Continued Strong Performance
Equity LifeStyle Properties, Inc. (NYSE: ELS) (referred to
herein as “we,” “us,” and “our”) today announced results for the
quarter ended March 31, 2017. All per share results are
reported on a fully diluted basis unless otherwise noted.
Financial Results for the Quarter Ended March 31,
2017
For the quarter ended March 31, 2017, total revenues
increased $12.3 million, or 5.6 percent, to $232.4 million compared
to $220.1 million for the same period in 2016. Net income available
for Common Stockholders increased $6.3 million, or $0.05 per Common
Share, to $56.9 million, or $0.65 per Common Share, compared to
$50.6 million, or $0.60 per Common Share, for the same period in
2016.
Non-GAAP Financial Measures and Portfolio Performance
For the quarter ended March 31, 2017, Funds from Operations
(“FFO”) available for Common Stock and OP Unit holders increased
$8.5 million, or $0.08 per Common Share, to $93.1 million or $1.00
per Common Share, compared to $84.6 million, or $0.92 per Common
Share, for the same period in 2016.
For the quarter ended March 31, 2017 Normalized Funds from
Operations (“Normalized FFO”) available for Common Stock and OP
Unit holders increased $8.4 million, or $0.08 per Common Share, to
$93.2 million, or $1.00 per Common Share, compared to $84.8
million, or $0.92 per Common Share, for the same period in
2016.
For the quarter ended March 31, 2017, property operating
revenues, excluding deferrals, increased $14.6 million to $222.0
million compared to $207.4 million for the same period in 2016. For
the quarter ended March 31, 2017, income from property
operations, excluding deferrals and property management, increased
$8.4 million to $135.6 million compared to $127.2 million for the
same period in 2016.
For the quarter ended March 31, 2017, Core property
operating revenues, excluding deferrals, increased approximately
4.3 percent and Core income from property operations, excluding
deferrals and property management, increased approximately 3.8
percent compared to the same period in 2016.
Balance Sheet Activity
During the quarter, we paid off one loan of approximately $21.1
million using available cash, with an interest rate of 5.76% per
annum, secured by one manufactured home community.
About Equity LifeStyle Properties
We are a self-administered, self-managed real estate investment
trust (“REIT”) with headquarters in Chicago.
As of April 17, 2017, we own or have an interest in 391
quality properties in 32 states and British Columbia consisting of
146,626 sites.
For additional information, please contact our Investor
Relations Department at (800) 247-5279 or at
investor_relations@equitylifestyle.com.
Conference Call
A live webcast of our conference call discussing these results
will take place tomorrow, Tuesday, April 18, 2017, at 10:00 a.m.
Central Time. Please visit the Investor Information section at
www.equitylifestyleproperties.com for the link. A replay of the
webcast will be available for two weeks at this site.
Reporting Calendar
Quarterly financial results and related earnings conference
calls for the next three quarters are expected to occur as
follows:
Release Date Earnings Call Second
Quarter 2017 Monday, July 17, 2017 Tuesday, July 18, 2017 10:00
a.m. CT Third Quarter 2017 Monday, October 16, 2017 Tuesday,
October 17, 2017 10:00 a.m. CT Fourth Quarter 2017 Monday, January
29, 2018 Tuesday, January 30, 2018 10:00 a.m. CT
Forward-Looking Statements
In addition to historical information, this press release
includes certain “forward-looking statements” within the meaning of
the Private Securities Litigation Reform Act of 1995. When used,
words such as "anticipate," "expect," "believe," "project,"
"intend," "may be" and "will be" and similar words or phrases, or
the negative thereof, unless the context requires otherwise, are
intended to identify forward-looking statements and may include
without limitation, information regarding our expectations, goals
or intentions regarding the future, and the expected effect of our
acquisitions. These forward-looking statements are subject to
numerous assumptions, risks and uncertainties, including, but not
limited to:
- our ability to control costs, real
estate market conditions, the actual rate of decline in customers,
the actual use of sites by customers and our success in acquiring
new customers at our properties (including those that we may
acquire);
- our ability to maintain historical or
increase future rental rates and occupancy with respect to
properties currently owned or that we may acquire;
- our ability to retain and attract
customers renewing, upgrading and entering right-to-use
contracts;
- our assumptions about rental and home
sales markets;
- our assumptions and guidance concerning
2017 estimated net income, FFO and Normalized FFO;
- our ability to manage counterparty
risk;
- in the age-qualified properties, home
sales results could be impacted by the ability of potential home
buyers to sell their existing residences as well as by financial,
credit and capital markets volatility;
- results from home sales and occupancy
will continue to be impacted by local economic conditions, lack of
affordable manufactured home financing and competition from
alternative housing options including site-built single-family
housing;
- impact of government intervention to
stabilize site-built single-family housing and not manufactured
housing;
- effective integration of recent
acquisitions and our estimates regarding the future performance of
recent acquisitions;
- the completion of future transactions
in their entirety, if any, and timing and effective integration
with respect thereto;
- unanticipated costs or unforeseen
liabilities associated with recent acquisitions;
- ability to obtain financing or
refinance existing debt on favorable terms or at all;
- the effect of interest rates;
- the dilutive effects of issuing
additional securities;
- the effect of accounting for the entry
of contracts with customers representing a right-to-use the
properties under the Codification Topic "Revenue Recognition";
- the outcome of pending or future
lawsuits or actions brought against us, including those disclosed
in our filings with the Securities and Exchange Commission;
and
- other risks indicated from time to time
in our filings with the Securities and Exchange Commission.
For further information on these and other factors that could
impact us and the statements contained herein, refer to our filings
with the Securities and Exchange Commission, including “Risk
Factors” in our most recent Annual Report on Form 10-K and
subsequent quarterly reports.
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.
Investor Information
Equity Research Coverage (1) Robert W.
Baird & Company BMO Capital Markets
Green Street Advisors Drew T. Babin Paul Adornato Ryan
Burke/Ryan Lumb 215-553-7816 212-885-4170 949-640-8780
dbabin@rwbaird.com
paul.adornato@bmo.com
rburke@greenstreetadvisors.com
rlumb@greenstreetadvisors.com
Cantor Fitzgerald Citi Research Gaurav Mehta Michael
Bilerman/ Nick Joseph
Wells Fargo Securities 212-915-1221
212-816-1383 Todd Stender
gmehta@cantor.com
michael.bilerman@citi.com
562-637-1371
nicholas.joseph@citi.com
todd.stender@wellsfargo.com
Bank of America Merrill
LynchGlobal Research
Evercore ISI Jeffrey Spector Steve Sakwa/ Gwen Clark
646-855-1363 212-446-5600
jeff.spector@baml.com
steve.sakwa@evercoreisi.com
gwen.clark@evercoreisi.com
______________________
1.
Any opinions, estimates or forecasts
regarding our performance made by these analysts or agencies do not
represent our opinions, forecasts or predictions. We do not by
reference to these firms imply our endorsement of or concurrence
with such information, conclusions or recommendations.
Financial Highlights
(In millions, except Stock and OP Units
outstanding and per share data, unaudited)
As of and for the Three Months Ended
March 31,2017
December 31,2016
September 30,2016
June 30,2016
March 31,2016
Operating Information Total revenues $ 232.4 $ 214.0 $ 226.2
$ 210.1 $ 220.1 Net income $ 63.1 $ 42.4 $ 46.8 $ 40.8 $ 57.2 Net
income available for Common Stockholders $ 56.9 $ 37.0 $ 41.0 $
35.5 $ 50.6 Adjusted EBITDA (1) $ 118.9 $ 101.4 $ 103.4 $ 95.9 $
111.3 FFO available for Common Stock and OP Unit holders(1)(2) $
93.1 $ 72.5 $ 76.9 $ 68.9 $ 84.6 Normalized FFO available for
Common Stock and OP Unit holders(1)(2) $ 93.2 $ 75.2 $ 77.2 $ 69.3
$ 84.8 Funds available for distribution (FAD) available for Common
Stock and OP Unit holders(1)(2) $ 86.0 $ 65.8 $ 67.2 $ 58.4 $ 77.4
Stock Outstanding (In thousands)
and Per Share Data
Common Stock and OP Units, end of the period 92,780 92,699 92,507
92,499 91,802 Weighted average Common Stock and OP Unit outstanding
- fully diluted 93,011 92,965 92,910 92,264 92,041 Net income per
Common Share - fully diluted $ 0.65 $ 0.43 $ 0.48 $ 0.42 $ 0.60 FFO
per Common Share - fully diluted $ 1.00 $ 0.78 $ 0.83 $ 0.75 $ 0.92
Normalized FFO per Common Share - fully diluted $ 1.00 $ 0.81 $
0.83 $ 0.75 $ 0.92 Dividends per Common Share $ 0.488 $ 0.425 $
0.425 $ 0.425 $ 0.425
Balance Sheet Total assets $
3,471 $ 3,479 $ 3,470 $ 3,486 $ 3,415 Total liabilities $ 2,371 $
2,397 $ 2,396 $ 2,420 $ 2,400
Market Capitalization
Total debt $ 2,078 $ 2,110 $ 2,111 $ 2,134 $ 2,125 Total market
capitalization (3) $ 9,364 $ 8,930 $ 9,387 $ 9,675 $ 8,938
Ratios Total debt / total market capitalization 22.2 % 23.6
% 22.5 % 22.1 % 23.8 % Total debt + preferred stock / total market
capitalization 23.6 % 25.2 % 23.9 % 23.5 % 25.3 % Total debt /
Adjusted EBITDA (4) 5.0 5.1 5.2 5.3 5.4 Interest coverage (5) 4.2
4.1 4.1 4.0 4.0 Fixed charges + preferred distributions coverage
(6) 3.8 3.7 3.6 3.5 3.5 ______________________ 1. See
Non-GAAP Financial Measure Definitions and Other Terms at the end
of the supplemental information for definitions of Adjusted EBITDA,
FFO, Normalized FFO and FAD; and reconciliation of Adjusted EBITDA.
2. See page 7 for a reconciliation of Net income available for
Common Stockholders to non-GAAP financial measures FFO available
for Common Stock and OP Unit holders, Normalized FFO available for
Common Stock and OP Unit holders and FAD available for Common Stock
and OP Unit holders. 3. See page 16 for market capitalization
calculation as of March 31, 2017. 4. Represents trailing twelve
months Adjusted EBITDA. We believe trailing twelve months Adjusted
EBITDA provides additional information for determining our ability
to meet future debt service requirements. 5. Interest coverage is
calculated by dividing trailing twelve months Adjusted EBITDA by
the interest expense incurred during the same period. 6. See
Non-GAAP Financial Measure Definitions and Other Terms at the end
of the supplemental information for a definition of fixed charges.
This ratio is calculated by dividing trailing twelve months
Adjusted EBITDA by the sum of fixed charges and preferred stock
dividends during the same period.
Balance Sheet
(In thousands, except share and per
share data)
March 31, 2017
December 31, 2016
(unaudited) Assets Investment in real estate: Land $
1,163,987 $ 1,163,987 Land improvements 2,903,564 2,893,759
Buildings and other depreciable property 635,248 627,590
4,702,799 4,685,336 Accumulated depreciation (1,429,999 )
(1,399,531 ) Net investment in real estate 3,272,800 3,285,805 Cash
73,248 56,340 Notes receivable, net 34,239 34,520 Investment in
unconsolidated joint ventures 19,187 19,369 Deferred commission
expense 31,357 31,375 Escrow deposits, goodwill, and other assets,
net (1) 40,210 51,578
Total Assets $
3,471,041 $ 3,478,987
Liabilities and Equity Liabilities: Mortgage notes payable $
1,859,890 $ 1,891,900 Term loan 199,431 199,379 Accrued expenses
and accounts payable (1) 85,554 89,864 Deferred revenue – upfront
payments from right-to-use contracts 82,264 81,484 Deferred revenue
– right-to-use annual payments 13,316 9,817 Accrued interest
payable 8,212 8,379 Rents and other customer payments received in
advance and security deposits 77,398 76,906 Distributions payable
45,230 39,411
Total Liabilities 2,371,295
2,397,140 Equity: Stockholders’ Equity: Preferred
stock, $0.01 par value, 9,945,539 shares authorized as of March 31,
2017 and December 31, 2016; none issued and outstanding. — — 6.75%
Series C Cumulative Redeemable Perpetual Preferred Stock, $0.01 par
value, 54,461 shares authorized and 54,458 issued and outstanding
as of March 31, 2017 and December 31, 2016 at liquidation value
136,144 136,144 Common stock, $0.01 par value, 200,000,000 shares
authorized as of March 31, 2017 and December 31, 2016; 86,841,775
and 85,529,386 shares issued and outstanding as of March 31, 2017
and December 31, 2016, respectively 866 854 Paid-in capital
1,117,628 1,103,048 Distributions in excess of accumulated earnings
(216,724 ) (231,276 ) Accumulated other comprehensive loss (1 )
(227 ) Total Stockholders’ Equity 1,037,913 1,008,543
Non-controlling interests – Common OP Units 61,833 73,304
Total Equity 1,099,746 1,081,847
Total Liabilities and Equity $ 3,471,041
$ 3,478,987 ______________________ 1.
As of December 31, 2016, Escrow deposits, goodwill, and
other assets, net includes insurance receivable of approximately
$10.9 million, and Accrued expenses and accounts payable includes
approximately $13.3 million litigation settlement payable related
to resolution of the California lawsuits. These amounts were
received and paid during the first quarter of 2017.
Consolidated Income Statement
(In thousands, unaudited)
Quarters Ended March 31, 2017
2016 Revenues: Community base rental income $ 120,692
$ 114,076 Rental home income 3,605 3,545 Resort base rental income
61,068 55,434 Right-to-use annual payments 11,252 11,054
Right-to-use contracts current period, gross 3,206 2,532
Right-to-use contract upfront payments, deferred, net (775 ) (302 )
Utility and other income 22,126 20,793 Gross revenues from home
sales 7,027 8,214 Brokered resale revenue and ancillary services
revenues, net 1,661 1,418 Interest income 1,770 1,660 Income from
other investments, net 757 1,723 Total revenues
232,389 220,147
Expenses: Property operating and
maintenance 68,054 62,954 Rental home operating and maintenance
1,551 1,525 Real estate taxes 14,037 13,198 Sales and marketing,
gross 2,690 2,493 Right-to-use contract commissions, deferred, net
(84 ) 104 Property management 12,560 11,763 Depreciation on real
estate assets and rental homes 30,109 28,656 Amortization of
in-place leases 1,032 335 Cost of home sales 7,119 8,281 Home
selling expenses 925 834 General and administrative 7,373 7,407
Property rights initiatives and other 219 654 Interest and related
amortization 24,879 25,634 Total expenses 170,464
163,838 Income before equity in income of
unconsolidated joint ventures 61,925 56,309 Equity in income of
unconsolidated joint ventures 1,150 881 Consolidated
net income 63,075 57,190 Income allocated to
non-controlling interest-Common OP Units (3,890 ) (4,310 ) Series C
Redeemable Perpetual Preferred Stock Dividends (2,297 ) (2,297 )
Net income available for Common Stockholders $
56,888 $ 50,583
Non-GAAP Financial Measures
First Quarter 2017 - Selected Non-GAAP
Financial Measures
(In millions, except per share data,
unaudited)
Quarter Ended
March 31,2017
Income from property operations, excluding deferrals and property
management - 2017 Core (1) $ 132.0 Income from property operations,
excluding deferrals and property management - Acquisitions (2) 3.6
Property management and general and administrative (excluding
transaction costs) (19.8 ) Other income and expenses 4.6 Financing
costs and other (27.2 )
Normalized FFO available for Common
Stock and OP Unit holders (3) 93.2 Transaction
costs (0.1 )
FFO available for Common Stock and OP
Unit holders (3)
$ 93.1 Normalized FFO per Common Share
- fully diluted $ 1.00 FFO per Common Share - fully diluted $ 1.00
Normalized FFO available for Common Stock and OP
Unit holders (3) $ 93.2 Non-revenue
producing improvements to real estate (7.2 )
FAD available for
Common Stock and OP Unit holders (3) $
86.0 Weighted average Common Stock and OP
Units - fully diluted 93.0 ___________________ 1. See
Non-GAAP Financial Measure Definitions and Other Terms at the end
of the supplemental information for definitions of non-GAAP
financial measures Income from property operations, excluding
deferrals and property management, and Core, and reconciliation of
income from property operations, excluding deferrals and property
management to income before equity in income of unconsolidated
joint ventures. See page 9 for details of the 2017 Core Income from
Property Operations, excluding deferrals and property management.
2. See Non-GAAP Financial Measure Definitions and Other Terms at
the end of the supplemental information for a definition of
Acquisition properties. See page 10 for details of the Income from
Property Operations, excluding deferrals and property management
for the Acquisitions. 3. See page 7 for a reconciliation of Net
income available for Common Stockholders to non-GAAP financial
measures FFO available for Common Stock and OP Unit holders,
Normalized FFO available for Common Stock and OP Unit holders and
FAD available for Common Stock and OP Unit holders. See definitions
of non-GAAP financial measures of FFO, Normalized FFO and FAD and
Non-revenue producing improvements in Non-GAAP Financial Measure
Definitions and Other Terms at the end of the supplemental
information.
Reconciliation of Net Income to
Non-GAAP Financial Measures
(In thousands, except per share data,
unaudited)
Quarters Ended March 31, 2017
2016 Net income available for Common Stockholders
$ 56,888 $ 50,583 Income allocated to
Common OP Units 3,890 4,310 Right-to-use contract upfront payments,
deferred, net (1) 775 302 Right-to-use contract commissions,
deferred, net (2) (84 ) 104 Depreciation on real estate assets
27,452 26,008 Depreciation on rental homes 2,657 2,647 Amortization
of in-place leases 1,032 335 Depreciation on unconsolidated joint
ventures 447 290
FFO available for Common Stock
and OP Unit holders (3) 93,057 84,579
Transaction costs (4) 104 200
Normalized FFO
available for Common Stock and OP Unit holders(3)
93,161 84,779 Non-revenue producing improvements to
real estate (7,160 ) (7,337 )
FAD available for Common Stock and
OP Unit holders (3) $ 86,001
$ 77,442 Net income available per
Common Share - Basic $ 0.66 $ 0.60
Net income available per Common Share - Fully Diluted
$ 0.65 $ 0.60 FFO per Common
Share & OP Units-Basic $ 1.00 $
0.92 FFO per Common Share & OP Units-Fully
Diluted $ 1.00 $ 0.92
Normalized FFO per Common Share & OP Units-Basic
$ 1.01 $ 0.93 Normalized FFO per
Common Share & OP Units-Fully Diluted $ 1.00
$ 0.92 Average Common Stock - Basic 86,048
84,321 Average Common Stock and OP Units - Basic 92,636 91,529
Average Common Stock and OP Units - Fully Diluted 93,011 92,041
_____________________________ 1. We are required by GAAP to
defer, over the estimated customer life, recognition of
non-refundable upfront payments from sales of new and upgrade
right-to-use contracts. For 2017, the customer life is estimated to
be 40 years and is based upon our experience operating the
membership platform since 2008. The amount shown represents the
deferral of a substantial portion of current period upgrade sales,
offset by amortization of prior period sales. 2. We are required by
GAAP to defer recognition of commissions paid related to the entry
of right-to-use contracts. The deferred commissions will be
amortized using the same method as used for the related
non-refundable upfront payments from the entry of right-to-use
contracts and upgrade sales. The amount shown represents the
deferral of a substantial portion of current period commissions on
those contracts, offset by the amortization of prior period
commissions. 3. See Non-GAAP Financial Measure Definitions and
Other Terms at the end of the supplemental information for non-GAAP
financial measure definitions of FFO, Normalized FFO and FAD and
for a definition of Non-revenue producing improvements. 4. Included
in general and administrative on the Consolidated Income Statement
on page 4.
Consolidated Income from Property
Operations (1)
(In millions, except home site and
occupancy figures, unaudited)
Quarters Ended March 31, 2017
2016 Community base rental income (2) $ 120.7 $ 114.1 Rental
home income 3.6 3.5 Resort base rental income (3) 61.1 55.4
Right-to-use annual payments 11.3 11.1 Right-to-use contracts
current period, gross 3.2 2.5 Utility and other income 22.1
20.8 Property operating revenues 222.0 207.4 Property
operating, maintenance and real estate taxes 82.1 76.2 Rental home
operating and maintenance 1.6 1.5 Sales and marketing, gross 2.7
2.5 Property operating expenses 86.4 80.2
Income from property operations, excluding deferrals and
property management (1) $ 135.6
$ 127.2 Manufactured home site
figures and occupancy averages: Total sites 70,992 70,114
Occupied sites 66,641 65,153 Occupancy % 93.9 % 92.9 % Monthly base
rent per site $ 604 $ 584
Resort base rental income:
Annual $ 32.1 $ 30.0 Seasonal 18.5 16.2 Transient 10.5 9.2
Total resort base rental income $ 61.1 $ 55.4
_________________________ 1. See page 4 for the Consolidated
Income Statement and see Non-GAAP Financial Measure Definitions and
Other Terms at the end of the supplemental information for non-GAAP
measure definitions and reconciliation of Income from property
operations, excluding deferrals and property management. 2. See the
manufactured home site figures and occupancy averages below within
this table. 3. See resort base rental income detail included below
within this table.
2017 Core Income from Property
Operations (1)
(In millions, except home site and
occupancy figures, unaudited)
Quarters Ended March 31, % 2017
2016 Change (2) Community base rental
income (3) $ 119.6 $ 114.1 4.8 % Rental home income 3.6 3.5 1.7 %
Resort base rental income (4) 56.9 55.2 3.0 % Right-to-use annual
payments 11.3 11.1 1.8 % Right-to-use contracts current period,
gross 3.2 2.5 26.6 % Utility and other income 21.6 20.8
4.2 % Property operating revenues 216.2 207.2 4.3 %
Property operating, maintenance and real estate taxes 79.9 76.0 5.1
% Rental home operating and maintenance 1.6 1.5 1.7 % Sales and
marketing, gross 2.7 2.5 7.9 % Property operating
expenses 84.2 80.0 5.2 %
Income from property
operations, excluding deferrals and property management
(1) $ 132.0 $ 127.2
3.8 % Occupied sites (5)
65,867 65,278 Core manufactured home site
figures and occupancy averages: Total sites 69,972 69,986
Occupied sites 65,753 65,153 Occupancy % 94.0 % 93.1 % Monthly base
rent per site $ 606 $ 584
Resort base rental income:
Annual $ 31.3 $ 29.9 4.6 % Seasonal 16.4 16.1 1.4 % Transient 9.2
9.2 0.5 % Total resort base rental income $ 56.9
$ 55.2 3.0 % ___________________________ 1.
See Non-GAAP Financial Measure Definitions and Other Terms at the
end of the supplemental information for definitions of non-GAAP
measures Income from property operations, excluding deferrals and
property management, and Core. 2. Calculations prepared using
actual results without rounding. 3. See the Core manufactured home
site figures and occupancy averages included below within this
table. 4. See resort base rental income detail included below
within this table. 5. Occupied sites as of the end of the period
shown. Occupied sites have increased by 141 from 65,726 at December
31, 2016.
Acquisitions - Income from Property
Operations (1)
(In millions, unaudited)
QuarterEnded
March 31,2017
Community base rental income $ 1.1 Resort base rental income 4.2
Utility income and other property income 0.5 Property operating
revenues 5.8 Property operating expenses 2.2
Income from
property operations, excluding deferrals and property
management $ 3.6 ______________________ 1.
See Non-GAAP Financial Measure Definitions and Other Terms at the
end of the supplemental information for a definition of
Acquisitions.
Income from Rental Home
Operations
(In millions, except occupied rentals,
unaudited)
Quarters Ended March 31, 2017
2016 Manufactured homes: New home $ 6.6 $ 6.1 Used
home 5.8 6.4 Rental operations revenues (1) 12.4 12.5 Rental
operations expense 1.6 1.5 Income from rental operations,
before depreciation 10.8 11.0 Depreciation on rental homes 2.7
2.6
Income from rental operations, after depreciation
$ 8.1 $ 8.4 Occupied
rentals: (2) New 2,467 2,247 Used 2,297 2,716
Total occupied rental sites 4,764 4,963
As of March 31, 2017 March 31, 2016
Cost basis in rental homes: (3) Gross
Net ofDepreciation
Gross
Net ofDepreciation
New $ 128.3 $ 99.8 $ 115.6 $ 92.3 Used 50.0 21.6 56.5
33.6 Total rental homes $ 178.3 $ 121.4 $
172.1 $ 125.9 __________________________ 1. For the
quarters ended March 31, 2017 and 2016, approximately $8.8 million
and $9.0 million, respectively, of the rental operations revenue
are included in the Community base rental income in the
Consolidated Income from Property Operations table on page 8. The
remainder of the rental operations revenue is included in the
Rental home income in the Consolidated Income from Property
Operations table on page 8. 2. Occupied rentals as of the end of
the period shown in our Core portfolio. Included in the quarters
ended March 31, 2017 and 2016 are 228 and 131 homes rented through
our ECHO joint venture, respectively. For the three months ended
March 31, 2017 and 2016, the rental home investment associated with
our ECHO joint venture totals approximately $8.0 million and $4.3
million, respectively. 3. Includes both occupied and unoccupied
rental homes. New home cost basis does not include the costs
associated with our ECHO joint venture. At March 31, 2017 and 2016,
our investment in the ECHO joint venture was approximately $15.3
million and $15.4 million, respectively.
Total Sites and Home Sales
(In thousands, except sites and home
sale volumes, unaudited)
Summary of Total Sites as of March 31, 2017
Sites Community sites 71,000 Resort sites: Annuals 26,600
Seasonal 11,200 Transient 10,500 Membership (1) 24,100 Joint
Ventures (2) 3,200
Total 146,600 Home Sales
- Select Data Quarters Ended March
31, 2017 2016 Total New Home Sales Volume (3) 120
121 New Home Sales Volume - ECHO joint venture 37 34 New Home Sales
Gross Revenues(3) $ 4,943 $ 5,399 Total Used Home Sales
Volume (3) 285 311 Used Home Sales Gross Revenues(3) $ 2,084 $
2,815 Brokered Home Resales Volume 168 186 Brokered Home
Resale Revenues, net $ 242 $ 279 __________________________ 1.
Sites primarily utilized by approximately 105,300 members.
Includes approximately 5,700 sites rented on an annual basis. 2.
Joint venture income is included in the Equity in income from
unconsolidated joint ventures in the Consolidated Income Statement
on page 4. 3. Total new home sales volume includes home sales from
our ECHO joint venture. New home sales gross revenues does not
include the revenues associated with our ECHO joint venture.
2017 Guidance - Selected Financial
Data (1)
Our guidance acknowledges the existence of
volatile economic conditions, which may impact our current guidance
assumptions. Factors impacting 2017 guidance include, but are not
limited to the following: (i) the mix of site usage within the
portfolio; (ii) yield management on our short-term resort sites;
(iii) scheduled or implemented rate increases on community and
resort sites; (iv) scheduled or implemented rate increases in
annual payments under right-to-use contracts; (v) occupancy
changes; (vi) our ability to retain and attract customers renewing
or entering right-to-use contracts; (vii) our ability to integrate
and operate recent acquisitions in accordance with our estimates;
(viii) completion of pending transactions in their entirety and on
assumed schedule; (ix) ongoing legal matters and related fees; and
(x) costs to restore property operations and potential revenues
losses following storms or other unplanned events.
(In millions, except per share data,
unaudited)
Quarter Ended Year Ended June 30, 2017
December 31, 2017 Income from property operations,
excluding deferrals and property management - 2017 Core (2) $ 117.9
$ 498.1 Income from property operations - Acquisitions (3) 1.5 8.4
Property management and general and administrative (21.1 ) (80.7 )
Other income and expenses 3.3 13.5 Financing costs and other (27.1
) (108.3 )
Normalized FFO available for Common Stock and
OP Unit holders (4) 74.5 331.0 Transaction
costs — (0.1 )
FFO available for Common Stock and
OP Unit holders (4) 74.5 330.9
Depreciation on real estate and other (28.7 ) (113.2 ) Depreciation
on rental homes (2.6 ) (10.6 ) Deferral of right-to-use contract
sales revenue and commission, net 0.4 (3.4 ) Income allocated to
non-controlling interest-Common OP Units (2.8 ) (13.0 )
Net income available for Common Stockholders $
40.8 $ 190.7
Net income per Common Share - fully diluted (5) $0.44 -
$0.50 $2.14 - $2.24 FFO per Common Share - fully diluted $0.77 -
$0.83 $3.50 - $3.60 Normalized FFO per Common Share - fully diluted
$0.77 - $0.83 $3.51 - $3.61 Weighted average Common Stock
outstanding - fully diluted 93.1 93.1
_____________________________________ 1. Each line item
represents the mid-point of a range of possible outcomes and
reflects management’s estimate of the most likely outcome. Actual
Normalized FFO available for Common Stock and OP Unit holders,
Normalized FFO per Common Share, FFO available for Common Stock and
OP Unit holders, FFO per Common Share, Net income available for
Common Stockholders and Net income per Common Share could vary
materially from amounts presented above if any of our assumptions
is incorrect. 2. See page 14 for 2017 Core Guidance Assumptions.
Amount represents 2016 income from property operations, excluding
deferrals and property management, from the 2017 Core properties of
$113.0 million multiplied by an estimated growth rate of 4.4% and
$476.1 million multiplied by an estimated growth rate of 4.6% for
the quarter ended June 30, 2017 and the year ended December 31,
2017, respectively. 3. See page 14 for the 2017 Assumptions
regarding the Acquisition properties. 4. See Non-GAAP Financial
Measure Definitions and Other Terms at the end of the supplemental
information for definitions of Normalized FFO and FFO. 5. Net
income per fully diluted Common Share is calculated before Income
allocated to non-controlling interest-Common OP Units.
2017 Core Guidance Assumptions
(1)
(In millions, unaudited)
QuarterEnded
SecondQuarter 2017
Year Ended
2017
June 30, 2016
GrowthFactors (2)
December 31,2016
GrowthFactors (2)
Community base rental income $ 115.2 4.6 % $ 462.3 4.5 % Rental
home income 3.5 0.2 % 14.1 0.3 % Resort base rental income (3) 44.2
5.7 % 196.8 4.5 % Right-to-use annual payments 11.2 1.2 % 45.0 0.5
% Right-to-use contracts current period, gross 3.1 11.2 % 12.3 1.7
% Utility and other income 19.4 (0.1 )% 80.9 (1.0 )%
Property operating revenues 196.6 4.2 % 811.4 3.6 % Property
operating, maintenance, and real estate taxes 79.1 4.0 % 317.3 2.3
% Rental home operating and maintenance 1.6 1.6 % 6.9 (5.8 )% Sales
and marketing, gross 2.9 4.4 % 11.1 3.8 % Property
operating expenses 83.6 4.0 % 335.3 2.2 %
Income
from property operations, excluding deferrals and property
management $ 113.0 4.4 %
$ 476.1 4.6 % Resort
base rental income: Annual $ 30.1 5.4 % $ 122.3 5.2 % Seasonal
3.9 3.0 % 30.2 2.1 % Transient 10.2 7.5 % 44.3 4.3 %
Total resort base rental income
$ 44.2
5.7 % $ 196.8 4.5
%
2017 Assumptions Regarding Acquisition
Properties (1)
(In millions, unaudited)
Quarter Ended
Year Ended June 30, 2017 (4)
December 31,2017
(4)
Community base rental income $ 1.2 $ 4.6 Resort base rental income
2.4 11.5 Utility income and other property income 0.2 1.3
Property operating revenues 3.8 17.4 Property operating,
maintenance, and real estate taxes 2.3 9.0 Property
operating expenses
Income from property
operations, excluding deferrals and property management
$ 1.5 $ 8.4
_____________________________________ 1. See Non-GAAP
Financial Measure Definitions and Other Terms at the end of the
supplemental information for a definition of Core and Acquisition
properties. 2. Management’s estimate of the growth of property
operations in the 2017 Core Properties compared to actual 2016
performance. Represents our estimate of the mid-point of a range of
possible outcomes. Calculations prepared using actual results
without rounding. Actual growth could vary materially from amounts
presented above if any of our assumptions is incorrect. 3. See
Resort base rental income table included below within this table.
4. Each line item represents our estimate of the mid-point of a
possible range of outcomes and reflects management’s best estimate
of the most likely outcome for the Acquisition properties. Actual
income from property operations for the Acquisition properties
could vary materially from amounts presented above if any of our
assumptions is incorrect.
Right-To-Use Memberships - Select
Data
(In thousands, except member count,
number of Thousand Trails Camping Pass, number of annuals and
number of upgrades, unaudited)
Year Ended December 31, 2013
2014 2015 2016
2017 (1) Member Count (2) 98,277 96,130 102,413
104,728 105,500 Thousand Trails Camping Pass (TTC)
Origination (3) 15,607 18,187 25,544 29,576 30,100 TTC Sales 9,289
10,014 11,877 12,856 13,100 RV Dealer TTC Activations 6,318 8,173
13,667 16,720 17,000 Number of annuals (4) 4,830 5,142 5,470 5,756
6,000 Number of upgrade sales (5) 2,999 2,978 2,687 2,477 2,600
Right-to-use annual payments (6) $ 47,967 $ 44,860 $ 44,441
$ 45,036 $ 45,300 Resort base rental income from annuals $ 11,148 $
12,491 $ 13,821 $ 15,413 $ 16,800 Resort base rental income from
seasonals/transients $ 12,692 $ 13,894 $ 15,795 $ 17,344 $ 17,800
Upgrade contract initiations (7) $ 13,815 $ 13,892 $ 12,783 $
12,312 $ 12,500 Utility and other income $ 2,293 $ 2,455 $ 2,430 $
2,442 $ 2,400 ________________________________ 1. Guidance
estimate. Each line item represents our estimate of the mid-point
of a possible range of outcomes and reflects management’s best
estimate of the most likely outcome. Actual figures could vary
materially from amounts presented above if any of our assumptions
is incorrect. 2. Members have entered into right-to-use contracts
with us that entitle them to use certain properties on a continuous
basis for up to 21 days. 3. TTCs allow access to any of five
geographic areas in the United States. 4. Members who rent a
specific site for an entire year in connection with their
right-to-use contract. 5. Existing customers that have upgraded
agreements are eligible for longer stays, can make earlier
reservations, may receive discounts on rental units, and may have
access to additional properties. Upgrades require a non-refundable
upfront payment. 6. The year ended December 31, 2013 includes $2.1
million of revenue recognized related to our right-to-use annual
memberships activated through our dealer program. During the third
quarter of 2013, we changed the accounting treatment of revenues
and expenses associated with the RV dealer program to recognize as
revenue only the cash received from members generated by the
program. 7. Revenues associated with contract upgrades, included in
Right-to-use contracts current period, gross, on our Consolidated
Income Statement on page 4.
Market Capitalization
(In millions, except share and OP Unit
data, unaudited)
Capital Structure as of March 31, 2017
TotalCommonStock/Units
% of
TotalCommonStock/Units
Total % of Total
% of
TotalMarketCapitalization
Secured Debt $ 1,878 90.4 % Unsecured Debt 200 9.6 %
Total Debt (1) $ 2,078 100.0
% 22.2 % Common Stock 86,841,775 93.6 %
OP Units 5,938,204 6.4 % Total Common Stock and OP Units
92,779,979 100.0 % Common Stock price at March 31, 2017 $ 77.06
Fair Value of Common Stock $ 7,150 98.1 % Perpetual Preferred Stock
136 1.9 %
Total Equity $ 7,286
100.0 % 77.8 % Total Market
Capitalization $ 9,364 100.0 %
Perpetual Preferred Stock as of March 31, 2017
Series
CallableDate
OutstandingStock
LiquidationValue
AnnualDividend
PerShare
AnnualDividendValue
6.75% Series C 9/7/2017 54,458 $ 136 $ 168.8 $ 9.2
_________________ 1. Excludes deferred financing costs of
approximately $18.4 million.
Debt Maturity Schedule
Debt Maturity Schedule as of
March 31, 2017
(In thousands, unaudited)
Year
SecuredDebt
WeightedAverageInterestRate
UnsecuredDebt
WeightedAverageInterestRate
Total Debt
% ofTotalDebt
WeightedAverageInterestRate
2017 13,177 6.00 % — — 13,177 0.64 % 6.00 % 2018 198,222
5.97 % — — 198,222 9.56 % 5.97 % 2019 200,167 6.27 % — — 200,167
9.66 % 6.27 % 2020 121,283 6.13 % 200,000 2.39 % 321,283 15.50 %
3.80 % 2021 189,525 5.01 % — — 189,525 9.14 % 5.01 % 2022 149,310
4.59 % — — 149,310 7.20 % 4.59 % 2023 110,645 5.11 % — — 110,645
5.34 % 5.11 % 2024 — — % — — — — % — % 2025 107,236 3.45 % — —
107,236 5.17 % 3.45 % 2026 — — % — — — — % — % Thereafter 783,303
4.27 % — — 783,303 37.79 % 4.27 %
Total $ 1,872,868 4.90 %
$ 200,000 2.39 % $
2,072,868 100.0 % 4.66 %
Note Premiums 4,809 —
4,809
Total Debt 1,877,677 200,000
2,077,677 Deferred Financing Costs
(17,787 ) (569 ) (18,356
) Total Debt, net 1,859,890
4.94 % (1) 199,431 2.50
% $ 2,059,321 4.71 %
(1) Average Years to Maturity 11.0
2.8 10.2 ______________________ 1. Reflects
effective interest rate including amortization of note premiums and
amortization of deferred loan cost for secured and total debt and
stated interest rate for unsecured debt.
Non-GAAP Financial
Measures Definitions and Other Terms
This document contains certain non-GAAP measures used by
management that we believe are helpful in understanding our
business, as further discussed in the paragraphs below. We believe
investors should review Funds from Operations (“FFO”), Normalized
Funds from Operations (“Normalized FFO”), Funds Available for
Distribution (“FAD”) and Adjusted Earnings Before Interest, Tax,
Depreciation and Amortization (“Adjusted EBITDA”), along with GAAP
net income and cash flow from operating activities, investing
activities and financing activities, when evaluating an equity
REIT’s operating performance. Our definitions and calculations of
these non-GAAP financial and operating measures and other terms may
differ from the definitions and methodologies used by other REITs
and, accordingly, may not be comparable. These non-GAAP financial
and operating measures do not represent cash generated from
operating activities in accordance with GAAP, nor do they represent
cash available to pay distributions and should not be considered as
an alternative to net income, determined in accordance with GAAP,
as an indication of our financial performance, or to cash flow from
operating activities, determined in accordance with GAAP, as a
measure of our liquidity, nor is it indicative of funds available
to fund our cash needs, including our ability to make cash
distributions.
FUNDS FROM OPERATIONS (FFO). We define FFO as net income,
computed in accordance with GAAP, excluding gains and actual or
estimated losses from sales of properties, plus real estate related
depreciation and amortization, impairments, if any, and after
adjustments for unconsolidated partnerships and joint ventures.
Adjustments for unconsolidated partnerships and joint ventures are
calculated to reflect FFO on the same basis. We compute FFO in
accordance with our interpretation of standards established by the
National Association of Real Estate Investment Trusts (“NAREIT”),
which may not be comparable to FFO reported by other REITs that do
not define the term in accordance with the current NAREIT
definition or that interpret the current NAREIT definition
differently than we do. We receive up-front non-refundable payments
from the entry of right-to-use contracts. In accordance with GAAP,
the upfront non-refundable payments and related commissions are
deferred and amortized over the estimated customer life. Although
the NAREIT definition of FFO does not address the treatment of
non-refundable right-to-use payments, we believe that it is
appropriate to adjust for the impact of the deferral activity in
our calculation of FFO.
We believe FFO, as defined by the Board of Governors of NAREIT,
is generally a measure of performance for an equity REIT. While FFO
is a relevant and widely used measure of operating performance for
equity REITs, it does not represent cash flow from operations or
net income as defined by GAAP, and it should not be considered as
an alternative to these indicators in evaluating liquidity or
operating performance.
NORMALIZED FUNDS FROM OPERATIONS (NORMALIZED FFO). We
define Normalized FFO as FFO excluding the following non-operating
income and expense items: a) the financial impact of contingent
consideration; b) gains and losses from early debt extinguishment,
including prepayment penalties and defeasance costs; c) property
acquisition and other transaction costs related to mergers and
acquisitions; and d) other miscellaneous non-comparable items.
Normalized FFO presented herein is not necessarily comparable to
Normalized FFO presented by other real estate companies due to the
fact that not all real estate companies use the same methodology
for computing this amount.
FUNDS AVAILABLE FOR DISTRIBUTION (FAD). We define FAD as
Normalized FFO less non-revenue producing capital expenditures.
We believe that FFO, Normalized FFO and FAD are helpful to
investors as supplemental measures of the performance of an equity
REIT. We believe that by excluding the effect of depreciation,
amortization, impairments, if any, and actual or estimated gains or
losses from sales of real estate, all of which are based on
historical costs and which may be of limited relevance in
evaluating current performance, FFO can facilitate comparisons of
operating performance between periods and among other equity REITs.
We further believe that Normalized FFO provides useful information
to investors, analysts and our management because it allows them to
compare our operating performance to the operating performance of
other real estate companies and between periods on a consistent
basis without having to account for differences not related to our
operations. For example, we believe that excluding the early
extinguishment of debt, property acquisition and other transaction
costs related to mergers and acquisitions from Normalized FFO
allows investors, analysts and our management to assess the
sustainability of operating performance in future periods because
these costs do not affect the future operations of the properties.
In some cases, we provide information about identified non-cash
components of FFO and Normalized FFO because it allows investors,
analysts and our management to assess the impact of those
items.
INCOME FROM PROPERTY OPERATIONS, EXCLUDING DEFERRALS AND
PROPERTY MANAGEMENT. We define Income from property operations,
excluding deferrals and property management as rental income,
utility income and right-to-use income less property operating and
maintenance expenses, real estate tax, sales and marketing
expenses, property management and the GAAP deferral of right-to-use
contract upfront payments and related commissions, net. We believe
that this non-GAAP financial measure is helpful to investors and
analysts as a measure of the operating results of our manufactured
home and RV communities.
The following table reconciles Income before equity in income of
unconsolidated joint ventures to Income from property operations
(amounts in thousands):
Quarters Ended March 31, 2017
2016 Income before equity in income of unconsolidated joint
ventures $ 61,925 $ 56,309 Right-to-use upfront payments, deferred,
net 775 302 Gross revenues from home sales (7,027 ) (8,214 )
Brokered resale revenues and ancillary services revenues, net
(1,661 ) (1,418 ) Interest income (1,770 ) (1,660 ) Income from
other investments, net (757 ) (1,723 ) Right-to-use contract
commissions, deferred, net (84 ) 104 Property management 12,560
11,763 Depreciation on real estate and rental homes 30,109 28,656
Amortization of in-place leases 1,032 335 Cost of homes sales 7,119
8,281 Home selling expenses 925 834 General and administrative
7,373 7,407 Property rights initiatives and other 219 654 Interest
and related amortization 24,879 25,634 Income from
property operations, excluding deferrals and property management
135,617 127,264 Right-to-use contracts, deferred and sales and
marketing, deferred, net (691 ) (406 ) Property management (12,560
) (11,763 ) Income from property operations $ 122,366 $
115,095
EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND AMORTIZATION
(EBITDA) AND ADJUSTED EBITDA. EBITDA is defined as net income
or loss before interest income and expense, income taxes,
depreciation and amortization. We define Adjusted EBITDA as EBITDA
excluding the following non-operating income and expense items: a)
the financial impact of contingent consideration; b) gains and
losses from early debt extinguishment, including prepayment
penalties and defeasance costs; c) property acquisition and other
transaction costs related to mergers and acquisitions; d) GAAP
deferral of right-to-use contract upfront payments and related
commissions, net; e) impairments, if any; and f) other
miscellaneous non-comparable items. EBITDA and Adjusted EBITDA
provide us with an understanding of one aspect of earnings before
the impact of investing and financing charges. We believe that
EBITDA and Adjusted EBITDA may be useful to an investor in
evaluating our operating performance and liquidity because the
measures are widely used to measure a company’s operating
performance and they are used by rating agencies and other parties,
including lenders, to evaluate our creditworthiness.
The following table reconciles Consolidated net income to EBITDA
and Adjusted EBITDA (amounts in thousands):
Quarters Ended March 31, 2017
2016 Consolidated net income $ 63,075 $ 57,190 Interest
Income (1,770 ) (1,660 ) Depreciation on real estate assets and
rental homes 30,109 28,656 Amortization of in-place leases 1,032
335 Depreciation on corporate assets 289 279 Depreciation on
unconsolidated joint ventures 447 290
Interest and related amortization
24,879 25,634 EBITDA 118,061 110,724 Right-to-use
contract upfront payments, deferred, net 775 302 Right-to-use
contract commissions, deferred, net (84 ) 104 Transaction costs 104
200 Adjusted EBITDA $ 118,856 $ 111,330
CORE. The Core properties include properties we owned and
operated during all of 2016 and 2017. We believe Core is a measure
that is useful to investors for annual comparison as it removes the
fluctuations associated with acquisitions, dispositions and
significant transactions or unique situations.
ACQUISITIONS. The Acquisition properties include all
properties that were not owned and operated in 2016 and 2017. This
includes, but is not limited to, four properties acquired during
2016 and Tropical Palms RV Resort.
NON-REVENUE PRODUCING IMPROVEMENTS. Represents capital
expenditures that will not directly result in increased revenue or
expense savings and are primarily comprised of common area
improvements, furniture, and mechanical improvements.
FIXED CHARGES. Fixed charges consist of interest expense,
amortization of note premiums and debt issuance costs.
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