ELS Reports Third Quarter Results
Continued Strong Performance
Preliminary 2025 Rent Rate Growth Assumptions
CHICAGO, Oct. 21, 2024 /PRNewswire/ -- 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, 2024. All per share results are reported on a fully diluted basis unless otherwise noted.
FINANCIAL RESULTS
($ in millions, except per share data)
Quarters Ended September 30,
2024
2023
$ Change
% Change (1)
Net Income per Common Share
$ 0.44
$ 0.41
$ 0.03
7.5 %
Funds from Operations ("FFO") per Common Share and OP Unit
$ 0.72
$ 0.68
$ 0.04
5.3 %
Normalized Funds from Operations ("Normalized FFO") per Common Share and OP Unit
$ 0.72
$ 0.68
$ 0.04
4.9 %
Nine Months Ended September 30,
2024
2023
$ Change
% Change (1)
Net Income per Common Share
$ 1.45
$ 1.19
$ 0.26
21.8 %
FFO per Common Share and OP Unit
$ 2.27
$ 2.01
$ 0.26
12.8 %
Normalized FFO per Common Share and OP Unit
$ 2.16
$ 2.04
$ 0.12
5.6 %
_____________________
1. Calculations prepared using actual results without rounding.
Operations Update
Normalized FFO per Common Share and OP Unit for the quarter ended September 30, 2024 was $0.72, representing a 4.9% increase compared to the same period in 2023, performing at the midpoint of our guidance range of $0.72. Normalized FFO for the nine months ended September 30, 2024, was $2.16 per Common Share and OP Unit, representing a 5.6% increase compared to the same period in 2023. Core property operating revenues increased 4.4% and Core income from property operations, excluding property management increased 5.8% for the quarter ended September 30, 2024, compared to the same period in 2023. For the nine months ended September 30, 2024, Core property operating revenues increased 4.9% and Core income from property operations, excluding property management increased 6.2% compared to the same period in 2023.
MH
Core MH base rental income for the quarter ended September 30, 2024 increased 6.2% compared to the same period in 2023, which reflects 5.8% growth from rate increases and 0.4% from occupancy gains. Core MH homeowners increased by 111, and we sold 173 new homes during the quarter ended September 30, 2024. The average sales price of new homes sold was approximately $88,000. Core MH base rental income for the nine months ended September 30, 2024 increased 6.2% compared to the same period in 2023, which reflects 6.0% growth from rate increases and 0.2% from occupancy gains.
RV and Marina
Core RV and marina base rental income for the quarter ended September 30, 2024 increased 1.3% compared to the same period in 2023. Core RV and marina annual base rental income increased 6.2% for the quarter ended September 30, 2024, compared to the same period in 2023. Core RV and marina base rental income for the nine months ended September 30, 2024 increased 3.0% compared to the same period in 2023. Core RV and marina annual base rental income increased 6.9% for the nine months ended September 30, 2024, compared to the same period in 2023.
Property Operating Expenses
Core property operating expenses, excluding property management for the quarter ended September 30, 2024 increased 2.8% compared to the same period in 2023. For the nine months ended September 30, 2024, Core property operating expenses, excluding property management increased 3.4% compared to same period in 2023.
Balance Sheet Activity
In October 2024, we sold approximately 4.5 million shares of our common stock at a price of $70.00 from our at-the-market ("ATM") offering program. The net proceeds of $314.2 million were used to repay our $300.0 million unsecured term loan (the "$300 million Term Loan") and to terminate the interest rate swaps, which fixed the interest rate of the $300 million Term Loan at 6.05% until maturity in April 2026.
Storm Events
Following Hurricane Helene which made landfall on September 26, 2024 we accrued approximately $1.0 million of expenses related to debris removal and clean up, which is reflected in Casualty-related charges/(recoveries), net on the consolidated income statement, and we recorded a $1.8 million reduction to the carrying value of certain assets, which is included in Loss on sale of real estate and impairment, net in the Consolidated Statements of Income on page 3.
Following Hurricane Milton which made landfall on October 9, 2024, we have continued clean up efforts at impacted properties. We believe that we have adequate insurance, subject to deductibles, including business interruption coverage, and at this time, we do not believe that Hurricane Milton will have a significant adverse impact on our results of operations or our financial condition on a consolidated basis.
Guidance Update (1)
Consistent with our historical practice at this time of year, we have updated and narrowed the full year guidance range. The full year guidance range of $0.06 per share is the same as the fourth quarter guidance range.
The updated guidance does not include assumptions related to debris removal and restoration costs, and possible business interruption losses, asset impairments or insurance recoveries related to Hurricane Milton. We believe we have adequate insurance coverage, subject to deductibles, for losses related to Hurricane Milton, but we are unable to predict the timing or amount of recovery. Furthermore, in accordance with GAAP, insurance reimbursement for business interruption losses is to be recognized as revenue only upon receipt.
($ in millions, except per share data)
2024
Fourth quarter
Full Year
Net Income per Common Share
$0.44 to $0.50
$1.89 to $1.95
FFO per Common Share and OP Unit
$0.70 to $0.76
$2.96 to $3.02
Normalized FFO per Common Share and OP Unit
$0.73 to $0.79
$2.89 to $2.95
2023 Actual
2024 Growth Rates
Core Portfolio:
Fourth quarter
Full Year
Fourth quarter
Full Year
MH base rental income
$ 170.1
$ 668.5
5.5% to 6.1%
5.8% to 6.4%
RV and marina base rental income (2)
$ 96.0
$ 413.5
2.7% to 3.3%
2.7% to 3.3%
Property operating revenues
$ 320.8
$ 1,297.7
4.2% to 4.8%
4.5% to 5.1%
Property operating expenses, excluding property management
$ 133.0
$ 562.3
1.1% to 1.7%
2.6% to 3.2%
Income from property operations, excluding property management
$ 187.8
$ 735.4
6.4% to 7.0%
6.0% to 6.6%
Non-Core Portfolio:
2024 Full Year
Income from property operations, excluding property management
$13.9 to $17.9
Other Guidance Assumptions:
2024 Full Year
Property management and general administrative
$113.6 to $119.6
Debt assumptions:
Weighted average debt outstanding
$3,350 to $3,550
Interest and related amortization
$135.4 to $141.4
Preliminary 2025 Rent Rate Growth Assumptions (1)
By October month-end, we anticipate sending 2025 rent increase notices to approximately 50% of our MH residents. The average expected rate increase of these notices is approximately 5.0%.
We have set RV annual rates for 2025 for more than 95% of our annual sites. The average rate increase for these annual sites is approximately 5.5%.
______________________
1.
Fourth quarter and full year 2024 guidance represent management's estimate of a range of possible outcomes. The midpoint of the ranges and the preliminary 2025 rent rate growth assumptions reflect management's estimate of the most likely outcome based on our current view of existing market conditions and assumptions. 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, are incorrect. See Forward-Looking Statements in this press release for additional factors impacting our 2024 and 2025 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.
Core RV and marina annual revenue represents approximately 77.8% and 70.4% of fourth quarter 2024 and full year 2024 RV and marina base rental income guidance, respectively. Core RV and marina annual revenue fourth quarter 2024 growth rate range is 5.8% to 6.4% and the full year 2024 growth rate range is 6.4% to 7.0%.
About Equity LifeStyle Properties
We are a self-administered, self-managed real estate investment trust ("REIT") with headquarters in Chicago. As of October 21, 2024, we own or have an interest in 452 properties in 35 states and British Columbia consisting of 172,870 sites.
For additional information, please contact our Investor Relations Department at (800) 247-5279 or at
Conference Call
A live audio webcast of our conference call discussing these results will take place tomorrow, Tuesday, October 22, 2024, 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," "estimate," "guidance," "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, and certain growth rates, 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) changes in debt service and interest rates; (x) our ability to integrate and operate recent acquisitions in accordance with our estimates; (xi) our ability to execute expansion/development opportunities in the face of supply chain delays/shortages; (xii) completion of pending transactions in their entirety and on assumed schedule; (xiii) our ability to attract and retain property employees, particularly seasonal employees; (xiv) ongoing legal matters and related fees; (xv) costs to clean up and restore property operations and potential revenue losses following storms or other unplanned events; and (xvi) the potential impact of, and our ability to remediate, material weaknesses in our internal control over financial reporting. 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 (1)(2)
(In millions, except Common Shares and OP Units outstanding and per share data, unaudited)
As of and for the Quarters Ended
Sep 30, 2024
June 30, 2024
Mar 31, 2024
Dec 31, 2023
Sep 30, 2023
Operating Information
Total revenues
$ 387.3
$ 380.0
$ 386.6
$ 360.6
$ 388.8
Consolidated net income
$ 86.9
$ 82.1
$ 115.3
$ 96.4
$ 80.7
Net income available for Common Stockholders
$ 82.8
$ 78.3
$ 109.9
$ 91.9
$ 77.0
Adjusted EBITDAre
$ 176.8
$ 164.3
$ 186.3
$ 171.1
$ 167.0
FFO available for Common Stock and OP Unit holders
$ 140.9
$ 134.7
$ 167.4
$ 148.5
$ 133.8
Normalized FFO available for Common Stock and OP Unit holders
$ 140.5
$ 128.5
$ 152.7
$ 138.2
$ 133.9
Funds Available for Distribution ("FAD") for Common Stock and OP Unit holders
$ 120.7
$ 108.3
$ 136.9
$ 109.2
$ 107.8
Common Shares and OP Units Outstanding (In thousands) and Per Share Data
Common Shares and OP Units, end of the period
195,617
195,621
195,598
195,531
195,525
Weighted average Common Shares and OP Units outstanding - Fully Diluted
195,510
195,465
195,545
195,475
195,440
Net income per Common Share - Fully Diluted (3)
$ 0.44
$ 0.42
$ 0.59
$ 0.49
$ 0.41
FFO per Common Share and OP Unit - Fully Diluted
$ 0.72
$ 0.69
$ 0.86
$ 0.76
$ 0.68
Normalized FFO per Common Share and OP Unit - Fully Diluted
$ 0.72
$ 0.66
$ 0.78
$ 0.71
$ 0.68
Dividends per Common Share
$ 0.4775
$ 0.4775
$ 0.4775
$ 0.4475
$ 0.4475
Balance Sheet
Total assets
$ 5,644
$ 5,645
$ 5,630
$ 5,614
$ 5,626
Total liabilities
$ 4,149
$ 4,135
$ 4,110
$ 4,115
$ 4,129
Market Capitalization
Total debt (4)
$ 3,502
$ 3,499
$ 3,507
$ 3,548
$ 3,533
Total market capitalization (5)
$ 17,457
$ 16,240
$ 16,104
$ 17,341
$ 15,990
Ratios
Total debt / total market capitalization
20.1 %
21.5 %
21.8 %
20.5 %
22.1 %
Total debt / Adjusted EBITDAre (6)
5.0
5.1
5.1
5.3
5.4
Interest coverage (7)
5.1
5.1
5.2
5.2
5.3
Fixed charges (8)
5.0
5.1
5.1
5.1
5.1
______________________
1.
See Non-GAAP Financial Measures Definitions and Reconciliations at the end of the supplemental financial information for definitions of Adjusted EBITDAre, FFO, Normalized FFO and FAD and a reconciliation of Consolidated net income to Adjusted EBITDAre.
2.
See page 6 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 $27.2 million as of September 30, 2024.
5.
See page 14 for the calculation of market capitalization as of September 30, 2024.
6.
Calculated using trailing twelve months Adjusted EBITDAre.
7.
Calculated by dividing trailing twelve months Adjusted EBITDAre by the interest expense incurred during the same period.
8.
See Non-GAAP Financial Measures Definitions and Reconciliations at the end of the supplemental financial information for a definition of fixed charges. This ratio is calculated by dividing trailing twelve months Adjusted EBITDAre by the sum of fixed charges and preferred stock dividends, if any, during the same period.
Consolidated Balance Sheets
(In thousands, except share and per share data)
September 30, 2024
December 31, 2023
(unaudited)
Assets
Investment in real estate:
Land
$ 2,088,682
$ 2,088,657
Land improvements
4,536,573
4,380,649
Buildings and other depreciable property
1,230,614
1,236,985
7,855,869
7,706,291
Accumulated depreciation
(2,592,258)
(2,448,876)
Net investment in real estate
5,263,611
5,257,415
Cash and restricted cash
40,398
29,937
Notes receivable, net
55,037
49,937
Investment in unconsolidated joint ventures
84,834
85,304
Deferred commission expense
56,050
53,641
Other assets, net
144,189
137,499
Total Assets
$ 5,644,119
$ 5,613,733
Liabilities and Equity
Liabilities:
Mortgage notes payable, net
$ 2,943,999
$ 2,989,959
Term loans, net
497,873
497,648
Unsecured line of credit
32,500
31,000
Accounts payable and other liabilities
207,603
151,567
Deferred membership revenue
232,862
218,337
Accrued interest payable
11,991
12,657
Rents and other customer payments received in advance and security deposits
128,345
126,451
Distributions payable
93,407
87,493
Total Liabilities
$ 4,148,580
$ 4,115,112
Equity:
Preferred stock, $0.01 par value, 10,000,000 shares authorized as of September 30, 2024 and December 31, 2023; none issued and outstanding
—
—
Common stock, $0.01 par value, 600,000,000 shares authorized as of September 30, 2024 and December 31, 2023; 186,512,609 and 186,426,281 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively
1,917
1,917
Paid-in capital
1,648,384
1,644,319
Distributions in excess of accumulated earnings
(219,724)
(223,576)
Accumulated other comprehensive income
(4,764)
6,061
Total Stockholders' Equity
1,425,813
1,428,721
Non-controlling interests, Common OP Units
69,726
69,900
Total Equity
1,495,539
1,498,621
Total Liabilities and Equity
$ 5,644,119
$ 5,613,733
Consolidated Statements of Income
(In thousands, unaudited)
Quarters Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
Revenues:
Rental income
$ 314,468
$ 303,334
$ 931,854
$ 888,440
Annual membership subscriptions
16,714
16,673
49,298
48,832
Membership upgrade sales (1)
4,173
3,744
12,170
10,863
Other income
16,440
15,658
48,186
51,283
Gross revenues from home sales, brokered resales and ancillary services
30,839
44,795
98,457
115,841
Interest income
2,430
2,276
7,018
6,623
Income from other investments, net
2,192
2,333
6,860
6,897
Total revenues
387,256
388,813
1,153,843
1,128,779
Expenses:
Property operating and maintenance
129,010
126,846
369,898
361,543
Real estate taxes
20,731
19,017
61,617
56,165
Membership sales and marketing (2)
6,448
5,696
17,871
16,055
Property management
20,165
19,887
59,311
58,710
Depreciation and amortization
50,934
50,968
153,386
152,934
Cost of home sales, brokered resales and ancillary services
22,051
33,471
71,668
85,880
Home selling expenses and ancillary operating expenses
7,336
7,164
20,955
21,258
General and administrative
9,274
9,895
30,248
38,163
Casualty-related charges/(recoveries), net (3)
591
—
(20,422)
—
Other expenses
1,402
1,338
4,120
4,187
Early debt retirement
30
68
30
68
Interest and related amortization
36,497
33,434
106,077
99,144
Total expenses
304,469
307,784
874,759
894,107
Income before income taxes and other items
82,787
81,029
279,084
234,672
Gain/(Loss) on sale of real estate and impairment, net (4)
(1,798)
(949)
(1,798)
(3,581)
Income tax benefit
—
—
239
—
Equity in income of unconsolidated joint ventures
5,874
661
6,736
2,158
Consolidated net income
86,863
80,741
284,261
233,249
Income allocated to non-controlling interests, Common OP Units
(4,042)
(3,772)
(13,230)
(10,981)
Redeemable perpetual preferred stock dividends
—
—
(8)
(8)
Net income available for Common Stockholders
$ 82,821
