
 
 
 
 
 
 
 
Total Market Capitalization
 
 
$
10,224

 
100.0
%
 
 
 
 
 
 
 
 
Perpetual Preferred Stock as of June 30, 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 $17.8 million.


2Q 2017 Supplemental information
16 
Equity LifeStyle Properties, Inc.



Debt Maturity Schedule

Debt Maturity Schedule as of June 30, 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
 
6,876

 
6.47
%
 

 

 
6,876

 
0.33
%
 
6.47
%
 
2018
 
203,463

 
5.95
%
 

 

 
203,463

 
9.84
%
 
5.95
%
 
2019
 
199,211

 
6.27
%
 

 

 
199,211

 
9.63
%
 
6.27
%
 
2020
 
120,700

 
6.14
%
 
200,000

 
2.39
%
 
320,700

 
15.51
%
 
3.80
%
 
2021
 
188,724

 
5.01
%
 

 

 
188,724

 
9.13
%
 
5.01
%
 
2022
 
148,368

 
4.59
%
 

 

 
148,368

 
7.17
%
 
4.59
%
 
2023
 
109,992

 
5.11
%
 

 

 
109,992

 
5.32
%
 
5.11
%
 
2024
 

 
%
 

 

 

 
%
 
%
 
2025
 
106,690

 
3.45
%
 

 

 
106,690

 
5.16
%
 
3.45
%
 
2026
 

 
%
 

 

 

 
%
 
%
 
Thereafter
 
783,993

 
4.27
%
 

 

 
783,993

 
37.91
%
 
4.27
%
 
Total
 
$
1,868,017

 
4.90
%
 
$
200,000

 
2.39
%
 
$
2,068,017

 
100.0
%
 
4.65
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note Premiums
 
4,298

 
 
 

 
 
 
4,298

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Debt
 
1,872,315

 
 
 
200,000

 
 
 
2,072,315

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deferred Financing Costs
 
(17,287
)
 
 
 
(517
)
 
 
 
(17,804
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Debt, net
 
1,855,028

 
4.92
%
(1) 
199,483

 
2.52
%
 
$
2,054,511

 
 
 
4.69
%
(1) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average Years to Maturity
 
10.8
 
 
 
2.6
 
 
 
10.0
 
 
 
 
 






















______________________
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.


2Q 2017 Supplemental information
17 
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 these Non-GAAP measures 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.

2Q 2017 Supplemental information
18 
Equity LifeStyle Properties, Inc.



The following table reconciles Net income available for Common Stockholders to Income from property operations (amounts in thousands):
 
 
Quarters Ended
 
Six Months Ended
 
 
 
June 30,
 
June 30,
 
 
 
2017
 
2016
 
2017
 
2016
 
Net income available for Common Stockholders
 
$
39,498

 
$
35,490

 
$
96,385

 
$
86,073

 
Series C Redeemable Perpetual Preferred Stock Dividends
 
2,316

 
2,316

 
4,613

 
4,613

 
Income allocated to non-controlling interests - Common OP Units
 
2,649

 
2,998

 
6,539

 
7,308

 
Equity in income of unconsolidated joint ventures
 
(1,040
)
 
(765
)
 
(2,190
)
 
(1,646
)
 
Income before equity in income of unconsolidated joint ventures
 
$
43,423

 
$
40,039

 
$
105,347

 
$
96,348

 
Right-to-use upfront payments, deferred, net
 
1,321

 
798

 
2,096

 
1,100

 
Gross revenues from home sales
 
(7,833
)
 
(9,130
)
 
(14,860
)
 
(17,344
)
 
Brokered resale revenues and ancillary services revenues, net
 
(444
)
 
(398
)
 
(2,105
)
 
(1,816
)
 
Interest income
 
(1,798
)
 
(1,625
)
 
(3,568
)
 
(3,285
)
 
Income from other investments, net
 
(1,109
)
 
(2,270
)
 
(1,866
)
 
(3,993
)
 
Right-to-use contract commissions, deferred, net
 
(112
)
 
(116
)
 
(196
)
 
(12
)
 
Property management
 
13,023

 
12,044

 
25,583

 
23,807

 
Depreciation on real estate and rental homes
 
30,247

 
29,029

 
60,357

 
57,684

 
Amortization of in-place leases
 
958

 
428

 
1,990

 
763

 
Cost of homes sales
 
7,895

 
9,481

 
15,014

 
17,762

 
Home selling expenses
 
929

 
805

 
1,854

 
1,639

 
General and administrative
 
8,461

 
8,255

 
15,834

 
15,663

 
Property rights initiatives and other
 
271

 
527

 
490

 
1,181

 
Interest and related amortization
 
24,822

 
25,561

 
49,701

 
51,195

 
Income from property operations, excluding deferrals and property management
 
120,054

 
113,428

 
255,671

 
240,692

 
Right-to-use contracts, deferred and sales and marketing, deferred, net
 
(1,209
)
 
(682
)
 
(1,900
)
 
(1,088
)
 
Property management
 
(13,023
)
 
(12,044
)
 
(25,583
)
 
(23,807
)
 
Income from property operations
 
$
105,822

 
$
100,702

 
$
228,188

 
$
215,797

 
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
 
Six Months Ended
 
 
 
June 30,
 
June 30,
 
 
 
2017
 
2016
 
2017
 
2016
 
Consolidated net income
 
$
44,463

 
$
40,804

 
$
107,537

 
$
97,994

 
Interest Income
 
(1,798
)
 
(1,625
)
 
(3,568
)
 
(3,285
)
 
Depreciation on real estate assets and rental homes
 
30,247

 
29,029

 
60,357

 
57,684

 
Amortization of in-place leases
 
958

 
428

 
1,990

 
763

 
Depreciation on corporate assets
 
314

 
279

 
603

 
558

 
Depreciation on unconsolidated joint ventures
 
364

 
305

 
811

 
595

 
Interest and related amortization
 
24,822

 
25,561

 
49,701

 
51,195

 
EBITDA
 
99,370

 
94,781

 
217,431

 
205,504

 
Right-to-use contract upfront payments, deferred, net
 
1,321

 
798

 
2,096

 
1,100

 
Right-to-use contract commissions, deferred, net
 
(112
)
 
(116
)
 
(196
)
 
(12
)
 
Transaction costs
 
220

 
398

 
324

 
598

 
Adjusted EBITDA
 
$
100,799

 
$
95,861

 
$
219,655

 
$
207,190

 

2Q 2017 Supplemental information
19 
Equity LifeStyle Properties, Inc.



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, one property acquired during 2017, four properties acquired during 2016, and Tropical Palms RV Resort.
INCOME FROM RENTAL OPERATIONS, NET OF DEPRECIATION. We use Income from rental operations, net of depreciation as an alternative measure to evaluate the operating results of our home rental program. Income from rental operations, net of depreciation, represents income from rental operations less depreciation expense on rental homes. We believe this
measure is meaningful for investors as it provides a complete picture of the home rental program operating results including the impact of depreciation which affects our home rental program investment decisions.
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 2017 Supplemental information
20 
Equity LifeStyle Properties, Inc.