Continued Strong Performance; Preliminary
2018 Guidance
Equity LifeStyle Properties, Inc. (NYSE: ELS) (referred to
herein as “we,” “us,” and “our”) today announced results for the
quarter and nine months ended September 30, 2017. All per
share results are reported on a fully diluted basis unless
otherwise noted.
Financial Results for the Quarter and Nine Months Ended
September 30, 2017
For the quarter ended September 30, 2017, total revenues
increased $15.4 million, or 6.8 percent, to $241.6 million compared
to $226.2 million for the same period in 2016. Net income available
for Common Stockholders for the quarter ended September 30,
2017 increased $7.5 million, or $0.08 per Common Share, to $48.5
million, or $0.56 per Common Share, compared to $41.0 million, or
$0.48 per Common Share, for the same period in 2016.
For the nine months ended September 30, 2017, total
revenues increased $38.9 million, or 5.9 percent, to $695.3 million
compared to $656.4 million for the same period in 2016. Net income
available for Common Stockholders for the nine months ended
September 30, 2017 increased $17.8 million, or $0.17 per
Common Share, to $144.9 million, or $1.66 per Common Share,
compared to $127.1 million, or $1.49 per Common Share, for the same
period in 2016.
Non-GAAP Financial Measures and Portfolio Performance
For the quarter ended September 30, 2017, Funds from
Operations (“FFO”) available for Common Stock and OP Unit holders
increased $7.4 million, or $0.07 per Common Share, to $84.3 million
or $0.90 per Common Share, compared to $76.9 million, or $0.83 per
Common Share, for the same period in 2016. For the nine months
ended September 30, 2017, FFO available for Common Stock and
OP Unit holders increased $21.9 million, or $0.22 per Common Share,
to $252.3 million or $2.71 per Common Share, compared to $230.4
million, or $2.49 per Common Share, for the same period in
2016.
For the quarter ended September 30, 2017, Normalized Funds
from Operations (“Normalized FFO”) available for Common Stock and
OP Unit holders increased $7.9 million, or $0.08 per Common Share,
to $85.1 million, or $0.91 per Common Share, compared to $77.2
million, or $0.83 per Common Share, for the same period in 2016.
For the nine months ended September 30, 2017, Normalized FFO
available for Common Stock and OP Unit holders increased $22.1
million, or $0.22 per Common Share, to $253.4 million, or $2.72 per
Common Share, compared to $231.3 million, or $2.50 per Common
Share, for the same period in 2016.
For the quarter ended September 30, 2017, property
operating revenues, excluding deferrals, increased $16.0 million to
$227.3 million compared to $211.3 million for the same period in
2016. For the nine months ended September 30, 2017, property
operating revenues, excluding deferrals, increased $44.5 million to
$660.7 million compared to $616.2 million for the same period in
2016. For the quarter ended September 30, 2017, income from
property operations, excluding deferrals and property management,
increased $8.5 million to $128.1 million compared to $119.6 million
for the same period in 2016. For the nine months ended
September 30, 2017, income from property operations, excluding
deferrals and property management, increased $23.5 million to
$383.8 million compared to $360.3 million for the same period in
2016.
For the quarter ended September 30, 2017, Core property
operating revenues, excluding deferrals, increased approximately
7.0 percent and Core income from property operations, excluding
deferrals and property management, increased approximately 7.1
percent compared to the same period in 2016. For the nine months
ended September 30, 2017, Core property operating revenues,
excluding deferrals, increased approximately 5.6 percent and Core
income from property operations, excluding deferrals and property
management, increased approximately 5.2 percent compared to the
same period in 2016.
Investment Activity
As previously disclosed, we contributed $30 million to a joint
venture to acquire a 49% interest in the Loggerhead Marina
portfolio of 11 high quality marinas with over 2,300 slips located
in Florida. Suntex Marinas is the operator of the portfolio. The
contribution was funded with net proceeds from sales of common
stock under our at-the-market (“ATM”) program.
Balance Sheet Activity
During the quarter, we paid off one loan of approximately $6.9
million using available cash, with an interest rate of 6.47% per
annum, secured by one manufactured home community.
During the quarter, we sold 484,913 shares of common stock as
part of our ATM equity offering program at a weighted average price
per share of $86.69, resulting in net cash proceeds of
approximately $41.5 million.
On September 22, 2017, we closed on three loans with Freddie Mac
totaling $146.0 million. The loans had a stated interest rate of
4.07% per annum, 20 year maturities with 30 year principal
amortization, and are secured by three MH communities. We used the
proceeds from these loans to redeem the Series C Preferred
stock.
On September 25, 2017, we redeemed our 6.75% Series C Preferred
Stock for $138.4 million, including accrued dividends. In
connection with the redemption, we recorded expense of $0.8 million
for the original issuance costs associated with the Series C
Preferred Stock in computing Net income available for Common
Shareholders.
Hurricane Irma
Our Florida mainland properties resumed normal operations
shortly after Hurricane Irma. Two RV resorts in the Florida Keys
will reopen as utility services are restored. We are in the process
of estimating the financial impact of the storm on our properties
and we believe that we have adequate insurance, subject to
deductibles, including business interruption coverage. During the
quarter, we recorded expense of $3.7 million related to property
damage and restoration work that has been approved and/or completed
to date. In addition, we recorded revenue of $3.5 million related
to the expected insurance recovery from this loss.
About Equity LifeStyle Properties
We are a self-administered, self-managed real estate investment
trust (“REIT”) with headquarters in Chicago. As of October 16,
2017, we own or have an interest in 404 quality properties in 32
states and British Columbia consisting of 149,448 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, October 17, 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 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 Second Quarter 2018 Monday, July 23, 2018 Tuesday,
July 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 and 2018 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 on Form 10-Q.
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 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 212-885-4115 212-446-5600
johnp.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.
Financial Highlights
(In millions, except Common Stock and
OP Units outstanding and per share data, unaudited)
As of and for the Three Months Ended
September 30,2017
June 30,2017
March 31,2017
December 31,2016
September 30,2016
Operating Information Total
revenues $ 241.6 $ 221.3 $ 232.4 $ 214.0 $ 226.2 Net income $ 54.9
$ 44.5 $ 63.1 $ 42.4 $ 46.8 Net income available for Common
Stockholders $ 48.5 $ 39.5 $ 56.9 $ 37.0 $ 41.0 Adjusted EBITDA (1)
$ 111.5 $ 100.8 $ 118.9 $ 101.4 $ 103.4 FFO available for Common
Stock and OP Unit holders(1)(2) $ 84.3 $ 74.9 $ 93.1 $ 72.5 $ 76.9
Normalized FFO available for Common Stock and OP Unit holders(1)(2)
$ 85.1 $ 75.1 $ 93.2 $ 75.2 $ 77.2 Funds available for distribution
(FAD) available for Common Stock and OP Unit holders(1)(2) $ 74.0 $
63.5 $ 86.0 $ 65.8 $ 67.2
Common Stock Outstanding (In
thousands)
and Per Share Data
Common Stock and OP Units, end of the period 93,334 92,840 92,780
92,699 92,507 Weighted average Common Stock and OP Units
outstanding - fully diluted 93,324 93,063 93,011 92,965 92,910 Net
income per Common Share - fully diluted $ 0.56 $ 0.45 $ 0.65 $ 0.43
$ 0.48 FFO per Common Share - fully diluted $ 0.90 $ 0.81 $ 1.00 $
0.78 $ 0.83 Normalized FFO per Common Share - fully diluted $ 0.91
$ 0.81 $ 1.00 $ 0.81 $ 0.83 Dividends per Common Share $ 0.488 $
0.488 $ 0.488 $ 0.425 $ 0.425
Balance Sheet Total
assets $ 3,526 $ 3,485 $ 3,471 $ 3,479 $ 3,470 Total liabilities $
2,511 $ 2,386 $ 2,371 $ 2,397 $ 2,396
Market
Capitalization Total debt $ 2,200 $ 2,072 $ 2,078 $ 2,110 $
2,111 Total market capitalization (3) $ 10,141 $ 10,224 $ 9,364 $
8,930 $ 9,387
Ratios Total debt / total market
capitalization 21.7 % 20.3 % 22.2 % 23.6 % 22.5 % Total debt +
preferred stock / total market capitalization 21.7 % 21.6 % 23.6 %
25.2 % 23.9 % Total debt / Adjusted EBITDA (4) 5.1 4.9 5.0 5.1 5.2
Interest coverage (5) 4.4 4.3 4.2 4.1 4.1 Fixed charges + preferred
distributions coverage (6) 4.0 3.9 3.8 3.7 3.6
______________________ 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 18 for market
capitalization calculation as of September 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.
Balance Sheet
(In thousands, except share and per
share data)
September 30,2017
December 31, 2016 (unaudited) Assets
Investment in real estate: Land $ 1,167,620 $ 1,163,987 Land
improvements 2,940,500 2,893,759 Buildings and other depreciable
property 647,513 627,590 4,755,633 4,685,336
Accumulated depreciation (1,488,722 ) (1,399,531 ) Net investment
in real estate 3,266,911 3,285,805 Cash 77,395 56,340 Notes
receivable, net 50,080 34,520 Investment in unconsolidated joint
ventures 52,966 19,369 Deferred commission expense 31,608 31,375
Escrow deposits, goodwill, and other assets, net (1) 46,887
51,578
Total Assets $ 3,525,847
$ 3,478,987 Liabilities and Equity
Liabilities: Mortgage notes payable $ 1,981,604 $ 1,891,900 Term
loan 199,534 199,379 Accrued expenses and accounts payable (1)
106,688 89,864 Deferred revenue – upfront payments from
right-to-use contracts 85,254 81,484 Deferred revenue –
right-to-use annual payments 10,513 9,817 Accrued interest payable
7,969 8,379 Rents and other customer payments received in advance
and security deposits 73,609 76,906 Distributions payable 45,501
39,411
Total Liabilities 2,510,672
2,397,140 Equity: Stockholders’ Equity: Preferred stock,
$0.01 par value, 10,000,000 shares authorized as of September 30,
2017 and 9,945,539 shares authorized as of December 31, 2016; none
issued and outstanding. — — 6.75% Series C Cumulative Redeemable
Perpetual Preferred Stock, $0.01 par value, no shares authorized as
of September 30, 2017 and 54,461 shares authorized as of December
31, 2016; none issued and outstanding as of September 30, 2017 and
54,461 shares issued and outstanding as of December 31, 2016. —
136,144 Common stock, $0.01 par value, 200,000,000 shares
authorized as of September 30, 2017 and December 31, 2016;
87,499,669 and 85,529,386 shares issued and outstanding as of
September 30, 2017 and December 31, 2016, respectively 872 854
Paid-in capital 1,164,658 1,103,048 Distributions in excess of
accumulated earnings (213,771 ) (231,276 ) Accumulated other
comprehensive income (loss) — (227 ) Total Stockholders’
Equity 951,759 1,008,543 Non-controlling interests – Common OP
Units 63,416 73,304
Total Equity 1,015,175
1,081,847
Total Liabilities and Equity
$ 3,525,847 $ 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 Nine Months Ended September
30, September 30, 2017 2016
2017 2016 Revenues: Community base
rental income $ 123,177 $ 117,164 $ 365,833 $ 346,625 Rental home
income 3,592 3,484 10,829 10,572 Resort base rental income 58,471
54,486 169,594 154,652 Right-to-use annual payments 11,531 11,349
34,133 33,590 Right-to-use contracts current period, gross 4,208
3,672 11,212 9,290 Right-to-use contract upfront payments,
deferred, net (1,670 ) (1,327 ) (3,766 ) (2,427 ) Utility and other
income 26,295 21,174 69,071 61,490 Gross revenues from home sales
10,012 10,895 24,872 28,239 Brokered resale revenue and ancillary
services revenues, net 1,983 920 4,088 2,736 Interest income 1,974
1,767 5,542 5,052 Income from other investments, net 2,052
2,581 3,918 6,574 Total revenues 241,625
226,165 695,326 656,393
Expenses: Property operating
and maintenance 80,164 73,410 221,119 203,011 Rental home operating
and maintenance 1,704 1,768 4,912 4,874 Real estate taxes 14,006
13,467 41,986 39,534 Sales and marketing, gross 3,277 3,100 8,861
8,524 Right-to-use contract commissions, deferred, net (176 ) (200
) (372 ) (212 ) Property management 13,160 11,863 38,743 35,670
Depreciation on real estate assets and rental homes 30,493 29,518
90,849 87,203 Amortization of in-place leases 138 1,376 2,128 2,139
Cost of home sales 10,377 10,745 25,391 28,507 Home selling
expenses 1,447 909 3,301 2,548 General and administrative 7,505
7,653 23,339 23,315 Other expenses, including property rights
initiatives 324 855 814 2,036 Interest and related amortization
25,027 25,440 74,728 76,635 Total
expenses 187,446 179,904 535,799 513,784
Income before equity in income of unconsolidated joint
ventures 54,179 46,261 159,527 142,609 Equity in income of
unconsolidated joint ventures 686 496 2,876
2,142 Consolidated net income 54,865 46,757
162,403 144,751 Income allocated to
non-controlling interest-Common OP Units (3,286 ) (3,462 ) (9,825 )
(10,770 ) Perpetual preferred stock dividends and original issuance
costs (3,054 ) (2,297 ) (7,667 ) (6,910 )
Net income available
for Common Stockholders $ 48,525 $
40,998 $ 144,911 $
127,071
Non-GAAP Financial Measures
Third Quarter 2017 - Selected Non-GAAP
Financial Measures
(In millions, except per share data,
unaudited)
Quarter Ended
September 30,2017
Income from property operations, excluding deferrals and property
management - 2017 Core (1) $ 126.6 Income from property operations,
excluding deferrals and property management - Acquisitions (2) 1.5
Property management and general and administrative (excluding
transaction costs) (20.7 ) Other income and expenses 4.9 Financing
costs and other (27.3 )
Normalized FFO available for Common
Stock and OP Unit holders (3) 85.0 Preferred
stock original issuance costs (4) (0.8 )
FFO available for
Common Stock and OP Unit holders (3) $
84.2 Normalized FFO per Common Share - fully
diluted $ 0.91 FFO per Common Share - fully diluted $ 0.90
Normalized FFO available for Common Stock and OP Unit
holders (3) $ 85.0 Non-revenue producing
improvements to real estate (11.0 )
FAD available for Common
Stock and OP Unit holders (3) $ 74.0
Weighted average Common Stock and OP Units - fully
diluted 93.3 __________________ 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. 4.
During the quarter ended September 30, 2017, we redeemed our 6.75%
Series C Preferred Stock for $136.1 million. In connection with the
redemption, we recorded expense of $0.8 million for the original
issuance costs associated with the Series C Preferred Stock.
Reconciliation of Net Income to
Non-GAAP Financial Measures
(In thousands, except per share data,
unaudited)
Quarters Ended Nine Months Ended September
30, September 30, 2017 2016
2017 2016 Net income available for Common
Stockholders $ 48,525 $ 40,998
$ 144,911 $ 127,071 Income allocated to
Common OP Units 3,286 3,462 9,825 10,770 Right-to-use contract
upfront payments, deferred, net (1) 1,670 1,327 3,766 2,427
Right-to-use contract commissions, deferred, net (2) (176 ) (200 )
(372 ) (212 ) Depreciation on real estate assets 27,879 26,847
82,939 79,218 Depreciation on rental homes 2,614 2,671 7,910 7,985
Amortization of in-place leases 138 1,376 2,128 2,139 Depreciation
on unconsolidated joint ventures 360 373 1,171
968
FFO available for Common Stock and OP Unit
holders (3) 84,296 76,854 252,278
230,366 Transaction costs (4) — 327 324 925 Preferred stock
original issuance costs (5) 757 — 757
—
Normalized FFO available for Common Stock
and OP Unit holders(3) 85,053 77,181
253,359 231,291 Non-revenue producing improvements to
real estate (11,015 ) (10,004 ) (29,823 ) (28,321 )
FAD
available for Common Stock and OP Unit holders (3)
$ 74,038 $ 67,177
$ 223,536 $ 202,970
Net income available per Common Share - Basic
$ 0.56 $ 0.48 $ 1.67
$ 1.50 Net income available per Common Share -
Fully Diluted $ 0.56 $ 0.48
$ 1.66 $ 1.49 FFO per Common
Share & OP Units-Basic $ 0.91 $
0.83 $ 2.72 $ 2.51 FFO per
Common Share & OP Units-Fully Diluted $ 0.90
$ 0.83 $ 2.71 $ 2.49
Normalized FFO per Common Share & OP Units-Basic
$ 0.92 $ 0.84 $ 2.73
$ 2.52 Normalized FFO per Common Share & OP
Units-Fully Diluted $ 0.91 $ 0.83
$ 2.72 $ 2.50 Average Common
Stock - Basic 87,037 85,105 86,620 84,649 Average Common Stock and
OP Units - Basic 92,873 92,307 92,720 91,854 Average Common Stock
and OP Units - Fully Diluted 93,324 92,910 93,135 92,405
_____________________________ 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. 5. During the quarter ended September 30, 2017, we
redeemed our 6.75% Series C Preferred Stock for $136.1 million. In
connection with the redemption, we recorded expense of $0.8 million
for the original issuance costs associated with the Series C
Preferred Stock.
Consolidated Income from Property
Operations (1)
(In millions, except home site and
occupancy figures, unaudited)
Quarters Ended
Nine Months Ended September 30, September 30,
2017 2016 2017 2016
Community base rental income (2) $ 123.2 $ 117.2 $ 365.8 $ 346.6
Rental home income 3.6 3.5 10.8 10.6 Resort base rental income (3)
58.5 54.5 169.6 154.6 Right-to-use annual payments 11.5 11.3 34.1
33.6 Right-to-use contracts current period, gross 4.2 3.7 11.2 9.3
Utility and other income 26.3 21.1 69.2 61.5
Property operating revenues 227.3 211.3 660.7 616.2
Property operating, maintenance and real estate taxes 94.2 86.8
263.1 242.5 Rental home operating and maintenance 1.7 1.8 4.9 4.9
Sales and marketing, gross 3.3 3.1 8.9 8.5
Property operating expenses 99.2 91.7 276.9
255.9
Income from property operations, excluding
deferrals and property management (1) $
128.1 $ 119.6 $
383.8 $ 360.3
Manufactured home site figures and occupancy averages: Total
sites 71,113 70,999 71,049 70,507 Occupied sites 67,017 66,331
66,827 65,697 Occupancy % 94.2 % 93.4 % 94.1 % 93.2 % Monthly base
rent per site $ 613 $ 589 $ 608 $ 586
Resort base rental
income: Annual $ 33.6 $ 31.3 $ 98.6 91.6 Seasonal 5.0 4.2 28.4
24.6 Transient 19.9 19.0 42.6 38.4
Total resort base rental income
$ 58.5 $ 54.5 $ 169.6 $ 154.6
_________________________ 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 Nine Months Ended September
30, % September 30, % 2017
2016 Change (2) 2017 2016
Change (2) Community base rental income (3) $ 121.8 $
116.1 5.0 % $ 362.1 $ 345.3 4.9 % Rental home income 3.6 3.5 3.1 %
10.8 10.6 2.4 % Resort base rental income (4) 56.4 53.3 5.8 % 161.0
152.7 5.4 % Right-to-use annual payments 11.5 11.3 1.6 % 34.1 33.6
1.6 % Right-to-use contracts current period, gross 4.2 3.7 14.6 %
11.2 9.3 20.7 % Utility and other income 26.0 21.0
23.7 % 68.0 61.2 11.0 % Property operating revenues
223.5 208.9 7.0 % 647.2 612.7 5.6 % Property operating,
maintenance and real estate taxes 91.9 85.8 7.1 % 256.3 241.0 6.4 %
Rental home operating and maintenance 1.7 1.8 (3.5 )% 4.9 4.9 0.8 %
Sales and marketing, gross 3.3 3.1 5.7 % 8.9
8.5 3.9 % Property operating expenses 96.9 90.7
6.8 % 270.1 254.4 6.2 %
Income from
property operations, excluding deferrals and property
management (1) $ 126.6 $
118.2 7.1 % $ 377.1
$ 358.3 5.2 % Occupied
sites (5) 66,076 65,582 Core
manufactured home site figures and occupancy averages: Total
sites 69,985 69,980 69,981 69,983 Occupied sites 66,019 65,446
65,890 65,304 Occupancy % 94.3 % 93.5 % 94.2 % 93.3 % Monthly base
rent per site $ 615 $ 591 $ 611 $ 588
Resort base rental
income: Annual $ 32.7 $ 30.9 6.0 % $ 95.9 $ 90.8 5.5 % Seasonal
4.5 3.8 18.7 % 25.4 23.9 6.2 % Transient 19.2 18.6
2.7 % 39.8 38.0 4.7 % Total resort base rental income
$ 56.4 $ 53.3 5.8 % $ 161.0 $ 152.7 5.4
% ___________________________ 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 350 from 65,726 at December 31, 2016.
Acquisitions - Income from Property
Operations (1)
(In millions, unaudited)
QuarterEnded
Nine MonthsEnded
September 30,2017
September 30,2017
Community base rental income $ 1.4 $ 3.8 Resort base rental income
2.1 8.6 Utility income and other property income 0.3 1.1
Property operating revenues 3.8 13.5 Property operating
expenses 2.3 6.7
Income from property operations,
excluding deferrals and property management $ 1.5
$ 6.7 ______________________ 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 Nine Months Ended September
30, September 30, 2017 2016
2017 2016 Manufactured homes: New home
$ 7.1 $ 6.3 $ 20.7 $ 18.8 Used home 5.1 6.0 16.4
18.7 Rental operations revenues (1) 12.2 12.3 37.1 37.5
Rental operations expense 1.7 1.8 4.9 4.9
Income from rental operations 10.5 10.5 32.2 32.6 Depreciation on
rental homes 2.6 2.7 7.9 8.0
Income from
rental operations, net of depreciation(4) $
7.9 $ 7.8 $ 24.3
$ 24.6 Occupied rentals:
(2) New 2,492 2,316 Used 2,010 2,473
Total
occupied rental sites 4,502 4,789
As
of September 30, 2017 September 30, 2016 Cost
basis in rental homes: (3) Gross
Net ofDepreciation
Gross
Net ofDepreciation
New $ 131.4 $ 105.4 $ 123.9 $ 101.8 Used 44.6 24.8
52.6 34.2 Total rental homes $ 176.0 $ 130.3 $
176.5 $ 136.0 __________________________ 1. For the
quarters ended September 30, 2017 and 2016, approximately $8.7
million and $8.9 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
September 30, 2017 and 2016 are 254 and 157 homes rented through
our ECHO joint venture, respectively. For the nine months ended
September 30, 2017 and 2016, the rental home investment associated
with our ECHO joint venture totals approximately $9.2 million and
$5.7 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 September 30, 2017
and 2016, our investment in the ECHO joint venture was
approximately $15.5 million and $15.3 million, respectively. 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.
Total Sites and Home Sales
(In thousands, except sites and home
sale volumes, unaudited)
Summary of Total Sites as of September 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) 5,900
Total 149,400
Home Sales - Select Data Quarters Ended
Nine Months Ended September 30, September 30,
2017 2016 2017 2016 Total New Home
Sales Volume (3) 173 207 413 508
New Home Sales Volume - ECHO joint
venture
48 65 126 162 New Home Sales Gross Revenues(3) $ 7,233 $ 8,057 $
16,724 $ 19,500 Total Used Home Sales Volume 331 335 954 988
Used Home Sales Gross Revenues $ 2,779 $ 2,838 $ 8,148 $ 8,739
Brokered Home Resales Volume 239 182 659 585 Brokered Home
Resale Revenues, net $ 337 $ 276 $ 925 $ 884
__________________________ 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.
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 Ending Year Ending December 31,
2017 December 31, 2017 Income from
property operations, excluding deferrals and property management -
2017 Core (2) $ 122.5 $ 499.6 Income from property operations -
Acquisitions (3) 2.2 8.9 Property management and general and
administrative (19.5 ) (81.3 ) Other income and expenses 2.2 15.1
Financing costs and other (25.8 ) (107.4 )
Normalized FFO
available for Common Stock and OP Unit holders (4)
81.6 334.9 Preferred stock original issuance costs —
(0.8 ) Transaction costs — (0.3 ) Early debt retirement (2.7 )
(2.7 )
FFO available for Common Stock and OP Unit
holders (4) 78.9 331.1 Depreciation on
real estate and other (28.3 ) (114.6 ) Depreciation on rental homes
(2.6 ) (10.5 ) Deferral of right-to-use contract sales revenue and
commission, net (0.7 ) (4.1 ) Income allocated to non-controlling
interest-Common OP Units (3.0 ) (12.6 )
Net income
available for Common Stockholders $ 44.3
$ 189.3 Net income per
Common Share - fully diluted (5) $0.47 - $0.53 $2.13 - $2.19 FFO
per Common Share - fully diluted $0.81 - $0.87 $3.52 - $3.58
Normalized FFO per Common Share - fully diluted $0.84 - $0.90 $3.56
- $3.62 Weighted average Common Stock outstanding - fully
diluted 94.0 93.4 _____________________________________ 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 $117.8 million multiplied by an estimated
growth rate of 4.0% and $476.1 million multiplied by an estimated
growth rate of 4.9% for the quarter and year ending 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
FourthQuarter 2017
Year Ended
2017
December 31,2016
GrowthFactors (2)
December 31,2016
GrowthFactors (2)
Community base rental income $ 117.0 4.8 % $ 462.3 4.8 % Rental
home income 3.5 1.7 % 14.1 2.2 % Resort base rental income (3) 44.1
5.3 % 196.8 5.4 % Right-to-use annual payments 11.4 (1.0 )% 45.0
0.9 % Right-to-use contracts current period, gross 3.0 (15.2 )%
12.3 11.8 % Utility and other income 19.7 (2.7 )% 80.9
7.7 % Property operating revenues 198.7 3.5 % 811.4 5.1 %
Property operating, maintenance, and real estate taxes 76.4
3.1 % 317.3 5.6 % Rental home operating and maintenance 2.0 (8.2 )%
6.9 (1.8 )% Sales and marketing, gross 2.5 2.5 % 11.1
3.6 % Property operating expenses 80.9 2.8 % 335.3
5.4 %
Income from property operations, excluding deferrals and
property management $ 117.8 4.0
% $ 476.1 4.9 %
Resort base rental income: Annual $ 31.5 5.9 % $ 122.4 5.6 %
Seasonal 6.3 7.9 % 30.2 6.5 % Transient 6.3 — % 44.2
4.1 % Total resort base rental income
$ 44.1
5.3 % $ 196.8 5.4
%
2017 Assumptions Regarding Acquisition
Properties (1)
(In millions, unaudited)
Quarter Ending Year Ending
December 31,2017
(4)
December 31,2017
(4)
Community base rental income $ 1.4 $ 5.1 Resort base rental income
2.8 11.4 Utility income and other property income 0.3 1.5
Property operating revenues 4.5 18.0 Property operating,
maintenance, and real estate taxes 2.3 9.1 Property
operating expenses 2.3 9.1
Income from property
operations, excluding deferrals and property management
$ 2.2 $ 8.9
_____________________________________ 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.
Preliminary 2018 Guidance - Selected
Financial Data (1)
Our guidance acknowledges the existence of
volatile economic conditions, which may impact our current guidance
assumptions. Factors impacting 2018 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; and (ix) ongoing legal matters and related fees;
and (x) costs to restore property operations following storms or
other unplanned events.
(In millions, except per share data,
unaudited)
Year Ending December 31, 2018 Income from
property operations, excluding deferrals and property management -
2018 Core (2) $ 530.5 Income from property operations -
Acquisitions 0.5 Property management and general and administrative
(84.4 ) Other income and expenses 15.1 Financing costs and other
(100.4 )
Normalized FFO and FFO available for Common Stock and
OP Unit holders (3) 361.3 Depreciation on real
estate and other (113.3 ) Depreciation on rental homes (10.5 )
Deferral of right-to-use contract sales revenue and commission, net
(4.0 ) Income allocated to non-controlling interest-Common OP Units
(13.9 )
Net income available for Common Stockholders
$ 219.6 Net income per Common Share -
fully diluted (4) $2.43 - $2.53 FFO per Common Share - fully
diluted $3.79 - $3.89 Normalized FFO per Common Share - fully
diluted $3.79 - $3.89 Weighted average Common Shares
outstanding - fully diluted 94.1
____________________________________ 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 Shares, Normalized FFO per
common share, FFO available for Common Shares, FFO per common
share, Net income available for Common Shares and Net income per
common share could vary materially from amounts presented above if
any of our assumptions are incorrect. 2. See page 16 for 2018 Core
Guidance Assumptions. Amount represents estimated 2017 income from
property operations, excluding deferrals and property management,
from the 2018 Core properties of $508.1 million multiplied by an
estimated growth rate of 4.4% for the year ending December 31,
2018. 3. See Non-GAAP Financial Measure Definitions and Other Terms
at the end of the supplemental information for definitions of
Normalized FFO and FFO. 4. Net income per fully diluted Common
Share is calculated before Income allocated to Common OP Units.
Preliminary 2018 Core Guidance
Assumptions(1)
(In millions, unaudited)
Year Ending 2018 Growth
December 31, 2017
Factors (2)
Community base rental income $ 489.3 4.0 % Rental home income 14.4
(4.2 )% Resort base rental income (3) 218.8 4.9 % Right-to-use
annual payments 45.5 1.8 % Right-to-use contracts current period,
gross 13.8 3.6 % Utility and other income 88.5 (4.2 )%
Property operating revenues
870.3 3.1 %
Property operating, maintenance, and real estate taxes 343.9 1.3 %
Rental home operating and maintenance 6.8 (4.9 )% Sales and
marketing, gross 11.5 4.4 % Property operating expenses
362.2 1.3 %
Income from property operations, excluding
deferrals and property management $ 508.1
4.4 % Resort base rental income: Annual
$ 132.9 5.3 % Seasonal 36.1 3.0 % Transient 49.8 4.9 % Total
resort base rental income
$ 218.8 4.9
%
2018 Assumptions Regarding Acquisition
Properties(1)
(In millions, unaudited)
Year Ending
December 31, 2018 (4)
Community base rental income $ 0.8 Resort base rental income —
Utility income and other property income — Property operating
revenues 0.8 Property operating, maintenance, and real
estate taxes 0.3 Property operating expenses 0.3
Income from
property operations, excluding deferrals and property
management $ 0.5
____________________________________ 1. See Non-GAAP
Financial Measure Definitions and Other Terms at the end of the
supplemental information for definition of Core and Acquisition
properties. 2. Management’s estimate of the growth of property
operations in the 2018 Core Properties compared to estimated 2017
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,
Year Ending December 31,
2014 2015 2016 2017
(1) 2018 (1) Member Count (2) 96,130
102,413 104,728 106,900 108,100 Thousand Trails Camping Pass (TTC)
Origination (3) 18,187 25,544 29,576 31,100 32,800 TTC Sales 10,014
11,877 12,856 13,600 14,700 RV Dealer TTC Activations 8,173 13,667
16,720 17,500 18,100 Number of annuals (4) 5,142 5,470 5,756 5,800
6,100 Number of upgrade sales (5) 2,978 2,687 2,477 2,600 2,600
Right-to-use annual payments $ 44,860 $ 44,441 $ 45,036 $
45,500 $ 46,300 Resort base rental income from annuals $ 12,491 $
13,821 $ 15,413 $ 16,800 $ 18,400 Resort base rental income from
seasonals/transients $ 13,894 $ 15,795 $ 17,344 $ 18,200 $ 19,900
Upgrade contract initiations (6) $ 13,892 $ 12,783 $ 12,312 $
13,800 $ 14,300 Utility and other income $ 2,455 $ 2,430 $ 2,442 $
2,300 $ 2,200 ________________________________ 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. 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 September 30, 2017
Total Common Stock/Units % of Total Common
Stock/Units Total % of Total
% of Total Market Capitalization Secured Debt $ 2,000
90.9 % Unsecured Debt 200 9.1 %
Total Debt
(1) $ 2,200 100.0 % 21.7
% Common Stock 87,499,669 93.7 % OP Units 5,834,753
6.3 % Total Common Stock and OP Units 93,334,422
100.0 % Common Stock price at September 30, 2017 $ 85.08 Fair Value
of Common Stock and OP Units $ 7,941 100.0 %
Total
Equity (2) $ 7,941 100.0 %
78.3 % Total Market Capitalization
$ 10,141 100.0 %
_________________ 1. Excludes deferred financing costs of
approximately $18.9 million. 2. During the quarter we redeemed our
6.75% Series C Preferred Stock for $136.1 million.
Debt Maturity Schedule
Debt Maturity Schedule as of
September 30, 2017
(In thousands, unaudited)
Year
SecuredDebt
WeightedAverageInterestRate
UnsecuredDebt
WeightedAverageInterestRate
Total Debt
% ofTotalDebt
WeightedAverageInterestRate
2018 202,415 5.96 % — — 202,415 9.22 % 5.96 % 2019 198,240
6.27 % — — 198,240 9.03 % 6.27 % 2020 120,110 6.14 % 200,000 2.39 %
320,110 14.58 % 3.80 % 2021 187,913 5.01 % — — 187,913 8.56 % 5.01
% 2022 147,415 4.59 % — — 147,415 6.71 % 4.59 % 2023 109,329 5.10 %
— — 109,329 4.98 % 5.10 % 2024 — — % — — — — % — % 2025 106,138
3.45 % — — 106,138 4.83 % 3.45 % 2026 — — % — — — — % — %
Thereafter 924,703 4.24 % — — 924,703
42.10 % 4.24 %
Total $ 1,996,263
4.83 % $ 200,000 2.39 %
$ 2,196,263 100.0 % 4.61
% Note Premiums 3,800 —
3,800 Total Debt 2,000,063
200,000 2,200,063 Deferred Financing
Costs (18,458 ) (466 )
(18,924 ) Total Debt, net
1,981,604 4.73 % (1)
199,534 2.62 % $
2,181,138 4.53 % (1)
Average Years to Maturity 11.3 2.3 10.5
______________________ 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 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.
The following table reconciles Net income available for Common
Stockholders to Income from property operations (amounts in
thousands):
Quarters Ended Nine Months Ended
September 30, September 30, 2017
2016 2017 2016 Net income available for
Common Stockholders $ 48,525 $ 40,998 $ 144,911 $ 127,071 Perpetual
preferred stock dividends and original issuance costs 3,054 2,297
7,667 6,910 Income allocated to non-controlling interests - Common
OP Units 3,286 3,462 9,825 10,770 Equity in income of
unconsolidated joint ventures (686 ) (496 ) (2,876 ) (2,142 )
Income before equity in income of unconsolidated joint ventures $
54,179 $ 46,261 $ 159,527 $ 142,609 Right-to-use upfront payments,
deferred, net 1,670 1,327 3,766 2,427 Gross revenues from home
sales (10,012 ) (10,895 ) (24,872 ) (28,239 ) Brokered resale
revenues and ancillary services revenues, net (1,983 ) (920 )
(4,088 ) (2,736 ) Interest income (1,974 ) (1,767 ) (5,542 ) (5,052
) Income from other investments, net (2,052 ) (2,581 ) (3,918 )
(6,574 ) Right-to-use contract commissions, deferred, net (176 )
(200 ) (372 ) (212 ) Property management 13,160 11,863 38,743
35,670 Depreciation on real estate and rental homes 30,493 29,518
90,849 87,203 Amortization of in-place leases 138 1,376 2,128 2,139
Cost of homes sales 10,377 10,745 25,391 28,507 Home selling
expenses 1,447 909 3,301 2,548 General and administrative 7,505
7,653 23,339 23,315 Property rights initiatives and other 324 855
814 2,036
Interest and related amortization
25,027 25,440 74,728 76,635 Income from
property operations, excluding deferrals and property management
128,123 119,584 383,794 360,276 Right-to-use contracts, deferred
and sales and marketing, deferred, net (1,494 ) (1,127 ) (3,394 )
(2,215 ) Property management (13,160 ) (11,863 ) (38,743 ) (35,670
) Income from property operations $ 113,469 $ 106,594
$ 341,657 $ 322,391
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 Nine Months Ended
September 30, September 30, 2017
2016 2017 2016 Consolidated net income
$ 54,865 $ 46,757 $ 162,403 $ 144,751 Interest Income (1,974 )
(1,767 ) (5,542 ) (5,052 ) Depreciation on real estate assets and
rental homes 30,493 29,518 90,849 87,203 Amortization of in-place
leases 138 1,376 2,128 2,139 Depreciation on corporate assets 326
282 929 840 Depreciation on unconsolidated joint ventures 360 373
1,171 968 Interest and related amortization 25,027 25,440
74,728 76,635 EBITDA 109,235 101,979 326,666
307,484 Right-to-use contract upfront payments, deferred, net 1,670
1,327 3,766 2,427 Right-to-use contract commissions, deferred, net
(176 ) (200 ) (372 ) (212 ) Transaction costs — 327 324 925
Preferred stock original issuance costs 757 —
757 — Adjusted EBITDA $ 111,486
$ 103,433 $ 331,141 $ 310,624
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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171016006165/en/
Equity LifeStyle Properties, Inc.Paul Seavey, 800-247-5279
Equity Lifestyle Propert... (NYSE:ELS)
Historical Stock Chart
From Mar 2024 to Apr 2024
Equity Lifestyle Propert... (NYSE:ELS)
Historical Stock Chart
From Apr 2023 to Apr 2024