ELS Reports Second Quarter Results

Strong Operating Performance

CHICAGO--()--Equity LifeStyle Properties, Inc. (NYSE: ELS) (referred to herein as “we,” “us,” and “our”) today announced results for the quarter and six months ended June 30, 2020.

All Common Stock and OP Units as well as per share results reflect the two for one stock split that was completed on October 15, 2019. Additionally, all per share results are reported on a fully diluted basis unless otherwise noted.

Financial Results for the Quarter and Six Months Ended June 30, 2020

For the quarter ended June 30, 2020, total revenues increased $5.7 million, or 2.3 percent, to $254.1 million compared to $248.4 million for the same period in 2019. For the quarter ended June 30, 2020, net income available for Common Stockholders decreased $0.2 million, or $0.01 per Common Share, to $46.2 million, or $0.25 per Common Share, compared to $46.4 million, or $0.26 per Common Share, for the same period in 2019.

For the six months ended June 30, 2020, total revenues increased $27.1 million, or 5.3 percent, to $534.6 million compared to $507.5 million for the same period in 2019. For the six months ended June 30, 2020, net income available for Common Stockholders decreased $46.6 million, or $0.27 per Common Share, to $113.1 million, or $0.62 per Common Share, compared to $159.7 million, or $0.89 per Common Share, for the same period in 2019. The financial results for 2019 included a gain of $52.5 million on the sale of five all-age MH communities.

Non-GAAP Financial Measures and Portfolio Performance

For the quarter ended June 30, 2020, Funds from Operations (“FFO”) available for Common Stock and OP Unit holders decreased $0.3 million to $89.5 million, or $0.47 per Common Share, compared to $89.8 million, or $0.47 per Common Share, for the same period in 2019. For the six months ended June 30, 2020, FFO available for Common Stock and OP Unit holders increased $4.0 million, or $0.02 per Common Share, to $201.8 million, or $1.05 per Common Share, compared to $197.8 million, or $1.03 per Common Share, for the same period in 2019.

For the quarter ended June 30, 2020, Normalized Funds from Operations (“Normalized FFO”) available for Common Stock and OP Unit holders decreased $1.0 million, or $0.01 per Common Share, to $90.9 million, or $0.47 per Common Share, compared to $91.9 million, or $0.48 per Common Share, for the same period in 2019. For the six months ended June 30, 2020, Normalized FFO available for Common Stock and OP Unit holders increased $4.7 million, or $0.02 per Common Share, to $204.3 million, or $1.06 per Common Share, compared to $199.6 million, or $1.04 per Common Share, for the same period in 2019.

For the quarter ended June 30, 2020, property operating revenues, excluding deferrals, increased $6.3 million to $247.0 million compared to $240.7 million for the same period in 2019. For the six months ended June 30, 2020, property operating revenues, excluding deferrals, increased $25.1 million to $516.7 million compared to $491.6 million for the same period in 2019. For the quarter ended June 30, 2020, income from property operations, excluding deferrals and property management, increased $3.7 million to $139.4 million compared to $135.7 million for the same period in 2019. For the six months ended June 30, 2020, income from property operations, excluding deferrals and property management, increased $14.2 million to $303.3 million compared to $289.1 million for the same period in 2019.

For the quarter ended June 30, 2020, Core property operating revenues, excluding deferrals, increased approximately 0.6 percent and Core income from property operations, excluding deferrals and property management, increased approximately 1.0 percent compared to the same period in 2019. For the six months ended June 30, 2020, Core property operating revenues, excluding deferrals, increased approximately 3.1 percent and Core income from property operations, excluding deferrals and property management, increased approximately 3.2 percent compared to the same period in 2019.

Business Update - COVID-19

Page 1 of this Earnings Release and Supplemental Financial Information provides a business update regarding the COVID-19 pandemic.

About Equity LifeStyle Properties

We are a self-administered, self-managed real estate investment trust (“REIT”) with headquarters in Chicago. As of July 20, 2020, we own or have an interest in 413 quality properties in 33 states and British Columbia consisting of 156,713 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, July 21, 2020, 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 ability to manage counterparty risk;
  • our ability to renew our insurance policies at existing rates and on consistent terms;
  • in the age-qualified properties, home sales results could be impacted by the ability of potential home buyers to sell their existing residences as well as by financial, credit and capital markets volatility;
  • results from home sales and occupancy will continue to be impacted by local economic conditions, lack of affordable manufactured home financing and competition from alternative housing options including site-built single-family housing;
  • impact of government intervention to stabilize site-built single-family housing and not manufactured housing;
  • effective integration of recent acquisitions and our estimates regarding the future performance of recent acquisitions;
  • the completion of future transactions in their entirety, if any, and timing and effective integration with respect thereto;
  • unanticipated costs or unforeseen liabilities associated with recent acquisitions;
  • ability to obtain financing or refinance existing debt on favorable terms or at all;
  • the effect of interest rates;
  • the effect from any breach of our, or any of our vendors', data management systems;
  • the dilutive effects of issuing additional securities;
  • the outcome of pending or future lawsuits or actions brought against us, including those disclosed in our filings with the Securities and Exchange Commission; and
  • other risks indicated from time to time in our filings with the Securities and Exchange Commission.

In addition, these forward-looking statements 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

COVID-19 Update

Operating Business Update

Below is an update on our operations pertaining to the COVID-19 pandemic:

  • All properties are open subject to state and local guidelines.
    • Some of the amenities at certain properties remain closed at this time due to state and local guidelines.
    • All RV properties are currently open to transient customers, although during the second quarter several properties were limited by local orders to restrict transient reservations.
  • Rent assistance and relief:
    • During the second quarter we approved approximately 540 resident applications for deferral of rent due to COVID related financial hardship. The total amount deferred was approximately $0.5 million. Based on declining monthly deferral applications, we discontinued offering deferrals in July.
    • In early July, we provided approximately $0.9 million of payment credits to annual residents at 15 Northern RV properties that experienced significantly delayed openings. Most of these properties were not open prior to the Memorial Day holiday weekend.
    • We have continued to waive late payment fees for July.
  • As of July 17, 2020 the total collection rate from our MH, RV Annuals, and Thousand Trails customers for the quarter ended June 30, 2020 was 99%, consistent with our collection rate for the quarter ended June 30, 2019. Collections for July 2020 as of the 17th of the month were consistent with the month-to-date collections for each month in the quarter ended June 30, 2020.
 

Investor Information

Equity Research Coverage (1)

Bank of America Securities

BMO Capital Markets

Citi Research

Jeffrey Spector/ Joshua Dennerlein

John Kim

Michael Bilerman/ Nick Joseph

 

 

 

Evercore ISI

Green Street Advisors

Robert W. Baird & Company

Steve Sakwa/ Samir Khanal

John Pawlowski

RJ Milligan

 

 

 

Wells Fargo Securities

 

 

Todd Stender

 

 

 

 

 

______________________

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

Financial Highlights

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

 

As of and for the Three Months Ended

 

Jun 30,
2020

Mar 31,
2020

Dec 31,
2019

Sept 30,
2019

Jun 30,
2019

Operating Information

 

 

 

 

 

Total revenues

$

254.1

 

$

280.5

 

$

258.6

 

$

271.2

 

$

248.4

 

Net income

$

48.9

 

$

70.7

 

$

58.1

 

$

68.2

 

$

49.1

 

Net income available for Common Stockholders

$

46.2

 

$

66.9

 

$

55.0

 

$

64.5

 

$

46.4

 

Adjusted EBITDAre (1)

$

116.2

 

$

138.2

 

$

124.5

 

$

127.0

 

$

117.7

 

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

$

89.5

 

$

112.3

 

$

99.5

 

$

108.6

 

$

89.8

 

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

$

90.9

 

$

113.3

 

$

99.5

 

$

102.7

 

$

91.9

 

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

$

75.6

 

$

101.8

 

$

84.6

 

$

88.4

 

$

79.1

 

 

 

 

 

 

 

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

 

 

 

 

 

Common Stock and OP Units, end of the period

192,636

 

192,627

 

192,581

 

192,574

 

192,562

 

Weighted average Common Stock and OP Units outstanding - Fully Diluted

192,542

 

192,564

 

192,458

 

192,400

 

191,860

 

Net income per Common Share - Fully Diluted (3)

$

0.25

 

$

0.37

 

$

0.30

 

$

0.35

 

$

0.26

 

FFO per Common Share and OP Unit - Fully Diluted

$

0.47

 

$

0.58

 

$

0.52

 

$

0.56

 

$

0.47

 

Normalized FFO per Common Share and OP Unit - Fully Diluted

$

0.47

 

$

0.59

 

$

0.52

 

$

0.53

 

$

0.48

 

Dividends per Common Share

$

0.3425

 

$

0.3425

 

$

0.3063

 

$

0.3063

 

$

0.3063

 

 

 

 

 

 

 

Balance Sheet

 

 

 

 

 

Total assets

$

4,268

 

$

4,212

 

$

4,151

 

$

4,137

 

$

4,014

 

Total liabilities

$

2,961

 

$

2,892

 

$

2,829

 

$

2,818

 

$

2,707

 

 

 

 

 

 

 

Market Capitalization

 

 

 

 

 

Total debt (4)

$

2,522

 

$

2,486

 

$

2,432

 

$

2,406

 

$

2,300

 

Total market capitalization (5)

$

14,558

 

$

13,558

 

$

15,988

 

$

15,270

 

$

13,983

 

 

 

 

 

 

 

Ratios

 

 

 

 

 

Total debt / total market capitalization

17.3

%

18.3

%

15.2

%

15.8

%

16.4

%

Total debt / Adjusted EBITDAre (6)

5.0

 

4.9

 

4.8

 

4.9

 

4.7

 

Interest coverage (7)

4.9

 

4.9

 

4.9

 

4.8

 

4.7

 

Fixed charges(8)

4.9

 

4.9

 

4.8

 

4.7

 

4.6

 

______________________

  1. See Non-GAAP Financial Measures Definitions and Other Terms 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 8 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 $25.3 million as of June 30, 2020.
  5. See page 15 for the calculation of market capitalization as of June 30, 2020.
  6. Calculated using trailing twelve months Adjusted EBITDAre.
  7. Calculated by dividing trailing twelve months Adjusted EBITDAre by the interest expense incurred during the same period.
  8. See Non-GAAP Financial Measures Definitions and Other Terms at the end of the supplemental 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)

 

June 30, 2020

 

December 31, 2019

 

(unaudited)

 

 

Assets

 

 

 

Investment in real estate:

 

 

 

Land

$

1,528,929

 

 

$

1,525,407

 

Land improvements

3,396,132

 

 

3,336,070

 

Buildings and other depreciable property

903,249

 

 

881,572

 

 

5,828,310

 

 

5,743,049

 

Accumulated depreciation

(1,849,799)

 

 

(1,776,224)

 

Net investment in real estate

3,978,511

 

 

3,966,825

 

Cash and restricted cash

119,993

 

 

28,860

 

Notes receivable, net

35,304

 

 

37,558

 

Investment in unconsolidated joint ventures

19,864

 

 

20,074

 

Deferred commission expense

41,622

 

 

41,149

 

Other assets, net

72,880

 

 

56,809

 

Total Assets

$

4,268,174

 

 

$

4,151,275

 

 

 

 

 

Liabilities and Equity

 

 

 

Liabilities:

 

 

 

Mortgage notes payable, net

$

2,247,790

 

 

$

2,049,509

 

Term loan, net

199,111

 

 

198,949

 

Unsecured line of credit

50,000

 

 

160,000

 

Accounts payable and other liabilities

142,269

 

 

124,665

 

Deferred revenue – upfront payments from membership upgrade sales

132,023

 

 

126,814

 

Deferred revenue – annual membership subscriptions

12,655

 

 

10,599

 

Accrued interest payable

8,485

 

 

8,639

 

Rents and other customer payments received in advance and security deposits

102,480

 

 

91,234

 

Distributions payable

65,978

 

 

58,978

 

Total Liabilities

2,960,791

 

 

2,829,387

 

Equity:

 

 

 

Preferred stock, $0.01 par value, 10,000,000 shares authorized as of June 30, 2020 and December 31, 2019; none issued and outstanding.

 

 

 

Common stock, $0.01 par value, 600,000,000 and 400,000,000 shares authorized as of June 30, 2020 and December 31, 2019, respectively; 182,153,754 and 182,089,595 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively.

1,812

 

 

1,812

 

Paid-in capital

1,405,764

 

 

1,402,696

 

Distributions in excess of accumulated earnings

(169,903)

 

 

(154,318)

 

Accumulated other comprehensive income (loss)

(1,161)

 

 

(380)

 

Total Stockholders’ Equity

1,236,512

 

 

1,249,810

 

Non-controlling interests – Common OP Units

70,871

 

 

72,078

 

Total Equity

1,307,383

 

 

1,321,888

 

Total Liabilities and Equity

$

4,268,174

 

 

$

4,151,275

 

Consolidated Income Statements

(In thousands, unaudited)

 

Quarters Ended June 30,

 

Six Months Ended June 30,

 

2020

 

2019

 

2020

 

2019

Revenues:

 

 

 

 

 

 

 

Rental income

$

217,963

 

 

$

212,007

 

 

$

457,309

 

 

$

435,573

 

Annual membership subscriptions

12,961

 

 

12,586

 

 

26,034

 

 

24,902

 

Membership upgrade sales current period, gross

5,048

 

 

5,041

 

 

9,891

 

 

8,879

 

Membership upgrade sales upfront payments, deferred, net

(2,666)

 

 

(2,912)

 

 

(5,208)

 

 

(4,683)

 

Other income

9,680

 

 

10,265

 

 

20,739

 

 

20,635

 

Gross revenues from home sales

8,866

 

 

7,825

 

 

20,175

 

 

14,300

 

Brokered resale and ancillary services revenues, net

(575)

 

 

872

 

 

363

 

 

2,431

 

Interest income

1,791

 

 

1,803

 

 

3,598

 

 

3,554

 

Income from other investments, net

1,022

 

 

879

 

 

1,665

 

 

1,865

 

Total revenues

254,090

 

 

248,366

 

 

534,566

 

 

507,456

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

Property operating and maintenance

85,265

 

 

84,868

 

 

168,899

 

 

162,816

 

Real estate taxes

16,668

 

 

15,107

 

 

33,509

 

 

30,430

 

Sales and marketing, gross

4,276

 

 

4,214

 

 

8,254

 

 

7,623

 

Membership sales commissions, deferred, net

(481)

 

 

(389)

 

 

(697)

 

 

(580)

 

Property management

14,813

 

 

14,385

 

 

29,817

 

 

28,070

 

Depreciation and amortization

38,332

 

 

37,776

 

 

77,356

 

 

75,753

 

Cost of home sales

8,850

 

 

8,164

 

 

20,761

 

 

14,796

 

Home selling expenses

1,081

 

 

1,102

 

 

2,294

 

 

2,185

 

General and administrative

10,609

 

 

9,225

 

 

21,464

 

 

19,134

 

Other expenses

639

 

 

540

 

 

1,227

 

 

967

 

Early debt retirement

 

 

1,491

 

 

1,054

 

 

1,491

 

Interest and related amortization

26,249

 

 

26,024

 

 

52,322

 

 

52,417

 

Total expenses

206,301

 

 

202,507

 

 

416,260

 

 

395,102

 

Gain on sale of real estate, net

 

 

 

 

 

 

52,507

 

Income before equity in income of unconsolidated joint ventures

47,789

 

 

45,859

 

 

118,306

 

 

164,861

 

Equity in income of unconsolidated joint ventures

1,064

 

 

3,226

 

 

1,271

 

 

4,759

 

Consolidated net income

48,853

 

 

49,085

 

 

119,577

 

 

169,620

 

 

 

 

 

 

 

 

 

Income allocated to non-controlling interests – Common OP Units

(2,658)

 

 

(2,676)

 

 

(6,507)

 

 

(9,902)

 

Redeemable perpetual preferred stock dividends

(8)

 

 

(8)

 

 

(8)

 

 

(8)

 

Net income available for Common Stockholders

$

46,187

 

 

$

46,401

 

 

$

113,062

 

 

$

159,710

 

Non-GAAP Financial Measures

This document contains certain non-GAAP measures used by management that we believe are helpful in understanding our business. We believe investors should review these non-GAAP measures along with GAAP net income and cash flows from operating activities, investing activities and financing activities, when evaluating an equity REIT’s operating performance. Our definitions and calculations of these non-GAAP financial and operating measures and other terms may differ from the definitions and methodologies used by other REITs and, accordingly, may not be comparable. These non-GAAP financial and operating measures do not represent cash generated from operating activities in accordance with GAAP, nor do they represent cash available to pay distributions and should not be considered as an alternative to net income, determined in accordance with GAAP, as an indication of our financial performance, or to cash flows from operating activities, determined in accordance with GAAP, as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make cash distributions. For definitions and reconciliations of non-GAAP measures to our financial statements as prepared under GAAP, refer to both Reconciliation of Net Income to Non-GAAP Financial Measures on page 8 and Non-GAAP Financial Measures Definitions and Reconciliations on pages 17 - 19.

 

Selected Non-GAAP Financial Measures

(In millions, except per share data, unaudited)

 

Quarter Ended

 

June 30, 2020

Income from property operations, excluding deferrals and property management - 2020 Core (1)

$

136.4

 

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

3.0

 

Property management and general and administrative

(25.4)

 

Other income and expenses

1.7

 

Interest and related amortization

(26.2)

 

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

89.5

 

COVID-19 expenses (3)

1.4

 

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

$

90.9

 

 

 

FFO per Common Share and OP Unit - Fully Diluted

$0.47

Normalized FFO per Common Share and OP Unit - Fully Diluted

$0.47

 

 

 

 

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

$

90.9

 

Non-revenue producing improvements to real estate

(15.3)

 

FAD for Common Stock and OP Unit holders (2)

$

75.6

 

 

 

Weighted average Common Stock and OP Units - Fully Diluted

192.5

 

______________________

  1. See page 10 for details of the Core Income from Property Operations, excluding deferrals and property management. See page 11 for details of the Non-Core Income from Property Operations, excluding deferrals and property management.
  2. See page 8 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. Includes expenses incurred related to the development and implementation of Center for Disease Control ("CDC") and public health guidelines for social distancing and enhanced cleaning, property employee appreciation bonuses and emergency time-off pay. These COVID-19 expenses are considered incremental to our normal operations and are nonrecurring. As such, they have been excluded from the calculation of Normalized FFO. Of the total expenses, $1.0 million was included in Core income from property operations and $0.4 million was included in other income and expenses.
 

Reconciliation of Net Income to Non-GAAP Financial Measures

(In thousands, except per share data (adjusted for stock split), unaudited)

 

 

Quarters Ended June 30,

 

Six Months Ended June 30,

 

 

2020

 

2019

 

2020

 

2019

Net income available for Common Stockholders

 

$

46,187

 

 

$

46,401

 

 

$

113,062

 

 

$

159,710

 

Income allocated to non-controlling interests – Common OP Units

 

2,658

 

 

2,676

 

 

6,507

 

 

9,902

 

Membership upgrade sales upfront payments, deferred, net

 

2,666

 

 

2,912

 

 

5,208

 

 

4,683

 

Membership sales commissions, deferred, net

 

(481)

 

 

(389)

 

 

(697)

 

 

(580)

 

Depreciation and amortization

 

38,332

 

 

37,776

 

 

77,356

 

 

75,753

 

Depreciation on unconsolidated joint ventures

 

184

 

 

441

 

 

361

 

 

873

 

Gain on sale of real estate, net

 

 

 

 

 

 

 

(52,507)

 

FFO available for Common Stock and OP Unit holders

 

89,546

 

 

89,817

 

 

201,797

 

 

197,834

 

Early debt retirement

 

 

 

2,085

 

 

1,054

 

 

2,085

 

Insurance proceeds due to catastrophic weather event (1)

 

 

 

 

 

 

 

(349)

 

COVID-19 expenses (2)

 

1,407

 

 

 

 

1,446

 

 

 

Normalized FFO available for Common Stock and OP Unit holders

 

90,953

 

 

91,902

 

 

204,297

 

 

199,570

 

Non-revenue producing improvements to real estate

 

(15,330)

 

 

(12,849)

 

 

(26,796)

 

 

(22,913)

 

FAD for Common Stock and OP Unit holders

 

$

75,623

 

 

$

79,053

 

 

$

177,501

 

 

$

176,657

 

 

 

 

 

 

 

 

 

 

Net income available per Common Share - Basic

 

$

0.25

 

 

$

0.26

 

 

$

0.62

 

 

$

0.89

 

Net income available per Common Share - Fully Diluted (3)

 

$

0.25

 

 

$

0.26

 

 

$

0.62

 

 

$

0.89

 

 

 

 

 

 

 

 

 

 

FFO per Common Share and OP Unit - Basic

 

$

0.47

 

 

$

0.47

 

 

$

1.05

 

 

$

1.03

 

FFO per Common Share and OP Unit - Fully Diluted

 

$

0.47

 

 

$

0.47

 

 

$

1.05

 

 

$

1.03

 

 

 

 

 

 

 

 

 

 

Normalized FFO per Common Share and OP Unit - Basic

 

$

0.47

 

 

$

0.48

 

 

$

1.06

 

 

$

1.04

 

Normalized FFO per Common Share and OP Unit - Fully Diluted

 

$

0.47

 

 

$

0.48

 

 

$

1.06

 

 

$

1.04

 

 

 

 

 

 

 

 

 

 

Average Common Stock - Basic

 

181,833

 

 

180,312

 

 

181,781

 

 

179,938

 

Average Common Stock and OP Units - Basic

 

192,315

 

 

191,598

 

 

192,267

 

 

191,320

 

Average Common Stock and OP Units - Fully Diluted

 

192,542

 

 

191,860

 

 

192,538

 

 

191,546

 

______________________

  1. Represents insurance recovery revenue from reimbursement for capital expenditures related to Hurricane Irma.
  2. Includes expenses incurred related to the development and implementation of CDC and public health guidelines for social distancing and enhanced cleaning, property employee appreciation bonuses and emergency time-off pay. These COVID-19 expenses are considered incremental to our normal operations and are nonrecurring. As such, they have been excluded from the calculation of Normalized FFO.
  3. 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 June 30,

 

Six Months Ended June 30,

 

2020

 

2019

 

2020

 

2019

MH base rental income (2)

$

142.6

 

 

$

136.2

 

 

$

284.0

 

 

$

271.5

 

Rental home income

4.1

 

 

3.6

 

 

8.1

 

 

7.2

 

RV and marina base rental income (3)

60.1

 

 

61.0

 

 

141.2

 

 

133.1

 

Annual membership subscriptions

13.0

 

 

12.6

 

 

26.0

 

 

24.9

 

Membership upgrade sales current period, gross

5.0

 

 

5.0

 

 

9.9

 

 

8.9

 

Utility and other income (4)

22.2

 

 

22.3

 

 

47.5

 

 

46.0

 

Property operating revenues

247.0

 

 

240.7

 

 

516.7

 

 

491.6

 

 

 

 

 

 

 

 

 

Property operating, maintenance and real estate taxes (5) (6)

102.1

 

 

99.5

 

 

202.5

 

 

192.4

 

Rental home operating and maintenance

1.3

 

 

1.3

 

 

2.6

 

 

2.5

 

Sales and marketing, gross

4.2

 

 

4.2

 

 

8.3

 

 

7.6

 

Property operating expenses

107.6

 

 

105.0

 

 

213.4

 

 

202.5

 

Income from property operations, excluding deferrals and property management (1) (6)

$

139.4

 

 

$

135.7

 

 

$

303.3

 

 

$

289.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Manufactured home site figures and occupancy averages:

 

 

 

 

 

 

 

Total sites

72,362

 

 

71,988

 

 

72,307

 

 

72,178

 

Occupied sites

68,613

 

 

68,316

 

 

68,554

 

 

68,453

 

Occupancy %

94.8

%

 

94.9

%

 

94.8

%

 

94.8

%

Monthly base rent per site

$

693

 

 

$

665

 

 

$

690

 

 

$

661

 

 

 

 

 

 

 

 

 

RV and marina base rental income:

 

 

 

 

 

 

 

Annual

$

47.1

 

 

$

40.8

 

 

$

94.4

 

 

$

79.8

 

Seasonal

5.2

 

 

5.7

 

 

27.8

 

 

26.8

 

Transient

7.8

 

 

14.5

 

 

19.0

 

 

26.5

 

Total RV and marina base rental income

$

60.1

 

 

$

61.0

 

 

$

141.2

 

 

$

133.1

 

______________________

  1. Excludes property management and the GAAP deferral of membership upgrade sales upfront payments and membership sales commissions, net.
  2. See the manufactured home site figures and occupancy averages included below within this table.
  3. See RV and marina base rental income detail included below within this table.
  4. Includes Hurricane Irma insurance recovery revenues of $0.6 million, which we have identified as business interruption, for the six months ended June 30, 2019.
  5. Includes bad debt expense for the periods presented.
  6. Includes $1.0 million related to the development and implementation of CDC and public health guidelines for social distancing and enhanced cleaning, property employee appreciation bonuses and emergency time-off pay. These COVID-19 expenses are considered incremental to our normal operations and are nonrecurring. As such, they have been excluded from the calculation of Normalized FFO. Excluding the impact of these expenses, Consolidated income from property operations, excluding deferrals and property management, was $140.4 million and $304.3 million for the quarter and six months ended June 30, 2020, respectively.

Core Income from Property Operations (1)

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

 

Quarters Ended June 30,

 

Six Months Ended June 30,

 

2020

 

2019

 

Change (2)

 

2020

 

2019

 

Change (2)

MH base rental income (3)

$

142.5

 

 

$

136.2

 

 

4.6

%

 

$

283.9

 

 

$

271.1

 

 

4.8

%

Rental home income

4.1

 

 

3.6

 

 

12.3

%

 

8.1

 

 

7.1

 

 

13.2

%

RV base rental income (4)

54.3

 

 

59.6

 

 

(8.8)

%

 

130.0

 

 

131.7

 

 

(1.4)

%

Annual membership subscriptions

13.0

 

 

12.6

 

 

3.0

%

 

26.0

 

 

24.9

 

 

4.5

%

Membership upgrade sales current period, gross

5.0

 

 

5.0

 

 

0.1

%

 

9.9

 

 

8.9

 

 

11.4

%

Utility and other income (5)

21.8

 

 

22.2

 

 

(1.9)

%

 

46.6

 

 

45.9

 

 

1.7

%

Property operating revenues

240.7

 

 

239.2

 

 

0.6

%

 

504.5

 

 

489.6

 

 

3.1

%

 

 

 

 

 

 

 

 

 

 

 

 

Property operating, maintenance and real estate taxes (6) (7)

98.8

 

 

98.7

 

 

%

 

196.2

 

 

191.3

 

 

2.6

%

Rental home operating and maintenance

1.3

 

 

1.3

 

 

(3.8)

%

 

2.6

 

 

2.5

 

 

4.4

%

Sales and marketing, gross

4.2

 

 

4.2

 

 

1.5

%

 

8.2

 

 

7.6

 

 

8.3

%

Property operating expenses

104.3

 

 

104.2

 

 

0.1

%

 

207.0

 

 

201.4

 

 

2.8

%

Income from property operations, excluding deferrals and property management (1) (7)

$

136.4

 

 

$

135.0

 

 

1.0

%

 

$

297.5

 

 

$

288.2

 

 

3.2

%

 

 

 

 

 

 

 

 

 

 

 

 

Occupied sites (8)

68,679

 

 

68,386

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core manufactured home site figures and occupancy averages:

 

 

 

 

 

 

Total sites

72,087

 

 

71,820

 

 

 

 

72,033

 

 

71,787

 

 

 

Occupied sites

68,599

 

 

68,276

 

 

 

 

68,543

 

 

68,224

 

 

 

Occupancy %

95.2

%

 

95.1

%

 

 

 

95.2

%

 

95.0

%

 

 

Monthly base rent per site

$

693

 

 

$

665

 

 

 

 

$

690

 

 

$

662

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core RV base rental income:

 

 

 

 

 

 

 

 

 

 

 

Annual

$

41.9

 

 

$

40.0

 

 

4.7

%

 

$

83.9

 

 

$

79.0

 

 

6.1

%

Seasonal

5.1

 

 

5.7

 

 

(8.9)

%

 

27.7

 

 

26.8

 

 

3.7

%

Transient

7.3

 

 

13.9

 

 

(47.7)

%

 

18.4

 

 

25.9

 

 

(29.2)

%

Total RV base rental income

$

54.3

 

 

$

59.6

 

 

(8.8)

%

 

$

130.0

 

 

$

131.7

 

 

(1.4)

%

______________________

  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. See Core manufactured home site figures and occupancy averages included below within this table.
  4. See Core RV base rental income detail included below within this table.
  5. Includes Hurricane Irma insurance recovery revenues of $0.6 million, which we have identified as business interruption, for the six months ended June 30, 2019.
  6. Includes bad debt expense for the periods presented.
  7. Includes $1.0 million related to expenses incurred related to the development and implementation of CDC and public health guidelines for social distancing and enhanced cleaning, property employee appreciation bonuses and emergency time-off pay. These COVID-19 expenses are considered incremental to our normal operations and are nonrecurring. As such, they have been excluded from the calculation of Normalized FFO. Excluding the impact of these expenses, Core income from property operations, excluding deferrals and property management, was $137.4 million and $298.5 million for the quarter and six months ended June 30, 2020, respectively.
  8. Occupied sites are presented as of the end of the period. Occupied sites have increased by 103 from 68,576 at December 31, 2019.
 

Non-Core Income from Property Operations (1)

(In millions, unaudited)

 

Quarter Ended

 

Six Months Ended

 

June 30, 2020

 

June 30, 2020

MH base rental income

$

0.1

 

 

$

0.1

 

Rental home income

 

 

 

RV and marina base rental income

5.8

 

 

11.2

 

Utility and other income

0.4

 

 

0.9

 

Property operating revenues

6.3

 

 

12.2

 

 

 

 

 

Property operating expenses (2)

3.3

 

 

6.4

 

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

$

3.0

 

 

$

5.8

 

 

 

 

 

 

 

 

 

______________________

  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 June 30,

 

Six Months Ended June 30,

 

2020

 

2019

 

2020

 

2019

Manufactured homes:

 

 

 

 

 

 

 

Rental operations revenues (1)

$

11.9

 

 

$

11.4

 

 

$

23.6

 

 

$

22.6

 

Rental operations expense

1.3

 

 

1.3

 

 

2.6

 

 

2.5

 

Income from rental operations

10.6

 

 

10.1

 

 

21.0

 

 

20.1

 

Depreciation on rental homes (2)

2.7

 

 

2.6

 

 

5.5

 

 

5.0

 

Income from rental operations, net of depreciation

$

7.9

 

 

$

7.5

 

 

$

15.5

 

 

$

15.1

 

 

 

 

 

 

 

 

 

Occupied rentals: (3)

 

 

 

 

 

 

 

New

3,291

 

 

3,011

 

 

 

 

 

Used

632

 

 

1,008

 

 

 

 

 

Total occupied rental sites

3,923

 

 

4,019

 

 

 

 

 

 

 

As of June 30, 2020

 

As of June 30, 2019

Cost basis in rental homes: (4)

Gross

 

Net of
Depreciation

 

Gross

 

Net of
Depreciation

New

$

233.8

 

 

$

196.2

 

 

$

195.8

 

 

$

171.9

 

Used

17.5

 

 

7.5

 

 

25.1

 

 

11.8

 

Total rental homes

$

251.3

 

 

$

203.7

 

 

$

220.9

 

 

$

183.7

 

______________________

  1. For the quarters ended June 30, 2020 and 2019, approximately $7.8 million of the rental operations revenue is included in the MH base rental income in the Core Income from Property Operations for each respective period on page 10. For the six months ended June 30, 2020 and 2019, approximately $15.6 million and $15.5 million, respectively, of the rental operations revenue is included in the MH base rental income in the Core Income from Property Operations on page 10. The remainder of the rental operations revenue is included in Rental home income for the quarters and six months ended June 30, 2020 and 2019 in the Core Income from Property Operations on page 10.
  2. Depreciation on rental homes in our Core portfolio is included in Depreciation and amortization in the Consolidated Income Statements on page 5.
  3. Occupied rentals as of the end of the period in our Core portfolio. Included in the quarters ended June 30, 2020 and 2019 were 283 and 298 homes rented through our ECHO joint venture, respectively. As of June 30, 2020 and 2019, the rental home investment associated with our ECHO joint venture totaled approximately $11.4 million and $10.6 million, respectively.
  4. Includes both occupied and unoccupied rental homes in our Core portfolio. New home cost basis does not include the costs associated with our ECHO joint venture. At June 30, 2020 and 2019, our investment in the ECHO joint venture was approximately $17.1 million and $16.5 million, respectively.

Total Sites and Home Sales

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

Summary of Total Sites as of June 30, 2020

 

 

Sites (1)

MH sites

72,300

 

RV sites:

 

Annual

29,500

 

Seasonal

10,200

 

Transient

14,200

 

Marina slips

2,300

 

Membership (2)

24,600

 

Joint Ventures (3)

3,600

 

Total

156,700

 

 

Home Sales - Select Data

 

 

 

 

 

 

 

 

Quarters Ended June 30,

 

Six Months Ended June 30,

 

2020

 

2019

 

2020

 

2019

Total New Home Sales Volume (4)

133

 

 

117

 

 

288

 

 

208

 

New Home Sales Volume - ECHO joint venture

11

 

 

18

 

 

23

 

 

31

 

New Home Sales Gross Revenues (4)

$

7,552

 

 

$

6,064

 

 

$

16,934

 

 

$

10,628

 

 

 

 

 

 

 

 

 

Total Used Home Sales Volume

136

 

 

210

 

 

330

 

 

429

 

Used Home Sales Gross Revenues

$

1,314

 

 

$

1,761

 

 

$

3,241

 

 

$

3,672

 

 

 

 

 

 

 

 

 

Brokered Home Resales Volume

111

 

 

237

 

 

287

 

 

405

 

Brokered Home Resale Revenues, net

$

178

 

 

$

379

 

 

$

439

 

 

$

657

 

______________________

  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 117,700 members. Includes approximately 5,700 sites rented on an annual basis.
  3. Joint ventures have approximately 2,900 annual Sites, 500 seasonal Sites, and 200 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 our ECHO joint venture.
 

Memberships - Select Data

(Unaudited)

 

 

2016

 

2017

 

2018

 

2019

 

2020 Q2
YTD (1)

 

Member Count (2)

 

104,728

 

 

106,456

 

 

111,094

 

 

115,680

 

 

117,727

 

 

Thousand Trails Camping Pass (TTC) Origination

 

29,576

 

 

31,618

 

 

37,528

 

 

41,484

 

 

19,693

 

 

TTC Sales

 

12,856

 

 

14,128

 

 

17,194

 

 

19,267

 

 

9,022

 

 

RV Dealer TTC Activations

 

16,720

 

 

17,490

 

 

20,334

 

 

22,217

 

 

10,671

 

 

Number of annuals (3)

 

5,756

 

 

5,843

 

 

5,888

 

 

5,938

 

 

5,744

 

 

Number of upgrade sales (4)

 

2,477

 

 

2,514

 

 

2,500

 

 

2,919

 

 

1,563

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(In thousands, unaudited)

 

 

 

 

 

 

 

 

 

 

 

Annual membership subscriptions

 

$

45,036

 

 

$

45,798

 

 

$

47,778

 

 

$

51,015

 

 

$

26,034

 

 

RV base rental income from annuals

 

$

15,413

 

 

$

16,841

 

 

$

18,363

 

 

$

19,634

 

 

$

10,025

 

 

RV base rental income from seasonals/transients

 

$

17,344

 

 

$

18,231

 

 

$

19,840

 

 

$

20,181

 

 

$

5,714

 

 

Membership upgrade sales current period, gross

 

$

12,312

 

 

$

14,130

 

 

$

15,191

 

 

$

19,111

 

 

$

9,891

 

 

Utility and other income

 

$

2,442

 

 

$

2,254

 

 

$

2,410

 

 

$

2,422

 

 

$

944

 

 

 

 

 

 

 

 

 

 

 

 

 

 

______________________

  1. Activity through June 30, 2020.
  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 June 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Common
Stock/Units

 

% of Total
Common
Stock/Units

 

Total

 

% of Total

 

% of Total
Market
Capitalization

 

 

 

 

 

 

 

 

 

 

 

Secured Debt

 

 

 

 

 

$

2,272

 

 

90.1

%

 

 

Unsecured Debt

 

 

 

 

 

250

 

 

9.9

%

 

 

Total Debt (1)

 

 

 

 

 

$

2,522

 

 

100.0

%

 

17.3

%

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

182,153,754

 

 

94.6

%

 

 

 

 

 

 

OP Units

 

10,481,994

 

 

5.4

%

 

 

 

 

 

 

Total Common Stock and OP Units

 

192,635,748

 

 

100.0

%

 

 

 

 

 

 

Common Stock price at June 30, 2020

 

$

62.48

 

 

 

 

 

 

 

 

 

Fair Value of Common Stock and OP Units

 

 

 

 

 

$

12,036

 

 

100.0

%

 

 

Total Equity

 

 

 

 

 

$

12,036

 

 

100.0

%

 

82.7

%

 

 

 

 

 

 

 

 

 

 

 

Total Market Capitalization

 

 

 

 

 

$

14,558

 

 

 

 

100.0

%

 

______________________

  1. Excludes deferred financing costs of approximately $25.3 million.
 

Debt Maturity Schedule

Debt Maturity Schedule as of June 30, 2020

(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

 

2020

 

$

 

 

%

 

$

 

 

%

 

$

 

 

%

 

%

 

2021

 

167,155

 

 

5.01

%

 

 

 

%

 

167,155

 

 

6.76

%

 

5.01

%

 

2022

 

143,774

 

 

4.62

%

 

 

 

%

 

143,774

 

 

5.82

%

 

4.62

%

 

2023

 

101,200

 

 

5.02

%

 

200,000

 

 

3.05

%

 

301,200

 

 

12.19

%

 

3.71

%

 

2024

 

10,537

 

 

5.49

%

 

 

 

%

 

10,537

 

 

0.43

%

 

5.49

%

 

2025

 

99,658

 

 

3.45

%

 

 

 

%

 

99,658

 

 

4.03

%

 

3.45

%

 

2026

 

 

 

%

 

 

 

%

 

 

 

%

 

%

 

2027

 

 

 

%

 

 

 

%

 

 

 

%

 

%

 

2028

 

219,466

 

 

4.19

%

 

 

 

%

 

219,466

 

 

8.88

%

 

4.19

%

 

2029

 

 

 

%

 

 

 

%

 

 

 

%

 

%

 

Thereafter

 

1,529,589

 

 

3.96

%

 

 

 

%

 

1,529,589

 

 

61.89

%

 

3.96

%

 

Total

 

$

2,271,379

 

 

4.13

%

 

$

200,000

 

 

3.05

%

 

$

2,471,379

 

 

100.0

%

 

4.05

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unsecured Line of Credit (1)

 

 

 

 

 

50,000

 

 

 

 

50,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note Premiums

 

849

 

 

 

 

 

 

 

 

849

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Debt

 

2,272,228

 

 

 

 

250,000

 

 

 

 

2,522,228

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred Financing Costs

 

(24,438)

 

 

 

 

(889)

 

 

 

 

(25,327)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Debt, net

 

$

2,247,790

 

 

 

 

$

249,111

 

 

 

 

$

2,496,901

 

 

 

 

4.23

%

(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Years to Maturity

 

12.5

 

 

 

2.6

 

 

 

11.5

 

 

 

 

 

______________________

  1. Reflects outstanding balance on our line of credit as of June 30, 2020. The Line of Credit matures in October 2021 and had an effective interest rate of 2.42% during the second quarter of 2020.
  2. Reflects effective interest rate for the quarter ended June 30, 2020, including amortization of note premiums and deferred financing costs.

     

Non-GAAP Financial Measures Definitions and Reconciliations

FUNDS FROM OPERATIONS (FFO). We define FFO as net income, computed in accordance with GAAP, excluding gains or losses from sales of properties, depreciation and amortization related to real estate, impairment charges and adjustments to reflect our share of FFO of unconsolidated joint ventures. Adjustments for unconsolidated joint ventures are calculated to reflect FFO on the same basis. We compute FFO in accordance with our interpretation of standards established by the National Association of Real Estate Investment Trusts (“NAREIT”), which may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently than we do. We receive 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, 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 June 30,

 

Six Months Ended June 30,

(amounts in thousands)

 

2020

 

2019

 

2020

 

2019

Net income available for Common Stockholders

 

$

46,187

 

 

$

46,401

 

 

$

113,062

 

 

$

159,710

 

Redeemable perpetual preferred stock dividends

 

8

 

 

8

 

 

8

 

 

8

 

Income allocated to non-controlling interests – Common OP Units

 

2,658

 

 

2,676

 

 

6,507

 

 

9,902

 

Equity in income of unconsolidated joint ventures

 

(1,064)

 

 

(3,226)

 

 

(1,271)

 

 

(4,759)

 

Income before equity in income of unconsolidated joint ventures

 

47,789

 

 

45,859

 

 

118,306

 

 

164,861

 

Gain on sale of real estate, net

 

 

 

 

 

 

 

(52,507)

 

Membership upgrade sales upfront payments, deferred, net

 

2,666

 

 

2,912

 

 

5,208

 

 

4,683

 

Gross revenues from home sales

 

(8,866)

 

 

(7,825)

 

 

(20,175)

 

 

(14,300)

 

Brokered resale and ancillary services revenues, net

 

575

 

 

(872)

 

 

(363)

 

 

(2,431)

 

Interest income

 

(1,791)

 

 

(1,803)

 

 

(3,598)

 

 

(3,554)

 

Income from other investments, net

 

(1,022)

 

 

(879)

 

 

(1,665)

 

 

(1,865)

 

Membership sales commissions, deferred, net

 

(481)

 

 

(389)

 

 

(697)

 

 

(580)

 

Property management

 

14,813

 

 

14,385

 

 

29,817

 

 

28,070

 

Depreciation and amortization

 

38,332

 

 

37,776

 

 

77,356

 

 

75,753

 

Cost of home sales

 

8,850

 

 

8,164

 

 

20,761

 

 

14,796

 

Home selling expenses

 

1,081

 

 

1,102

 

 

2,294

 

 

2,185

 

General and administrative

 

10,609

 

 

9,225

 

 

21,464

 

 

19,134

 

Other expenses

 

639

 

 

540

 

 

1,227

 

 

967

 

Early debt retirement

 

 

 

1,491

 

 

1,054

 

 

1,491

 

Interest and related amortization

 

26,249

 

 

26,024

 

 

52,322

 

 

52,417

 

Income from property operations, excluding deferrals and property management

 

139,443

 

 

135,710

 

 

303,311

 

 

289,120

 

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

 

(2,185)

 

 

(2,523)

 

 

(4,511)

 

 

(4,103)

 

Property management

 

(14,813)

 

 

(14,385)

 

 

(29,817)

 

 

(28,070)

 

Income from property operations

 

$

122,445

 

 

$

118,802

 

 

$

268,983

 

 

$

256,947

 

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, and other miscellaneous non-comparable items.

We believe that EBITDAre and Adjusted EBITDAre may be useful to an investor in evaluating our operating performance and liquidity because the measures are widely used to measure the operating performance of an equity REIT.

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

 

 

Quarters Ended June 30,

 

Six Months Ended June 30,

(amounts in thousands)

 

2020

 

2019

 

2020

 

2019

Consolidated net income

 

$

48,853

 

 

$

49,085

 

 

$

119,577

 

 

$

169,620

 

Interest income

 

(1,791)

 

 

(1,803)

 

 

(3,598)

 

 

(3,554)

 

Membership upgrade sales upfront payments, deferred, net

 

2,666

 

 

2,912

 

 

5,208

 

 

4,683

 

Membership sales commissions, deferred, net

 

(481)

 

 

(389)

 

 

(697)

 

 

(580)

 

Real estate depreciation and amortization

 

38,332

 

 

37,776

 

 

77,356

 

 

75,753

 

Other depreciation and amortization

 

639

 

 

449

 

 

1,227

 

 

876

 

Interest and related amortization

 

26,249

 

 

26,024

 

 

52,322

 

 

52,417

 

Gain on sale of real estate, net

 

 

 

 

 

 

 

(52,507)

 

Adjustments to our share of EBITDAre of unconsolidated joint ventures

 

279

 

 

1,598

 

 

542

 

 

2,599

 

EBITDAre

 

114,746

 

 

115,652

 

 

251,937

 

 

249,307

 

Early debt retirement

 

 

 

2,085

 

 

1,054

 

 

2,085

 

Insurance proceeds due to catastrophic weather event

 

 

 

 

 

 

 

(349)

 

COVID-19 expenses

 

1,407

 

 

 

 

1,446

 

 

 

Adjusted EBITDAre

 

$

116,153

 

 

$

117,737

 

 

$

254,437

 

 

$

251,043

 

CORE. The Core properties include properties we owned and operated during all of 2019 and 2020. 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 2019 and 2020. This includes, but is not limited to, four properties and the marinas acquired and five properties sold during 2019.

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.

Contacts

Paul Seavey
(800) 247-5279

Contacts

Paul Seavey
(800) 247-5279