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, 2023. All per share results are reported on a fully diluted basis unless otherwise noted.
($ in millions, except per share data) | |||||||||
FINANCIAL RESULTS | Q3 2023 | Q3 2022 | $ Change | ||||||
Total Revenues | $ | 388.8 | $ | 381.0 | $ | 7.8 | |||
Net Income available for Common Stockholders | $ | 77.0 | $ | 67.2 | $ | 9.8 | |||
Net Income per Common Share - Fully Diluted | $ | 0.41 | $ | 0.36 | $ | 0.05 | |||
NON-GAAP FINANCIAL MEASURES | Q3 2023 | Q3 2022 | $ Change | ||||||
Funds from Operations (“FFO”) per Common Share and OP Unit - Fully Diluted | $ | 0.71 | $ | 0.69 | $ | 0.02 | |||
Normalized Funds from Operations (“Normalized FFO”) per Common Share and OP Unit - Fully Diluted | $ | 0.71 | $ | 0.70 | $ | 0.01 | |||
Property operating revenues, excluding deferrals | $ | 347.6 | $ | 332.8 | $ | 14.8 | |||
Income from property operations, excluding deferrals and property management | $ | 193.7 | $ | 183.9 | $ | 9.8 | |||
Core Portfolio Performance | Q3 2023 | Q3 2022 | % Change | ||||||
Core property operating revenues, excluding deferrals | $ | 335.7 | $ | 320.7 | 4.7 | % | |||
Core Income from property operations, excluding deferrals and property management | $ | 186.2 | $ | 178.4 | 4.4 | % | |||
Operations Update
Normalized FFO for the quarter ended September 30, 2023 was $0.71 per share, representing a 2.1% increase compared to the same period in 2022, outperforming the midpoint of our guidance expectation by $0.5 million. Normalized FFO for the nine months ended September 30, 2023 was $2.12 per share, representing a 2.4% increase compared to the same period in 2022.
MH
Core MH base rental income for the quarter ended September 30, 2023 increased 6.8% compared to the same period in 2022. We sold 285 new homes during the quarter ended September 30, 2023, with an average sales price of $97,000. Core MH occupancy increased by 42 sites during the quarter ended September 30, 2023, which included a net gain of 225 homeowners. The average rent increase to market on turnover was approximately 13% during the nine months ended September 30, 2023.
RV and Marina
Core RV and marina base rental income for the quarter ended September 30, 2023 increased 2.0% compared to the same period in 2022. Core RV and marina annual base rental income for the quarter ended September 30, 2023 increased 8.0% compared to the same period in 2022, which reflects 7.8% growth from rate increases and 0.2% from occupancy gains.
Property Operating Expenses
Core property operating expenses for the quarter ended September 30, 2023 increased 5.1% compared to the same period in 2022 and was in line with guidance. Combined Core utility and payroll expenses represent 48.6% of Core property operating expenses and increased 1.2% during the quarter ended September 30, 2023, compared to the same period in 2022. Core repair and maintenance expense for the quarter ended September 30, 2023 increased 8.0%, compared to the same period in 2022, which includes clean-up costs following local storm events across the portfolio.
Balance Sheet Activity
During the quarter ended September 30, 2023, we closed on three secured financing facilities totaling $375 million. The facilities are secured by twenty MH and RV properties, and consistent with the rates we had locked in May 2023, the facilities have a weighted average interest rate of 5.05% per annum and a weighted average term of approximately eight years. The proceeds were used to repay all debt scheduled to mature in 2023 and 2024 and the remaining balance on our unsecured line of credit.
2023 Guidance Update (1)(2)
($ in millions, except per share data) | 2023 | ||||||||
Fourth Quarter | Full Year | ||||||||
Net Income per Common Share - Fully Diluted | $0.41 to $0.47 | $1.60 to $1.66 | |||||||
FFO per Common Share and OP Unit - Fully Diluted | $0.70 to $0.76 | $2.78 to $2.84 | |||||||
Normalized FFO per Common Share and OP Unit - Fully Diluted | $0.70 to $0.76 | $2.82 to $2.88 | |||||||
2022 Actual | 2023 Growth Rates | ||||||||
Core Portfolio: | Fourth
| Full Year | Fourth Quarter | Full Year | |||||
MH base rental income | $ | 158.8 | $ | 626.0 | 6.7% to 7.3% | 6.5% to 7.1% | |||
RV and marina base rental income (3) | $ | 91.2 | $ | 392.3 | 4.7% to 5.3% | 3.5% to 4.1% | |||
Property operating revenues | $ | 302.5 | $ | 1,238.1 | 6.3% to 6.9% | 5.4% to 6.0% | |||
Property operating expenses | $ | 122.0 | $ | 524.1 | 6.3% to 6.9% | 6.2% to 6.8% | |||
Income from property operations, excluding deferrals and property management | $ | 180.5 | $ | 714.0 | 6.3% to 6.9% | 4.8% to 5.4% | |||
Non-Core Portfolio: | 2023 Full Year | ||||||||
Income from property operations, excluding deferrals and property management | $25.5 to $29.5 | ||||||||
Other Guidance Assumptions: | 2023 Full Year | ||||||||
Property management and general administrative (4) | $121.4 to $127.4 | ||||||||
Debt assumptions: (5) | |||||||||
Weighted average debt outstanding | $3,400 to $3,600 | ||||||||
Interest and related amortization | $129.4 to $135.4 | ||||||||
Preliminary 2024 Rent Rate Growth Assumptions (1)(2)
- By October month-end, we anticipate sending 2024 rent increase notices to approximately 50% of our MH residents. The average rate increase of these notices is approximately 5.4%.
- We have set RV annual rates for 2024 for approximately 95% of our annual sites. The average rate increase for these annual sites is approximately 7.0%.
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1. | Fourth quarter and full year 2023 guidance represent management's estimate of a range of possible outcomes. The midpoint of the ranges and the preliminary 2024 rent rate growth assumptions reflect management's estimate of the most likely outcome. Actual results could vary materially from management’s estimates presented above if any of our assumptions, including occupancy and rate changes, our ability to manage expenses in an inflationary environment, our ability to integrate and operate recent acquisitions and costs to restore property operations and potential revenue losses following storms or other unplanned events, is incorrect. See Forward-Looking Statements in this press release for additional factors impacting our 2023 and 2024 guidance assumptions. See Non-GAAP Financial Measures Definitions and Reconciliations at the end of the supplemental financial information for definitions of FFO and Normalized FFO and a reconciliation of Net income per Common Share - Fully Diluted to FFO per Common Share and OP Unit - Fully Diluted and Normalized FFO per Common Share and OP Unit - Fully Diluted. |
2. | Guidance assumptions do not include future capital events (financing transactions, acquisitions or dispositions) subsequent to those discussed in this press release or the use of free cash flow. |
3. | Core RV and marina annual revenue represents approximately 75.3% and 68.4% of fourth quarter 2023 and full year 2023 RV and marina base rental income, respectively. Core RV and marina annual revenue fourth quarter 2023 growth rate range is 8.5% to 9.1% and the full year 2023 growth rate range is 8.0% to 8.6%. |
4. | Includes accelerated vesting of stock-based compensation expense of $6.3 million recognized during the quarter ended June 30, 2023 as a result of the passing of a member of our Board of Directors. |
5. | Includes financing transactions discussed in this press release. |
About Equity LifeStyle Properties
We are a self-administered, self-managed real estate investment trust (“REIT”) with headquarters in Chicago. As of October 16, 2023, we own or have an interest in 450 properties in 35 states and British Columbia consisting of 171,707 sites.
For additional information, please contact our Investor Relations Department at (800) 247-5279 or at [email protected].
Conference Call
A live audio webcast of our conference call discussing these results will take place tomorrow, Tuesday, October 17, 2023, 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. Forward-looking statements, including our guidance concerning Net Income, FFO and Normalized FFO per share data, by their nature, involve estimates, projections, goals, forecasts and assumptions and are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in a forward-looking statement due to a number of factors, which include, but are not limited to the following: (i) the mix of site usage within the portfolio; (ii) yield management on our short-term resort and marina sites; (iii) scheduled or implemented rate increases on community, resort and marina sites; (iv) scheduled or implemented rate increases in annual payments under membership subscriptions; (v) occupancy changes; (vi) our ability to attract and retain membership customers; (vii) change in customer demand regarding travel and outdoor vacation destinations; (viii) our ability to manage expenses in an inflationary environment; (ix) our ability to integrate and operate recent acquisitions in accordance with our estimates; (x) our ability to execute expansion/development opportunities in the face of supply chain delays/shortages; (xi) completion of pending transactions in their entirety and on assumed schedule; (xii) our ability to attract and retain property employees, particularly seasonal employees; (xiii) ongoing legal matters and related fees; and (xiv) costs to restore property operations and potential revenue losses following storms or other unplanned events. 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” and “Forward-Looking Statements” sections in our most recent Annual Report on Form 10-K and any 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
Financial Highlights |
(In millions, except Common Shares and OP Units outstanding and per share data, unaudited)
As of and for the Quarters Ended | |||||||||||||||
Sep 30,
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Operating Information | |||||||||||||||
Total revenues | $ | 388.8 | $ | 370.0 | $ | 370.0 | $ | 340.6 | $ | 381.0 | |||||
Consolidated net income | $ | 80.7 | $ | 66.0 | $ | 86.5 | $ | 76.7 | $ | 70.5 | |||||
Net income available for Common Stockholders | $ | 77.0 | $ | 62.9 | $ | 82.4 | $ | 73.0 | $ | 67.2 | |||||
Adjusted EBITDAre (1) | $ | 172.9 | $ | 162.5 | $ | 176.7 | $ | 159.2 | $ | 166.4 | |||||
FFO available for Common Stock and OP Unit holders (1)(2) | $ | 139.7 | $ | 123.4 | $ | 144.1 | $ | 126.6 | $ | 134.4 | |||||
Normalized FFO available for Common Stock and OP Unit holders (1)(2) | $ | 139.7 | $ | 129.7 | $ | 144.3 | $ | 128.1 | $ | 136.8 | |||||
Funds Available for Distribution ("FAD") for Common Stock and OP Unit holders (1)(2) | $ | 113.7 | $ | 103.1 | $ | 126.2 | $ | 106.9 | $ | 115.6 | |||||
Common Shares and OP Units Outstanding (In thousands) and Per Share Data | |||||||||||||||
Common Shares and OP Units, end of the period | 195,525 | 195,514 | 195,446 | 195,386 | 195,380 | ||||||||||
Weighted average Common Shares and OP Units outstanding - Fully Diluted | 195,440 | 195,430 | 195,369 | 195,281 | 195,269 | ||||||||||
Net income per Common Share - Fully Diluted (3) | $ | 0.41 | $ | 0.34 | $ | 0.44 | $ | 0.39 | $ | 0.36 | |||||
FFO per Common Share and OP Unit - Fully Diluted | $ | 0.71 | $ | 0.63 | $ | 0.74 | $ | 0.65 | $ | 0.69 | |||||
Normalized FFO per Common Share and OP Unit - Fully Diluted | $ | 0.71 | $ | 0.66 | $ | 0.74 | $ | 0.66 | $ | 0.70 | |||||
Dividends per Common Share | $ | 0.4475 | $ | 0.4475 | $ | 0.4475 | $ | 0.4100 | $ | 0.4100 | |||||
Balance Sheet | |||||||||||||||
Total assets | $ | 5,626 | $ | 5,586 | $ | 5,519 | $ | 5,493 | $ | 5,405 | |||||
Total liabilities | $ | 4,129 | $ | 4,083 | $ | 4,006 | $ | 3,975 | $ | 3,886 | |||||
