UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 27, 2018

 

 

EQUITY LIFESTYLE PROPERTIES, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Maryland		1-11718		36-3857664
(State or other jurisdiction of incorporation or organization)		(Commission File No.)		(IRS Employer Identification Number)
Two North Riverside Plaza, Chicago, Illinois				60606
(Address of principal executive offices)				(Zip Code)

(312) 279-1400

(Registrant’s telephone number, including area code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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  ☐

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.  ☐

 

 

 

---

Item 2.02

Results of Operations and Financial Condition

Equity LifeStyle Properties, Inc. (referred to herein as “we,” “us,” and “our”) hereby reaffirms previously issued guidance for our Net Income per share of common stock (“Common Share”) (fully diluted), for the three months ending March 31, 2018 and year ending December 31, 2018, to be between $0.65 and $0.71 and $2.40 and $2.50, respectively.

We also reaffirm previously issued guidance for our Funds from Operations (“FFO”) per Common Share (fully diluted), for the three months ending March 31, 2018 and year ending December 31, 2018, to be between $1.00 and $1.06 and $3.80 and $3.90, respectively.

We also reaffirm previously issued guidance for our Normalized Funds from Operations (“Normalized FFO”) per Common Share (fully diluted) for the three months ending March 31, 2018 and year ending December 31, 2018, to be between $1.00 and $1.06 and $3.80 and $3.90, respectively.

The projected 2018 per Common Share amounts represent a range of possible outcomes and the mid-point of each range reflects management’s best estimate of the most likely outcome. Actual figures could vary materially from these amounts if any of our assumptions are incorrect.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

(b) Departure of Director.

On February 27, 2018, Mr. William Young, a member of our Board of Directors, informed the Board of Directors that he will not stand for reelection at the Company’s 2018 Annual Meeting of Stockholders. Accordingly, Mr. Young’s service as a member of the Board of Directors will cease at the Company’s 2018 Annual Meeting of Stockholders scheduled to be held on May 1, 2018, at which time the Board of Directors will be reduced to nine members. Mr. Young’s decision not to stand for reelection is not a result of any disagreement with other Board members or with our management.

 

Item 5.03

Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

On February 27, 2018, our Board of Directors amended our bylaws, effective immediately. The amended Article XIV now permits stockholders, subject to the satisfaction of certain procedural requirements, to amend our bylaws by the affirmative vote of the holders of a majority of our outstanding Common Shares pursuant to a binding proposal submitted for approval at a duly called annual meeting or special meeting of stockholders by a stockholder, or group of up to five stockholders, owning at least one percent or more of our outstanding Common Shares continuously for at least one year (the “Ownership Threshold”). A stockholder proposal submitted under the amended Article XIV may not alter or repeal (i) Article XII of the bylaws, which provides for indemnification of our directors and officers, or (ii) Article XIV of the bylaws, which addresses procedures for amendment of the bylaws, without the approval of the Board of Directors.

The Board of Directors believes the Ownership Threshold enables stockholders who own a meaningful stake in our outstanding Common Shares for more than a brief period of time to propose binding amendments to our bylaws. In that regard, the Board considered that, based on the most recently available public filings made by stockholders as of February 23, 2018, (i) approximately 69.9% of our outstanding Common Shares is owned by stockholders that each own at least 1% or more of our outstanding Common Shares and (ii) approximately 90.7% of our outstanding Common Shares are owned by stockholders that each own at least 0.2% or more of our outstanding Common Shares.

The foregoing description of the amended bylaws is qualified in its entirety by reference to a copy of the First Amendment to Second Amended and Restated Bylaws filed as Exhibit 3.1 to this Form 8-K, which is incorporated by reference herein.

 

Item 7.01

Regulation FD Disclosure

From time to time, we will meet with analysts and investors and present a slide presentation. A copy of this slide presentation is attached hereto as Exhibit 99.1 and is incorporated herein by reference. The presentation will be posted on our website, www.equitylifestyleproperties.com, on February 27, 2018. Included in this presentation is a discussion of our business and certain financial information regarding 2018 guidance.

---

Item 8.01

Other Events

Our Board of Directors declared the first quarter 2018 dividend of $0.55 per Common Share, representing, on an annualized basis, a dividend of $2.20 per Common Share. The dividend will be paid on April 13, 2018 to stockholders of record on March 30, 2018.

In accordance with General Instruction B.2. of Form 8-K, the information included in items 2.02 and 7.01 of this Current Report of Form 8-K, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section, nor shall such information be deemed incorporated by reference in any registration statement filed by Equity Lifestyle Properties, Inc. under the Securities Act of 1933, as amended. We disclaim any intention or obligation to update or revise this information.

This report includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. When used, words such as “anticipate,” “expect,” “believe,” “project,” “intend,” “may be” and “will be” and similar words or phrases, or the negative thereof, unless the context requires otherwise, are intended to identify forward-looking statements and may include without limitation, information regarding our expectations, goals or intentions regarding the future, and the expected effect of our acquisitions. These forward-looking statements are subject to numerous assumptions, risks and uncertainties, including, but not limited to:

 

•

our ability to control costs, real estate market conditions, the actual rate of decline in customers, the actual use of Sites by customers and our success in acquiring new customers at our Properties (including those that we may acquire);

 

•

our ability to maintain historical or increase future rental rates and occupancy with respect to Properties currently owned or that we may acquire;

 

•

our ability to retain and attract customers renewing, upgrading and entering right-to-use contracts;

 

•

our assumptions about rental and home sales markets;

 

•

our assumptions and guidance concerning 2018 estimated net income, FFO and Normalized FFO;

 

•

our ability to manage counter-party risk;

 

•

our ability to renew our insurance policies at existing rates and on consistent terms;

 

•

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.

These forward-looking statements are based on management’s present expectations and beliefs about future events. As with any projection or forecast, these statements are inherently susceptible to uncertainty and changes in circumstances. We are under no obligation to, and expressly disclaim any obligation to, update or alter our forward-looking statements whether as a result of such changes, new information, subsequent events or otherwise.

Equity LifeStyle Properties, Inc. is a fully integrated owner and operator of lifestyle-oriented properties and owns or has an interest in 406 quality properties in 32 states and British Columbia consisting of 151,323 sites. We are a self-administered, self-managed, real estate investment trust with headquarters in Chicago.

---

Item 9.01

Financial Statement and Exhibits

(d) Exhibits

 

Exhibit   3.1		Equity LifeStyle Properties, Inc. First Amendment to Second Amended and Restated Bylaws, effective as of February 27, 2018.
Exhibit 99.1		Investor Presentation

---

SIGNATURE

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

 

Date: February 27, 2018

Exhibit 3.1

EQUITY LIFESTYLE PROPERTIES, INC.

FIRST AMENDMENT

TO SECOND AMENDED AND RESTATED BYLAWS

1. The Second Amended and Restated Bylaws (the “Bylaws”) of Equity LifeStyle Properties, Inc., a Maryland corporation, are hereby amended by deleting therefrom the third sentence of Section 7 of Article II in its entirety and inserting in lieu thereof a new sentence as follows:

A majority of the votes cast at a meeting of stockholders duly called and at which a quorum is present shall be sufficient to approve any other matter which may properly come before the meeting, unless more than a majority of the votes cast is required by statute, the Charter of the Corporation or these Bylaws.

2. The Bylaws are hereby further amended by deleting therefrom Article XIV in its entirety and inserting in lieu thereof a new Article XIV as follows:

ARTICLE XIV

AMENDMENT OF BYLAWS

The Board of Directors shall have the power to adopt, alter or repeal any provision of these Bylaws and to make new Bylaws; provided, however, that, pursuant to a binding proposal that is submitted to the stockholders for approval at a duly called annual meeting or special meeting of stockholders by a stockholder or group of no more than five stockholders:

(a) each of which provides to the Secretary of the Corporation a timely notice of such proposal which satisfies the notice procedures and all other relevant provisions of Section 3 or Section 11 of Article II of these Bylaws and is otherwise permitted by applicable law (the “Notice of Bylaw Amendment Proposal”),

(b) that Owned at least one percent or more of the Common Stock, $.01 par value per share, of the Corporation (the “Common Stock”) outstanding from time to time continuously for at least one year as of both the date the Notice of Bylaw Amendment Proposal is delivered or mailed to and received by the Secretary of the Corporation

---

in accordance with Section 3 or Section 11 of Article II of these Bylaws and the close of business on the record date for determining the stockholders entitled to vote at such annual meeting or special meeting of stockholders and

(c) that continuously Owns such shares of Common Stock through the date of such annual meeting or special meeting of stockholders (and any postponement or adjournment thereof),

the stockholders shall have the power, by the affirmative vote of a majority of all votes entitled to be cast on the matter, to alter or repeal any provision of these Bylaws and to adopt new Bylaws, except that the stockholders shall not have the power to alter or repeal Article XII or this Article XIV or adopt any provision of these Bylaws inconsistent with Article XII or this Article XIV without the approval of the Board of Directors.

For purposes of this Article XIV, a stockholder shall be deemed to “Own” only those outstanding shares of Common Stock as to which such stockholder possesses both (i) the full voting and investment rights pertaining to the shares and (ii) the full economic interest in (including the opportunity for profit from and risk of loss on) such shares; provided that the number of shares calculated in accordance with clauses (i) and (ii) shall not include any shares (A) sold by such stockholder or any of its Affiliates (as defined below) in any transaction that has not been settled or closed, including short sales, (B) borrowed by such stockholder or any of its Affiliates for any purpose or purchased by such stockholder or any of its Affiliates pursuant to an agreement to resell, (C) that are subject to any option, warrant, forward contract, swap, contract of sale, other derivative or similar instrument, agreement, arrangement or understanding entered into by such stockholder or any of its Affiliates, whether any such instrument, agreement, arrangement or understanding is to be settled with shares or with cash based on the notional amount or value of shares of outstanding Common Stock, in any such case which instrument, agreement, arrangement or understanding has, or is intended to have, the purpose or effect of (1) reducing in any manner, to any extent or at any time in the future, such stockholder’s or its Affiliate’s full right to vote or direct the voting of any such shares and/or (2) hedging,

 

-2-

---

offsetting or altering to any degree any gain or loss arising from the full economic ownership of such shares by such stockholder or its Affiliate or (D) for which the stockholder has transferred the right to vote the shares other than by means of a proxy, power of attorney or other instrument or arrangement that is unconditionally revocable at any time by the stockholder and that expressly directs the proxy holder to vote at the direction of the stockholder. In addition, a stockholder shall be deemed to “Own” shares of Common Stock held in the name of a nominee or other intermediary so long as the stockholder retains the full right to instruct how the shares are voted with respect to the election of directors and possesses the full economic interest in the shares of Common Stock. A stockholder’s Ownership of shares of Common Stock shall be deemed to continue during any period in which the stockholder has loaned such shares provided that the stockholder has the power to recall such loaned shares on five business days’ notice and has in fact recalled such loaned shares as of the time the Notice of Bylaw Amendment Proposal is provided and through the date of the relevant annual meeting or special meeting of stockholders. For purposes of this Article XIV, the terms “Owned,” “Owning” and other variations of the word “Own” shall have correlative meanings. Whether outstanding shares of Common Stock are “Owned” for these purposes shall be determined by the Board of Directors, in its sole discretion. In addition, the term “Affiliate” or “Affiliates” shall have the meaning ascribed thereto under the Exchange Act.

3. Except as set forth herein, the Bylaws shall remain in full force and effect.

 

-3-

Exhibit 99.1

 

Equity LifeStyle Properties

---

 

Our Story
• One of the nation’s largest real estate networks with 406 properties containing 151,323 sites in 32 states and British Columbia • Unique business model uOwn the land uLow maintenance costs/customer turnover costs uLease developed sites
• High-quality real estate locations uMore than 90 properties with lake, river or ocean frontage    uMore than 100 properties within 10 miles of coastal United States uProperty locations are strongly correlated with population migration uProperty locations in retirement and vacation destinations
• Stable, predictable financial performance and fundamentals uBalance sheet flexibility
• In business for more than 40 years
1

---

 

Property Locations 2

---

 

Steady,Predictable Revenue Streams Property Operating
Revenue Buckets(2)
Property/Site composition(1) Transient 6.0%
• 205 manufactured/resort home communities Seasonal 4.0%    u 73,000 sites Annual
Right to Use
• 190 RV resorts 6.6%    u 76,200 sites    u Annuals 28,800 Annual RV    u Seasonal 11,600 16.0%    u Transient 11,700    uMembership sites 24,100 Annual MH
67.4%
Note:
(1) Property and site counts exclude Marina JV investment properties.
(2) Property operating revenue buckets reflect estimated 2018 property operating revenues, derivable from                our guidance included in Exhibit 99.1 to the Form 8-K filed with the SEC on January 30, 2018 (“ELS All Annual Revenue = 90.0%
Reports Fourth Quarter Results”).
3

---

 

Our Lifestyle Options
• Customers own the units they place on our sites    u Manufactured homes u Resort cottages (park models) u Recreational vehicles
• We offer a lifestyle and a variety of product options to meet our customers’ needs • We seek to create long-term relationships with our customers
RV Site
Manufactured Home
RV Resort Cottage
4

---

 

Favorable Customer Demographics
• The population of people age 55 and older is expected to grow 22% from 2018 to 2033 • Roughly 10,000 Baby Boomers will turn 65 every day through 2030
U.S. Population Over Age 55 (in millions)
120
100
80 New Residents
60 MH u Average age: 59 years RV u Average age: 55 years
40
20
0
2018 2023 2028 2033
55-59                60-64                 65-69                70-74                 75+
Note:
Sources: US Census, Released Dec 2014, Pew Research Center 2010 5

---

 

Track Record 10-Year Total Return Performance
500
400
300
Item IPO Year—1993 2018 200
100
Properties 41 406
0
Sites 12,312 151,323 -100
States 16 32 1/31/08 1/31/09 1/31/10 1/31/11 1/31/12 1/31/13 1/31/14 1/31/15 1/31/16 1/31/17 1/31/18
ELS (+405%) S&P 500 (+154%) SNL US REIT Equity (+115%)
Net Income Per Share (1) $0.35 $2.45 FFO Per Share (1) $0.47 $3.85 Normalized FFO Per Share (1) $0.47 $3.85
Total Return Performance Since IPO
Common Stock Price (2) $6.44 $86.32
Enterprise Value (3) $296 million $10.4 billion 4,500
4,000
Dividend Paid Cumulative (4)—$22.92 3,500
3,000
Cumulative Total Return (5)—3,777%
2,500
S&P 500 Total Return (5)—947% 2,000
1,500 1,000
Note: 500
(1) The 2018 amounts are the midpoint of an estimate range. See our guidance included in Exhibit 99.1 to the Form 8-K 0
2/25/93 2/25/95 2/25/97 2/25/99 2/25/01 2/25/03 2/25/05 2/25/07 2/25/09 2/25/11 2/25/13 2/25/15 2/25/17                filed with the SEC on January 30, 2018. See pages 11 and 12 for the reconciliation and definition of ELS (+3,777%) S&P 500 (+947%) SNL US REIT Equity (+1,106%)                FFO and Normalized FFO. The 1993 amount was determined from amounts presented in the 1996 Form 10-K.
(2) The 1993 stock price is adjusted for stock splits; the 2018 price is the closing price as of January 31, 2018. (3) The 2018 enterprise value is as of January 31, 2018. See page 9.
(4) Source: SNL Financial. Includes dividends paid from IPO date of February 25,1993 through Notes: January 31, 2018 and adjusted for stock splits. Source: SNL Financial
(5) Source: SNL Financial from IPO through January 31, 2018 (calculation assumes common dividend reinvestment). (1) Total return calculation assumes dividend reinvestment.
(2) SNL US REIT Equity; Includes all publicly traded (NYSE, NYSE Amex, NASDAQ,    OTC BB, Pink Sheets) Equity REITs in SNL’s coverage universe.
(3) Stock price date from IPO as of January 31, 2018.
6

---

 

Consistent Same Store NOI Growth and Outperformance
ELS has maintained positive same store NOI growth in all quarters since at least Q3 1998.

---

 

Dividend
Dividend per Share
$2.50
• 2018—$2.20/share(1) $1.00 g $2.20(1)
$2.00
u 13% increase u 8% FFO growth
$1.50
• Dividend growth
$1.00
u 5 year CAGR
(2)
uELS 17%
$0.50
(3)
uREIT Average 7%
$0.00
• Tax treatment of dividend 2013 2014 2015 2016 2017 2018
ELS(4) REIT average (5) u70% Ordinary Income u70% Ordinary Income u30% Capital Gains u10% Capital Gains u20% Return of Capital
Note:
(1) On October 31, 2017, our Board approved setting the annual dividend rate for 2018 at $2.20 per common share. (2) Compound average growth rate through 2018.
(3) Source: SNL Financial; Includes all publicly traded U.S. Equity REITs in SNL’s coverage universe that declared regular dividends during the period January 1, 2011 through December 31, 2016. (4) Tax treatment of dividend in 2017.
(5) Source: Citi Research and NAREIT 8

---

 

Capital Structure
As of January 31, 2018 (in millions) Loan Maturity as of December 31, 2017
• Total enterprise value is $10.4 billion $400,000 • Debt to enterprise value is 21.4% $350,000
$300,000
• $370 million available line of credit thousands)
(in $250,000
OPU’s $503.2, 4.9% Debt $200,000 Term Loan $200.0, 1.9% Line of Credit $30.0, 0.3% $150,000 $100,000
Outstanding $50,000
$0
Mortgage 2018 2019 2020 2021 2022 2023 2025 2028 2031 2034 2036 2037 2038 2039 2040 2041
Debt Common(1) Year
$1,992.5 $7,647.2 Secured Fully Amortizing Unsecured
19.2% 73.7%
12 4.5%
Average to Maturity Years Weighted Interest Average Rate
Note:
(1) Stock price as of January 31, 2018.
9

---

 

Performance Update
• 200 Manufactured Home Communities(1) • 189 RV Resorts(1) u Core(2) occupancy of 94.5% as of 1/31/18 u Core resort base rental income    u Core occupancy has grown 33 consecutive    growth for the month ended    quarters through 12/31/17    1/31/18 is 7.9%(3) u Core rental income growth from u Core community base rental income growth    for the month ended 1/31/18 is 4.7%(3)                annuals for the month ended
1/31/18 is 6.2%(3)
Note:
(1) Excludes joint venture properties.
(2) Core Portfolio is defined as properties acquired prior to December 31, 2016.
The Core Portfolio may change from time-to-time depending on acquisitions, dispositions and significant transactions or unique situations. (3) Compared to the month ended January 31, 2017. 10

---

 

Safe Harbor Statement
Under the Private Securities Litigation Reform Act of 1995:
The the heading forward -“Risk looking Factors” statements in our contained 2017 Annual in this Report presentation on Form are 10 -subject K. See to Form certain 8-K economic filed January risks 30, and 2018 uncertainties for the full described text of our under forward    -looking statements projections .are We based assume on no 2018 obligation budgets, to reforecasts update or supplement and pro forma forward expectations -looking statements on recent investments that become . untrue because of subsequent events. All
Non-GAAP Financial Measures
Net Income to FFO and Normalized FFO Reconciliation (in millions)
2013 2014 2015 2016 2017 2018 (1)
Net income available for common stockholders    $106.9 $118.7 $130.1 $164.0 $189.9 $217.9
Income allocated to common OP units 9.7 10.5 11.1 13.9 12.8 13.7 Right-to-use contract revenue and commissions deferred, net    3.3 2.9 2.7 2.9 3.8 5.3 Depreciation on real estate assets and other    102.7 101.2 104.0 108.0 112.6 114.0 Depreciation on rental homes    6.5 10.9 10.7 10.7 10.4 10.1 Depreciation on discontinued operations    1.5 — — -Amortization of in-place leases 1.9 4.0 2.4 3.4 2.2 3.0 Gain on real estate (41.5) (1.5) — —
FFO available for common stock and OP unit holders    191.0 246.7 261.0 302.9 331.7 364.0
Change in fair value of contingent consideration asset 1.4 (0.1) — —Transaction costs    2.0 1.6 1.1 1.2 0.7 -Loss from early extinguishment of debt    37.9 5.1 16.9—2.7 -Litigation settlement, net ——2.4 —Preferred stock original issuance costs — — 0.8 -
Normalized FFO available for common stock and OP unit holders    $232.3 $253.3 $279.0 $279.0 $335.9 $364.0
Note:
(1) The 2018 amounts are the midpoint of an estimate range. See our guidance included in Exhibit 99.1 to the Form 8-K filed with the SEC on January 30, 2018.
11

---

 

Non-GAAP Financial Measures
This the paragraphs document contains below. We certain believe non investors -GAAP measures should review used these by management non-GAAP that measures, we believe along are with helpful GAAP in understanding net income and our cash business, flow from as further operating discussed activities, in and investing operating activities measures and financing and other activities, terms when may differ evaluating from an the equity definitions REIT’s and operating methodologies performance used. Our by other definitions REITs and and, calculations accordingly, of these may not non be -GAAP comparable financial. These cash available non-GAAP to pay financial distributions and operating and should measures not be do considered not represent as an cash alternative generated to net from income, operating determined activities in in accordance accordance with with GAAP, GAAP, as nor an do indication they represent of our financial available performance, to fund our cash or to needs, cash flow including from our operating ability to activities, make cash determined distributions in accordance . with GAAP, as a measure of our liquidity, nor is it indicative of funds from FUNDS sales FROM of properties, OPERATIONS plus real (FFO) estate . We related define depreciation FFO as net and income, amortization, computed impairments, in accordance if any, with and GAAP, after adjustments excluding gains for unconsolidated and actual or estimated partnerships losses and with joint ventures our interpretation . Adjustments of standards for unconsolidated established partnerships by the National and Association joint ventures of are Real calculated Estate Investment to reflect FFO Trusts on (“NAREIT”), the same basis which . We may compute not be comparable FFO in accordance to FFO we reported do. We by receive other REITs up-front that non do not -refundable define the payments term in accordance from the entry with of the right current -to-use NAREIT contracts definition . In accordance or that interpret with GAAP, the current the upfront NAREIT non definition -refundable differently payments than of and non related -refundable commissions right-to -are use deferred payments, and we amortized believe that over it the is appropriate estimated customer to adjust for life .the Although impact the of the NAREIT deferral definition activity of in FFO our calculation does not address of FFO. the treatment expense NORMALIZED items: a) FUNDS the financial FROM impact OPERATIONS of contingent (NORMALIZED consideration; FFO) b) ..gains We define and losses Normalized from early FFO debt as FFO extinguishment, excluding the following including non prepayment -operating penalties income and and Normalized defeasance FFO costs; presented c) property herein acquisition is not necessarily and other transaction comparable costs to Normalized related to FFO mergers presented and acquisitions; by other real and estate d) other companies miscellaneous due to non the -fact comparable that not all items real. estate companies use the same methodology for computing this amount. the We effect believe of that depreciation, FFO and Normalized amortization, FFO impairments, are helpful to if any, investors and actual as supplemental or estimated measures gains or losses of the performance from sales of of real an estate, equity all REIT of. which We believe are based that by on excluding historical among costs and other which equity may REITs be of. We limited further relevance believe in that evaluating Normalized current FFO performance, provides useful FFO information can facilitate to comparisons investors, analysts of operating and our performance management between because periods it allows and having them to to compare account our for differences operating performance not related to to our the operations operating. performance For example, of we other believe real that estate excluding companies the early and extinguishment between periods of debt, on a consistent property acquisition basis without and operating other transaction performance costs in related future to periods mergers because and acquisitions these costs from do Normalized not affect the FFO future allows operations investors, of analysts the properties and our . In management some cases, to we assess provide the information sustainability about of identified non-cash components of FFO and Normalized FFO because it allows investors, analysts and our management to assess the impact of those items.
12

---

 

Equity LifeStyle Properties
Two North Riverside Plaza, Chicago, Illinois 60606 800.247.5279 | EquityLifeStyleProperties.com
2/18