Strong Performance Drives 2019 Guidance
Increase and Preliminary 2020 Guidance Growth Rates
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, 2019. All Common Stock
and OP units as well as per share results reflect the two-for-one
stock split that was completed on October 15, 2019. Additionally,
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, 2019
For the quarter ended September 30, 2019, total revenues
increased $14.5 million, or 5.6 percent, to $271.2 million compared
to $256.7 million for the same period in 2018. For the quarter
ended September 30, 2019, net income available for Common
Stockholders increased $8.4 million, or $0.04 per Common Share, to
$64.5 million, or $0.35 per Common Share, compared to $56.1
million, or $0.31 per Common Share, for the same period in
2018.
For the nine months ended September 30, 2019, total revenues
increased $35.4 million, or 4.8 percent, to $778.6 million compared
to $743.2 million for the same period in 2018. For the nine months
ended September 30, 2019, net income available for Common
Stockholders increased $61.8 million, or $0.33 per Common Share, to
$224.2 million, or $1.24 per Common Share, compared to $162.4
million, or $0.91 per Common Share, for the same period in
2018.
Non-GAAP Financial Measures and Portfolio Performance
For the quarter ended September 30, 2019, Funds from Operations
(“FFO”) available for Common Stock and OP Unit holders increased
$10.9 million, or $0.05 per Common Share, to $108.6 million, or
$0.56 per Common Share, compared to $97.7 million, or $0.51 per
Common Share, for the same period in 2018. For the nine months
ended September 30, 2019, FFO available for Common Stock and OP
Unit holders increased $24.9 million, or $0.12 per Common Share, to
$306.4 million, or $1.60 per Common Share, compared to $281.5
million, or $1.48 per Common Share, for the same period in
2018.
For the quarter ended September 30, 2019, Normalized Funds from
Operations (“Normalized FFO”) available for Common Stock and OP
Unit holders increased $8.8 million, or $0.04 per Common Share, to
$102.7 million, or $0.53 per Common Share, compared to $93.9
million, or $0.49 per Common Share, for the same period in 2018.
For the nine months ended September 30, 2019, Normalized FFO
available for Common Stock and OP Unit holders increased $26.7
million, or $0.13 per Common Share, to $302.3 million, or $1.58 per
Common Share, compared to $275.6 million, or $1.45 per Common
Share, for the same period in 2018.
For the quarter ended September 30, 2019, property operating
revenues, excluding deferrals, increased $14.6 million to $256.2
million compared to $241.6 million for the same period in 2018. For
the nine months ended September 30, 2019, property operating
revenues, excluding deferrals, increased $43.9 million to $747.8
million compared to $703.9 million for the same period in 2018. For
the quarter ended September 30, 2019, income from property
operations, excluding deferrals and property management, increased
$6.9 million to $145.3 million compared to $138.4 million for the
same period in 2018. For the nine months ended September 30, 2019,
income from property operations, excluding deferrals and property
management, increased $25.5 million to $434.4 million compared to
$408.9 million for the same period in 2018.
For the quarter ended September 30, 2019, Core property
operating revenues, excluding deferrals, increased approximately
4.8 percent and Core income from property operations, excluding
deferrals and property management, increased approximately 5.1
percent compared to the same period in 2018. For the nine months
ended September 30, 2019, Core property operating revenues,
excluding deferrals, increased approximately 4.6 percent and Core
income from property operations, excluding deferrals and property
management, increased approximately 5.1 percent compared to the
same period in 2018.
Investment Activity
On September 10, 2019, we completed the acquisition of the
remaining interest in the Loggerhead joint venture that owns 11
marinas for a purchase price of approximately $49.0 million. As
part of the acquisition, we also funded the joint venture's
repayment of its non-transferable debt of approximately $72.0
million. The transaction was funded with proceeds from our
unsecured line of credit. Following the consummation of the
transaction, we own 100% of the marinas.
About Equity LifeStyle Properties
We are a self-administered, self-managed real estate investment
trust (“REIT”) with headquarters in Chicago. As of October 21,
2019, we own or have an interest in 413 quality properties in 33
states and British Columbia consisting of 156,081 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 22, 2019, at 10:00 a.m.
Central Time. Please visit the Investor Relations 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 2019
Monday, January 27, 2020
Tuesday, January 28, 2020 10:00 a.m.
CT
First Quarter 2020
Monday, April 20, 2020
Tuesday, April 21, 2020 10:00 a.m. CT
Second Quarter 2020
Monday, July 20, 2020
Tuesday, July 21, 2020 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 and real estate market conditions,
our ability to retain 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 2019 and 2020,
including estimated net income, FFO and Normalized FFO;
- our ability to manage counterparty risk;
- our ability to renew our insurance policies at existing rates
and on consistent terms;
- in the age-qualified properties, home sales results could be
impacted by the ability of potential home buyers to sell their
existing residences as well as by financial, credit and capital
markets volatility;
- results from home sales and occupancy will continue to be
impacted by local economic conditions, lack of affordable
manufactured home financing and competition from alternative
housing options including site-built single-family housing;
- impact of government intervention to stabilize site-built
single-family housing and not manufactured housing;
- effective integration of recent acquisitions and our estimates
regarding the future performance of recent acquisitions;
- the completion of future transactions in their entirety, if
any, and timing and effective integration with respect
thereto;
- unanticipated costs or unforeseen liabilities associated with
recent acquisitions;
- ability to obtain financing or refinance existing debt on
favorable terms or at all;
- the effect of interest rates;
- the effect from any breach of our, or any of our vendors', data
management systems;
- the dilutive effects of issuing additional securities;
- 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 the “Risk
Factors” section 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)
Bank of America Merrill Lynch Global
Research
BMO Capital Markets
Citi Research
Jeffrey Spector/ Joshua Dennerlein
John Kim
Michael Bilerman/ Nick Joseph
646-855-1363
212-885-4115
212-816-1383
jeff.spector@baml.com
johnp.kim@bmo.com
michael.bilerman@citi.com
joshua.dennerlein@baml.com
nicholas.joseph@citi.com
Evercore ISI
Green Street Advisors
Robert W. Baird & Company
Steve Sakwa/ Samir Khanal
John Pawlowski
Drew T. Babin
212-466-5600
949-640-8780
215-553-7816
steve.sakwa@evercoreisi.com
jpawlowski@greenst.com
dbabin@rwbaird.com
samir.khanal@evercoreisi.com
Wells Fargo Securities
Todd Stender
562-637-1371
todd.stender@wellsfargo.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 (adjusted for stock split),
unaudited)
As of and for the Three Months
Ended
Sept 30, 2019
June 30, 2019
March 31, 2019
Dec 31, 2018
Sept 30, 2018
Operating Information
Total revenues
$
271.2
$
248.4
$
259.1
$
243.5
$
256.7
Net income
$
68.2
$
49.1
$
120.5
$
53.4
$
59.7
Net income available for Common
Stockholders
$
64.5
$
46.4
$
113.3
$
50.2
$
56.1
Adjusted EBITDAre (1)
$
127.0
$
117.7
$
133.3
$
117.9
$
119.5
FFO available for Common Stock and OP Unit
holders (1)(2)
$
108.6
$
89.8
$
108.0
$
90.4
$
97.7
Normalized FFO available for Common Stock
and OP Unit holders (1)(2)
$
102.7
$
91.9
$
107.7
$
92.3
$
93.9
Funds available for distribution ("FAD")
available for Common Stock and OP Unit holders (1)(2)
$
88.4
$
79.1
$
97.6
$
80.4
$
82.1
Common Stock and OP Units Outstanding
(In thousands) and Per Share Data
Common Stock and OP Units, end of the
period
192,574
192,562
191,470
191,334
190,986
Weighted average Common Stock and OP Units
outstanding - Fully Diluted
192,400
191,860
191,248
191,154
190,526
Net income per Common Share - Fully
Diluted (3)
$
0.35
$
0.26
$
0.63
$
0.28
$
0.31
FFO per Common Share and OP Unit - Fully
Diluted
$
0.56
$
0.47
$
0.56
$
0.47
$
0.51
Normalized FFO per Common Share and OP
Unit - Fully Diluted
$
0.53
$
0.48
$
0.56
$
0.48
$
0.49
Dividends per Common Share
$
0.3063
$
0.3063
$
0.3063
$
0.2750
$
0.2750
Balance Sheet
Total assets
$
4,136
$
4,014
$
4,009
$
3,926
$
3,855
Total liabilities
$
2,816
$
2,707
$
2,752
$
2,732
$
2,665
Market Capitalization
Total debt (4)
$
2,406
$
2,300
$
2,372
$
2,386
$
2,318
Total market capitalization (5)
$
15,270
$
13,983
$
13,315
$
11,678
$
11,528
Ratios
Total debt / total market
capitalization
15.8
%
16.4
%
17.8
%
20.4
%
20.1
%
Total debt / Adjusted EBITDAre (6)
4.9
4.7
4.9
5.1
5.1
Interest coverage (7)
4.8
4.7
4.6
4.5
4.4
Fixed charges + preferred distributions
coverage (8)
4.7
4.6
4.5
4.5
4.4
______________________
1.
See Non-GAAP Financial Measures
Definitions and Other Terms at the end of the supplemental
information for definitions of Adjusted EBITDAre, FFO, Normalized
FFO and FAD and a reconciliation of Consolidated net income to
Adjusted EBITDAre.
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.
Net income per Common Share - Fully
Diluted is calculated before Income allocated to non-controlling
interest - Common OP Units.
4.
Excludes deferred financing costs of
approximately $24.6 million as of September 30, 2019.
5.
See page 18 for market capitalization as
of September 30, 2019.
6.
Calculated using trailing twelve months
Adjusted EBITDAre.
7.
Calculated by dividing trailing twelve
months Adjusted EBITDAre by the interest expense incurred during
the same period.
8.
See Non-GAAP Financial Measures
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 EBITDAre by
the sum of fixed charges and preferred stock dividends during the
same period.
Consolidated Balance
Sheets
(In thousands, except share and per
share data (adjusted for stock split))
September 30, 2019
December 31, 2018
(unaudited)
Assets
Investment in real estate:
Land
$
1,516,956
$
1,408,832
Land improvements
3,290,312
3,143,745
Buildings and other depreciable
property
870,511
720,900
5,677,779
5,273,477
Accumulated depreciation
(1,739,285
)
(1,631,888
)
Net investment in real estate
3,938,494
3,641,589
Cash and restricted cash
42,386
68,974
Notes receivable, net
37,228
35,041
Investment in unconsolidated joint
ventures
20,339
57,755
Deferred commission expense
40,953
40,308
Other assets, net
56,551
46,227
Assets held for sale, net
—
35,914
Total Assets
$
4,135,951
$
3,925,808
Liabilities and Equity
Liabilities:
Mortgage notes payable, net
$
2,062,736
$
2,149,726
Term loan, net
198,868
198,626
Unsecured line of credit
120,000
—
Accounts payable and other liabilities
143,102
102,854
Deferred revenue – upfront payments from
right-to-use contracts (membership upgrade sales)
124,577
116,363
Deferred revenue – right-to-use annual
payments (membership subscriptions)
11,395
10,055
Accrued interest payable
8,410
8,759
Rents and other customer payments received
in advance and security deposits
88,094
81,114
Distributions payable
58,976
52,617
Liabilities related to assets held for
sale
—
12,350
Total Liabilities
2,816,158
2,732,464
Equity:
Preferred stock, $0.01 par value,
10,000,000 shares authorized as of September 30, 2019 and December
31, 2018; none issued and outstanding.
—
—
Common stock, $0.01 par value, 400,000,000
and 200,000,000 shares authorized as of September 30, 2019 and
December 31, 2018, respectively; 182,080,186 and 179,842,036 shares
issued and outstanding as of September 30, 2019 and December 31,
2018, respectively.
1,802
1,792
Paid-in capital
1,399,961
1,328,495
Distributions in excess of accumulated
earnings
(153,505
)
(211,034
)
Accumulated other comprehensive income
(loss)
(499
)
2,299
Total Stockholders’ Equity
1,247,759
1,121,552
Non-controlling interests – Common OP
Units
72,034
71,792
Total Equity
1,319,793
1,193,344
Total Liabilities and Equity
$
4,135,951
$
3,925,808
Consolidated Income
Statements
(In thousands, unaudited)
Quarters Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Revenues:
Rental income
$
225,116
$
211,102
$
660,689
$
617,250
Right-to-use annual payments (membership
subscriptions)
13,150
12,206
38,052
35,616
Right-to-use contracts current period,
gross (membership upgrade sales)
5,730
4,863
14,609
11,969
Right-to-use contract upfront payments,
deferred, net
(3,530
)
(2,883
)
(8,213
)
(6,189
)
Other income
11,263
13,419
31,898
38,991
Gross revenues from home sales
8,438
9,339
22,738
26,753
Brokered resale and ancillary services
revenues, net
2,133
1,362
4,564
3,380
Interest income
1,831
1,846
5,385
5,658
Income from other investments, net
7,029
5,421
8,894
9,774
Total revenues
271,160
256,675
778,616
743,202
Expenses:
Property operating and maintenance
90,765
86,349
253,581
244,401
Real estate taxes
15,166
13,240
45,596
40,815
Sales and marketing, gross
4,063
3,568
11,686
9,685
Right-to-use contract commissions,
deferred, net
(313
)
(458
)
(893
)
(744
)
Property management
14,605
13,589
42,675
40,742
Depreciation and amortization
37,032
34,980
112,785
101,699
Cost of home sales
8,434
9,742
23,230
27,948
Home selling expenses
1,033
1,101
3,218
3,149
General and administrative
8,710
8,816
27,844
26,523
Other expenses
1,460
386
2,427
1,096
Early debt retirement
—
—
1,491
—
Interest and related amortization
25,547
26,490
77,964
78,478
Total expenses
206,502
197,803
601,604
573,792
Gain on sale of real estate, net
—
—
52,507
—
Income before equity in income of
unconsolidated joint ventures
64,658
58,872
229,519
169,410
Equity in income of unconsolidated joint
ventures
3,518
788
8,277
3,596
Consolidated net income
68,176
59,660
237,796
173,006
Income allocated to non-controlling
interests – Common OP Units
(3,715
)
(3,590
)
(13,617
)
(10,569
)
Redeemable perpetual preferred stock
dividends
—
—
(8
)
(8
)
Net income available for Common
Stockholders
$
64,461
$
56,070
$
224,171
$
162,429
Non-GAAP Financial Measures
This document contains certain non-GAAP measures used by
management that we believe are helpful in understanding our
business. We believe investors should review these non-GAAP
measures along with GAAP net income and cash flows 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 flows 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. For definitions and
reconciliations of non-GAAP measures to our financial statements as
prepared under GAAP, please refer to both Reconciliation of Net
Income to Non-GAAP Financial Measures on page 7 and Non-GAAP
Financial Measures Definitions and Reconciliations on pages 20 -
22.
Selected Non-GAAP Financial
Measures
(In millions, except per share data
(adjusted for stock split), unaudited)
Quarter Ended
September 30, 2019
Income from property operations, excluding
deferrals and property management - 2019 Core (1)
$
140.5
Income from property operations, excluding
deferrals and property management - Non-Core (1)
4.8
Property management and general and
administrative
(23.3
)
Other income and expenses
6.2
Interest and related amortization
(25.5
)
Normalized FFO available for Common
Stock and OP Unit holders (2)
102.7
Insurance proceeds due to catastrophic
weather event (3)
5.9
FFO available for Common Stock and OP
Unit holders (2)
$
108.6
Normalized FFO per Common Share and OP
Unit - Fully Diluted
$0.53
FFO per Common Share and OP Unit - Fully
Diluted
$0.56
Normalized FFO available for Common
Stock and OP Unit holders (2)
$
102.7
Non-revenue producing improvements to real
estate (2)
(14.3
)
FAD available for Common Stock and OP
Unit holders (2)
$
88.4
Weighted average Common Stock and OP Units
- Fully Diluted
192.4
__________________________
1.
See page 9 for details of the Core Income
from Property Operations, excluding deferrals and property
management. See page 10 for details of the Non-Core Income from
Property Operations, excluding deferrals and property
management.
2.
See page 7 for a reconciliation of Net
income available for Common Stockholders to 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.
Represents insurance recovery revenue from
reimbursement for capital expenditures related to Hurricane
Irma.
Reconciliation of Net Income
to Non-GAAP Financial Measures
(In thousands, except per share data
(adjusted for stock split), unaudited)
Quarters Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Net income available for Common
Stockholders
$
64,461
$
56,070
$
224,171
$
162,429
Income allocated to non-controlling
interests – Common OP Units
3,715
3,590
13,617
10,569
Right-to-use contract upfront payments,
deferred, net
3,530
2,883
8,213
6,189
Right-to-use contract commissions,
deferred, net
(313
)
(458
)
(893
)
(744
)
Depreciation and amortization
37,032
34,980
112,785
101,699
Depreciation on unconsolidated joint
ventures
174
651
1,047
1,390
Gain on sale of real estate, net
—
—
(52,507
)
—
FFO available for Common Stock and OP
Unit holders
108,599
97,716
306,433
281,532
Early debt retirement
—
—
2,085
—
Insurance proceeds due to catastrophic
weather event and other, net (1)
(5,856
)
(3,833
)
(6,205
)
(5,925
)
Normalized FFO available for Common
Stock and OP Unit holders
102,743
93,883
302,313
275,607
Non-revenue producing improvements to real
estate
(14,357
)
(11,790
)
(37,270
)
(32,965
)
FAD available for Common Stock and OP
Unit holders
$
88,386
$
82,093
$
265,043
$
242,642
Net income available per Common Share -
Basic
$
0.35
$
0.31
$
1.24
$
0.91
Net income available per Common Share -
Fully Diluted (2)
$
0.35
$
0.31
$
1.24
$
0.91
FFO per Common Share and OP Unit -
Basic
$
0.57
$
0.51
$
1.60
$
1.49
FFO per Common Share and OP Unit -
Fully Diluted
$
0.56
$
0.51
$
1.60
$
1.48
Normalized FFO per Common Share and OP
Unit - Basic
$
0.53
$
0.49
$
1.58
$
1.46
Normalized FFO per Common Share and OP
Unit - Fully Diluted
$
0.53
$
0.49
$
1.58
$
1.45
Average Common Stock - Basic
181,649
178,400
180,515
177,520
Average Common Stock and OP Units -
Basic
192,145
189,942
191,599
189,138
Average Common Stock and OP Units - Fully
Diluted
192,400
190,526
191,840
189,654
______________________
1.
Represents insurance recovery revenue from reimbursement for
capital expenditures related to Hurricane Irma.
2.
Net income per fully diluted Common Share is calculated before
Income allocated to non-controlling interest - Common OP Units.
Consolidated Income from
Property Operations (1)
(In millions, except home site and
occupancy figures, unaudited)
Quarters Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Community base rental income (2)
$
137.6
$
130.7
$
409.1
$
386.1
Rental home income
3.8
3.5
11.0
10.6
Resort and marina base rental income
(3)
71.7
64.4
204.8
183.8
Right-to-use annual payments (membership
subscriptions)
13.1
12.2
38.0
35.6
Right-to-use contracts current period,
gross (membership upgrade sales)
5.7
4.9
14.6
12.0
Utility and other income (4)
24.3
25.9
70.3
75.8
Property operating revenues
256.2
241.6
747.8
703.9
Property operating, maintenance and real
estate taxes (5)
105.3
97.7
297.7
280.3
Rental home operating and maintenance
1.6
1.9
4.1
5.0
Sales and marketing, gross
4.0
3.6
11.6
9.7
Property operating expenses
110.9
103.2
313.4
295.0
Income from property operations,
excluding deferrals and property management (1)
$
145.3
$
138.4
$
434.4
$
408.9
Manufactured home site figures and
occupancy averages:
Total sites
72,008
72,221
72,121
71,782
Occupied sites
68,352
68,330
68,419
67,857
Occupancy %
94.9
%
94.6
%
94.9
%
94.5
%
Monthly base rent per site
$
671
$
638
$
664
$
632
Resort and marina base rental
income:
Annual
$
42.6
$
37.4
$
122.4
$
109.2
Seasonal
5.4
4.9
32.2
29.0
Transient
23.7
22.1
50.2
45.6
Total resort and marina base rental
income
$
71.7
$
64.4
$
204.8
$
183.8
____________________
1.
Excludes property management and the GAAP
deferral of right-to-use contract upfront payments and related
commissions, net.
2.
See the manufactured home site figures and
occupancy averages included below within this table.
3.
See resort and marina base rental income
detail included below within this table.
4.
Includes Hurricane Irma insurance recovery
revenues of $0.2 million and $0.8 million, which we have identified
as business interruption related to Non-Core properties for the
quarter and nine months ended September 30, 2019, respectively, and
Hurricane Irma insurance recovery revenues of $1.3 million and $6.5
million, of which we have identified $1.2 million and $3.7 million
as business interruption related to Non-Core properties, for the
quarter and nine months ended September 30, 2018, respectively.
5.
Property operating, maintenance and real
estate taxes includes bad debt expense for the quarters and nine
months ended September 30, 2019 and 2018.
Property operating, maintenance and real
estate taxes includes debris removal and cleanup costs related to
Hurricane Irma of $0.1 million and $2.6 million for the quarter and
nine months ended September 30, 2018, respectively.
Core Income from Property
Operations (1)
(In millions, except home site and
occupancy figures, unaudited)
Quarters Ended September
30,
Nine Months Ended September
30,
2019
2018
Change (2)
2019
2018
Change (2)
Community base rental income (3)
$
133.8
$
126.9
5.4
%
$
397.2
$
377.6
5.2
%
Rental home income
3.8
3.2
18.4
%
10.9
9.7
12.4
%
Resort base rental income (4)
65.5
62.6
4.5
%
187.6
179.9
4.3
%
Right-to-use annual payments (membership
subscriptions)
13.1
12.2
7.7
%
38.0
35.6
6.8
%
Right-to-use contracts current period,
gross
(membership upgrade sales)
5.7
4.9
17.8
%
14.6
12.0
22.0
%
Utility and other income (5)
23.4
24.3
(3.7
)%
67.8
70.2
(3.5
)%
Property operating revenues
245.3
234.1
4.8
%
716.1
685.0
4.6
%
Property operating, maintenance and real
estate taxes (6)
99.2
95.1
4.3
%
282.7
273.1
3.5
%
Rental home operating and maintenance
1.6
1.8
(10.8
)%
4.1
4.7
(12.9
)%
Sales and marketing, gross
4.0
3.6
13.8
%
11.6
9.7
20.7
%
Property operating expenses
104.8
100.5
4.4
%
298.4
287.5
3.8
%
Income from property operations,
excluding deferrals and property management (1)
$
140.5
$
133.6
5.1
%
$
417.7
$
397.5
5.1
%
Occupied sites (7)
66,573
66,161
Core manufactured home site figures and
occupancy averages:
Total sites
69,693
69,568
69,634
69,546
Occupied sites
66,482
66,061
66,394
65,996
Occupancy %
95.4
%
95.0
%
95.3
%
94.9
%
Monthly base rent per site
$
671
$
640
$
665
$
636
Resort base rental income:
Annual
$
39.0
$
36.7
6.2
%
$
114.6
$
108.0
6.1
%
Seasonal
4.6
4.4
3.9
%
28.9
28.1
3.2
%
Transient
21.9
21.5
1.8
%
44.1
43.8
0.5
%
Total resort base rental income
$
65.5
$
62.6
4.5
%
$
187.6
$
179.9
4.3
%
______________________
1.
Excludes property management and the GAAP
deferral of right-to-use contract upfront payments and related
commissions, net.
2.
Calculations prepared using actual results
without rounding.
3.
See Core manufactured home site figures
and occupancy averages included below within this table.
4.
See Core resort base rental income detail
included below within this table.
5.
Includes Hurricane Irma insurance recovery
revenues of $2.4 million for the nine months ended September 30,
2018.
6.
Property operating, maintenance and real
estate taxes includes bad debt expense for the quarters and nine
months ended September 30, 2019 and 2018. Property operating,
maintenance and real estate taxes includes debris removal and
cleanup costs related to Hurricane Irma of $2.2 million for the
nine months ended September 30, 2018.
7.
Occupied sites are presented as of the end
of the period. Occupied sites have increased by 262 from 66,311 at
December 31, 2018.
Non-Core Income from Property
Operations (1)
(In millions, unaudited)
Quarter Ended
Nine Months Ended
September 30, 2019
September 30, 2019
Community base rental income
$
3.8
$
11.9
Rental home income
—
0.1
Resort and marina base rental income
6.2
17.2
Utility and other income (2)
0.9
2.5
Property operating revenues
10.9
31.7
Property operating expenses (3)
6.1
15.0
Income from property operations,
excluding deferrals and property management (1)
$
4.8
$
16.7
______________________
1.
Excludes property management and the GAAP
deferral of right-to-use contract upfront payments and related
commissions, net.
2.
Utility and other income includes
Hurricane Irma insurance recovery revenues of $0.2 million and $0.8
million, which we have identified as business interruption for the
quarter and nine months ended September 30, 2019, respectively.
3.
Property operating expenses include bad
debt expense for the quarter and nine months ended September 30,
2019.
Income from Rental Home
Operations
(In millions, except occupied rentals,
unaudited)
Quarters Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Manufactured homes:
Rental operations revenues (1)
$
11.6
$
10.8
$
34.2
$
33.0
Rental operations expense
1.6
1.8
4.1
4.7
Income from rental operations
10.0
9.0
30.1
28.3
Depreciation on rental homes (2)
2.7
2.3
7.6
6.9
Income from rental operations, net of
depreciation
$
7.3
$
6.7
$
22.5
$
21.4
Occupied rentals: (3)
New
3,073
2,622
Used
913
1,323
Total occupied rental sites
3,986
3,945
As of September 30,
2019
As of September 30,
2018
Cost basis in rental homes: (4)
Gross
Net of Depreciation
Gross
Net of Depreciation
New
$
216.2
$
182.4
$
147.0
$
125.5
Used
23.4
10.4
32.1
16.3
Total rental homes
$
239.6
$
192.8
$
179.1
$
141.8
______________________
1.
For both quarters ended September 30, 2019
and 2018, approximately $7.8 million and $7.6 million,
respectively, of the rental operations revenue is included in the
Community base rental income in the Core Income from Property
Operations on page 9. For the nine months ended September 30, 2019
and 2018, approximately $23.4 million and $23.3 million,
respectively, of the rental operations revenue is included in the
Community base rental income in the Core Income from Property
Operations on page 9.The remainder of the rental operations revenue
is included in Rental home income for the quarters and nine months
ended September 30, 2019 and 2018 in the Core Income from Property
Operations on page 9.
2.
Depreciation on rental homes in our Core
portfolio is included in Depreciation and amortization in the
Consolidated Income Statements on page 4.
3.
Occupied rentals as of the end of the
period in our Core portfolio. Included in the quarters ended
September 30, 2019 and 2018 were 294 and 265 homes rented through
our ECHO joint venture, respectively. For the quarters ended
September 30, 2019 and 2018, the rental home investment associated
with our ECHO joint venture totaled approximately $10.7 million and
$9.4 million, respectively.
4.
Includes both occupied and unoccupied
rental homes in our Core portfolio. New home cost basis does not
include the costs associated with our ECHO joint venture. At
September 30, 2019 and 2018, our investment in the ECHO joint
venture was approximately $16.7 million and $16.1 million,
respectively.
Total Sites and Home
Sales
(In thousands, except sites and home
sale volumes, unaudited)
Summary of Total Sites as of September
30, 2019
Sites
Community sites
72,100
Resort sites:
Annuals
30,400
Seasonal
11,300
Transient
12,100
Marina slips
2,300
Right-to-use Membership (1)
24,300
Joint Ventures (2)
3,600
Total
156,100
Home Sales - Select Data
Quarters Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Total New Home Sales Volume (3)
128
141
336
417
New Home Sales Volume - ECHO joint
venture
19
31
50
74
New Home Sales Gross Revenues (3)
$
6,864
$
7,048
$
17,492
$
20,643
Total Used Home Sales Volume
198
304
627
842
Used Home Sales Gross Revenues
$
1,574
$
2,291
$
5,246
$
6,110
Brokered Home Resales Volume
270
231
675
677
Brokered Home Resale Revenues, net
$
420
$
358
$
1,077
$
1,009
______________________
1.
Sites primarily utilized by approximately
117,600 members. Includes approximately 5,900 sites rented on an
annual basis.
2.
Joint ventures have approximately 2,700
annual Sites, 400 seasonal Sites and 500 transient Sites.
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.
2019 Guidance - Selected
Financial Data (1)
Our guidance acknowledges the existence of
volatile economic conditions, which may impact our current guidance
assumptions. Factors impacting 2019 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 and
marina sites; (iii) scheduled or implemented rate increases on
community, resort and marina 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
(adjusted for stock split), unaudited)
Quarter Ending
Year Ending
December 31, 2019
December 31, 2019
Income from property operations, excluding
deferrals and property management - Core (2)
$
139.4
$
557.2
Income from property operations - Non-Core
(3)
6.3
23.0
Property management and general and
administrative
(22.6
)
(93.1
)
Other income and expenses
1.6
17.9
Interest and related amortization
(26.1
)
(104.1
)
Normalized FFO available for Common
Stock and OP Unit holders
98.6
400.9
Early debt retirement
—
(2.1
)
Insurance proceeds due to catastrophic
weather event (4)
—
6.2
FFO available for Common Stock and OP
Unit holders
98.6
405.0
Depreciation and amortization
(38.3
)
(152.0
)
Deferral of right-to-use contract sales
revenue and commission, net
(1.6
)
(9.0
)
Gain on sale of real estate, net
—
52.5
Income allocated to non-controlling
interest-Common OP Units
(3.2
)
(16.7
)
Net income available for Common
Stockholders
$
55.5
$
279.8
Net income per Common Share - Fully
Diluted (5)
$0.29 - $0.33
$1.52 - $1.56
FFO per Common Share and OP Unit - Fully
Diluted
$0.49 - $0.53
$2.09 - $2.13
Normalized FFO per Common Share and OP
Unit - Fully Diluted
$0.49 - $0.53
$2.07 - $2.11
Weighted average Common Stock outstanding
- Fully Diluted
192.4
192.0
______________________
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 and OP
Unit, FFO available for Common Stock and OP Unit holders, FFO per
Common Share and OP Unit, 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 2019 Core Guidance
Assumptions. Amount represents 2018 Income from property
operations, excluding deferrals and property management, from the
2019 Core properties of $133.4 million multiplied by an estimated
growth rate of 4.6% and $530.9 million multiplied by an estimated
growth rate of 4.9% for the quarter and year ending December 31,
2019, respectively.
3.
See page 14 for the 2019 Assumptions
regarding the Non-Core Properties.
4.
Includes insurance recovery revenue from
reimbursement for capital expenditures related to Hurricane
Irma.
5.
Net income per Common Share - Fully
Diluted is calculated before Income allocated to non-controlling
interest - Common OP Units.
2019 Core Guidance Assumptions
(1)
(In millions, unaudited)
Quarter Ended
Fourth Quarter 2019
Year Ended
2019
December 31, 2018
Growth Factors (2)
December 31, 2018
Growth Factors (2)
Community base rental income
$
127.7
5.3
%
$
505.3
5.2
%
Rental home income
3.4
16.7
%
13.1
13.5
%
Resort base rental income (3)
53.4
4.9
%
233.4
4.4
%
Right-to-use annual payments (membership
subscriptions)
12.2
6.4
%
47.8
6.7
%
Right-to-use contracts current period,
gross (membership upgrade sales)
3.2
6.3
%
15.2
18.7
%
Utility and other income
23.4
(10.0
)%
93.5
(5.1
)%
Property operating revenues
223.3
3.9
%
908.3
4.4
%
Property operating, maintenance, and real
estate taxes
85.2
3.3
%
358.4
3.5
%
Rental home operating and maintenance
1.8
(20.0
)%
6.5
(14.9
)%
Sales and marketing, gross
2.9
4.2
%
12.5
16.9
%
Property operating expenses
89.9
2.8
%
377.4
3.6
%
Income from property operations,
excluding deferrals and property management
$
133.4
4.6
%
$
530.9
4.9
%
Resort base rental income:
Annual
$
37.6
5.5
%
$
145.7
6.0
%
Seasonal
8.2
4.1
%
36.3
3.4
%
Transient
7.6
3.0
%
51.4
0.8
%
Total resort base rental income
$
53.4
4.9
%
$
233.4
4.4
%
2019 Non-Core Guidance
Assumptions (1)
(In millions, unaudited)
Quarter Ending
Year Ending
December 31, 2019
December 31, 2019
Community base rental income
$
3.8
$
15.7
Rental home income
—
0.1
Resort and marina base rental income
8.5
25.7
Utility and other income
1.2
3.7
Property operating revenues
13.5
45.2
Property operating, maintenance, and real
estate taxes
7.2
22.2
Property operating expenses
7.2
22.2
Income from property operations,
excluding deferrals and property management
$
6.3
$
23.0
___________________
1.
Each line item represents the mid-point of
a range of possible outcomes and reflects management’s best
estimate of the most likely outcome. Actual income from property
operations could vary materially from amounts presented above if
any of our assumptions is incorrect.
2.
Management’s estimate of the growth of
property operations in the 2019 Core Properties compared to actual
2018 performance. Represents the mid-point of a range of possible
outcomes. Calculations prepared using actual results without
rounding. Actual growth for Core properties could vary materially
from amounts presented above if any of our assumptions is
incorrect.
3.
See resort base rental income detail
included below within this table.
Preliminary 2020 Guidance -
Selected Financial Data (1)
Our guidance acknowledges the existence of
volatile economic conditions, which may impact our current guidance
assumptions. Factors impacting 2020 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 and
marina sites; (iii) scheduled or implemented rate increases on
community, resort and marina 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, 2020
Income from property operations, excluding
deferrals and property management - 2020 Core (2)
$
605.8
Income from property operations - Non-Core
(3)
10.8
Property management and general and
administrative
(95.5
)
Other income and expenses
11.6
Interest and related amortization
(106.3
)
Normalized FFO and FFO available for
Common Stock and OP Unit holders
426.4
Depreciation on real estate and other
(137.6
)
Depreciation on rental homes
(11.1
)
Deferral of right-to-use contract sales
revenue and commission, net
(9.5
)
Income allocated to non-controlling
interest-Common OP Units
(14.6
)
Net income available for Common
Stockholders
$
253.6
Net income per Common Share - Fully
Diluted (4)
$1.36 - $1.42
FFO per Common Share and OP Unit - Fully
Diluted
$2.19 - $2.25
Normalized FFO per Common Share and OP
Unit - Fully Diluted
$2.19 - $2.25
Weighted average Common Stock outstanding
- Fully Diluted
192.5
______________________
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 and OP
Unit, FFO available for Common Stock and OP Unit holders, FFO per
Common Share and OP Unit, 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 16 for Preliminary 2020 Core
Guidance Assumptions. Amount represents estimated 2019 Income from
property operations, excluding deferrals and property management,
from the 2020 Core properties of $575.0 million multiplied by an
estimated growth rate of 5.3% for the year ending December 31,
2020.
3.
See page 16 for Preliminary 2020 Non-Core
Guidance Assumptions.
4.
Net income per fully diluted Common Share
is calculated before Income allocated to Common OP Units.
Preliminary 2020 Core Guidance
Assumptions (1)
(In millions, unaudited)
Year Ending
2020
December 31, 2019
Growth Factors (2)
Community base rental income
$
544.4
4.4
%
Rental home income
14.9
2.5
%
Resort base rental income (3)
258.9
5.2
%
Right-to-use annual payments (membership
subscriptions)
51.0
4.2
%
Right-to-use contracts current period,
gross (membership upgrade sales)
18.0
10.5
%
Utility and other income
91.1
2.7
%
Property operating revenues
978.3
4.6
%
Property operating, maintenance, and real
estate taxes
383.1
3.1
%
Rental home operating and maintenance
5.5
2.9
%
Sales and marketing, gross
14.7
7.5
%
Property operating expenses
403.3
3.3
%
Income from property operations,
excluding deferrals and property management
$
575.0
5.3
%
Resort base rental income:
Annual
$
160.8
5.4
%
Seasonal
41.0
4.6
%
Transient
57.1
4.8
%
Total resort base rental income
$
258.9
5.2
%
Preliminary 2020 Non-Core
Guidance Assumptions (1)
(In millions, unaudited)
Year Ending
December 31, 2020
Community base rental income
$
—
Rental home income
—
Resort and marina base rental income
22.0
Utility and other income
3.0
Property operating revenues
25.0
Property operating, maintenance, and real
estate taxes
14.2
Property operating expenses
14.2
Income from property operations,
excluding deferrals and property management
$
10.8
______________________
1.
Each line item represents the mid-point of
a range of possible outcomes and reflects management’s best
estimate of the most likely outcome. Actual income from property
operations could vary materially from amounts presented above if
any of our assumptions is incorrect.
2.
Management’s estimate of the growth of
property operations in the 2020 Core Properties compared to
estimated 2019 performance. Represents 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.
Right-To-Use Memberships -
Select Data
(Unaudited)
2016
2017
2018
2019 (1)
2020 (1)
Member Count (2)
104,728
106,456
111,094
116,000
120,000
Thousand Trails Camping Pass (TTC)
Origination
29,576
31,618
37,528
40,800
42,700
TTC Sales
12,856
14,128
17,194
19,100
20,300
RV Dealer TTC Activations
16,720
17,490
20,334
21,700
22,400
Number of annuals (3)
5,756
5,843
5,888
5,600
5,600
Number of upgrade sales (4)
2,477
2,514
2,500
2,900
3,100
(In thousands, unaudited)
Right-to-use annual payments (membership
subscriptions)
$
45,036
$
45,798
$
47,778
$
51,000
$
53,100
Resort base rental income from annuals
$
15,413
$
16,841
$
18,363
$
19,600
$
21,100
Resort base rental income from
seasonals/transients
$
17,344
$
18,231
$
19,840
$
20,400
$
21,900
Upgrade contract initiations (5)
$
12,312
$
14,130
$
15,191
$
18,000
$
20,000
Utility and other income
$
2,442
$
2,254
$
2,410
$
2,300
$
2,000
______________________
1.
Guidance estimate. Each line item
represents the mid-point of a range of possible 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 (membership subscriptions) with us that entitle them to
use certain properties on a continuous basis for up to 21 days.
3.
Members who rent a specific site for an
entire year in connection with their right-to-use contracts
(membership subscriptions).
4.
Existing members who have upgraded
agreements are eligible for enhanced benefits, including but not
limited to longer stays, the ability to make earlier reservations,
potential discounts on rental units, and potential access to
additional properties. Upgrades require a non-refundable upfront
payment.
5.
Revenues associated with contract
upgrades, included in Right-to-use contracts current period, gross
(membership upgrade sales) on our Consolidated Income Statements on
page 4.
Market Capitalization
(In millions, except share and OP Unit
data (adjusted for stock split), unaudited)
Capital Structure as of September 30,
2019
Total Common
Stock/Units
% of Total Common
Stock/Units
Total
% of Total
% of Total Market
Capitalization
Secured Debt
$
2,086
86.7
%
Unsecured Debt
320
13.3
%
Total Debt (1)
$
2,406
100.0
%
15.8
%
Common Stock
182,080,186
94.6
%
OP Units
10,493,422
5.4
%
Total Common Stock and OP Units
192,573,608
100.0
%
Common Stock price at September 30,
2019(2)
$
66.80
Fair Value of Common Stock and OP
Units
$
12,864
100.0
%
Total Equity
$
12,864
100.0
%
84.2
%
Total Market Capitalization
$
15,270
100.0
%
______________________
1.
Excludes deferred financing costs of
approximately $24.6 million.
2.
Reflects the September 30, 2019 share
closing price of $133.60 on a post stock-split basis.
Debt Maturity Schedule
Debt Maturity Schedule as of September
30, 2019
(In thousands, unaudited)
Year
Secured Debt
Weighted Average Interest
Rate
Unsecured Debt
Weighted Average Interest
Rate
Total Debt
% of Total Debt
Weighted Average Interest
Rate
2019
$
—
—
%
$
—
—
%
$
—
—
%
—
%
2020
48,607
5.18
%
—
—
%
48,607
2.13
%
5.18
%
2021
169,804
5.01
%
—
—
%
169,804
7.43
%
5.01
%
2022
147,101
4.62
%
—
—
%
147,101
6.44
%
4.62
%
2023
103,552
5.05
%
200,000
3.05
%
303,552
13.28
%
3.73
%
2024
10,683
5.49
%
—
—
%
10,683
0.47
%
5.49
%
2025
101,486
3.45
%
—
—
%
101,486
4.44
%
3.45
%
2026
—
—
%
—
—
%
—
—
%
—
%
2027
—
—
%
—
—
%
—
—
%
—
%
2028
222,879
4.19
%
—
—
%
222,879
9.75
%
4.19
%
Thereafter
1,280,856
4.24
%
—
—
%
1,280,856
56.06
%
4.24
%
Total
$
2,084,968
4.35
%
$
200,000
3.05
%
$
2,284,968
100.0
%
4.24
%
Unsecured Line of Credit
(1)
—
120,000
120,000
Note Premiums
1,234
—
1,234
Total Debt
2,086,202
320,000
2,406,202
Deferred Financing
Costs
(23,466
)
(1,132
)
(24,598
)
Total Debt, net
$
2,062,736
$
318,868
$
2,381,604
4.29
%(2)
Average Years to
Maturity
13.4
3.1
12.0
______________________
1.
Reflects outstanding balance on the Line
of Credit as of September 30, 2019. The Line of Credit matures in
October 2021 and had an effective interest rate of 1.76% during the
third quarter of 2019.
2.
Reflects effective interest rate during
the third quarter of 2019, including amortization of note premiums
and deferred financing costs.
Non-GAAP Financial
Measures Definitions and Reconciliations
FUNDS FROM OPERATIONS (FFO). We define FFO as net income,
computed in accordance with GAAP, excluding gains or losses from
sales of properties, depreciation and amortization related to real
estate, impairment charges, and adjustments to reflect our share of
FFO of unconsolidated joint ventures. Adjustments for
unconsolidated 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) gains and losses from early debt
extinguishment, including prepayment penalties and defeasance
costs, and b) 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 gains or losses
from sales of properties, depreciation and amortization related to
real estate, impairment charges, which are based on historical
costs and 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 and other income and right-to-use income less property and
rental home operating and maintenance expenses, real estate taxes,
sales and marketing expenses, excluding property management and the
GAAP deferral of right-to-use contract upfront payments and related
commissions, net. For comparative purposes, we present bad debt
expense within Property operating, maintenance and real estate
taxes in the current and prior periods. 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:
Quarters Ended September
30,
Nine Months Ended September
30,
(amounts in thousands)
2019
2018
2019
2018
Net income available for Common
Stockholders
$
64,461
$
56,070
$
224,171
$
162,429
Redeemable perpetual preferred stock
dividends
—
—
8
8
Income allocated to non-controlling
interests – Common OP Units
3,715
3,590
13,617
10,569
Equity in income of unconsolidated joint
ventures
(3,518
)
(788
)
(8,277
)
(3,596
)
Income before equity in income of
unconsolidated joint ventures
64,658
58,872
229,519
169,410
Gain on sale of real estate, net
—
—
(52,507
)
—
Right-to-use contract upfront payments,
deferred, net
3,530
2,883
8,213
6,189
Gross revenues from home sales
(8,438
)
(9,339
)
(22,738
)
(26,753
)
Brokered resale and ancillary services
revenues, net
(2,133
)
(1,362
)
(4,564
)
(3,380
)
Interest income
(1,831
)
(1,846
)
(5,385
)
(5,658
)
Income from other investments, net
(7,029
)
(5,421
)
(8,894
)
(9,774
)
Right-to-use contract commissions,
deferred, net
(313
)
(458
)
(893
)
(744
)
Property management
14,605
13,589
42,675
40,742
Depreciation and amortization
37,032
34,980
112,785
101,699
Cost of home sales
8,434
9,742
23,230
27,948
Home selling expenses
1,033
1,101
3,218
3,149
General and administrative
8,710
8,816
27,844
26,523
Other expenses
1,460
386
2,427
1,096
Early debt retirement
—
—
1,491
—
Interest and related amortization
25,547
26,490
77,964
78,478
Income from property operations, excluding
deferrals and property management
145,265
138,433
434,385
408,925
Right-to-use contracts, upfront payments
and commissions, deferred, net
(3,217
)
(2,425
)
(7,320
)
(5,445
)
Property management
(14,605
)
(13,589
)
(42,675
)
(40,742
)
Income from property operations
$
127,443
$
122,419
$
384,390
$
362,738
EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND AMORTIZATION
FOR REAL ESTATE (EBITDAre) AND ADJUSTED EBITDAre. We define
EBITDAre as net income or loss excluding interest income and
expense, income taxes, depreciation and amortization, gains or
losses from sales of properties, impairments charges, and
adjustments to reflect our share of EBITDAre of unconsolidated
joint ventures. We compute EBITDAre in accordance with our
interpretation of the standards established by NAREIT, which may
not be comparable to EBITDAre 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 EBITDAre 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 EBITDAre.
We define Adjusted EBITDAre as EBITDAre excluding non-operating
income and expense items such as gains and losses from early debt
extinguishment, including prepayment penalties and defeasance
costs, and other miscellaneous non-comparable items.
We believe that EBITDAre and Adjusted EBITDAre may be useful to
an investor in evaluating our operating performance and liquidity
because the measures are widely used to measure the operating
performance of an equity REIT.
The following table reconciles Consolidated net income to
EBITDAre and Adjusted EBITDAre:
Quarters Ended September
30,
Nine Months Ended September
30,
(amounts in thousands)
2019
2018
2019
2018
Consolidated net income
$
68,176
$
59,660
$
237,796
$
173,006
Interest income
(1,831
)
(1,846
)
(5,385
)
(5,658
)
Right-to-use contract upfront payments,
deferred, net
3,530
2,883
8,213
6,189
Right-to-use contract commissions,
deferred, net
(313
)
(458
)
(893
)
(744
)
Real estate depreciation and
amortization
37,032
34,980
112,785
101,699
Other depreciation and amortization
460
386
1,336
1,096
Interest and related amortization
25,547
26,490
77,964
78,478
Gain on sale of real estate, net
—
—
(52,507
)
—
Adjustments to our share of EBITDAre of
unconsolidated joint ventures
259
1,214
2,858
3,125
EBITDAre
132,860
123,309
382,167
357,191
Early debt retirement
—
—
2,085
—
Insurance proceeds due to catastrophic
weather event
(5,856
)
(3,833
)
(6,205
)
(5,925
)
Adjusted EBITDAre
$
127,004
$
119,476
$
378,047
$
351,266
CORE. The Core properties include properties we owned and
operated during all of 2018 and 2019. 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.
NON-CORE. The Non-Core properties include all properties
that were not owned and operated during all of 2018 and 2019. This
includes, but is not limited to, four properties and the Loggerhead
marinas acquired and five properties sold during 2019, five
properties acquired during 2018 and Fiesta Key and Sunshine Key RV
Resorts.
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: https://www.businesswire.com/news/home/20191021005546/en/
Paul Seavey (800) 247-5279
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