ELS Reports Third Quarter Results

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, 2018. 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, 2018

For the quarter ended September 30, 2018, total revenues increased $15.1 million, or 6.2 percent, to $256.7 million compared to $241.6 million for the same period in 2017. Net income available for Common Stockholders for the quarter ended September 30, 2018 increased $7.6 million, or $0.07 per Common Share, to $56.1 million, or $0.63 per Common Share, compared to $48.5 million, or $0.56 per Common Share, for the same period in 2017.

For the nine months ended September 30, 2018, total revenues increased $47.9 million, or 6.9 percent, to $743.2 million compared to $695.3 million for the same period in 2017. Net income available for Common Stockholders for the nine months ended September 30, 2018 increased $17.5 million or $0.16 per Common Share, to $162.4 million, or $1.82 per Common Share, compared to $144.9 million or $1.66 per Common Share, for the same period in 2017.

 Stay Updated To Save Money & Time. Join Our Free Newsletter 
. Indepth Analysis & Opinion       . Interviews      . Exclusive Reports  
. Free Digital Magazines      News & updates      . Event Invitations 
                     
& Much More Delivered To Your Inbox For Free.
Submit
We Will Not Spam, Rent, or Sell Your Information.
All emails include an unsubscribe link. You may opt-out at any time. See our privacy policy.

 

Non-GAAP Financial Measures and Portfolio Performance

For the quarter ended September 30, 2018, Funds from Operations (FFO) available for Common Stock and OP Unit holders increased $13.4 million, or $0.13 per Common Share, to $97.7 million or $1.03 per Common Share, compared to $84.3 million, or $0.90 per Common Share, for the same period in 2017. For the nine months ended September 30, 2018, FFO available for Common Stock and OP Unit holders increased $29.2 million, or $0.26 per Common Share, to $281.5 million or $2.97 per Common Share, compared to $252.3 million or $2.71 per Common Share, for the same period in 2017.

For the quarter ended September 30, 2018, Normalized Funds from Operations (Normalized FFO) available for Common Stock and OP Unit holders increased $8.8 million, or $0.08 per Common Share, to $93.9 million, or $0.99 per Common Share, compared to $85.1 million, or $0.91 per Common Share, for the same period in 2017. For the nine months ended September 30, 2018, Normalized FFO available for Common Stock and OP Unit holders increased $22.2 million or $0.19 per Common Share, to $275.6 million, or $2.91 per Common Share, compared to $253.4 million or $2.72 per Common Share, for the same period in 2017.

For the quarter ended September 30, 2018, property operating revenues, excluding deferrals, increased $14.3 million to $241.6 million compared to $227.3 million for the same period in 2017. For the nine months ended September 30, 2018, property operating revenues, excluding deferrals, increased $43.2 million to $703.9 million compared to $660.7 million for the same period in 2017. For the quarter ended September 30, 2018, income from property operations, excluding deferrals and property management, increased $10.3 million to $138.4 million compared to $128.1 million for the same period in 2017. For the nine months ended September 30, 2018, income from property operations, excluding deferrals and property management, increased $25.1 million to $408.9 million compared to $383.8 million for the same period in 2017.

For the quarter ended September 30, 2018, Core property operating revenues, excluding deferrals, increased approximately 3.5 percent and Core income from property operations, excluding deferrals and property management, increased approximately 4.8 percent compared to the same period in 2017. For the nine months ended September 30, 2018, Core property operating revenues, excluding deferrals, increased approximately 4.9 percent and Core income from property operations, excluding deferrals and property management, increased approximately 4.8 percent compared to the same period in 2017.

Balance Sheet Activity

During the quarter, we sold 861,141 shares of common stock as part of our ATM equity offering program at a weighted average price per share of $91.45, resulting in net cash proceeds of approximately $77.7 million.

Subsequent to the quarter, we paid off six mortgage loans of $66.3 million, including $0.1 million of prepayment penalties, using our line of credit. The loans had a weighted average interest rate of 6.07% per annum and were secured by six MH properties.

About Equity LifeStyle Properties

We are a self-administered, self-managed real estate investment trust (REIT) with headquarters in Chicago. As of October 22, 2018, we own or have an interest in 411 quality properties in 32 states and British Columbia consisting of 153,847 sites.

For additional information, please contact our Investor Relations Department at (800) 247-5279 or at [email protected].

Conference Call

A live webcast of our conference call discussing these results will take place tomorrow, Tuesday, October 23, 2018, at 10:00 a.m. Central Time. Please visit the Investor Information section at www.equitylifestyleproperties.com for the link. A replay of the webcast will be available for two weeks at this site.

Reporting Calendar

Quarterly financial results and related earnings conference calls for the next three quarters are expected to occur as follows:

    Release Date     Earnings Call
Fourth Quarter 2018 Monday, January 28, 2019 Tuesday, January 29, 2019 10:00 a.m. CT
First Quarter 2019 Monday, April 22, 2019 Tuesday, April 23, 2019 10:00 a.m. CT
Second Quarter 2019 Monday, July 22, 2019 Tuesday, July 23, 2019 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 2018 and 2019, 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 dilutive effects of issuing additional securities;
  • the effect of changes in accounting for Leases set forth under the Codification Topic “Leases”;
  • the outcome of pending or future lawsuits or actions brought against us, including those disclosed in our filings with the Securities and Exchange Commission; and
  • other risks indicated from time to time in our filings with the Securities and Exchange Commission.

For further information on these and other factors that could impact us and the statements contained herein, refer to our filings with the Securities and Exchange Commission, including Risk Factors in our most recent Annual Report on Form 10-K and subsequent quarterly reports.

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

 

Investor Information

 
 

Equity Research Coverage (1)

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

[email protected]

[email protected]

[email protected]

[email protected]

[email protected]

 
Evercore ISI Green Street Advisors Robert W. Baird & Company
Steve Sakwa/ Samir Khanal John Pawlowski/ Ryan Lumb Drew T. Babin
212-466-5600 949-640-8780 215-553-7816

[email protected]

[email protected]

[email protected]

[email protected]

[email protected]

 
Wells Fargo Securities
Todd Stender
562-637-1371

[email protected]

_____________________________

1.   Any opinions, estimates or forecasts regarding our performance made by these analysts or agencies do not represent our opinions, forecasts or predictions. We do not by reference to these firms imply our endorsement of or concurrence with such information, conclusions or recommendations.
 
 

Financial Highlights

 

(In millions, except Common Stock and OP Units outstanding and per share data, unaudited)

 
As of and for the Three Months Ended

Sept 30, 2018

 

June 30, 2018

 

March 31, 2018

 

Dec 31, 2017

 

Sept 30, 2017

Operating Information        
Total revenues $   256.7   $   240.5   $   246.0   $   230.0   $   241.6  
Net income $ 59.7 $ 49.2 $ 64.2 $ 48.0 $ 54.9
Net income available for Common Stockholders $ 56.1 $ 46.1 $ 60.2 $ 45.0 $ 48.5
Adjusted EBITDA (1) $ 118.9 $ 108.6 $ 122.0 $ 106.7 $ 111.5
FFO available for Common Stock and OP Unit holders (1)(2) $ 97.7 $ 85.6 $ 98.2 $ 79.4 $ 84.3
Normalized FFO available for Common Stock and OP Unit holders (1)(2) $ 93.9 $ 83.8 $ 97.9 $ 82.6 $ 85.1
Funds available for distribution (“FAD”) available for Common Stock and OP Unit holders (1)(2) $ 82.1 $ 71.4 $ 89.1 $ 72.6 $ 74.0
 
Common Stock Outstanding (In thousands)

and Per Share Data

Common Stock and OP Units, end of the period 95,493 94,623 94,565 94,420 93,334
Weighted average Common Stock and OP Units outstanding – Fully Diluted 95,263 94,623 94,577 94,295 93,324
Net income per Common Share – Fully Diluted (3) $ 0.63 $ 0.52 $ 0.68 $ 0.51 $ 0.56
FFO per Common Share and OP Unit – Fully Diluted $ 1.03 $ 0.90 $ 1.04 $ 0.84 $ 0.90
Normalized FFO per Common Share and OP Unit – Fully Diluted $ 0.99 $ 0.89 $ 1.04 $ 0.88 $ 0.91
Dividends per Common Share $ 0.550 $ 0.550 $ 0.550 $ 0.488 $ 0.488
 
Balance Sheet
Total assets $ 3,855 $ 3,700 $ 3,690 $ 3,610 $ 3,526
Total liabilities $ 2,665 $ 2,598 $ 2,589 $ 2,510 $ 2,511
 
Market Capitalization
Total debt (4) $ 2,318 $ 2,251 $ 2,264 $ 2,224 $ 2,200
Total market capitalization (5) $ 11,528 $ 10,947 $ 10,564 $ 10,629 $ 10,141
 
Ratios
Total debt / total market capitalization 20.1 % 20.6 % 21.4 % 20.9 % 21.7 %
Total debt + preferred stock / total market capitalization 20.1 % 20.6 % 21.4 % 20.9 % 21.7 %
Total debt / Adjusted EBITDA (6) 5.1 5.0 5.1 5.1 5.1
Interest coverage (7) 4.4 4.4 4.4 4.4 4.4
Fixed charges + preferred distributions coverage (8) 4.4 4.3 4.2 4.1 4.0

______________________

1.   See Non-GAAP Financial Measures Definitions and Other Terms at the end of the supplemental information for definitions of Adjusted EBITDA, FFO, Normalized FFO and FAD and a reconciliation of Consolidated net income to Adjusted EBITDA.
2. See page 7 for a reconciliation of Net income available for Common Stockholders to Non-GAAP financial measures FFO available for Common Stock and OP Unit holders, Normalized FFO available for Common Stock and OP Unit holders and FAD available for Common Stock and OP Unit holders.
3. Net income per fully diluted Common Share is calculated before Income allocated to non-controlling interest- Common OP Units.
4. Excludes deferred financing costs of approximately $23.6 million.
5. See page 18 for market capitalization as of September 30, 2018.
6. Calculated using trailing twelve months Adjusted EBITDA.
7. Interest coverage is calculated by dividing trailing twelve months Adjusted EBITDA 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 EBITDA 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)

 
September 30, 2018 December 31, 2017
(unaudited)
Assets
Investment in real estate:
Land $ 1,342,925 $ 1,221,375
Land improvements 3,114,815 3,045,221
Buildings and other depreciable property 708,600   649,217  
5,166,340 4,915,813
Accumulated depreciation (1,613,158 ) (1,516,694 )
Net investment in real estate 3,553,182 3,399,119
Cash and restricted cash 112,410 31,085
Notes receivable, net 35,889 49,477
Investment in unconsolidated joint ventures 57,366 53,080
Deferred commission expense 40,352 31,443
Escrow deposits, goodwill, and other assets, net 55,838   45,828  
Total Assets $ 3,855,037   $ 3,610,032  
Liabilities and Equity
Liabilities:
Mortgage notes payable $ 2,016,257 $ 1,971,715
Term loan 198,545 198,302
Unsecured line of credit 80,000 30,000
Accrued expenses and accounts payable 102,620 80,744
Deferred revenue “ upfront payments from right-to-use contracts 115,172 85,596
Deferred revenue “ right-to-use annual payments 11,025 9,932
Accrued interest payable 8,369 8,387
Rents and other customer payments received in advance and security deposits 80,011 79,267
Distributions payable 52,521   46,047  
Total Liabilities 2,664,520   2,509,990  
Equity:
Stockholders Equity:
Preferred stock, $0.01 par value, 10,000,000 shares authorized as of September 30, 2018 and December 31, 2017; none issued and outstanding.
Common stock, $0.01 par value, 200,000,000 shares authorized as of September 30, 2018 and December 31, 2017; 89,746,747 and 88,585,160 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively. 895 883
Paid-in capital 1,325,648 1,242,109
Distributions in excess of accumulated earnings (211,743 ) (211,980 )
Accumulated other comprehensive income 3,959   942  
Total Stockholders Equity 1,118,759 1,031,954
Non-controlling interests “ Common OP Units 71,758   68,088  
Total Equity 1,190,517   1,100,042  
Total Liabilities and Equity $ 3,855,037   $ 3,610,032  
     
 

Consolidated Income Statements

 

(In thousands, unaudited)

 
 
Quarters Ended September 30, Nine Months Ended September 30,
2018   2017 2018   2017
Revenues:
Community base rental income $ 130,746 $ 123,177 $ 386,064 $ 365,833
Rental home income 3,507 3,592 10,583 10,829
Resort base rental income 64,351 58,471 183,836 169,594
Right-to-use annual payments 12,206 11,531 35,616 34,133
Right-to-use contracts current period, gross 4,863 4,208 11,969 11,212
Right-to-use contract upfront payments, deferred, net (2,883 ) (1,670 ) (6,189 ) (3,766 )
Utility and other income 25,917 26,295 75,758 69,071
Gross revenues from home sales 9,339 10,012 26,753 24,872
Brokered resale and ancillary services revenues, net 1,362 1,983 3,380 4,088
Interest income 1,846 1,974 5,658 5,542
Income from other investments, net 5,421   2,052   9,774   3,918  
Total revenues 256,675 241,625 743,202 695,326
 
Expenses:
Property operating and maintenance 84,445 80,164 239,444 221,119
Rental home operating and maintenance 1,904 1,704 4,957 4,912
Real estate taxes 13,240 14,006 40,815 41,986
Sales and marketing, gross 3,568 3,277 9,685 8,861
Right-to-use contract commissions, deferred, net (458 ) (176 ) (744 ) (372 )
Property management 13,589 13,160 40,742 38,743
Depreciation on real estate assets and rental homes 32,856 30,493 96,630 90,849
Amortization of in-place leases 2,124 138 5,069 2,128
Cost of home sales 9,742 10,377 27,948 25,391
Home selling expenses 1,101 1,447 3,149 3,301
General and administrative 8,816 7,505 26,523 23,339
Other expenses 386 324 1,096 814
Interest and related amortization 26,490   25,027   78,478   74,728  
Total expenses 197,803   187,446   573,792   535,799  
Income before equity in income of unconsolidated joint ventures 58,872 54,179 169,410 159,527
Equity in income of unconsolidated joint ventures 788   686   3,596   2,876  
Consolidated net income 59,660   54,865   173,006   162,403  
 
Income allocated to non-controlling interest-Common OP Units (3,590 ) (3,286 ) (10,569 ) (9,825 )
Redeemable perpetual preferred stock dividends and original issuance costs   (3,054 ) (8 ) (7,667 )
Net income available for Common Stockholders $ 56,070   $ 48,525   $ 162,429   $ 144,911  
 
 

Non-GAAP Financial Measures

   
 

Selected Non-GAAP Financial Measures

 

(In millions, except per share data, unaudited)

 
 
Quarter Ended
September 30, 2018
Income from property operations, excluding deferrals and property management – 2018 Core (1) $ 133.3
Income from property operations, excluding deferrals and property management – Non-Core (1) 5.1
Property management and general and administrative (22.4 )
Other income and expenses 4.4
Interest and related amortization (26.5 )
Normalized FFO available for Common Stock and OP Unit holders (2) 93.9
Insurance proceeds due to catastrophic weather event (3) 3.8  
FFO available for Common Stock and OP Unit holders (2) $ 97.7  
 
Normalized FFO per Common Share and OP Unit – Fully Diluted $ 0.99
FFO per Common Share and OP Unit – Fully Diluted $ 1.03
 
 
Normalized FFO available for Common Stock and OP Unit holders (2) $ 93.9
Non-revenue producing improvements to real estate (2) (11.8 )
FAD available for Common Stock and OP Unit holders (2) $ 82.1  
 
Weighted average Common Stock and OP Units – Fully Diluted 95.3

__________________

1.   See Non-GAAP Financial Measures Definitions and Other Terms at the end of the supplemental information for definitions of Income from property operations, excluding deferrals and property management, Core, Non-Core, and a reconciliation of Net income available for Common Stockholders to Income from property operations, excluding deferrals and property management. 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 Non-GAAP Financial Measures Definitions and Other Terms at the end of the supplemental information for definitions of FFO, Normalized FFO, FAD and Non-revenue producing improvements to real estate. 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, unaudited)

 
Quarters Ended September 30, Nine Months Ended September 30,
2018   2017 2018   2017
Net income available for Common Stockholders $ 56,070 $ 48,525 $ 162,429 $ 144,911
Income allocated to Common OP Units 3,590 3,286 10,569 9,825
Right-to-use contract upfront payments, deferred, net (1) 2,883 1,670 6,189 3,766
Right-to-use contract commissions, deferred, net (2) (458 ) (176 ) (744 ) (372 )
Depreciation on real estate assets 30,424 27,879 89,307 82,939
Depreciation on rental homes 2,432 2,614 7,323 7,910
Amortization of in-place leases 2,124 138 5,069 2,128
Depreciation on unconsolidated joint ventures 651   360   1,390   1,171  
FFO available for Common Stock and OP Unit holders (3) 97,716 84,296 281,532 252,278
Transaction costs 324
Preferred stock original issuance costs 757 757
Insurance proceeds due to catastrophic weather event (4) (3,833 )   (5,925 )  
Normalized FFO available for Common Stock and OP Unit holders (3) 93,883 85,053 275,607 253,359
Non-revenue producing improvements to real estate (3) (11,790 ) (11,015 ) (32,965 ) (29,823 )
FAD available for Common Stock and OP Unit holders (3) $ 82,093   $ 74,038   $ 242,642   $ 223,536  
 
Net income available per Common Share – Basic $ 0.63 $ 0.56 $ 1.83 $ 1.67
Net income available per Common Share – Fully Diluted (5) $ 0.63 $ 0.56 $ 1.82 $ 1.66
 
FFO per Common Share and OP Unit-Basic $ 1.03 $ 0.91 $ 2.98 $ 2.72
FFO per Common Share and OP Unit-Fully Diluted $ 1.03 $ 0.90 $ 2.97 $ 2.71
 
Normalized FFO per Common Share and OP Unit-Basic $ 0.99 $ 0.92 $ 2.91 $ 2.73
Normalized FFO per Common Share and OP Unit-Fully Diluted $ 0.99 $ 0.91 $ 2.91 $ 2.72
 
Average Common Stock – Basic 89,200 87,037 88,760 86,620
Average Common Stock and OP Units – Basic 94,971 92,873 94,569 92,720
Average Common Stock and OP Units – Fully Diluted 95,263 93,324 94,827 93,135

___________________________

1.   The Company adopted ASU 2014-09, Revenue from Contracts with Customers, and all related amendments, effective January 1, 2018. Upon adoption, right-to-use upfront nonrefundable payments are recognized on a straight-line basis over 20 years to reflect our current estimated customer life for the majority of our upgrade contracts. The amount shown represents the deferral of a substantial portion of current period upgrade sales, offset by amortization of prior period sales.
2. The deferred commissions are amortized using the same method as used for the related non-refundable upfront payments from the entry of right-to-use contracts and upgrade sales. The amount shown represents the deferral of a substantial portion of current period commissions on those contracts, offset by the amortization of prior period commissions.
3. See Non-GAAP Financial Measures Definitions and Other Terms at the end of the supplemental information for definitions of FFO, Normalized FFO, FAD and Non-revenue producing improvements to real estate.
4. Represents insurance recovery revenue from reimbursement for capital expenditures related to Hurricane Irma.
5. 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,
2018   2017 2018   2017
Community base rental income (2) $ 130.7 $ 123.2 $ 386.1 $ 365.8
Rental home income 3.5 3.6 10.6 10.8
Resort base rental income (3) 64.4 58.5 183.8 169.6
Right-to-use annual payments 12.2 11.5 35.6 34.1
Right-to-use contracts current period, gross 4.9 4.2 12.0 11.2
Utility and other income (4) 25.9   26.3   75.8   69.2  
Property operating revenues 241.6 227.3 703.9 660.7
 
Property operating, maintenance and real estate taxes (5) 97.7 94.2 280.3 263.1
Rental home operating and maintenance 1.9 1.7 5.0 4.9
Sales and marketing, gross 3.6   3.3   9.7   8.9  
Property operating expenses 103.2   99.2   295.0   276.9  
Income from property operations, excluding deferrals and property management (1) $ 138.4   $ 128.1   $ 408.9   $ 383.8  
 
Manufactured home site figures and occupancy averages:
Total sites 72,221 71,113 71,782 71,049
Occupied sites 68,330 67,017 67,857 66,827
Occupancy % 94.6 % 94.2 % 94.5 % 94.1 %
Monthly base rent per site $ 638 $ 613 $ 632 $ 608
 
Resort base rental income:
Annual $ 37.4 $ 33.6 $ 109.2 98.6
Seasonal 4.9 5.0 29.0 28.4
Transient 22.1   19.9   45.6   42.6  
Total resort base rental income $ 64.4   $ 58.5   $ 183.8   $ 169.6  

_________________________

1.   Excludes property management and the GAAP deferral of right-to-use contract upfront payments and related commissions, net. See page 4 for the Consolidated Income Statements and see Non-GAAP Financial Measures Definitions and Other Terms at the end of the supplemental information for the definition and reconciliation of Income from property operations, excluding deferrals and property management to Net income available to Common Stockholders.
2. See the manufactured home site figures and occupancy averages below within this table.
3. See resort base rental income detail included below within this table.
4. Includes impact of Hurricane Irma. Utility and other income includes insurance recovery revenues of $1.3 million and $6.5 million, including $1.2 million and $3.7 million which we have identified as business interruption, for the quarter and nine months ended September 30, 2018. Utility and other income includes insurance recovery revenues of $3.1 million in the quarter and nine months ended September 30, 2017.
5. Includes the impact of Hurricane Irma. Property operating, maintenance and real estate taxes includes debris removal and cleanup costs of $0.1 million and $2.6 million for the quarter and nine months ended September 30, 2018 and $3.3 million for the quarter and nine months ended September 30, 2017.
 
 

Core Income from Property Operations (1)

 

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

 
 
Quarters Ended September 30, Nine Months Ended September 30,
2018   2017   Change (2) 2018   2017   Change (2)
Community base rental income (3) $ 128.4 $ 123.0 4.4 % $ 382.2 $ 365.5 4.6 %
Rental home income 3.5 3.6 (2.4 )% 10.6 10.8 (2.3 )%
Resort base rental income (4) 59.9 56.6 5.9 % 173.8 162.5 7.0 %
Right-to-use annual payments 12.2 11.5 6.1 % 35.6 34.1 4.4 %
Right-to-use contracts current period, gross 4.9 4.2 15.6 % 12.0 11.2 6.8 %
Utility and other income (5) 24.1   26.1   (7.9 )% 70.4   68.5   2.7 %
Property operating revenues 233.0 225.0 3.5 % 684.6 652.6 4.9 %
 
Property operating, maintenance and real estate taxes (6) 94.2 92.8 1.5 % 271.9 259.0 5.0 %
Rental home operating and maintenance 1.9 1.7 11.7 % 5.0 4.9 0.9 %
Sales and marketing, gross 3.6   3.3   8.8 % 9.7   8.9   9.3 %
Property operating expenses 99.7   97.8   1.9 % 286.6   272.8   5.1 %
Income from property operations, excluding deferrals and property management (1) $ 133.3   $ 127.2   4.8 % $ 398.0   $ 379.8   4.8 %
Occupied sites (7) 67,302 66,967
 
Core manufactured home site figures and occupancy averages:
Total sites 70,923 70,877 70,901 70,873
Occupied sites 67,188 66,910 67,123 66,779
Occupancy % 94.7 % 94.4 % 94.7 % 94.2 %
Monthly base rent per site $ 637 $ 613 $ 633 $ 608
 
Resort base rental income:
Annual $ 35.4 $ 33.3 6.4 % $ 104.1 $ 97.6 6.7 %
Seasonal 4.5 4.3 4.0 % 28.1 25.8 8.6 %
Transient 20.0   19.0   5.4 % 41.6   39.1   6.6 %
Total resort base rental income $ 59.9   $ 56.6   5.9 % $ 173.8   $ 162.5   7.0 %

___________________________

1.   Excludes property management and the GAAP deferral of right-to-use contract upfront payments and related commissions, net. See Non-GAAP Financial Measures Definitions and Other Terms at the end of the supplemental information for definitions of Income from property operations, excluding deferrals and property management, and Core.
2. Calculations prepared using actual results without rounding.
3. See the Core manufactured home site figures and occupancy averages included below within this table.
4. See resort base rental income detail included below within this table.
5. Includes impact of Hurricane Irma. Utility and other income includes insurance recovery revenues of $2.4 million for the nine months ended September 30, 2018 and $3.1 million for the quarter and nine months ended September 30, 2017.
6. Includes impact of Hurricane Irma. Property operating, maintenance and real estate taxes includes debris removal and cleanup costs of $2.2 million for the nine months ended September 30, 2018 and $3.3 million for the quarter and nine months ended September 30, 2017.
7. Occupied sites are presented as of the end of the period. Occupied sites have increased by 209 from 67,093 at December 31, 2017.
     
 

Non-Core Income from Property Operations (1)

 

(In millions, unaudited)

 
Quarter Ended Nine Months Ended
September 30, 2018 September 30, 2018
Community base rental income $ 2.3 $ 3.9
Resort base rental income 4.4 10.0
Utility income and other property income (2) 1.9   5.4
Property operating revenues 8.6 19.3
 
Property operating expenses (2) 3.5   8.4
Income from property operations, excluding deferrals and property management (1) $ 5.1   $ 10.9

______________________

1.   Excludes property management and the GAAP deferral of right-to-use contract upfront payments and related commissions, net. See Non-GAAP Financial Measures Definitions and Other Terms at the end of the supplemental information for definitions of Income from property operations, excluding deferrals and property management, and Non-Core.
2. Includes impact of Hurricane Irma. Utility and other property includes insurance recovery revenues of $1.3 million and $4.2 million, including proceeds which we have identified as business interruption for the quarter and nine months ended September 30, 2018. Property operating expenses includes debris removal and cleanup costs of $0.1 million and $0.4 million for the quarter and nine months ended September 30, 2018.
     
 

Income from Rental Home Operations

 

(In millions, except occupied rentals, unaudited)

 
Quarters ended September 30, Nine Months Ended September 30,
2018   2017 2018   2017
Manufactured homes:
Rental operations revenues (1) $ 11.5 $ 12.2 $ 35.1 $ 37.1
Rental operations expense 1.9   1.7   5.0   4.9
Income from rental operations 9.6 10.5 30.1 32.2
Depreciation on rental homes (2) 2.4   2.6   7.3   7.9
Income from rental operations, net of depreciation (3) $ 7.2   $ 7.9   $ 22.8   $ 24.3
 
Occupied rentals: (4)
New 2,704 2,492
Used 1,515   2,010  
Total occupied rental sites 4,219   4,502  
     
As of September 30, 2018 As of September 30, 2017
Cost basis in rental homes: (5) Gross  

Net of Depreciation

Gross  

Net of Depreciation

New $ 151.9 $ 122.9 $ 131.4 $ 105.4
Used 36.6   17.8   44.6   24.8
Total rental homes $ 188.5   $ 140.7   $ 176.0   $ 130.2

__________________________

1.   For the quarters ended September 30, 2018 and 2017, approximately $8.0 million and $8.7 million, respectively, of the rental operations revenue are included in the Community base rental income in the Consolidated Income from Property Operations table on page 8. For the nine months ended September 30, 2018 and 2017, approximately $24.5 million and $26.3 million, respectively, of the rental operations revenue are included in the Community base rental income in the Consolidated Income from Property Operations table on page 8. The remainder of the rental operations revenue is included in Rental home income for the quarters and nine months ended September 30, 2018 and 2017 in the Consolidated Income from Property Operations table on page 8.
2. Included in Depreciation on real estate and rental homes in the Consolidated Statements of Income and Comprehensive Income.
3. See Non-GAAP Financial Measures Definitions and Other Terms at the end of the supplemental information for the definition of Income from rental operations, net of depreciation.
4. Occupied rentals as of the end of the period in our Core portfolio. Included in the quarters ended September 30, 2018 and 2017 are 265 and 254 homes rented through our ECHO joint venture, respectively. For the nine months ended September 30, 2018 and 2017, the rental home investment associated with our ECHO joint venture totals approximately $9.4 million and $9.2 million, respectively.
5. Includes both occupied and unoccupied rental homes. New home cost basis does not include the costs associated with our ECHO joint venture. At September 30, 2018 and 2017, our investment in the ECHO joint venture was approximately $16.1 million and $15.5 million, respectively.
     

Total Sites and Home Sales

 

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

 
Summary of Total Sites as of September 30, 2018
Sites
Community sites 72,400
Resort sites:
Annuals 28,500
Seasonal 11,300
Transient 11,400
Membership (1) 24,300
Joint Ventures (2) 5,900
Total 153,800
         
Home Sales – Select Data
Quarters Ended Nine Months Ended
September 30, September 30,
2018 2017 2018 2017
Total New Home Sales Volume (3) 141 173 417 413
New Home Sales Volume – ECHO joint venture 31 48 74 126
New Home Sales Gross Revenues (3) $ 7,048 $ 7,233 $ 20,643 $ 16,724
 
Total Used Home Sales Volume 304 331 842 954
Used Home Sales Gross Revenues $ 2,291 $ 2,779 $ 6,110 $ 8,148
 
Brokered Home Resales Volume 231 239 677 659
Brokered Home Resale Revenues, net $ 358 $ 337 $ 1,009 $ 925

__________________________

1.   Sites primarily utilized by approximately 112,500 members. Includes approximately 5,800 sites rented on an annual basis.
2. Joint ventures have approximately 2,700 annual Sites, 400 seasonal Sites, 500 transient Sites and includes approximately 2,300 marina slips.
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.
   
 

2018 Guidance – Selected Financial Data (1)

 

Our guidance acknowledges the existence of volatile economic conditions, which may impact our current guidance assumptions. Factors impacting 2018 guidance include, but are not limited to the following: (i) the mix of site usage within the portfolio; (ii) yield management on our short-term resort sites; (iii) scheduled or implemented rate increases on community and resort sites; (iv) scheduled or implemented rate increases in annual payments under right-to-use contracts; (v) occupancy changes; (vi) our ability to retain and attract customers renewing or entering right-to-use contracts; (vii) our ability to integrate and operate recent acquisitions in accordance with our estimates; (viii) completion of pending transactions in their entirety and on assumed schedule; (ix) ongoing legal matters and related fees; and (x) costs to restore property operations and potential revenue losses following storms or other unplanned events.

 

(In millions, except per share data, unaudited)

 
Quarter Ending Year Ending
December 31, 2018 December 31, 2018
Income from property operations, excluding deferrals and property management – 2018 Core (2) $ 132.3 $ 530.3
Income from property operations – Non-Core (3) (4) 4.8 15.7
Property management and general and administrative (21.1 ) (88.4 )
Other income and expenses 2.7 15.1
Interest and related amortization (26.2 ) (104.6 )
Normalized FFO available for Common Stock and OP Unit holders (5) 92.5 368.1
Early debt retirement (1.1 ) (1.1 )
Insurance proceeds due to catastrophic weather event (6)   5.9  
FFO available for Common Stock and OP Unit holders (5) 91.4 372.9
Depreciation on real estate and other (33.2 ) (129.0 )
Depreciation on rental homes (2.4 ) (9.8 )
Deferral of right-to-use contract sales revenue and commission, net (1.2 ) (6.5 )
Income allocated to non-controlling interest-Common OP Units (3.3 ) (13.6 )
Net income available for Common Stockholders $ 51.3   $ 214.0  
 
 
Net income per Common Share – Fully Diluted (7) $0.54 – $0.60 $2.37 – $2.43
FFO per Common Share and OP Unit – Fully Diluted $0.93 – $0.99 $3.90 – $3.96
Normalized FFO per Common Share and OP Unit – Fully Diluted $0.94 – $1.00 $3.85 – $3.91
 
Weighted average Common Stock outstanding – Fully Diluted 95.5 95.0

_____________________________________

1.   Each line item represents the mid-point of a range of possible outcomes and reflects managements 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 2018 Core Guidance Assumptions. Amount represents 2017 Income from property operations, excluding deferrals and property management, from the 2018 Core properties of $125.5 million multiplied by an estimated growth rate of 5.4% and $505.5 million multiplied by an estimated growth rate of 4.9% for the quarter ending and year ending December 31, 2018, respectively.
3. Includes insurance proceeds for business interruption related to Hurricane Irma. As this insurance claim is currently in process, we can not provide assurance that the anticipated insurance proceeds will be received as projected nor can we provide assurance as to the amount that may be received.
4. See page 14 for the 2018 Assumptions regarding the Non-Core Properties.
5. See Non-GAAP Financial Measures Definitions and Other Terms at the end of the supplemental information for definitions of Normalized FFO and FFO.
6. Includes insurance recovery revenue from reimbursement for capital expenditures related to Hurricane Irma.
7. Net income per fully diluted Common Share is calculated before Income allocated to non-controlling interest- Common OP Units.
         
 

2018 Core Guidance Assumptions (1)

(In millions, unaudited)

 
Quarter Ended Fourth Quarter 2018 Year Ended 2018
December 31, 2017 Growth Factors (2) December 31, 2017 Growth Factors (2)
Community base rental income $ 123.6 4.7 % $ 489.1 4.6 %
Rental home income 3.5 3.9 % 14.3 (0.8 )%
Resort base rental income (3) 48.6 5.8 % 211.1 6.7 %
Right-to-use annual payments 11.7 3.4 % 45.8 4.1 %
Right-to-use contracts current period, gross 2.9 % 14.1 5.4 %
Utility and other income 23.4   (11.3 )% 92.0   (0.8 )%
Property operating revenues 213.7 3.1 % 866.4 4.4 %
 
Property operating, maintenance, and real estate taxes 83.9 (0.1 )% 342.9 3.7 %
Rental home operating and maintenance 1.7 (8.7 )% 6.6 (1.6 )%
Sales and marketing, gross 2.6   3.4 % 11.4   8.0 %
Property operating expenses 88.2   (0.2 )% 360.9   3.8 %
Income from property operations, excluding deferrals and property management $ 125.5   5.4 % $ 505.5   4.9 %
 
Resort base rental income:
Annual $ 34.1 6.3 % $ 131.7 6.6 %
Seasonal 7.8 3.4 % 33.6 7.4 %
Transient 6.7   6.5 % 45.8   6.6 %
Total resort base rental income $ 48.6   5.8 % $ 211.1   6.7 %
     
 

2018 Assumptions Regarding Non-Core Properties (1)

(In millions, unaudited)

 
Quarter Ending Year Ending
December 31, 2018 (4) December 31, 2018 (4)
Community base rental income $ 2.4 $ 6.3
Resort base rental income 4.5 14.5
Utility and other income (5) 1.6   6.9
Property operating revenues 8.5 27.7
 
Property operating, maintenance, and real estate taxes 3.7   12.0
Property operating expenses 3.7   12.0
Income from property operations, excluding deferrals and property management $ 4.8   $ 15.7

_____________________________________

1.   See Non-GAAP Financial Measures Definitions and Other Terms at the end of the supplemental information for definitions of Core and Non-Core.
2. Managements estimate of the growth of property operations in the 2018 Core Properties compared to actual 2017 performance. Represents our estimate of 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 table included below within this table.
4. Each line item represents our estimate of the mid-point of a possible range of outcomes and reflects managements best estimate of the most likely outcome for the Non-Core properties. Actual income from property operations for Non-Core properties could vary materially from amounts presented above if any of our assumptions is incorrect.
5. Includes insurance proceeds for business interruption related to Hurricane Irma. As this insurance claim is currently in process, we can not provide assurance that the anticipated proceeds will be received as projected nor can we provide assurance as to the amount that may be received.
 
 

Preliminary Guidance 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 sites; (iii) scheduled or implemented rate increases on community and resort sites; (iv) scheduled or implemented rate increases in annual payments under right-to-use contracts; (v) occupancy changes; (vi) our ability to retain and attract customers renewing or entering right-to-use contracts; (vii) our ability to integrate and operate recent acquisitions in accordance with our estimates; (viii) completion of pending transactions in their entirety and on assumed schedule; and (ix) ongoing legal matters and related fees; and (x) costs to restore property operations following storms or other unplanned events.

 

(In millions, except per share data, unaudited)

 
Year Ending
December 31, 2019
Income from property operations, excluding deferrals and property management – 2019 Core (2) $ 560.4
Income from property operations – Non-Core (3) 11.2
Property management and general and administrative (91.0 )
Other income and expenses 14.8
Interest and related amortization (101.6 )
Normalized FFO and FFO available for Common Stock and OP Unit holders (4) 393.8
Depreciation on real estate and other (129.6 )
Depreciation on rental homes (9.8 )
Deferral of right-to-use contract sales revenue and commission, net (5.8 )
Income allocated to non-controlling interest-Common OP Units (14.7 )
Net income available for Common Stockholders $ 233.9  
 
 
Net income per Common Share – Fully Diluted (5) $2.55 – $2.65
FFO per Common Share and OP Unit – Fully Diluted $4.07 – $4.17
Normalized FFO per Common Share and OP Unit – Fully Diluted $4.07 – $4.17
 
Weighted average Common Stock outstanding – Fully Diluted 95.7

_____________________________________

1.   Each line item represents the mid-point of a range of possible outcomes and reflects managements 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 2019 Core Guidance Assumptions. Amount represents estimated 2018 Income from property operations, excluding deferrals and property management, from the 2019 Core properties of $535.6 million multiplied by an estimated growth rate of 4.6% for the year ending December 31, 2019.
3. See page 16 for the 2019 Assumptions Regarding Non-Core Properties.
4. See Non-GAAP Financial Measure Definitions and Other Terms at the end of the supplemental information for definitions of Normalized FFO and FFO.
5. Net income per fully diluted Common Share is calculated before Income allocated to Common OP Units.
     
 

Preliminary 2019 Core Guidance Assumptions (1)

(In millions, unaudited)

 
Year Ending 2019
December 31, 2018 Growth Factors (2)
Community base rental income $ 512.4 4.3 %
Rental home income 14.2 0.2 %
Resort base rental income (3) 233.3 5.2 %
Right-to-use annual payments 47.7 1.6 %
Right-to-use contracts current period, gross 14.9 %
Utility and other income 92.3   (4.0 )%
Property operating revenues 914.8 3.4 %
 
Property operating, maintenance, and real estate taxes 360.4 1.9 %
Rental home operating and maintenance 6.5 (9.2 )%
Sales and marketing, gross 12.3   2.7 %
Property operating expenses 379.2   1.8 %
Income from property operations, excluding deferrals and property management $ 535.6   4.6 %
 
Resort base rental income:
Annual $ 145.6 5.8 %
Seasonal 36.1 3.1 %
Transient 51.6   5.0 %
Total resort base rental income $ 233.3   5.2 %
   
 

2019 Assumptions Regarding Non-Core Properties (1)

(In millions, unaudited)

 
Year Ending
December 31, 2019 (4)
Community base rental income $ 9.2
Resort base rental income 13.0
Utility and other income 1.0
Property operating revenues 23.2
 
Property operating, maintenance, and real estate taxes 12.0
Property operating expenses 12.0
Income from property operations, excluding deferrals and property management $ 11.2

_____________________________________

1.   See Non-GAAP Financial Measures Definitions and Other Terms at the end of the supplemental information for definitions of Core and Non-Core properties.
2. Managements estimate of the growth of property operations in the 2019 Core Properties compared to estimated 2018 performance. Represents our estimate of the mid-point of a range of possible outcomes. Calculations prepared using actual results without rounding. Actual growth could vary materially from amounts presented above if any of our assumptions is incorrect.
3. See Resort base rental income table included below within this table.
4. Each line item represents our estimate of the mid-point of a possible range of outcomes and reflects managements best estimate of the most likely outcome for the Non-Core properties. Actual income from property operations for the Non-Core properties could vary materially from amounts presented above if any of our assumptions is incorrect.
   
 

Right-To-Use Memberships – Select Data

 

(In thousands, except member count, number of Thousand Trails Camping Pass, number of annuals and number of upgrades, unaudited)

 
Year Ended December 31,
2015   2016   2017   2018 (1)   2019 (1)
Member Count (2) 102,413 104,728 106,456 110,245 113,000
Thousand Trails Camping Pass (TTC) Origination 25,544 29,576 31,618 36,541 37,600
TTC Sales 11,877 12,856 14,128 16,665 17,400
RV Dealer TTC Activations 13,667 16,720 17,490 19,876 20,200
Number of annuals (3) 5,470 5,756 5,843 5,900 6,000
Number of upgrade sales (4) 2,687 2,477 2,514 2,500 2,500
 
Right-to-use annual payments $ 44,441 $ 45,036 $ 45,798 $ 47,700 $ 48,500
Resort base rental income from annuals $ 13,821 $ 15,413 $ 16,841 $ 18,300 $ 19,500
Resort base rental income from seasonals/transients $ 15,795 $ 17,344 $ 18,231 $ 19,600 $ 21,200
Upgrade contract initiations (5) $ 12,783 $ 12,312 $ 14,130 $ 14,900 $ 14,900
Utility and other income $ 2,430 $ 2,442 $ 2,254 $ 2,300 $ 2,300

________________________________

1.   Guidance estimate. Each line item represents our estimate of the mid-point of a possible range of outcomes and reflects managements best estimate of the most likely outcome. Actual figures could vary materially from amounts presented above if any of our assumptions is incorrect.
2. Members have entered into right-to-use contracts with us that entitle them to use certain properties on a continuous basis for up to 21 days.
3. Members who rent a specific site for an entire year in connection with their right-to-use contract.
4. Existing customers who have upgraded agreements are eligible for enhanced benefits, including but not limited to longer stays, can make earlier reservations, may receive discounts on rental units, and may have access to additional properties. Upgrades require a non-refundable upfront payment.
5. Revenues associated with contract upgrades, included in Right-to-use contracts current period, gross, on our Consolidated Income Statements on page 4.
       
 

Market Capitalization

 

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

 
Capital Structure as of September 30, 2018
   

Total Common Stock/Units

% of Total Common Stock/Units

Total % of Total

% of Total Market Capitalization

 
Secured Debt $ 2,038 87.9 %
Unsecured Debt 280   12.1 %
Total Debt (1) $ 2,318 100.0 % 20.1 %
 
Common Stock 89,746,747 94.0 %
OP Units 5,746,382   6.0 %
Total Common Stock and OP Units 95,493,129 100.0 %
Common Stock price at September 30, 2018 $ 96.45
Fair Value of Common Stock and OP Units $ 9,210   100.0 %
Total Equity $ 9,210 100.0 % 79.9 %
 
Total Market Capitalization $ 11,528 100.0 %

_________________

1.   Excludes deferred financing costs of approximately $23.6 million.
             
 

Debt Maturity Schedule

 

Debt Maturity Schedule as of September 30, 2018

(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

2018 $ 3,020 8.00 % $ % $ 3,020 0.14 % 8.00 %
2019 (1) 194,114 6.27 % % 194,114 8.68 % 6.27 %
2020 117,623 6.14 % % 117,623 5.26 % 6.14 %
2021 184,482 5.01 % % 184,482 8.25 % 5.01 %
2022 143,455 4.58 % % 143,455 6.42 % 4.58 %
2023 106,529 5.08 % 200,000 3.05 % 306,529 13.71 % 3.76 %
2024 % % % %
2025 103,853 3.45 % % 103,853 4.64 % 3.45 %
2026 % % % %
2027 % % % %
Thereafter 1,183,109   4.23 %   % 1,183,109   52.91 % 4.23 %
Total $ 2,036,185 4.64 % $ 200,000 3.05 % $ 2,236,185 100.0 % 4.50 %
 
Unsecured Line of Credit (2)   80,000   80,000  
 
Note Premiums 2,191     2,191  
 
Total Debt 2,038,376 280,000 2,318,376
 
Deferred Financing Costs (22,119 ) (1,455 ) (23,574 )
 
Total Debt, net $ 2,016,257   $ 278,545   $ 2,294,802   4.55 % (3)
 
Average Years to Maturity 12.5 4.2 11.5

__________________

1.   Includes secured debt outstanding of $66.3 million at September 30, 2018 that has been paid off subsequent to the quarter.
2. Reflects outstanding balance on the Line of Credit as of September 30, 2018. The Line of Credit matures in October 2021 and has a weighted average interest rate of 2.64% as of September 30, 2018.
3. Reflects effective interest rate including amortization of note premiums and deferred financing costs.
 
 

Non-GAAP Financial Measures Definitions and Other Terms

This document contains certain Non-GAAP measures used by management that we believe are helpful in understanding our business, as further discussed in the paragraphs below. We believe investors should review these Non-GAAP measures along with GAAP net income and cash flow from operating activities, investing activities and financing activities, when evaluating an equity REITs operating performance. Our definitions and calculations of these Non-GAAP financial and operating measures and other terms may differ from the definitions and methodologies used by other REITs and, accordingly, may not be comparable. These Non-GAAP financial and operating measures do not represent cash generated from operating activities in accordance with GAAP, nor do they represent cash available to pay distributions and should not be considered as an alternative to net income, determined in accordance with GAAP, as an indication of our financial performance, or to cash flow from operating activities, determined in accordance with GAAP, as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make cash distributions.

FUNDS FROM OPERATIONS (FFO). We define FFO as net income, computed in accordance with GAAP, excluding gains and actual or estimated losses from sales of properties, plus real estate related depreciation and amortization, impairments, if any, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO on the same basis. We compute FFO in accordance with our interpretation of standards established by the National Association of Real Estate Investment Trusts (NAREIT), which may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently than we do. We receive up-front non-refundable payments from the entry of right-to-use contracts. In accordance with GAAP, the upfront non-refundable payments and related commissions are deferred and amortized over the estimated customer life. Although the NAREIT definition of FFO does not address the treatment of non-refundable right-to-use payments, we believe that it is appropriate to adjust for the impact of the deferral activity in our calculation of FFO.

We believe FFO, as defined by the Board of Governors of NAREIT, is generally a measure of performance for an equity REIT. While FFO is a relevant and widely used measure of operating performance for equity REITs, it does not represent cash flow from operations or net income as defined by GAAP, and it should not be considered as an alternative to these indicators in evaluating liquidity or operating performance.

NORMALIZED FUNDS FROM OPERATIONS (NORMALIZED FFO). We define Normalized FFO as FFO excluding the following non-operating income and expense items: a) gains and losses from early debt extinguishment, including prepayment penalties and defeasance costs; b) acquisition and other transaction costs related to business combinations; and c) other miscellaneous non-comparable items. Normalized FFO presented herein is not necessarily comparable to Normalized FFO presented by other real estate companies due to the fact that not all real estate companies use the same methodology for computing this amount.

FUNDS AVAILABLE FOR DISTRIBUTION (FAD). We define FAD as Normalized FFO less non-revenue producing capital expenditures.

We believe that FFO, Normalized FFO and FAD are helpful to investors as supplemental measures of the performance of an equity REIT. We believe that by excluding the effect of depreciation, amortization, impairments, if any, and actual or estimated gains or losses from sales of real estate, all of which are based on historical costs and which may be of limited relevance in evaluating current performance, FFO can facilitate comparisons of operating performance between periods and among other equity REITs. We further believe that Normalized FFO provides useful information to investors, analysts and our management because it allows them to compare our operating performance to the operating performance of other real estate companies and between periods on a consistent basis without having to account for differences not related to our operations. For example, we believe that excluding the early extinguishment of debt, property acquisition and other transaction costs related to business combinations 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 tax, sales and marketing expenses, excluding property management and the GAAP deferral of right-to-use contract upfront payments and related commissions, net. We believe that this Non-GAAP financial measure is helpful to investors and analysts as a measure of the operating results of our manufactured home and RV communities.

The following table reconciles Net income available for Common Stockholders to Income from property operations (amounts in thousands):

     
Quarters Ended September 30, Nine Months Ended September 30,
2018   2017 2018   2017
Net income available for Common Stockholders $ 56,070 $ 48,525 $ 162,429 $ 144,911
Redeemable perpetual preferred stock dividends and original issuance costs 3,054 8 7,667
Income allocated to non-controlling interests – Common OP Units 3,590 3,286 10,569 9,825
Equity in income of unconsolidated joint ventures (788 ) (686 ) (3,596 ) (2,876 )
Income before equity in income of unconsolidated joint ventures 58,872 54,179 169,410 159,527
Right-to-use upfront payments, deferred, net 2,883 1,670 6,189 3,766
Gross revenues from home sales (9,339 ) (10,012 ) (26,753 ) (24,872 )
Brokered resale and ancillary services revenues, net (1,362 ) (1,983 ) (3,380 ) (4,088 )
Interest income (1,846 ) (1,974 ) (5,658 ) (5,542 )
Income from other investments, net (5,421 ) (2,052 ) (9,774 ) (3,918 )
Right-to-use contract commissions, deferred, net (458 ) (176 ) (744 ) (372 )
Property management 13,589 13,160 40,742 38,743
Depreciation on real estate and rental homes 32,856 30,493 96,630 90,849
Amortization of in-place leases 2,124 138 5,069 2,128
Cost of homes sales 9,742 10,377 27,948 25,391
Home selling expenses 1,101 1,447 3,149 3,301
General and administrative 8,816 7,505 26,523 23,339
Other expenses, including property rights initiatives 386 324 1,096 814
Interest and related amortization 26,490   25,027   78,478   74,728  
Income from property operations, excluding deferrals and property management 138,433 128,123 408,925 383,794
Right-to-use contracts, upfront payments and commissions, deferred, net (2,425 ) (1,494 ) (5,445 ) (3,394 )
Property management (13,589 ) (13,160 ) (40,742 ) (38,743 )
Income from property operations $ 122,419   $ 113,469   $ 362,738   $ 341,657  

EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND AMORTIZATION (EBITDA) AND ADJUSTED EBITDA. EBITDA is defined as net income or loss before interest income and expense, income taxes, depreciation and amortization. We define Adjusted EBITDA as EBITDA excluding the following non-operating income and expense items: a) gains and losses from early debt extinguishment, including prepayment penalties and defeasance costs; b) property acquisition and other transaction costs related to business combinations; c) GAAP deferral of right-to-use contract upfront payments and related commissions, net; d) depreciation on unconsolidated joint ventures; e) impairments, if any; and f) other miscellaneous non-comparable items. EBITDA and Adjusted EBITDA provide us with an understanding of one aspect of earnings before the impact of investing and financing charges. We believe that EBITDA and Adjusted EBITDA may be useful to an investor in evaluating our operating performance and liquidity because the measures are widely used to measure a companys operating performance and they are used by rating agencies and other parties, including lenders, to evaluate our creditworthiness.

The following table reconciles Consolidated net income to EBITDA and Adjusted EBITDA (amounts in thousands):

     
Quarters Ended September 30, Nine Months Ended September 30,
2018   2017 2018   2017
Consolidated net income $ 59,660 $ 54,865 $ 173,006 $ 162,403
Interest income (1,846 ) (1,974 ) (5,658 ) (5,542 )
Depreciation on real estate assets and rental homes 32,856 30,493 96,630 90,849
Amortization of in-place leases 2,124 138 5,069 2,128
Depreciation on corporate assets 386 326 1,096 929
Depreciation on unconsolidated joint ventures 651 360 1,390 1,171
Interest and related amortization 26,490   25,027   78,478   74,728  
EBITDA 120,321 109,235 350,011 326,666
Right-to-use contract upfront payments, deferred, net 2,883 1,670 6,189 3,766
Right-to-use contract commissions, deferred, net (458 ) (176 ) (744 ) (372 )
Transaction costs 324
Preferred stock original issuance costs 757 757
Insurance proceeds due to catastrophic weather event (3,833 )   (5,925 )    
Adjusted EBITDA $ 118,913   $ 111,486     $ 349,531     $ 331,141  

CORE. The Core properties include properties we owned and operated during all of 2017 and 2018. 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 2017 and 2018. This includes, but is not limited to, five properties acquired during 2018, three properties acquired during 2017 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.

Equity LifeStyle Properties, Inc.
Paul Seavey, (800) 247-5279

 Stay Updated To Save Money & Time. Join Our Free Newsletter 
. Indepth Analysis & Opinion       . Interviews      . Exclusive Reports  
. Free Digital Magazines      News & updates      . Event Invitations 
                     
& Much More Delivered To Your Inbox For Free.
Submit
We Will Not Spam, Rent, or Sell Your Information.
All emails include an unsubscribe link. You may opt-out at any time. See our privacy policy.

 
Close
Stay Updated To Save Money & Time. Join Our Free Newsletter. 
. Indepth Analysis & Opinion       Interviews          . Exclusive Reports 
. Free Digital Magazines        . News & updates        . Event Invitations
& Much More Delivered To Your Inbox For Free. 
Submit
We Will Not Spam, Rent, or Sell Your Information.
All emails include an unsubscribe link. You may opt-out at any time. See our privacy policy.
 
Close