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ELS Reports Third Quarter Results

Continued Strong Performance;

Updated Guidance Due To Hurricane Ian

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, 2022. 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, 2022

For the quarter ended September 30, 2022, total revenues increased $33.7 million, or 9.7%, to $381.0 million, compared to $347.2 million for the same period in 2021. For the quarter ended September 30, 2022, net income available for Common Stockholders decreased $3.4 million, to $67.2 million, or $0.36 per Common Share, compared to $70.6 million, or $0.38 per Common Share, for the same period in 2021.

For the nine months ended September 30, 2022, total revenues increased $125.4 million, or 12.8%, to $1,106.5 million, compared to $981.1 million for the same period in 2021. For the nine months ended September 30, 2022, net income available for Common Stockholders increased $14.7 million, or $0.06 per Common Share, to $211.6 million, or $1.14 per Common Share, compared to $196.9 million, or $1.08 per Common Share, for the same period in 2021.

Non-GAAP Financial Measures and Portfolio Performance

For the quarter ended September 30, 2022, Funds from Operations (“FFO”) available for Common Stock and OP Unit holders increased $9.9 million, or $0.04 per Common Share, to $134.4 million, or $0.69 per Common Share, compared to $124.5 million, or $0.65 per Common Share, for the same period in 2021. For the nine months ended September 30, 2022, Funds from Operations available for Common Stock and OP Unit holders increased $34.3 million, or $0.15 per Common Share, to $396.9 million, or $2.03 per Common Share, compared to $362.6 million, or $1.88 per Common Share, for the same period in 2021.

For the quarter ended September 30, 2022, Normalized Funds from Operations (“Normalized FFO”) available for Common Stock and OP Unit holders increased $12.3 million, or $0.05 per Common Share, to $136.8 million, or $0.70 per Common Share, compared to $124.5 million, or $0.65 per Common Share, for the same period in 2021. For the nine months ended September 30, 2022, Normalized Funds from Operations available for Common Stock and OP Unit holders increased $38.1 million, or $0.17 per Common Share, to $403.5 million, or $2.07 per Common Share, compared to $365.4 million, or $1.90 per Common Share, for the same period in 2021.

For the quarter ended September 30, 2022, property operating revenues, excluding deferrals, increased $24.1 million to $332.8 million, compared to $308.7 million for the same period in 2021. For the nine months ended September 30, 2022, property operating revenues, excluding deferrals, increased $81.9 million to $971.0 million, compared to $889.1 million for the same period in 2021. For the quarter ended September 30, 2022, income from property operations, excluding deferrals and property management, increased $11.1 million to $183.9 million, compared to $172.8 million for the same period in 2021. For the nine months ended September 30, 2022, income from property operations, excluding deferrals and property management, increased $41.6 million to $551.2 million, compared to $509.6 million for the same period in 2021.

For the quarter ended September 30, 2022, Core property operating revenues, excluding deferrals, increased approximately 5.3% and Core income from property operations, excluding deferrals and property management, increased approximately 3.5%, compared to the same period in 2021. For the nine months ended September 30, 2022, Core property operating revenues, excluding deferrals, increased approximately 6.5% and Core income from property operations, excluding deferrals and property management, increased approximately 5.3%, compared to the same period in 2021.

Business Updates

Pages 1 and 2 of this Earnings Release and Supplemental Financial Information provide an update on operations, Hurricane Ian and 2022 guidance.

Investment Activity

In July 2022, we continued our partnership with RVC Outdoor Destinations and acquired an 80% equity interest in a joint venture for a total value of $1.1 million. The joint venture owns one property under development located in Gulf Shores, Alabama.

During the third quarter, we completed the acquisition of two parcels of land adjacent to two of our MH properties for an aggregate purchase price of $7.3 million.

About Equity LifeStyle Properties

We are a self-administered, self-managed real estate investment trust (“REIT”) with headquarters in Chicago. As of October 17, 2022, we own or have an interest in 445 quality properties in 35 states and British Columbia consisting of 170,245 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 18, 2022, 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.

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 attract and retain customers entering, renewing and upgrading membership subscriptions;
  • our assumptions about rental and home sales markets;
  • our assumptions and guidance concerning Net Income, FFO and Normalized FFO per share data;
  • our ability to manage counterparty risk;
  • our ability to renew our insurance policies at existing rates and on consistent terms;
  • home sales results could be impacted by the ability of potential homebuyers to sell their existing residences as well as by financial, credit and capital markets volatility;
  • results from home sales and occupancy will continue to be impacted by local economic conditions, including an adequate supply of homes at reasonable costs, 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;
  • the effect of Hurricane Ian on our business including, but not limited to the following: (i) the timing and cost of recovery, (ii) the impact of the condition of properties and homes on occupancy demand and related rent revenue and (iii) the timing and amount of insurance proceeds;
  • our ability to obtain financing or refinance existing debt on favorable terms or at all;
  • the effect of inflation and 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 by or 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.

Our guidance acknowledges the existence of volatile economic conditions, which may impact our current guidance assumptions. Factors impacting 2022 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 membership subscriptions; (v) occupancy changes; (vi) our ability to attract and retain membership customers; (vii) change in customer demand regarding travel and outdoor vacation destinations; (viii) our ability to manage expenses in an inflationary environment; (ix) our ability to integrate and operate recent acquisitions in accordance with our estimates; (x) our ability to execute expansion/development opportunities in the face of supply chain delays/shortages; (xi) completion of pending transactions in their entirety and on assumed schedule; (xii) our ability to attract and retain property employees, particularly seasonal employees; (xiii) ongoing legal matters and related fees; and (xiv) costs to restore property operations and potential revenue losses following storms or other unplanned events. In addition, these forward-looking statements, including our 2022 guidance are subject to risks related to the COVID-19 pandemic, many of which are unknown, including the duration of the pandemic, the extent of the adverse health impact on the general population and on our residents, customers and employees in particular, its impact on the employment rate and the economy, the extent and impact of governmental responses and the impact of operational changes we have implemented and may implement in response to the pandemic.

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.

Supplemental Financial Information

Operations Update

Normalized FFO per Common Share

  • Third Quarter (“Q3”) 2022: $0.70 or 8.5% growth compared to the same period in 2021.
  • September Year to Date (“YTD”) 2022: $2.07 or 9.0% growth compared to the same period in 2021.

Core Income from property operations, excluding deferrals and property management

  • Q3 2022: 3.5% growth compared to the same period in 2021.
  • September YTD 2022: 5.3% growth compared to the same period in 2021.

REVENUES

MH - 60% of Total Property Operating Revenues

  • Q3 2022 Core MH base rental income: 5.9% growth compared to the same period in 2021, which reflects 5.5% growth from rate increases and 0.4% from occupancy gains.
  • September YTD 2022 Core MH base rental income: 5.7% growth compared to the same period in 2021, which reflects 5.3% growth from rate increases and 0.4% from occupancy gains.
  • September YTD 2022 Core MH occupancy increased by 119 sites since December 31, 2021.
  • September YTD 2022 Core Manufactured homeowners increased by 633 since December 31, 2021.
  • Q3 2022 New home sales: 331 sales with an average sales price of $106,000.
  • By October month-end, we anticipate sending 2023 rent increase notices to approximately 51% of our MH residents. These rent increases will be effective by February 1, 2023 and have an average growth rate in the range of 6.2% to 6.6%.

RV and Marina - 32% of Total Property Operating Revenues

  • Q3 2022 Core RV and marina base rental income: 4.1% growth compared to the same period in 2021.
  • September YTD 2022 Core RV and marina base rental income: 10.3% growth compared to the same period in 2021.
  • Q3 2022 Core RV annual base rental income: 8.7% growth compared to the same period in 2021, which reflects 6.6% growth from rate increases and 2.1% from occupancy gains.
  • Q3 2022 combined Core Seasonal and Transient RV base rental income: exceeded our previously provided guidance with a decline of 2.0% from the same period in 2021 as a result of better than expected Seasonal rental income.
  • September YTD 2022 combined Core Seasonal and Transient RV base rental income: increased 13.0% or $12.5 million over the same period in 2021.
  • Core RV Site Composition

 

September 30, 2022

 

September 30, 2021

Annual

32,200

 

31,600

Seasonal

12,100

 

10,700

Transient

12,200

 

13,800

Member

25,400

 

24,800

  • Third quarter total nights camped increased 1.8% and 7.4% compared to the quarters ended September 30, 2021 and September 30, 2019, respectively.
  • We have set RV annual rates for the 2023 season for 95% of our annual sites. These rate increases will take effect between November 1, 2022 and April 1, 2023 and have an average growth rate in the range of 7.6% to 8.0%.

EXPENSES

Utility Expense - 27% of Total Property Operating Expenses

  • The increase in Utility expense was driven by average electric rate increases of 14% in Q3 2022 and 11% for September YTD 2022 compared to the same periods in 2021. The RV properties, which generate lower expense recovery due to the Transient component of the business, experienced the highest rate increases in the quarter with increases in the Northeast and South ranging from 16% to 29%.

Hurricane Ian Update and 2022 Guidance (1)

Hurricane Ian Update

Hurricane Ian made landfall on the west coast of Florida on September 28, 2022. Approximately 60% of our Florida portfolio was in the path of the storm as it moved across the state. During the storm, we prioritized the safety of our residents, guests and employees. For the majority of our properties the impact was limited to flooding, wind, wind-blown debris and falling trees and branches. These properties have resumed operations.

The most significant damage to our properties occurred in or near the Fort Myers area. Six of our properties in or near this market continue to experience utility disruptions and are temporarily closed. The properties include four RV parks and two marinas with a total of 2,100 sites/slips. During the storm, the four RV properties experienced strong winds as well as significant flooding, including from unprecedented storm surges that resulted in damage to certain common area buildings, utility infrastructure and residents’ homes. The two marinas suffered wind related building damage and the process of restoring the buildings has begun. We currently expect these properties will resume operations during the fourth quarter, although certain locations may operate at a limited capacity.

Over the last 20 days, we have worked towards quickly returning our properties to full operating condition with efforts focused on debris cleanup and removal and initiating the process to restore impacted buildings and infrastructure. Based on our prior experience with recovery following major storms, developing restoration plans and estimating costs to execute on those plans takes time, often several weeks. We did not record any expenses related to property damage and restoration work during the third quarter of 2022 given the short period of time between the storm’s passage and the end of the reporting period.

We have reviewed our assets impacted by the storm for potential impairment and determined that the estimated future cash flows are greater than the net book value of the assets. As such, it is appropriate not to impair any assets based on our recoverability tests. As part of our review and based on information currently available, we have determined that storm-related damage to certain assets supported a $3.7 million reduction to the carrying value of those assets, which is included in Loss on sale of real estate and impairment, net in the Consolidated Statements of Income on page 6. We believe the costs to restore these damaged assets will be included in our insurance claim.

2022 Guidance

Our updated per share guidance for 2022 Net Income, FFO and Normalized FFO is presented below. We have withdrawn our previously provided full year Core guidance for revenue, expense and NOI for the following reasons:

  • The recency of the Hurricane Ian storm event;
  • The status of our ongoing assessment of the storm’s impact on our properties; and
  • The uncertainty with respect to property operating revenues and expenses for the affected properties as we resume full operations following the storm.

The updated guidance does not include an assumption that we will receive insurance reimbursement for losses resulting from business interruption in 2022. In accordance with GAAP, insurance reimbursement for business interruption losses is to be recognized as revenue upon receipt. At this time, we do not have an estimate of the total potential clean up and restoration costs. We believe we have adequate insurance coverage, subject to deductibles, including business interruption, though we are unable to predict the timing or amount of insurance recovery.

($ in millions except per share)

 

Full Year

Net Income/share

 

$1.46 to $1.52

FFO/share

 

$2.60 to $2.66

Normalized FFO/share

 

$2.64 to $2.70

 

 

 

______________________

(1) Full year 2022 guidance ranges represent a range of possible outcomes and the midpoint reflects management's estimate of the most likely outcome. Actual growth rates and per share amounts could vary materially from growth rates and per share amounts presented above if any of our assumptions, including occupancy and rate changes, our ability to manage expenses in an inflationary environment, our ability to integrate and operate recent acquisitions and costs to restore property operations and potential revenue losses following storms or other unplanned events, is incorrect. See Forward-Looking Statements in this release for additional factors impacting our 2022 guidance assumptions.

Investor Information

Equity Research Coverage(1)

Bank of America Securities

Barclays

BMO Capital Markets

Jeffrey Spector/Joshua Dennerlein

Anthony Powell

John Kim

 

 

 

Citi Research

Colliers Securities

Evercore ISI

Nick Joseph

David Toti

Steve Sakwa/Samir Khanal

 

 

 

Green Street Advisors

RBC Capital Markets

Robert W. Baird & Company

John Pawlowski

Brad Heffern

Wes Golladay

 

 

 

Truist

UBS

Wolfe Research

Anthony Hau

Michael Goldsmith

Andrew Rosivach/Keegan Carl

 

 

 

 

 

 

 

 

 

______________________

  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 Shares and OP Units outstanding and per share data, unaudited)

 

As of and for the Quarter Ended

 

Sep 30, 2022

Jun 30, 2022

Mar 31, 2022

Dec 31, 2021

Sept 30, 2021

Operating Information

 

 

 

 

 

Total revenues

$

381.0

 

$

365.3

 

$

360.2

 

$

335.3

 

$

347.2

 

Net income

$

70.5

 

$

64.6

 

$

87.1

 

$

68.8

 

$

74.1

 

Net income available for Common Stockholders

$

67.2

 

$

61.5

 

$

82.9

 

$

65.5

 

$

70.6

 

Adjusted EBITDAre (1)

$

166.4

 

$

153.3

 

$

168.4

 

$

150.7

 

$

150.8

 

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

$

134.4

 

$

121.6

 

$

140.9

 

$

123.0

 

$

124.5

 

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

$

136.8

 

$

125.3

 

$

141.4

 

$

123.6

 

$

124.5

 

Funds Available for Distribution ("FAD") for Common Stock and OP Unit holders (1)(2)

$

115.4

 

$

103.6

 

$

125.1

 

$

102.3

 

$

106.1

 

 

 

 

 

 

 

Common Shares and OP Units Outstanding (In thousands) and Per Share Data

 

 

 

 

 

Common Shares and OP Units, end of the period

 

195,380

 

 

195,373

 

 

195,303

 

 

194,946

 

 

192,852

 

Weighted average Common Shares and OP Units outstanding - Fully Diluted

 

195,269

 

 

195,227

 

 

195,246

 

 

193,412

 

 

192,736

 

Net income per Common Share - Fully Diluted (3)

$

0.36

 

$

0.33

 

$

0.45

 

$

0.36

 

$

0.38

 

FFO per Common Share and OP Unit - Fully Diluted

$

0.69

 

$

0.62

 

$

0.72

 

$

0.64

 

$

0.65

 

Normalized FFO per Common Share and OP Unit - Fully Diluted

$

0.70

 

$

0.64

 

$

0.72

 

$

0.64

 

$

0.65

 

Dividends per Common Share

$

0.4100

 

$

0.4100

 

$

0.4100

 

$

0.3625

 

$

0.3625

 

 

 

 

 

 

 

Balance Sheet

 

 

 

 

 

Total assets

$

5,405

 

$

5,400

 

$

5,265

 

$

5,308

 

$

4,982

 

Total liabilities

$

3,886

 

$

3,878

 

$

3,734

 

$

3,822

 

$

3,673

 

 

 

 

 

 

 

Market Capitalization

 

 

 

 

 

Total debt (4)

$

3,329

 

$

3,298

 

$

3,193

 

$

3,303

 

$

3,154

 

Total market capitalization (5)

$

15,607

 

$

17,066

 

$

18,130

 

$

20,392

 

$

18,216

 

 

 

 

 

 

 

Ratios

 

 

 

 

 

Total debt / total market capitalization

 

21.3

%

 

19.3

%

 

17.6

%

 

16.2

%

 

17.3

%

Total debt / Adjusted EBITDAre (6)

 

5.2

 

 

5.3

 

 

5.2

 

 

5.6

 

 

5.5

 

Interest coverage (7)

 

5.7

 

 

5.7

 

 

5.7

 

 

5.5

 

 

5.5

 

Fixed charges(8)

 

5.6

 

 

5.6

 

 

5.6

 

 

5.5

 

 

5.4

 

________________

  1. See Non-GAAP Financial Measures Definitions and Reconciliations at the end of the supplemental financial information for definitions of Adjusted EBITDAre, FFO, Normalized FFO and FAD and a reconciliation of Consolidated net income to Adjusted EBITDAre.
  2. See page 9 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 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 $29.0 million as of September 30, 2022.
  5. See page 17 for the calculation of market capitalization as of September 30, 2022.
  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 Reconciliations at the end of the supplemental financial 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, if any, during the same period.

Consolidated Balance Sheets

(In thousands, except share and per share data)

 

September 30, 2022

 

December 31, 2021

 

(unaudited)

 

 

Assets

 

 

 

Investment in real estate:

 

 

 

Land

$

2,080,234

 

 

$

2,019,787

 

Land improvements

 

4,083,036

 

 

 

3,912,062

 

Buildings and other depreciable property

 

1,139,755

 

 

 

1,057,215

 

 

 

7,303,025

 

 

 

6,989,064

 

Accumulated depreciation

 

(2,246,214

)

 

 

(2,103,774

)

Net investment in real estate

 

5,056,811

 

 

 

4,885,290

 

Cash and restricted cash

 

30,510

 

 

 

123,398

 

Notes receivable, net

 

44,653

 

 

 

39,955

 

Investment in unconsolidated joint ventures

 

88,352

 

 

 

70,312

 

Deferred commission expense

 

50,029

 

 

 

47,349

 

Other assets, net

 

135,091

 

 

 

141,567

 

Total Assets

$

5,405,446

 

 

$

5,307,871

 

 

 

 

 

Liabilities and Equity

 

 

 

Liabilities:

 

 

 

Mortgage notes payable, net

$

2,708,751

 

 

$

2,627,783

 

Term loan, net

 

496,595

 

 

 

297,436

 

Unsecured line of credit

 

94,984

 

 

 

349,000

 

Accounts payable and other liabilities

 

184,771

 

 

 

172,285

 

Deferred membership revenue

 

195,290

 

 

 

176,439

 

Accrued interest payable

 

10,317

 

 

 

9,293

 

Rents and other customer payments received in advance and security deposits

 

115,035

 

 

 

118,696

 

Distributions payable

 

80,314

 

 

 

70,768

 

Total Liabilities

 

3,886,057

 

 

 

3,821,700

 

Equity:

 

 

 

Preferred stock, $0.01 par value, 10,000,000 shares authorized as of September 30, 2022 and December 31, 2021; none issued and outstanding.

 

 

 

 

 

Common stock, $0.01 par value, 600,000,000 shares authorized as of September 30, 2022 and December 31, 2021; 186,108,851 and 185,640,379 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively.

 

1,916

 

 

 

1,913

 

Paid-in capital

 

1,625,751

 

 

 

1,593,362

 

Distributions in excess of accumulated earnings

 

(200,969

)

 

 

(183,689

)

Accumulated other comprehensive income

 

20,476

 

 

 

3,524

 

Total Stockholders’ Equity

 

1,447,174

 

 

 

1,415,110

 

Non-controlling interests – Common OP Units

 

72,215

 

 

 

71,061

 

Total Equity

 

1,519,389

 

 

 

1,486,171

 

Total Liabilities and Equity

$

5,405,446

 

 

$

5,307,871

 

Consolidated Statements of Income

(In thousands, unaudited)

 

Quarters Ended September 30,

 

Nine Months Ended September 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Revenues:

 

 

 

 

 

 

 

Rental income.

$

289,016

 

 

$

269,573

 

 

$

849,411

 

 

$

774,293

 

Annual membership subscriptions

 

16,254

 

 

 

15,127

 

 

 

47,003

 

 

 

43,048

 

Membership upgrade sales current period, gross

 

11,085

 

 

 

10,122

 

 

 

27,771

 

 

 

29,343

 

Membership upgrade sales upfront payments, deferred, net

 

(7,777

)

 

 

(7,253

)

 

 

(18,228

)

 

 

(21,134

)

Other income

 

15,580

 

 

 

12,053

 

 

 

43,316

 

 

 

36,759

 

Gross revenues from home sales, brokered resales and ancillary services (1)

 

52,547

 

 

 

44,570

 

 

 

144,937

 

 

 

110,048

 

Interest income.

 

1,865

 

 

 

1,805

 

 

 

5,346

 

 

 

5,314

 

Income from other investments, net

 

2,399

 

 

 

1,238

 

 

 

6,920

 

 

 

3,396

 

Total revenues

 

380,969

 

 

 

347,235

 

 

 

1,106,476

 

 

 

981,067

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

Property operating and maintenance

 

123,181

 

 

 

109,164

 

 

 

341,480

 

 

 

300,700

 

Real estate taxes

 

17,734

 

 

 

18,408

 

 

 

56,373

 

 

 

54,154

 

Sales and marketing, gross

 

7,143

 

 

 

6,513

 

 

 

18,466

 

 

 

18,987

 

Membership sales commissions, deferred, net

 

(1,206

)

 

 

(1,468

)

 

 

(2,746

)

 

 

(4,405

)

Property management

 

19,003

 

 

 

17,015

 

 

 

55,973

 

 

 

48,955

 

Depreciation and amortization

 

52,547

 

 

 

44,414

 

 

 

152,737

 

 

 

138,127

 

Cost of home sales, brokered resales and ancillary services (1)

 

40,224

 

 

 

34,830

 

 

 

111,894

 

 

 

85,541

 

Home selling expenses and ancillary operating expenses (1)

 

7,080

 

 

 

6,558

 

 

 

21,146

 

 

 

17,588

 

General and administrative

 

11,086

 

 

 

10,401

 

 

 

35,078

 

 

 

31,141

 

Other expenses

 

1,627

 

 

 

797

 

 

 

6,636

 

 

 

2,295

 

Early debt retirement

 

 

 

 

 

 

 

1,156

 

 

 

2,784

 

Interest and related amortization

 

29,759

 

 

 

27,361

 

 

 

85,276

 

 

 

80,767

 

Total expenses

 

308,178

 

 

 

273,993

 

 

 

883,469

 

 

 

776,634

 

Loss on sale of real estate and impairment, net (2)

 

(3,747

)

 

 

 

 

 

(3,747

)

 

 

(59

)

Income before equity in income of unconsolidated joint ventures

 

69,044

 

 

 

73,242

 

 

 

219,260

 

 

 

204,374

 

Equity in income of unconsolidated joint ventures

 

1,465

 

 

 

851

 

 

 

2,889

 

 

 

2,786

 

Consolidated net income

 

70,509

 

 

 

74,093

 

 

 

222,149

 

 

 

207,160

 

 

 

 

 

 

 

 

 

Income allocated to non-controlling interests – Common OP Units

 

(3,346

)

 

 

(3,468

)

 

 

(10,563

)

 

 

(10,236

)

Redeemable perpetual preferred stock dividends

 

 

 

 

 

 

 

(8

)

 

 

(8

)

Net income available for Common Stockholders

$

67,163

 

 

$

70,625

 

 

$

211,578

 

 

$

196,916

 

______________________

  1. Prior period amounts have been reclassified to conform to the current period presentation.
  2. Reflects a $3.7 million reduction to the carrying value of certain assets, including home inventory as a result of Hurricane Ian for the quarter and nine months ended September 30, 2022.

Non-GAAP Financial Measures

This document contains certain non-GAAP measures used by management that we believe are helpful to understand 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 are they indicative of funds available to fund our cash needs, including our ability to make cash distributions. For definitions and reconcilitions of non-GAAP measures to our financial statements as prepared under GAAP, refer to both Reconciliation of Net Income to Non-GAAP Financial Measures on page 9 and Non-GAAP Financial Measures Definitions and Reconciliations on pages 19- 21.

Selected Non-GAAP Financial Measures

(In millions, except per share data, unaudited)

 

Quarter Ended

 

September 30, 2022

Income from property operations, excluding deferrals and property management - 2022 Core (1)

$

173.1

 

Income from property operations, excluding deferrals and property management - Non-Core (1)

 

10.8

 

Property management and general and administrative

 

(30.1

)

Other income and expenses (excluding transaction/pursuit costs)

 

12.8

 

Interest and related amortization

 

(29.8

)

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

$

136.8

 

Transaction/pursuit costs (3)

 

(0.3

)

Lease termination expenses (4)

 

(2.1

)

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

$

134.4

 

 

 

FFO per Common Share and OP Unit - Fully Diluted

$

0.69

 

Normalized FFO per Common Share and OP Unit - Fully Diluted

$

0.70

 

 

 

 

 

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

$

136.8

 

Non-revenue producing improvements to real estate

 

(21.4

)

FAD for Common Stock and OP Unit holders (2)

$

115.4

 

 

 

Weighted average Common Shares and OP Units - Fully Diluted

 

195.3

 

______________________

  1. See pages 11-12 for details of the Core Income from Property Operations, excluding deferrals and property management. See page 13 for details of the Non-Core Income from Property Operations, excluding deferrals and property management.
  2. See page 9 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 for Common Stock and OP Unit holders.
  3. Represents transaction/pursuit costs related to unconsummated acquisitions included in Other expenses in the Consolidated Statements of Income on page 6.
  4. Represents non-operating expenses associated with the Westwinds ground leases that terminated on August 31, 2022. As such, the expenses are not comparable from period to period and have been added back to Normalized FFO.

Reconciliation of Net Income to Non-GAAP Financial Measures

(In thousands, except per share data, unaudited)

 

 

Quarters Ended September 30,

 

Nine Months Ended September 30,

 

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Net income available for Common Stockholders

 

$

67,163

 

 

$

70,625

 

 

$

211,578

 

 

$

196,916

 

Income allocated to non-controlling interests – Common OP Units

 

 

3,346

 

 

 

3,468

 

 

 

10,563

 

 

 

10,236

 

Membership upgrade sales upfront payments, deferred, net

 

 

7,777

 

 

 

7,253

 

 

 

18,228

 

 

 

21,134

 

Membership sales commissions, deferred, net

 

 

(1,206

)

 

 

(1,468

)

 

 

(2,746

)

 

 

(4,405

)

Depreciation and amortization

 

 

52,547

 

 

 

44,414

 

 

 

152,737

 

 

 

138,127

 

Depreciation on unconsolidated joint ventures

 

 

1,035

 

 

 

180

 

 

 

2,811

 

 

 

547

 

Loss on sale of real estate and impairment, net (1)

 

 

3,747

 

 

 

 

 

 

3,747

 

 

 

59

 

FFO available for Common Stock and OP Unit holders

 

 

134,409

 

 

 

124,472

 

 

 

396,918

 

 

 

362,614

 

Early debt retirement

 

 

 

 

 

 

 

 

1,156

 

 

 

2,784

 

Transaction/pursuit costs (2)

 

 

302

 

 

 

 

 

 

3,384

 

 

 

 

Lease termination expenses (3)

 

 

2,073

 

 

 

 

 

 

2,073

 

 

 

 

Normalized FFO available for Common Stock and OP Unit holders

 

 

136,784

 

 

 

124,472

 

 

 

403,531

 

 

 

365,398

 

Non-revenue producing improvements to real estate

 

 

(21,405

)

 

 

(18,369

)

 

 

(59,511

)

 

 

(49,263

)

FAD for Common Stock and OP Unit holders

 

$

115,379

 

 

$

106,103

 

 

$

344,020

 

 

$

316,135

 

 

 

 

 

 

 

 

 

 

Net income available per Common Share - Basic

 

$

0.36

 

 

$

0.38

 

 

$

1.14

 

 

$

1.08

 

Net income available per Common Share - Fully Diluted (4)

 

$

0.36

 

 

$

0.38

 

 

$

1.14

 

 

$

1.08

 

 

 

 

 

 

 

 

 

 

FFO per Common Share and OP Unit - Basic

 

$

0.69

 

 

$

0.65

 

 

$

2.03

 

 

$

1.88

 

FFO per Common Share and OP Unit - Fully Diluted

 

$

0.69

 

 

$

0.65

 

 

$

2.03

 

 

$

1.88

 

 

 

 

 

 

 

 

 

 

Normalized FFO per Common Share and OP Unit - Basic

 

$

0.70

 

 

$

0.65

 

 

$

2.07

 

 

$

1.90

 

Normalized FFO per Common Share and OP Unit - Fully Diluted

 

$

0.70

 

 

$

0.65

 

 

$

2.07

 

 

$

1.90

 

 

 

 

 

 

 

 

 

 

Weighted average Common Shares outstanding - Basic

 

 

185,814

 

 

 

183,469

 

 

 

185,758

 

 

 

182,590

 

Weighted average Common Shares and OP Units outstanding - Basic

 

 

195,102

 

 

 

192,525

 

 

 

195,053

 

 

 

192,478

 

Weighted average Common Shares and OP Units outstanding - Fully Diluted

 

 

195,269

 

 

 

192,736

 

 

 

195,248

 

 

 

192,689

 

______________________

  1. Reflects a $3.7 million reduction to the carrying value of certain assets, including home inventory as a result of Hurricane Ian for the quarter and nine months ended September 30, 2022.
  2. Represents transaction/pursuit costs related to unconsummated acquisitions included in Other expenses in the Consolidated Statements of Income on page 6.
  3. Represents non-operating expenses associated with the Westwinds ground leases that terminated on August 31, 2022. As such, the expenses are not comparable from period to period and have been added back to Normalized FFO.
  4. 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,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

MH base rental income (2)

$

159.0

 

 

$

151.1

 

 

$

475.1

 

 

$

450.3

 

Rental home income (2)

 

3.7

 

 

 

4.1

 

 

 

11.5

 

 

 

12.7

 

RV and marina base rental income (2)

 

109.9

 

 

 

100.6

 

 

 

317.0

 

 

 

273.2

 

Annual membership subscriptions

 

16.3

 

 

 

15.1

 

 

 

47.0

 

 

 

43.0

 

Membership upgrade sales current period, gross

 

11.1

 

 

 

10.1

 

 

 

27.8

 

 

 

29.3

 

Utility and other income (2)

 

32.8

 

 

 

27.7

 

 

 

92.6

 

 

 

80.6

 

Property operating revenues

 

332.8

 

 

 

308.7

 

 

 

971.0

 

 

 

889.1

 

 

 

 

 

 

 

 

 

Property operating, maintenance and real estate taxes (2)

 

141.8

 

 

 

129.4

 

 

 

401.3

 

 

 

360.5

 

Sales and marketing, gross

 

7.1

 

 

 

6.5

 

 

 

18.5

 

 

 

19.0

 

Property operating expenses

 

148.9

 

 

 

135.9

 

 

 

419.8

 

 

 

379.5

 

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

$

183.9

 

 

$

172.8

 

 

$

551.2

 

 

$

509.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Manufactured home site figures and occupancy averages:

 

 

 

 

 

 

 

Total sites

 

73,198

 

 

 

73,293

 

 

 

73,368

 

 

 

73,156

 

Occupied sites

 

69,730

 

 

 

69,474

 

 

 

69,690

 

 

 

69,394

 

Occupancy %

 

95.3

%

 

 

94.8

%

 

 

95.0

%

 

 

94.9

%

Monthly base rent per site

$

760

 

 

$

725

 

 

$

757

 

 

$

721

 

 

 

 

 

 

 

 

 

RV and marina base rental income:

 

 

 

 

 

 

 

Annual

$

68.0

 

 

$

60.5

 

 

$

199.0

 

 

$

173.7

 

Seasonal

 

9.5

 

 

 

7.3

 

 

 

45.6

 

 

 

30.1

 

Transient

 

32.4

 

 

 

32.8

 

 

 

72.4

 

 

 

69.4

 

Total RV and marina base rental income

$

109.9

 

 

$

100.6

 

 

$

317.0

 

 

$

273.2

 

______________________

  1. Excludes property management and the GAAP deferral of membership upgrade sales upfront payments and membership sales commissions, net.
  2. MH base rental income, Rental home income, RV and marina base rental income and Utility income, net of bad debt expense, are presented in Rental income in the Consolidated Statements of Income on page 6. Bad debt expense is presented in Property operating, maintenance and real estate taxes in this table.

Core Income from Property Operations (1)

(In millions, except home site and occupancy figures, unaudited)

 

Quarters Ended September 30,

 

Nine Months Ended September 30,

 

 

2022

 

 

2021

 

Change (2)

 

 

2022

 

 

2021

 

Change (2)

MH base rental income

$

157.0

 

$

148.3

 

5.9

%

 

$

467.2

 

$

441.9

 

5.7

%

Rental home income

 

3.7

 

 

4.1

 

(9.8

) %

 

 

11.5

 

 

12.7

 

(9.5

)%

RV and marina base rental income

 

96.7

 

 

92.9

 

4.1

%

 

 

280.5

 

 

254.2

 

10.3

%

Annual membership subscriptions

 

16.1

 

 

15.1

 

6.1

%

 

 

46.6

 

 

43.0

 

8.1

%

Membership upgrade sales current period, gross

 

10.3

 

 

10.1

 

2.1

%

 

 

26.8

 

 

29.3

 

(8.8

)%

Utility and other income

 

28.3

 

 

25.8

 

9.9

%

 

 

80.6

 

 

76.1

 

6.1

%

Property operating revenues

 

312.1

 

 

296.3

 

5.3

%

 

 

913.2

 

 

857.2

 

6.5

%

 

 

 

 

 

 

 

 

 

 

 

 

Utility expense

 

39.3

 

 

35.1

 

12.1

%

 

 

106.6

 

 

95.0

 

12.2

%

Payroll

 

30.6

 

 

27.8

 

10.2

%

 

 

83.7

 

 

77.5

 

8.1

%

Repair & Maintenance

 

22.6

 

 

21.4

 

5.5

%

 

 

65.0

 

 

58.3

 

11.4

%

Insurance and other (3)

 

23.1

 

 

21.9

 

5.7

%

 

 

67.5

 

 

63.1

 

7.0

%

Real estate taxes

 

16.8

 

 

16.3

 

3.2

%

 

 

50.8

 

 

48.7

 

4.2

%

Sales and marketing, gross

 

6.6

 

 

6.5

 

1.7

%

 

 

17.9

 

 

19.0

 

(5.9

)%

Property operating expenses

 

139.0

 

 

129.0

 

7.8

%

 

 

391.5

 

 

361.6

 

8.3

%

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

$

173.1

 

$

167.3

 

3.5

%

 

$

521.7

 

$

495.6

 

5.3

%

 

 

 

 

 

 

 

 

 

 

 

 

Occupied sites (4)

 

69,014

 

 

68,778

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

_____________________

  1. Excludes property management and the GAAP deferral of membership upgrades sales upfront payments and membership sales commissions, net.
  2. Calculations prepared using actual results without rounding.
  3. Includes bad debt expense for the periods presented.
  4. Occupied sites are presented as of the end of the period. Occupied sites have increased by 119 from 68,895 at December 31, 2021.

Core Income from Property Operations (continued)

(In millions, except home site and occupancy figures, unaudited)

 

Quarters Ended September 30,

 

Nine Months Ended September 30,

 

 

2022

 

 

 

2021

 

 

Change (1)

 

 

2022

 

 

 

2021

 

 

Change (1)

Core manufactured home site figures and occupancy averages:

 

 

 

 

 

 

 

 

 

 

 

Total sites

 

72,455

 

 

 

72,301

 

 

 

 

 

72,455

 

 

 

72,161

 

 

 

Occupied sites

 

68,950

 

 

 

68,711

 

 

 

 

 

68,914

 

 

 

68,633

 

 

 

Occupancy %

 

95.2

%

 

 

95.0

%

 

 

 

 

95.1

%

 

 

95.1

%

 

 

Monthly base rent per site

$

759

 

 

$

720

 

 

 

 

$

753

 

 

$

715

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core RV and marina base rental income:

 

 

 

 

 

 

 

 

 

 

 

Annual (2)

$

58.5

 

 

$

53.9

 

 

8.6%

 

$

171.3

 

 

$

157.5

 

 

8.8%

Seasonal

 

8.7

 

 

 

7.2

 

 

21.2%

 

 

42.7

 

 

 

29.2

 

 

46.0%

Transient

 

29.5

 

 

 

31.8

 

 

(7.2)%

 

 

66.5

 

 

 

67.5

 

 

(1.4)%

Total Seasonal and Transient

$

38.2

 

 

$

39.0

 

 

(2.0)%

 

$

109.2

 

 

$

96.7

 

 

12.9%

 

 

 

 

 

 

 

 

 

 

 

 

Total RV and marina base rental income

$

96.7

 

 

$

92.9

 

 

4.1%

 

$

280.5

 

 

$

254.2

 

 

13.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

Core utility information:

 

 

 

 

 

 

 

 

 

 

 

Income

$

16.3

 

 

$

14.9

 

 

9.4%

 

$

46.5

 

 

$

41.7

 

 

11.5%

Expense

 

39.3

 

 

 

35.1

 

 

12.1%

 

 

106.6

 

 

 

95.0

 

 

12.2%

Expense, net

$

23.0

 

 

$

20.2

 

 

13.9%

 

$

60.1

 

 

$

53.3

 

 

12.8%

 

 

 

 

 

 

 

 

 

 

 

 

Utility Recovery Rate (3)

 

41.5

%

 

 

42.5

%

 

 

 

 

43.6

%

 

 

43.9

%

 

 

_____________________

  1. Calculations prepared using actual results without rounding.
  2. Core Annual marina base rental income represents approximately 99% of the total Core marina base rental income for all periods presented.
  3. Calculated by dividing the utility income by utility expense.

Non-Core Income from Property Operations (1)

(In millions, unaudited)

 

Quarter Ended

 

Nine Months Ended

 

September 30, 2022

 

September 30, 2022

MH base rental income

$

2.0

 

$

7.8

RV and marina base rental income

 

13.2

 

 

36.5

Annual membership subscriptions

 

0.2

 

 

0.5

Utility and other income

 

4.4

 

 

12.0

Membership upgrade sales current period, gross

 

0.8

 

 

1.0

Property operating revenues

 

20.6

 

 

57.8

 

 

 

 

Property operating expenses (2)

 

9.8

 

 

28.3

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

$

10.8

 

$

29.5

 

 

 

 

 

 

 

 

______________________

  1. Excludes property management and the GAAP deferral of membership upgrade sales upfront payments and membership sales commissions, net.
  2. Includes bad debt expense for the periods presented.

Income from Rental Home Operations

(In millions, except occupied rentals, unaudited)

 

Quarters Ended September 30,

 

Nine Months Ended September 30,

 

2022

 

2021

 

2022

 

2021

Manufactured homes:

 

 

 

 

 

 

 

Rental operations revenues (1)

$

10.4

 

$

12.0

 

$

32.6

 

$

36.7

Rental home operations expense (2)

 

1.5

 

 

1.5

 

 

4.1

 

 

4.0

Income from rental home operations

 

8.9

 

 

10.5

 

 

28.5

 

 

32.7

Depreciation on rental homes (3)

 

2.5

 

 

2.7

 

 

7.5

 

 

8.0

Income from rental operations, net of depreciation

$

6.4

 

$

7.8

 

$

21.0

 

$

24.7

 

 

 

 

 

 

 

 

Occupied rentals: (4)

 

 

 

 

 

 

 

New

 

2,594

 

 

3,132

 

 

 

 

Used

 

355

 

 

456

 

 

 

 

Total occupied rental sites

 

2,949

 

 

3,588

 

 

 

 

 

As of September 30, 2022

 

As of September 30, 2021

Cost basis in rental homes: (5)

Gross

 

Net of Depreciation

 

Gross

 

Net of Depreciation

New

$

221.8

 

$

179.6

 

$

231.7

 

$

198.2

Used

 

15.2

 

 

6.5

 

 

16.7

 

 

10.9

Total rental homes

$

237.0

 

$

186.1

 

$

248.4

 

$

209.1

______________________

  1. For the quarters ended September 30, 2022 and 2021, approximately $6.7 million and $7.8 million, respectively, of the rental operations revenue is included in the MH base rental income in the Core Income from Property Operations on pages 11-12. The remainder of the rental operations revenue is included in Rental home income for the quarters ended September 30, 2022 and 2021 in the Core Income from Property Operations on pages 11-12.
  2. Rental home operations expense is included in Property operating, maintenance and real estate taxes in the Consolidated Income from Property Operations on page 10. Rental home operations expense is included in Insurance and other in the Core Income from Property Operations on pages 11-12.
  3. Depreciation on rental homes in our Core portfolio is presented in Depreciation and amortization in the Consolidated Statements of Income on page 6.
  4. Occupied rentals as of the end of the period in our Core portfolio. Included in the quarters ended September 30, 2022 and 2021 were 165 and 253 homes rented through ECHO Financing LLC ("ECHO joint venture"), respectively. As of September 30, 2022 and 2021, the rental home investment associated with the ECHO joint venture totaled approximately $6.4 million and $10.0 million, respectively.
  5. 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. As of September 30, 2022 and 2021, our investment in the ECHO joint venture was approximately $19.0 million and $17.8 million, respectively.

Total Sites and Home Sales

(In thousands, except sites and home sale volumes, unaudited)

Summary of Total Sites as of September 30, 2022

 

 

Sites (1)

MH sites

72,700

RV sites:

 

Annual

34,400

Seasonal

12,700

Transient

14,600

Marina slips

6,900

Membership (2)

25,800

Joint Ventures (3)

3,100

Total

 

170,200

Home Sales - Select Data

 

 

 

 

 

 

 

 

Quarters Ended September 30,

 

Nine Months Ended September 30,

 

 

2022

 

 

2021

 

 

2022

 

2021

Total New Home Sales Volume (4)

 

331

 

 

338

 

 

957

 

 

825

New Home Sales Volume - ECHO joint venture

 

21

 

 

32

 

 

72

 

 

56

New Home Sales Gross Revenues (4)

$

32,850

 

$

26,413

 

$

92,228

 

$

64,071

 

 

 

 

 

 

 

 

Total Used Home Sales Volume

 

81

 

 

104

 

 

250

 

 

314

Used Home Sales Gross Revenues

$

972

 

$

863

 

$

3,337

 

$

2,852

 

 

 

 

 

 

 

 

Brokered Home Resales Volume.

 

223

 

 

171

 

 

674

 

 

543

Brokered Home Resales Gross Revenues

$

931

 

$

535

 

$

2,591

 

$

1,555

______________________

  1. MH sites are generally leased on an annual basis to residents who own or lease factory-built homes, including manufactured homes. Annual RV and marina sites are leased on an annual basis to customers who generally have an RV, factory-built cottage, boat or other unit placed on the site, including those Northern properties that are open for the summer season. Seasonal RV and marina sites are leased to customers generally for one to six months. Transient RV and marina sites are leased to customers on a short-term basis.
  2. Sites primarily utilized by approximately 132,200 members. Includes approximately 6,400 sites rented on an annual basis.
  3. Joint ventures have approximately 1,800 annual Sites and 1,300 transient Sites.
  4. 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 the ECHO joint venture.

Memberships - Select Data

(Unaudited)

 

 

Years Ended December 31,

 

 

 

 

 

2018

 

 

2019

 

 

2020

 

 

2021

 

Nine Months

Ended

September

30, 2022 (1)

Member Count (2)

 

 

111,094

 

 

115,680

 

 

116,169

 

 

125,149

 

 

132,185

Thousand Trails Camping Pass (TTC) Origination

 

 

37,528

 

 

41,484

 

 

44,129

 

 

50,523

 

 

42,436

TTC Sales

 

 

17,194

 

 

19,267

 

 

20,587

 

 

23,923

 

 

19,504

RV Dealer TTC Activations

 

 

20,334

 

 

22,217

 

 

23,542

 

 

26,600

 

 

22,932

Number of annuals (3)

 

 

5,888

 

 

5,938

 

 

5,986

 

 

6,320

 

 

6,416

Number of upgrade sales (4)

 

 

2,500

 

 

2,919

 

 

3,373

 

 

4,863

 

 

3,288

 

 

 

 

 

 

 

 

 

 

 

(In thousands, unaudited)

 

 

 

 

 

 

 

 

 

 

Annual membership subscriptions

 

$

47,778

 

$

51,015

 

$

53,085

 

$

58,251

 

$

47,003

RV base rental income from annuals

 

$

18,363

 

$

19,634

 

$

20,761

 

$

23,127

 

$

19,092

RV base rental income from seasonals/transients

 

$

19,840

 

$

20,181

 

$

18,126

 

$

25,562

 

$

20,667

Membership upgrade sales current period, gross

 

$

15,191

 

$

19,111

 

$

21,739

 

$

36,270

 

$

27,771

Utility and other income

 

$

2,410

 

$

2,422

 

$

2,426

 

$

2,735

 

$

1,950

 

 

 

 

 

 

 

 

 

 

 

______________________

  1. Activity through September 30, 2022.
  2. Members have entered into annual 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 membership subscriptions.
  4. Existing members who have upgraded memberships 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.

Market Capitalization

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

Capital Structure as of September 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Common Shares/Units

 

% of Total Common Shares/Units

 

Total

 

% of Total

 

% of Total Market Capitalization

 

 

 

 

 

 

 

 

 

 

 

Secured Debt

 

 

 

 

 

$

2,734

 

82.1

%

 

 

Unsecured Debt

 

 

 

 

 

 

595

 

17.9

%

 

 

Total Debt (1)

 

 

 

 

 

$

3,329

 

100.0

%

 

21.3

%

 

 

 

 

 

 

 

 

 

 

 

Common Shares

 

 

186,108,851

 

95.3

%

 

 

 

 

 

 

OP Units

 

 

9,270,971

 

4.7

%

 

 

 

 

 

 

Total Common Shares and OP Units

 

 

195,379,822

 

100.0

%

 

 

 

 

 

 

Common Stock price at September 30, 2022

 

$

62.84

 

 

 

 

 

 

 

 

Fair Value of Common Shares and OP Units

 

 

 

 

 

$

12,278

 

100.0

%

 

 

Total Equity

 

 

 

 

 

$

12,278

 

100.0

%

 

78.7

%

 

 

 

 

 

 

 

 

 

 

 

Total Market Capitalization

 

 

 

 

 

$

15,607

 

 

 

100.0

%

______________________

1. Excludes deferred financing costs of approximately $29.0 million.

Debt Maturity Schedule

Debt Maturity Schedule as of September 30, 2022

(In thousands, unaudited)

Year

 

Secured Debt

 

Weighted Average Interest Rate

 

Unsecured Debt (1)

 

Weighted Average Interest Rate

 

Total Debt

 

% of Total Debt

 

Weighted Average Interest Rate

 

2022

 

$

 

 

%

 

$

 

 

%

 

$

 

 

%

 

%

 

2023

 

 

93,447

 

 

4.92

%

 

 

 

 

%

 

 

93,447

 

 

2.89

%

 

4.92

%

 

2024

 

 

10,061

 

 

5.49

%

 

 

 

 

%

 

 

10,061

 

 

0.31

%

 

5.49

%

 

2025

 

 

93,879

 

 

3.45

%

 

 

 

 

%

 

 

93,879

 

 

2.90

%

 

3.45

%

 

2026

 

 

 

 

%

 

 

300,000

 

 

1.79

%

 

 

300,000

 

 

9.28

%

 

1.79

%

 

2027

 

 

 

 

%

 

 

200,000

 

 

2.01

%

 

 

200,000

 

 

6.18

%

 

3.45

%

 

2028

 

 

208,409

 

 

4.19

%

 

 

 

 

%

 

 

208,409

 

 

6.44

%

 

4.19

%

 

2029

 

 

39,525

 

 

4.10

%

 

 

 

 

%

 

 

39,525

 

 

1.22

%

 

4.10

%

 

2030

 

 

275,385

 

 

2.69

%

 

 

 

 

%

 

 

275,385

 

 

8.51

%

 

2.69

%

 

2031

 

 

261,567

 

 

2.46

%

 

 

 

 

%

 

 

261,567

 

 

8.09

%

 

2.46

%

 

Thereafter

 

 

1,751,864

 

 

3.76

%

 

 

 

 

%

 

 

1,751,864

 

 

54.17

%

 

3.76

%

 

Total

 

$

2,734,137

 

 

3.60

%

 

$

500,000

 

 

2.45

%

 

$

3,234,137

 

 

100.0

%

 

3.43

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unsecured Line of Credit

 

 

 

 

 

 

 

94,984

 

 

 

 

 

94,984

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note Premiums

 

 

173

 

 

 

 

 

 

 

 

 

 

173

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Debt

 

 

2,734,310

 

 

 

 

 

594,984

 

 

 

 

 

3,329,294

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred Financing Costs

 

 

(25,559

)

 

 

 

 

(3,405

)

 

 

 

 

(28,964

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Debt, net

 

$

2,708,751

 

 

 

 

$

591,579

 

 

 

 

$

3,300,330

 

 

 

 

3.59

%

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Years to Maturity

 

 

11.4

 

 

 

 

 

3.7

 

 

 

 

 

10.1

 

 

 

 

 

 

______________________

  1. Reflects effective interest rate for the quarter ended September 30, 2022, including interest associated with the line of credit and 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 non-refundable upfront payments from membership upgrade contracts. In accordance with GAAP, the non-refundable upfront payments and related commissions are deferred and amortized over the estimated membership upgrade contract term. Although the NAREIT definition of FFO does not address the treatment of non-refundable upfront 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 non-operating income and expense items, such as gains and losses from early debt extinguishment, including prepayment penalties and defeasance costs, transaction/pursuit costs, and 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 and 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 and other miscellaneous non-comparable items from 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, membership subscriptions and upgrade sales, utility and other 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 membership upgrade sales upfront payments and membership sales 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 properties.

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)

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Net income available for Common Stockholders

 

$

67,163

 

 

$

70,625

 

 

$

211,578

 

 

$

196,916

 

Redeemable perpetual preferred stock dividends

 

 

 

 

 

 

 

 

8

 

 

 

8

 

Income allocated to non-controlling interests – Common OP Units

 

 

3,346

 

 

 

3,468

 

 

 

10,563

 

 

 

10,236

 

Equity in income of unconsolidated joint ventures

 

 

(1,465

)

 

 

(851

)

 

 

(2,889

)

 

 

(2,786

)

Income before equity in income of unconsolidated joint ventures

 

 

69,044

 

 

 

73,242

 

 

 

219,260

 

 

 

204,374

 

Loss on sale of real estate and impairment, net (1)

 

 

3,747

 

 

 

 

 

 

3,747

 

 

 

59

 

Membership upgrade sales upfront payments, deferred, net

 

 

7,777

 

 

 

7,253

 

 

 

18,228

 

 

 

21,134

 

Gross revenues from home sales, brokered resales and ancillary services (2)

 

 

(52,547

)

 

 

(44,570

)

 

 

(144,937

)

 

 

(110,048

)

Interest income

 

 

(1,865

)

 

 

(1,805

)

 

 

(5,346

)

 

 

(5,314

)

Income from other investments, net

 

 

(2,399

)

 

 

(1,238

)

 

 

(6,920

)

 

 

(3,396

)

Membership sales commissions, deferred, net

 

 

(1,206

)

 

 

(1,468

)

 

 

(2,746

)

 

 

(4,405

)

Property management

 

 

19,003

 

 

 

17,015

 

 

 

55,973

 

 

 

48,955

 

Depreciation and amortization

 

 

52,547

 

 

 

44,414

 

 

 

152,737

 

 

 

138,127

 

Cost of home sales, brokered resales and ancillary services (2)

 

 

40,224

 

 

 

34,830

 

 

 

111,894

 

 

 

85,541

 

Home selling expenses and ancillary operating expenses (2)

 

 

7,080

 

 

 

6,558

 

 

 

21,146

 

 

 

17,588

 

General and administrative

 

 

11,086

 

 

 

10,401

 

 

 

35,078

 

 

 

31,141

 

Other expenses

 

 

1,627

 

 

 

797

 

 

 

6,636

 

 

 

2,295

 

Early debt retirement

 

 

 

 

 

 

 

 

1,156

 

 

 

2,784

 

Interest and related amortization

 

 

29,759

 

 

 

27,361

 

 

 

85,276

 

 

 

80,767

 

Income from property operations, excluding deferrals and property management

 

 

183,877

 

 

 

172,790

 

 

 

551,182

 

 

 

509,602

 

Membership upgrade sales upfront payments, and membership sales commissions, deferred, net

 

 

(6,571

)

 

 

(5,785

)

 

 

(15,482

)

 

 

(16,729

)

Property management

 

 

(19,003

)

 

 

(17,015

)

 

 

(55,973

)

 

 

(48,955

)

Income from property operations

 

$

158,303

 

 

$

149,990

 

 

$

479,727

 

 

$

443,918

 

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 non-refundable upfront payments from membership upgrade contracts. In accordance with GAAP, the non-refundable upfront 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 upfront 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, transaction/pursuit 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.

______________________

  1. Reflects a $3.7 million reduction to the carrying value of certain assets, including home inventory as a result of Hurricane Ian for the quarter and nine months ended September 30, 2022.
  2. Prior period amounts have been reclassified to conform to the current period presentation.

The following table reconciles Consolidated net income to EBITDAre and Adjusted EBITDAre:

 

 

Quarters Ended September 30,

 

Nine Months Ended September 30,

(amounts in thousands)

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Consolidated net income

 

$

70,509

 

 

$

74,093

 

 

$

222,149

 

 

$

207,160

 

Interest income

 

 

(1,865

)

 

 

(1,805

)

 

 

(5,346

)

 

 

(5,314

)

Membership upgrade sales upfront payments, deferred, net

 

 

7,777

 

 

 

7,253

 

 

 

18,228

 

 

 

21,134

 

Membership sales commissions, deferred, net

 

 

(1,206

)

 

 

(1,468

)

 

 

(2,746

)

 

 

(4,405

)

Real estate depreciation and amortization

 

 

52,547

 

 

 

44,414

 

 

 

152,737

 

 

 

138,127

 

Other depreciation and amortization

 

 

1,327

 

 

 

718

 

 

 

3,273

 

 

 

2,162

 

Interest and related amortization

 

 

29,759

 

 

 

27,361

 

 

 

85,276

 

 

 

80,767

 

Loss on sale of real estate and impairment, net (1)

 

 

3,747

 

 

 

 

 

 

3,747

 

 

 

59

 

Adjustments to our share of EBITDAre of unconsolidated joint ventures

 

 

1,439

 

 

 

259

 

 

 

4,256

 

 

 

778

 

EBITDAre

 

 

164,034

 

 

 

150,825

 

 

 

481,574

 

 

 

440,468

 

Early debt retirement

 

 

 

 

 

 

 

 

1,156

 

 

 

2,784

 

Transaction/pursuit costs (2)

 

 

302

 

 

 

 

 

 

3,384

 

 

 

 

Lease termination expenses (3)

 

 

2,073

 

 

 

 

 

 

2,073

 

 

 

 

Adjusted EBITDAre

 

$

166,409

 

 

$

150,825

 

 

$

488,187

 

 

$

443,252

 

CORE. The Core properties include properties we owned and operated during all of 2021 and 2022. 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 properties that were not owned and operated during all of 2021 and 2022. This includes, but is not limited to, six RV communities and eleven marinas acquired during 2021, one membership RV community and three RV communities acquired during 2022 and our Westwinds MH community and an adjacent shopping center. The ground leases with respect to Westwinds and the adjacent shopping center terminated on August 31, 2022.

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 do 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.

______________________

  1. Reflects a $3.7 million reduction to the carrying value of certain assets, including home inventory as a result of Hurricane Ian for the quarter and nine months ended September 30, 2022.
  2. Represents transaction/pursuit costs related to unconsummated acquisitions included in Other expenses in the Consolidated Statements of Income on page 6.
  3. Represents non-operating expenses associated with the Westwinds ground leases that terminated on August 31, 2022.

 

Contacts

Paul Seavey

(800) 247-5279

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