CHICAGO--(BUSINESS WIRE)--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, 2023. All per share results are reported on a fully diluted basis unless otherwise noted.
($ in millions, except per share data) | |||||||||
FINANCIAL RESULTS | Q2 2023 | Q2 2022 | $ Change | ||||||
Total Revenues | $ | 370.0 | $ | 365.3 | $ | 4.7 | |||
Net Income available for Common Stockholders | $ | 62.9 | $ | 61.5 | $ | 1.4 | |||
Net Income per Common Share - Fully Diluted | $ | 0.34 | $ | 0.33 | $ | 0.01 | |||
NON-GAAP FINANCIAL MEASURES | Q2 2023 | Q2 2022 | $ Change | ||||||
Funds from Operations ("FFO") per Common Share and OP Unit - Fully Diluted | $ | 0.63 | $ | 0.62 | $ | 0.01 | |||
Normalized Funds from Operations ("Normalized FFO") per Common Share and OP Unit - Fully Diluted | $ | 0.66 | $ | 0.64 | $ | 0.02 | |||
Property operating revenues, excluding deferrals | $ | 333.3 | $ | 315.8 | $ | 17.5 | |||
Income from property operations, excluding deferrals and property management | $ | 184.5 | $ | 174.8 | $ | 9.7 | |||
Core Portfolio Performance | Q2 2023 | Q2 2022 | % Change | ||||||
Core property operating revenues, excluding deferrals | $ | 320.6 | $ | 305.3 | 5.0 | % | |||
Core income from property operations, excluding deferrals and property management | $ | 175.6 | $ | 169.9 | 3.5 | % | |||
Operations Update
Normalized FFO for the quarter ended June 30, 2023 was $0.66 per share, representing a 3.4% increase compared to the same period in 2022, outperforming the midpoint of our guidance expectation by $3.2 million.
MH
Core MH base rental income for the quarter ended June 30, 2023 increased 6.7% compared to the same period in 2022, which reflects 7.0% growth from rate increases. We sold 226 new homes during the quarter ended June 30, 2023, with an average sales price of $102,000.
RV and Marina
Core RV and marina base rental income for the quarter ended June 30, 2023 increased 2.3% compared to the same period in 2022. Core RV and marina annual base rental income for the quarter ended June 30, 2023 increased 7.8% compared to the same period in 2022, which reflects 7.3% growth from rate increases and 0.5% from occupancy gains. Demand from customers to visit our RV and Thousand Trails properties remains strong as total site utilization throughout the portfolio is in line compared to the quarter ended June 30, 2022 and increased 8% compared to the quarter ended June 30, 2019. Core RV and marina transient base rental income for the quarter ended June 30, 2023 decreased 13.9% compared to the same period in 2022. We continue to see demand for annual sites and have increased our Core RV and marina annual site count by approximately 240 since December 31, 2022, which has reduced the number of transient sites available for use. We experienced significant weather events during the quarter ended June 30, 2023 in California, the Pacific Northwest and along the East coast that impacted our results. During the quarter ended June 30, 2023, we made a change to our Core portfolio. Refer to page 19 for properties designated as Non-Core.
Property Operating Expenses
Core property operating expenses for the quarter ended June 30, 2023 increased 7.0% compared to the same period in 2022. Property operating and maintenance expenses for the quarter ended June 30, 2023 were favorable to our guidance expectations and the variance, primarily related to utility and payroll expenses, demonstrated a strong correlation to RV locations with lower than expected Transient rent in the same period. See page 8 for details of the Core property operating expenses.
Guidance (1)(2) | |||||||||
($ in millions, except per share data) | 2023 | ||||||||
Third Quarter | Full Year | ||||||||
Net Income per Common Share - Fully Diluted | $0.38 to $0.44 | $1.59 to $1.69 | |||||||
FFO per Common Share and OP Unit - Fully Diluted | $0.68 to $0.74 | $2.76 to $2.86 | |||||||
Normalized FFO per Common Share and OP Unit - Fully Diluted | $0.68 to $0.74 | $2.80 to $2.90 | |||||||
2022 Actual | 2023 Growth Rates | ||||||||
Core Portfolio: | Third Quarter | Full Year | Third Quarter | Full Year | |||||
MH base rental income | $ | 157.0 | $ | 626.0 | 6.5% to 7.1% | 6.3% to 7.3% | |||
RV and marina base rental income (3) | $ | 104.3 | $ | 392.3 | 2.7% to 3.3% | 4.1% to 5.1% | |||
Property operating revenues | $ | 320.7 | $ | 1,238.1 | 4.9% to 5.5% | 5.5% to 6.5% | |||
Property operating expenses | $ | 142.3 | $ | 524.1 | 4.7% to 5.3% | 6.3% to 7.3% | |||
Income from property operations, excluding deferrals and property management | $ | 178.4 | $ | 714.0 | 5.2% to 5.8% | 4.9% to 5.9% | |||
Non-Core Portfolio: | 2023 Full Year | ||||||||
Income from property operations, excluding deferrals and property management | $22.8 to $26.8 | ||||||||
Other Guidance Assumptions: | 2023 Full Year | ||||||||
Property management and general administrative (4) | $120.6 to $126.6 | ||||||||
Debt Assumptions: (5) | |||||||||
Weighted average debt outstanding | $3,375 to $3,575 | ||||||||
Interest and related amortization | $129.0 to $135.0 | ||||||||
(1) | Third quarter and full year 2023 guidance ranges represent a range of possible outcomes and the midpoint reflects management's estimate of the most likely outcome. Actual growth rates and per share amounts could vary materially from growth rates and per share amounts presented above if any of our assumptions, including occupancy and rate changes, our ability to manage expenses in an inflationary environment, our ability to integrate and operate recent acquisitions and costs to restore property operations and potential revenue losses following storms or other unplanned events, is incorrect. See Forward-Looking Statements in this release for additional factors impacting our 2023 guidance assumptions. See Non-GAAP Financial Measures Definitions and Reconciliations at the end of the supplemental financial information. | |
(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 65.8% and 67.9% of third quarter 2023 and full year 2023 RV and marina base rental income, respectively. Core RV and marina annual revenue third quarter 2023 growth rate range is 8.2% to 8.8% and the full year 2023 growth rate range is 7.8% to 8.8%. | |
(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. |
Balance Sheet Activity
In June 2023, we closed on a secured refinancing transaction generating gross proceeds of $89 million (the "June 2023 financing"). The loan represents an incremental borrowing from an existing secured facility, has a fixed interest rate of 5.04% per annum and matures in 10 years.
We also locked rate on a $375 million secured financing at a weighted average interest rate of 5.05% secured by a pool of MH and RV assets. The secured financing has a weighted average term to maturity of 7.5 years. We expect to close in the third quarter of 2023.
In July 2023 we repaid all debt scheduled to mature in 2023 and 2024 with proceeds from the June 2023 financing and our unsecured line of credit. Upon consummation of the $375 million secured financing, which is subject to customary closing conditions, the proceeds will be used to pay off the remaining balance on our unsecured line of credit.
About Equity LifeStyle Properties
We are a self-administered, self-managed real estate investment trust ("REIT") with headquarters in Chicago. As of July 17, 2023, we own or have an interest in 450 properties in 35 states and British Columbia consisting of 171,706 sites.
For additional information, please contact our Investor Relations Department at (800) 247-5279 or at investor_relations@equitylifestyle.com.
Conference Call
A live audio webcast of our conference call discussing these results will take place tomorrow, Tuesday, July 18, 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 | |||||||||||||||
Jun 30,
| Mar 31,
| Dec 31,
| Sep 30,
| Jun 30,
| |||||||||||
Operating Information | |||||||||||||||
Total revenues | $ | 370.0 | $ | 370.0 | $ | 340.6 | $ | 381.0 | $ | 365.3 | |||||
Consolidated net income | $ | 66.0 | $ | 86.5 | $ | 76.7 | $ | 70.5 | $ | 64.6 | |||||
Net income available for Common Stockholders | $ | 62.9 | $ | 82.4 | $ | 73.0 | $ | 67.2 | $ | 61.5 | |||||
Adjusted EBITDAre (1) | $ | 162.5 | $ | 176.7 | $ | 159.2 | $ | 166.4 | $ | 153.3 | |||||
FFO available for Common Stock and OP Unit holders (1)(2) | $ | 123.4 | $ | 144.1 | $ | 126.6 | $ | 134.4 | $ | 121.6 | |||||
Normalized FFO available for Common Stock and OP Unit holders (1)(2) | $ | 129.7 | $ | 144.3 | $ | 128.1 | $ | 136.8 | $ | 125.3 | |||||
Funds Available for Distribution ("FAD") for Common Stock and OP Unit holders (1)(2) | $ | 103.1 | $ | 126.2 | $ | 106.9 | $ | 115.4 | $ | 103.6 | |||||
Common Shares and OP Units Outstanding (In thousands) and Per Share Data | |||||||||||||||
Common Shares and OP Units, end of the period | 195,514 | 195,446 | 195,386 | 195,380 | 195,373 | ||||||||||
Weighted average Common Shares and OP Units outstanding - Fully Diluted | 195,430 | 195,369 | 195,281 | 195,269 | 195,227 | ||||||||||
Net income per Common Share - Fully Diluted (3) | $ | 0.34 | $ | 0.44 | $ | 0.39 | $ | 0.36 | $ | 0.33 | |||||
FFO per Common Share and OP Unit - Fully Diluted | $ | 0.63 | $ | 0.74 | $ | 0.65 | $ | 0.69 | $ | 0.62 | |||||
Normalized FFO per Common Share and OP Unit - Fully Diluted | $ | 0.66 | $ | 0.74 | $ | 0.66 | $ | 0.70 | $ | 0.64 | |||||
Dividends per Common Share | $ | 0.4475 | $ | 0.4475 | $ | 0.4100 | $ | 0.4100 | $ | 0.4100 | |||||
Balance Sheet | |||||||||||||||
Total assets | $ | 5,586 | $ | 5,519 | $ | 5,493 | $ | 5,405 | $ | 5,400 | |||||
Total liabilities | $ | 4,083 | $ | 4,006 | $ | 3,975 | $ | 3,886 | $ | 3,878 | |||||
Market Capitalization | |||||||||||||||
Total debt (4) | $ | 3,479 | $ | 3,414 | $ | 3,416 | $ | 3,329 | $ | 3,298 | |||||
Total market capitalization (5) | $ | 16,557 | $ | 16,534 | $ | 16,038 | $ | 15,607 | $ | 17,066 | |||||
Ratios | |||||||||||||||
Total debt / total market capitalization | 21.0 | % | 20.6 | % | 21.3 | % | 21.3 | % | 19.3 | % | |||||
Total debt / Adjusted EBITDAre (6) | 5.2 | 5.2 | 5.3 | 5.2 | 5.3 | ||||||||||
Interest coverage (7) | 5.4 | 5.5 | 5.6 | 5.7 | 5.7 | ||||||||||
Fixed charges(8) | 5.2 | 5.4 | 5.6 | 5.6 | 5.6 | ||||||||||
| _____________________________ | |||||||||||||||
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Consolidated Balance Sheets | |||||||
(In thousands, except share and per share data) | |||||||
June 30, 2023 | December 31, 2022 | ||||||
(unaudited) | |||||||
Assets | |||||||
Investment in real estate: | |||||||
Land | $ | 2,088,511 | $ | 2,084,532 | |||
Land improvements | 4,237,327 | 4,115,439 | |||||
Buildings and other depreciable property | 1,223,492 | 1,169,590 | |||||
7,549,330 | 7,369,561 | ||||||
Accumulated depreciation | (2,355,031 | ) | (2,258,540 | ) | |||
Net investment in real estate | 5,194,299 | 5,111,021 | |||||
Cash and restricted cash | 28,107 | 22,347 | |||||
Notes receivable, net | 47,375 | 45,356 | |||||
Investment in unconsolidated joint ventures | 82,423 | 81,404 | |||||
Deferred commission expense | 51,978 | 50,441 | |||||
Other assets, net | 181,805 | 181,950 | |||||
Total Assets | $ | 5,585,987 | $ | 5,492,519 | |||
Liabilities and Equity | |||||||
Liabilities: | |||||||
Mortgage notes payable, net | $ | 2,748,807 | $ | 2,693,167 | |||
Term loan, net | 497,195 | 496,817 | |||||
Unsecured line of credit | 205,000 | 198,000 | |||||
Accounts payable and other liabilities | 172,851 | 175,148 | |||||
Deferred membership revenue | 210,242 | 197,743 | |||||
Accrued interest payable | 12,305 | 11,739 | |||||
Rents and other customer payments received in advance and security deposits | 148,989 | 122,318 | |||||
Distributions payable | 87,486 | 80,102 | |||||
Total Liabilities | 4,082,875 | 3,975,034 | |||||
Equity: | |||||||
Preferred stock, $0.01 par value, 10,000,000 shares authorized as of June 30, 2023 and December 31, 2022; none issued and outstanding. | - | - | |||||
Common stock, $0.01 par value, 600,000,000 shares authorized as of June 30, 2023 and December 31, 2022; 186,273,876 and 186,120,298 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively. | 1,916 | 1,916 | |||||
Paid-in capital | 1,638,354 | 1,628,618 | |||||
Distributions in excess of accumulated earnings | (225,640 | ) | (204,248 | ) | |||
Accumulated other comprehensive income | 17,327 | 19,119 | |||||
Total Stockholders' Equity | 1,431,957 | 1,445,405 | |||||
Non-controlling interests - Common OP Units | 71,155 | 72,080 | |||||
Total Equity | 1,503,112 | 1,517,485 | |||||
Total Liabilities and Equity | $ | 5,585,987 | $ | 5,492,519 | |||
Consolidated Statements of Income | |||||||||||||||
(In thousands, unaudited) | |||||||||||||||
Quarters Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Revenues: | |||||||||||||||
Rental income | $ | 288,655 | $ | 275,330 | $ | 585,106 | $ | 560,395 | |||||||
Annual membership subscriptions | 16,189 | 15,592 | 32,159 | 30,749 | |||||||||||
Membership upgrade sales (1) | 3,614 | 3,168 | 7,119 | 6,235 | |||||||||||
Other income | 17,911 | 14,195 | 35,625 | 27,736 | |||||||||||
Gross revenues from home sales, brokered resales and ancillary services | 38,913 | 52,681 | 71,046 | 92,390 | |||||||||||
Interest income | 2,259 | 1,722 | 4,347 | 3,481 | |||||||||||
Income from other investments, net | 2,473 | 2,617 | 4,564 | 4,521 | |||||||||||
Total revenues | 370,014 | 365,305 | 739,966 | 725,507 | |||||||||||
Expenses: | |||||||||||||||
Property operating and maintenance | 122,214 | 114,307 | 234,697 | 218,299 | |||||||||||
Real estate taxes | 18,832 | 19,182 | 37,148 | 38,639 | |||||||||||
Membership sales and marketing (2) | 5,521 | 5,452 | 10,359 | 9,783 | |||||||||||
Property management | 19,359 | 19,099 | 38,823 | 36,970 | |||||||||||
Depreciation and amortization | 51,464 | 50,796 | 101,966 | 100,190 | |||||||||||
Cost of home sales, brokered resales and ancillary services | 29,268 | 40,971 | 52,409 | 71,670 | |||||||||||
Home selling expenses and ancillary operating expenses | 7,170 | 7,584 | 14,094 | 14,066 | |||||||||||
General and administrative (3)(4) | 16,607 | 11,679 | 28,268 | 23,750 | |||||||||||
Casualty-related charges/(recoveries), net (5) | - | - | - | - | |||||||||||
Other expenses (4) | 1,381 | 4,205 | 2,849 | 5,251 | |||||||||||
Early debt retirement | - | 640 | - | 1,156 | |||||||||||
Interest and related amortization | 33,122 | 28,053 | 65,710 | 55,517 | |||||||||||
Total expenses | 304,938 | 301,968 | 586,323 | 575,291 | |||||||||||
Loss on sale of real estate and impairment, net | - | - | (2,632 | ) | - | ||||||||||
Income before equity in income of unconsolidated joint ventures | 65,076 | 63,337 | 151,011 | 150,216 | |||||||||||
Equity in income of unconsolidated joint ventures | 973 | 1,253 | 1,497 | 1,424 | |||||||||||
Consolidated net income | 66,049 | 64,590 | 152,508 | 151,640 | |||||||||||
Income allocated to non-controlling interests - Common OP Units | (3,121 | ) | (3,073 | ) | (7,209 | ) | (7,217 | ) | |||||||
Redeemable perpetual preferred stock dividends | (8 | ) | (8 | ) | (8 | ) | (8 | ) | |||||||
Net income available for Common Stockholders | $ | 62,920 | $ | 61,509 | $ | 145,291 | $ | 144,415 | |||||||
| ________________________________ | |||||||||||||||
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Non-GAAP Financial Measures
This document contains certain non-GAAP measures used by management that we believe are helpful to understand our business. We believe investors should review these non-GAAP measures along with GAAP net income and cash flows from operating activities, investing activities and financing activities, when evaluating an equity REIT's operating performance. Our definitions and calculations of these non-GAAP financial and operating measures and other terms may differ from the definitions and methodologies used by other REITs and, accordingly, may not be comparable. These non-GAAP financial and operating measures do not represent cash generated from operating activities in accordance with GAAP, nor do they represent cash available to pay distributions and should not be considered as an alternative to net income, determined in accordance with GAAP, as an indication of our financial performance, or to cash flows from operating activities, determined in accordance with GAAP, as a measure of our liquidity, nor are they indicative of funds available to fund our cash needs, including our ability to make cash distributions. For definitions and 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 6 and Non-GAAP Financial Measures Definitions and Reconciliations on pages 16-19.
Selected Non-GAAP Financial Measures | |||
(In millions, except per share data, unaudited) | |||
Quarter Ended | |||
June 30, 2023 | |||
Income from property operations, excluding deferrals and property management - 2023 Core (1) | $ | 175.6 | |
Income from property operations, excluding deferrals and property management - Non-Core (1) | 9.0 | ||
Property management and general and administrative | (36.0 | ) | |
Other income and expenses | 14.2 | ||
Interest and related amortization | (33.1 | ) | |
Normalized FFO available for Common Stock and OP Unit holders (2) | $ | 129.7 | |
Accelerated vesting of stock-based compensation expense(3) | (6.3 | ) | |
FFO available for Common Stock and OP Unit holders (2) | $ | 123.4 | |
FFO per Common Share and OP Unit - Fully Diluted | $ | 0.63 | |
Normalized FFO per Common Share and OP Unit - Fully Diluted | $ | 0.66 | |
Normalized FFO available for Common Stock and OP Unit holders (2) | $ | 129.7 | |
Non-revenue producing improvements to real estate | (26.6 | ) | |
FAD for Common Stock and OP Unit holders (2) | $ | 103.1 | |
Weighted average Common Shares and OP Units - Fully Diluted | 195.4 | ||
| ______________________________________ | |||
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Reconciliation of Net Income to Non-GAAP Financial Measures | |||||||||||||||
(In thousands, except per share data, unaudited) | |||||||||||||||
Quarters Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Net income available for Common Stockholders | $ | 62,920 | $ | 61,509 | $ | 145,291 | $ | 144,415 | |||||||
Income allocated to non-controlling interests - Common OP Units | 3,121 | 3,073 | 7,209 | 7,217 | |||||||||||
Membership upgrade sales upfront payments, deferred, net (1) | 5,664 | 6,367 | 10,134 | 10,451 | |||||||||||
Membership sales commissions, deferred, net (1) | (871 | ) | (957 | ) | (1,550 | ) | (1,540 | ) | |||||||
Depreciation and amortization | 51,464 | 50,796 | 101,966 | 100,190 | |||||||||||
Depreciation on unconsolidated joint ventures | 1,081 | 835 | 2,216 | 1,776 | |||||||||||
Gain on unconsolidated joint ventures | - | - | (416 | ) | - | ||||||||||
Loss on sale of real estate and impairment, net | - | - | 2,632 | - | |||||||||||
FFO available for Common Stock and OP Unit holders | 123,379 | 121,623 | 267,482 | 262,509 | |||||||||||
Accelerated vesting of stock-based compensation expense (2) | 6,320 | - | 6,320 | - | |||||||||||
Early debt retirement | - | 640 | - | 1,156 | |||||||||||
Transaction/pursuit costs | - | 3,082 | 117 | 3,082 | |||||||||||
Lease termination expenses | - | - | 90 | - | |||||||||||
Normalized FFO available for Common Stock and OP Unit holders | 129,699 | 125,345 | 274,009 | 266,747 | |||||||||||
Non-revenue producing improvements to real estate | (26,573 | ) | (21,738 | ) | (44,685 | ) | (38,106 | ) | |||||||
FAD for Common Stock and OP Unit holders | $ | 103,126 | $ | 103,607 | $ | 229,324 | $ | 228,641 | |||||||
Net income per Common Share - Basic | $ | 0.34 | $ | 0.33 | $ | 0.78 | $ | 0.78 | |||||||
Net income per Common Share - Fully Diluted (3) | $ | 0.34 | $ | 0.33 | $ | 0.78 | $ | 0.78 | |||||||
FFO per Common Share and OP Unit - Basic | $ | 0.63 | $ | 0.62 | $ | 1.37 | $ | 1.35 | |||||||
FFO per Common Share and OP Unit - Fully Diluted | $ | 0.63 | $ | 0.62 | $ | 1.37 | $ | 1.34 | |||||||
Normalized FFO per Common Share and OP Unit - Basic | $ | 0.66 | $ | 0.64 | $ | 1.40 | $ | 1.37 | |||||||
Normalized FFO per Common Share and OP Unit - Fully Diluted | $ | 0.66 | $ | 0.64 | $ | 1.40 | $ | 1.37 | |||||||
Weighted average Common Shares outstanding - Basic | 186,023 | 185,767 | 185,962 | 185,729 | |||||||||||
Weighted average Common Shares and OP Units outstanding - Basic | 195,263 | 195,064 | 195,213 | 195,028 | |||||||||||
Weighted average Common Shares and OP Units outstanding - Fully Diluted | 195,430 | 195,227 | 195,388 | 195,253 | |||||||||||
| ____________________________ | |||||||||||||||
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Consolidated Income from Property Operations (1) | |||||||||||||||
(In millions, except home site and occupancy figures, unaudited) | |||||||||||||||
Quarters Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
MH base rental income (2) | $ | 166.4 | $ | 158.7 | $ | 331.0 | $ | 316.0 | |||||||
Rental home income (2) | 3.7 | 3.8 | 7.6 | 7.8 | |||||||||||
RV and marina base rental income (2) | 101.9 | 98.3 | 213.5 | 207.1 | |||||||||||
Annual membership subscriptions | 16.2 | 15.6 | 32.1 | 30.7 | |||||||||||
Membership upgrade sales current period, gross (3) | 9.3 | 9.5 | 17.2 | 16.7 | |||||||||||
Utility and other income (2)(4) | 35.8 | 29.9 | 71.2 | 59.9 | |||||||||||
Property operating revenues | 333.3 | 315.8 | 672.6 | 638.2 | |||||||||||
Property operating, maintenance and real estate taxes (2) | 142.4 | 134.6 | 274.3 | 259.6 | |||||||||||
Membership sales and marketing, gross (3) | 6.4 | 6.4 | 11.9 | 11.3 | |||||||||||
Property operating expenses | 148.8 | 141.0 | 286.2 | 270.9 | |||||||||||
Income from property operations, excluding deferrals and property management (1) | $ | 184.5 | $ | 174.8 | $ | 386.4 | $ | 367.3 | |||||||
Manufactured home site figures and occupancy averages: | |||||||||||||||
Total sites | 72,729 | 73,442 | 72,723 | 73,505 | |||||||||||
Occupied sites | 68,792 | 69,693 | 68,820 | 69,723 | |||||||||||
Occupancy % | 94.6 | % | 94.9 | % | 94.6 | % | 94.9 | % | |||||||
Monthly base rent per site | $ | 806 | $ | 759 | $ | 802 | $ | 756 | |||||||
RV and marina base rental income: | |||||||||||||||
Annual | $ | 72.7 | $ | 66.6 | $ | 142.1 | $ | 131.0 | |||||||
Seasonal | 9.5 | 9.5 | 37.4 | 36.1 | |||||||||||
Transient | 19.7 | 22.2 | 34.0 | 40.0 | |||||||||||
Total RV and marina base rental income | $ | 101.9 | $ | 98.3 | $ | 213.5 | $ | 207.1 | |||||||
| ___________________________ | |||||||||||||||
| |||||||||||||||
Core Income from Property Operations (1) | |||||||||||||||||
(In millions, except home site and occupancy figures, unaudited) | |||||||||||||||||
Quarters Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
2023 | 2022 | Change (2) | 2023 | 2022 | Change (2) | ||||||||||||
MH base rental income | $ | 166.3 | $ | 155.8 | 6.7 | % | $ | 330.7 | $ | 310.2 | 6.6 | % | |||||
Rental home income | 3.7 | 3.8 | (2.9 | )% | 7.5 | 7.8 | (2.6 | )% | |||||||||
RV and marina base rental income | 96.5 | 94.2 | 2.3 | % | 204.8 | 196.8 | 4.1 | % | |||||||||
Annual membership subscriptions | 15.9 | 15.2 | 4.7 | % | 31.5 | 30.1 | 4.8 | % | |||||||||
Membership upgrade sales current period, gross | 9.0 | 9.3 | (2.8 | )% | 16.9 | 16.2 | 4.2 | % | |||||||||
Utility and other income | 29.2 | 27.0 | 8.6 | % | 58.7 | 53.9 | 9.0 | % | |||||||||
Property operating revenues | 320.6 | 305.3 | 5.0 | % | 650.1 | 615.0 | 5.7 | % | |||||||||
Utility expense | 36.3 | 34.2 | 6.2 | % | 74.5 | 68.4 | 8.9 | % | |||||||||
Payroll | 30.7 | 29.7 | 3.3 | % | 58.5 | 55.1 | 6.2 | % | |||||||||
Repair & maintenance | 26.2 | 24.0 | 8.9 | % | 47.9 | 43.1 | 11.0 | % | |||||||||
Insurance and other (3) | 27.3 | 23.6 | 15.5 | % | 50.0 | 46.5 | 7.4 | % | |||||||||
Real estate taxes | 18.2 | 17.5 | 4.2 | % | 35.9 | 35.4 | 1.2 | % | |||||||||
Membership sales and marketing, gross | 6.3 | 6.3 | (0.9 | )% | 11.8 | 11.2 | 5.3 | % | |||||||||
Property operating expenses | 145.0 | 135.3 | 7.0 | % | 278.6 | 259.7 | 7.2 | % | |||||||||
Income from property operations, excluding deferrals and property management (1) | $ | 175.6 | $ | 169.9 | 3.5 | % | $ | 371.5 | $ | 355.2 | 4.6 | % | |||||
Occupied sites (4) | 68,778 | 68,992 | |||||||||||||||
| __________________________________ | |||||||||||||||||
| |||||||||||||||||
Core Income from Property Operations (continued) | |||||||||||||||||||||
(In millions, except home site and occupancy figures, unaudited) | |||||||||||||||||||||
Quarters Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||
2023 | 2022 | Change (1) | 2023 | 2022 | Change (1) | ||||||||||||||||
Core manufactured home site figures and occupancy averages: | |||||||||||||||||||||
Total sites | 72,468 | 72,458 | 72,462 | 72,521 | |||||||||||||||||
Occupied sites | 68,734 | 68,915 | 68,762 | 68,948 | |||||||||||||||||
Occupancy % | 94.8 | % | 95.1 | % | 94.9 | % | 95.1 | % | |||||||||||||
Monthly base rent per site | $ | 806 | $ | 753 | $ | 801 | $ | 750 | |||||||||||||
Core RV and marina base rental income: | |||||||||||||||||||||
Annual (2) | $ | 69.1 | $ | 64.0 | 7.8 | % | $ | 136.1 | $ | 125.8 | 8.1 | % | |||||||||
Seasonal | 9.1 | 9.0 | 1.6 | % | 36.5 | 33.3 | 9.2 | % | |||||||||||||
Transient | 18.3 | 21.3 | (13.9 | )% | 32.3 | 37.6 | (14.2 | )% | |||||||||||||
Total Seasonal and Transient | $ | 27.4 | $ | 30.3 | (9.3 | )% | $ | 68.8 | $ | 70.9 | (3.2 | )% | |||||||||
Total RV and marina base rental income | $ | 96.5 | $ | 94.3 | 2.3 | % | $ | 204.9 | $ | 196.7 | 4.1 | % | |||||||||
Core utility information: | |||||||||||||||||||||
Income | $ | 16.4 | $ | 15.0 | 9.6 | % | $ | 34.0 | $ | 30.6 | 11.1 | % | |||||||||
Expense | 36.3 | 34.1 | 6.2 | % | 74.6 | 68.4 | 9.1 | % | |||||||||||||
Expense, net | $ | 19.9 | $ | 19.1 | 4.2 | % | $ | 40.6 | $ | 37.8 | 7.4 | % | |||||||||
Utility recovery rate (3) | 45.2 | % | 44.0 | % | 45.6 | % | 44.7 | % | |||||||||||||
| ___________________________ | |||||||||||||||||||||
| |||||||||||||||||||||
Non-Core Income from Property Operations (1) | |||||
(In millions, unaudited) | |||||
Quarter Ended | Six Months Ended | ||||
June 30, 2023 | June 30, 2023 | ||||
MH base rental income | $ | 0.2 | $ | 0.3 | |
RV and marina base rental income | 5.4 | 8.7 | |||
Annual membership subscriptions | 0.3 | 0.7 | |||
Utility and other income | 6.6 | 12.5 | |||
Membership upgrade sales current period, gross | 0.3 | 0.3 | |||
Property operating revenues | 12.8 | 22.5 | |||
Property operating expenses (2) | 3.8 | 7.6 | |||
Income from property operations, excluding deferrals and property management (1) | $ | 9.0 | $ | 14.9 | |
________________________________ | |||||
| |||||
Home Sales and Rental Home Operations | |||||||||||
(In thousands, except home sale volumes and occupied rentals, unaudited) | |||||||||||
Home Sales - Select Data | Quarters Ended June 30, | Six Months Ended June 30, | |||||||||
2023 | 2022 | 2023 | 2022 | ||||||||
Total new home sales volume (1) | 226 | 365 | 402 | 626 | |||||||
New home sales gross revenues (1) | $ | 23,038 | $ | 33,848 | $ | 41,352 | $ | 59,378 | |||
Total used home sales volume | 66 | 97 | 168 | 169 | |||||||
Used home sales gross revenues | $ | 1,034 | $ | 1,367 | $ | 2,209 | $ | 2,364 | |||
Brokered home resales volume | 201 | 263 | 335 | 451 | |||||||
Brokered home resales gross revenues | $ | 876 | $ | 1,049 | $ | 1,551 | $ | 1,660 | |||
Rental Homes - Select Data | Quarters Ended June 30, | Six Months Ended June 30, | |||||||||
2023 | 2022 | 2023 | 2022 | ||||||||
Rental operations revenues (2) | $ | 9,827 | $ | 10,868 | $ | 20,085 | $ | 22,216 | |||
Rental home operations expense (3) | 1,158 | 1,220 | 2,117 | 2,611 | |||||||
Depreciation on rental homes (4) | 2,802 | 2,500 | 5,549 | 5,017 | |||||||
Occupied rentals: (5) | |||||||||||
New | 2,236 | 2,742 | |||||||||
Used | 292 | 375 | |||||||||
Total occupied rental sites | 2,528 | 3,117 | |||||||||
As of June 30, 2023 | As of June 30, 2022 | ||||||||||
Cost basis in rental homes: (6) | Gross | Net of Depreciation | Gross | Net of Depreciation | |||||||
New | $ | 257,978 | $ | 215,087 | $ | 221,251 | $ | 191,048 | |||
Used | 13,491 | 7,806 | 14,571 | 7,673 | |||||||
Total rental homes | $ | 271,469 | $ | 222,893 | $ | 235,822 | $ | 198,721 | |||
| _________________________ | |||||||||||
| |||||||||||
Total Sites | |
(Unaudited) | |
Summary of Total Sites as of June 30, 2023 | |
Sites (1) | |
MH sites | 72,700 |
RV sites: | |
Annual | 35,300 |
Seasonal | 12,500 |
Transient | 14,900 |
Marina slips | 6,900 |
Membership (2) | 25,800 |
Joint Ventures (3) | 3,600 |
Total | 171,700 |
| ____________________________ | |
| |
Memberships - Select Data | ||||||||||||||
(Unaudited) | ||||||||||||||
Years Ended December 31, | ||||||||||||||
2019 | 2020 | 2021 | 2022 | Six Months Ended June 30, 2023 | ||||||||||
Member Count (1) | 115,680 | 116,169 | 125,149 | 128,439 | 126,945 | |||||||||
Thousand Trails Camping Pass (TTC) Origination | 41,484 | 44,129 | 50,523 | 51,415 | 24,576 | |||||||||
TTC Sales | 19,267 | 20,587 | 23,923 | 23,237 | 11,294 | |||||||||
RV Dealer TTC Activations | 22,217 | 23,542 | 26,600 | 28,178 | 13,282 | |||||||||
Number of annuals (2) | 5,938 | 5,986 | 6,320 | 6,390 | 6,175 | |||||||||
Number of upgrade sales (3) | 2,919 | 3,373 | 4,863 | 4,068 | 1,877 | |||||||||
(In thousands, unaudited) | ||||||||||||||
Annual membership subscriptions | $ | 51,015 | $ | 53,085 | $ | 58,251 | $ | 63,215 | $ | 32,159 | ||||
RV base rental income from annuals | $ | 19,634 | $ | 20,761 | $ | 23,127 | $ | 25,945 | $ | 13,578 | ||||
RV base rental income from seasonals/transients | $ | 20,181 | $ | 18,126 | $ | 25,562 | $ | 24,316 | $ | 8,507 | ||||
Membership upgrade sales current period, gross | $ | 19,111 | $ | 21,739 | $ | 36,270 | $ | 34,661 | $ | 17,253 | ||||
Utility and other income | $ | 2,422 | $ | 2,426 | $ | 2,735 | $ | 2,626 | $ | 1,129 | ||||
Membership Upgrade Sales Activity | Quarters Ended June 30, | Six Months Ended June 30, | |||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Membership upgrade sales current period, gross | $ | 9,278 | $ | 9,535 | $ | 17,253 | $ | 16,686 | |||||||
Membership upgrade sales upfront payments, deferred, net | (5,664 | ) | (6,367 | ) | (10,134 | ) | (10,451 | ) | |||||||
Membership upgrade sales | $ | 3,614 | $ | 3,168 | $ | 7,119 | $ | 6,235 | |||||||
Membership sales and marketing, gross | $ | (6,392 | ) | $ | (6,409 | ) | $ | (11,909 | ) | $ | (11,323 | ) | |||
Membership sales commissions, deferred, net | 871 | 957 | 1,550 | 1,540 | |||||||||||
Membership sales and marketing | $ | (5,521 | ) | $ | (5,452 | ) | $ | (10,359 | ) | $ | (9,783 | ) | |||
| ________________________________ | |||||||||||||||
| |||||||||||||||
Market Capitalization | ||||||||||||||
(In millions, except share and OP Unit data, unaudited) | ||||||||||||||
Capital Structure as of June 30, 2023 | ||||||||||||||
Total
| % of Total
| Total | % of Total | % of Total
| ||||||||||
Secured Debt | $ | 2,774 | 79.7 | % | ||||||||||
Unsecured Debt | 705 | 20.3 | % | |||||||||||
Total Debt (1) | $ | 3,479 | 100.0 | % | 21.0 | % | ||||||||
Common Shares | 186,273,876 | 95.3 | % | |||||||||||
OP Units | 9,240,069 | 4.7 | % | |||||||||||
Total Common Shares and OP Units | 195,513,945 | 100.0 | % | |||||||||||
Common Stock price at June 30, 2023 | $ | 66.89 | ||||||||||||
Fair Value of Common Shares and OP Units | $ | 13,078 | 100.0 | % | ||||||||||
Total Equity | $ | 13,078 | 100.0 | % | 79.0 | % | ||||||||
Total Market Capitalization | $ | 16,557 | 100.0 | % | ||||||||||
| ________________________ | ||||||||||||||
1. Excludes deferred financing costs of approximately $28.0 million. | ||||||||||||||
Debt Maturity Schedule | |||||||||||
| Debt Maturity Schedule as of June 30, 2023 | |||||||||||
(In thousands, unaudited) | |||||||||||
Year | Outstanding
| Weighted
| % of Total Debt | Weighted
| |||||||
Secured Debt | |||||||||||
2023 | $ | 90,597 | 4.88 | % | 2.60 | % | 0.02 | ||||
2024 | 9,887 | 5.49 | % | 0.28 | % | 0.95 | |||||
2025 | 91,841 | 3.45 | % | 2.64 | % | 1.79 | |||||
2026 | - | - | % | - | % | - | |||||
2027 | - | - | % | - | % | - | |||||
2028 | 204,491 | 4.19 | % | 5.88 | % | 5.22 | |||||
2029 | 38,905 | 4.10 | % | 1.12 | % | 6.01 | |||||
2030 | 275,385 | 2.69 | % | 7.92 | % | 6.77 | |||||
2031 | 255,210 | 2.46 | % | 7.34 | % | 7.91 | |||||
2032 | 202,000 | 2.47 | % | 5.81 | % | 9.22 | |||||
Thereafter | 1,605,601 | 3.99 | % | 46.15 | % | 13.93 | |||||
Total | $ | 2,773,917 | 3.64 | % | 79.74 | % | 10.7 | ||||
Unsecured Term Loans | |||||||||||
2023 | $ | - | - | % | - | % | - | ||||
2024 | - | - | % | - | % | - | |||||
2025 | - | - | % | - | % | - | |||||
2026 | 300,000 | 1.81 | % | 8.62 | % | 2.84 | |||||
2027 | 200,000 | 4.88 | % | 5.75 | % | 3.61 | |||||
Thereafter | - | - | % | - | % | - | |||||
Total | $ | 500,000 | 3.04 | % | 14.37 | % | 3.2 | ||||
Total Secured and Unsecured | $ | 3,273,917 | 3.55 | % | 94.11 | % | 9.5 | ||||
Line of Credit Borrowing (1) | 205,000 | 6.29 | % | 5.89 | % | - | |||||
Note Premiums and Unamortized loan costs | (27,915 | ) | |||||||||
Total Debt, Net | $ | 3,451,002 | 3.92% (2) | 100 | % | ||||||
| ______________________ | |||||||||||
| |||||||||||
Non-GAAP Financial Measures Definitions and Reconciliations |
FUNDS FROM OPERATIONS (FFO). We define FFO as net income, computed in accordance with GAAP, excluding gains or losses from sales of properties, depreciation and amortization related to real estate, impairment charges and adjustments to reflect our share of FFO of unconsolidated joint ventures. Adjustments for unconsolidated joint ventures are calculated to reflect FFO on the same basis. We compute FFO in accordance with our interpretation of standards established by the National Association of Real Estate Investment Trusts ("NAREIT"), which may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently than we do. We receive non-refundable upfront payments from membership upgrade contracts. In accordance with GAAP, the non-refundable upfront payments and related commissions are deferred and amortized over the estimated membership upgrade contract term. Although the NAREIT definition of FFO does not address the treatment of non-refundable upfront payments, we believe that it is appropriate to adjust for the impact of the deferral activity in our calculation of FFO.
We believe FFO, as defined by the Board of Governors of NAREIT, is generally a measure of performance for an equity REIT. While FFO is a relevant and widely used measure of operating performance for equity REITs, it does not represent cash flow from operations or net income as defined by GAAP, and it should not be considered as an alternative to these indicators in evaluating liquidity or operating performance.
NORMALIZED FUNDS FROM OPERATIONS (NORMALIZED FFO). We define Normalized FFO as FFO excluding non-operating income and expense items, such as gains and losses from early debt extinguishment, including prepayment penalties and defeasance costs, transaction/pursuit costs, and other miscellaneous non-comparable items. Normalized FFO presented herein is not necessarily comparable to Normalized FFO presented by other real estate companies due to the fact that not all real estate companies use the same methodology for computing this amount.
FUNDS AVAILABLE FOR DISTRIBUTION (FAD). We define FAD as Normalized FFO less non-revenue producing capital expenditures.
We believe that FFO, Normalized FFO and FAD are helpful to investors as supplemental measures of the performance of an equity REIT. We believe that by excluding the effect of gains or losses from sales of properties, depreciation and amortization related to real estate and impairment charges, which are based on historical costs and may be of limited relevance in evaluating current performance, FFO can facilitate comparisons of operating performance between periods and among other equity REITs. We further believe that Normalized FFO provides useful information to investors, analysts and our management because it allows them to compare our operating performance to the operating performance of other real estate companies and between periods on a consistent basis without having to account for differences not related to our normal 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 expenses and the impact of GAAP deferrals of membership upgrade sales upfront payments and membership sales commissions, net. Property management represents the expenses associated with indirect costs such as off-site payroll and certain administrative and professional expenses. We believe exclusion of property management expenses is helpful to investors and analysts as a measure of the operating results of our properties, excluding items that are not directly related to the operation of the properties. 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) | 2023 | 2022 | 2023 | 2022 | |||||||||||
Net income available for Common Stockholders | $ | 62,920 | $ | 61,509 | $ | 145,291 | $ | 144,415 | |||||||
Redeemable perpetual preferred stock dividends | 8 | 8 | 8 | 8 | |||||||||||
Income allocated to non-controlling interests - Common OP Units | 3,121 | 3,073 | 7,209 | 7,217 | |||||||||||
Equity in income of unconsolidated joint ventures | (973 | ) | (1,253 | ) | (1,497 | ) | (1,424 | ) | |||||||
Income before equity in income of unconsolidated joint ventures | 65,076 | 63,337 | 151,011 | 150,216 | |||||||||||
Loss on sale of real estate and impairment, net | - | - | 2,632 | - | |||||||||||
Membership upgrade sales upfront payments, deferred, net | 5,664 | 6,367 | 10,134 | 10,451 | |||||||||||
Gross revenues from home sales, brokered resales and ancillary services | (38,913 | ) | (52,681 | ) | (71,046 | ) | (92,390 | ) | |||||||
Interest income | (2,259 | ) | (1,722 | ) | (4,347 | ) | (3,481 | ) | |||||||
Income from other investments, net | (2,473 | ) | (2,617 | ) | (4,564 | ) | (4,521 | ) | |||||||
Membership sales commissions, deferred, net | (871 | ) | (957 | ) | (1,550 | ) | (1,540 | ) | |||||||
Property management | 19,359 | 19,099 | 38,823 | 36,970 | |||||||||||
Depreciation and amortization | 51,464 | 50,796 | 101,966 | 100,190 | |||||||||||
Cost of home sales, brokered resales and ancillary services | 29,268 | 40,971 | 52,409 | 71,670 | |||||||||||
Home selling expenses and ancillary operating expenses | 7,170 | 7,584 | 14,094 | 14,066 | |||||||||||
General and administrative (1)(2) | 16,607 | 11,679 | 28,268 | 23,750 | |||||||||||
Casualty-related charges/(recoveries), net (3) | - | - | - | - | |||||||||||
Other expenses (1) | 1,381 | 4,205 | 2,849 | 5,251 | |||||||||||
Early debt retirement | - | 640 | - | 1,156 | |||||||||||
Interest and related amortization | 33,122 | 28,053 | 65,710 | 55,517 | |||||||||||
Income from property operations, excluding deferrals and property management | 184,595 | 174,754 | 386,389 | 367,305 | |||||||||||
Membership upgrade sales upfront payments, and membership sales commissions, deferred, net | (4,793 | ) | (5,410 | ) | (8,584 | ) | (8,911 | ) | |||||||
Property management | (19,359 | ) | (19,099 | ) | (38,823 | ) | (36,970 | ) | |||||||
Income from property operations | $ | 160,443 | $ | 150,245 | $ | 338,982 | $ | 321,424 | |||||||
EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND AMORTIZATION FOR REAL ESTATE (EBITDAre) AND ADJUSTED EBITDAre. We define EBITDAre as net income or loss excluding interest income and expense, income taxes, depreciation and amortization, gains or losses from sales of properties, impairments charges, and adjustments to reflect our share of EBITDAre of unconsolidated joint ventures. We compute EBITDAre in accordance with our interpretation of the standards established by NAREIT, which may not be comparable to EBITDAre reported by other REITs that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently than we do. We receive non-refundable upfront payments from membership upgrade contracts. In accordance with GAAP, the non-refundable upfront payments and related commissions are deferred and amortized over the estimated customer life. Although the NAREIT definition of EBITDAre does not address the treatment of non-refundable upfront payments, we believe that it is appropriate to adjust for the impact of the deferral activity in our calculation of EBITDAre.
_____________________ |
|
We define Adjusted EBITDAre as EBITDAre excluding non-operating income and expense items, such as gains and losses from early debt extinguishment, including prepayment penalties and defeasance costs, transaction/pursuit costs and other miscellaneous non-comparable items.
We believe that EBITDAre and Adjusted EBITDAre may be useful to an investor in evaluating our operating performance and liquidity because the measures are widely used to measure the operating performance of an equity REIT.
The following table reconciles Consolidated net income to EBITDAre and Adjusted EBITDAre:
Quarters Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(amounts in thousands) | 2023 | 2022 | 2023 | 2022 | |||||||||||
Consolidated net income | $ | 66,049 | $ | 64,590 | $ | 152,508 | $ | 151,640 | |||||||
Interest income | (2,259 | ) | (1,722 | ) | (4,347 | ) | (3,481 | ) | |||||||
Membership upgrade sales upfront payments, deferred, net (1) | 5,664 | 6,367 | 10,134 | 10,451 | |||||||||||
Membership sales commissions, deferred, net (1) | (871 | ) | (957 | ) | (1,550 | ) | (1,540 | ) | |||||||
Real estate depreciation and amortization | 51,464 | 50,796 | 101,966 | 100,190 | |||||||||||
Other depreciation and amortization | 1,339 | 1,119 | 2,690 | 1,946 | |||||||||||
Interest and related amortization | 33,122 | 28,053 | 65,710 | 55,517 | |||||||||||
Loss on sale of real estate and impairment, net | - | - | 2,632 | - | |||||||||||
Adjustments to our share of EBITDAre of unconsolidated joint ventures | 1,684 | 1,361 | 2,991 | 2,817 | |||||||||||
EBITDAre | 156,192 | 149,607 | 332,734 | 317,540 | |||||||||||
Stock-based compensation expense | 6,320 | - | 6,320 | - | |||||||||||
Early debt retirement | - | 640 | - | 1,156 | |||||||||||
Transaction/pursuit costs | - | 3,082 | 117 | 3,082 | |||||||||||
Lease termination expenses | - | - | 90 | - | |||||||||||
Adjusted EBITDAre | $ | 162,512 | $ | 153,329 | $ | 339,261 | $ | 321,778 | |||||||
CORE. The Core properties include properties we owned and operated during all of 2022 and 2023. 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 2022 and 2023. This includes, but is not limited to, three RV communities and one membership RV community acquired during 2022 and one RV community acquired during 2023. The Non-Core properties also include Fish Tale Marina, Fort Myers Beach, Gulf Air, Palm Harbour Marina, Pine Island, and Ramblers Rest. During the quarter ended June 30, 2023, we designated Rancho Oso and Turtle Beach as Non-Core properties as operations at these properties have been suspended due to storms and flooding events in California.
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.
______________________ |
|
FORWARD-LOOKING NON-GAAP MEASURES. The following table reconciles Net Income per Common Share - Fully Diluted guidance to FFO per Common Share and OP Unit - Fully Diluted guidance and Normalized FFO per Common Share and OP Unit - Fully diluted guidance:
(Unaudited) | Third Quarter 2023 | Full Year 2023 | |
Net income per Common Share - Fully Diluted | $0.38 to $0.44 | $1.59 to $1.69 | |
Membership upgrade sales deferred, net and membership sales commissions deferred, net | 0.27 | 1.06 | |
Depreciation and amortization | 0.03 | 0.10 | |
Loss on sale of real estate and impairment, net | - | 0.01 | |
FFO per Common Share and OP Unit - Fully Diluted | $0.68 to $0.74 | $2.76 to $2.86 | |
Normalized adjustment | - | 0.04 | |
Normalized FFO per Common Share and OP Unit - Fully Diluted | $0.68 to $0.74 | $2.80 to $2.90 |
This press release includes certain forward-looking information, including Core and Non-Core Income from property operations, excluding deferrals and property management, that is not presented in accordance with GAAP. In reliance on the exception in Item 10(e)(1)(i)(B) of Regulation S-K, we do not provide a quantitative reconciliation of such forward-looking information to the most directly comparable financial measure calculated and presented in accordance with GAAP, where we are unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This includes, for example, (i) scheduled or implemented rate increases on community, resort and marina sites; (ii) scheduled or implemented rate increases in annual payments under membership subscriptions; (iii) occupancy changes; (iv) costs to restore property operations and potential revenue losses following storms or other unplanned events and (v) other nonrecurring/unplanned income or expense items, which may not be within our control, may vary between periods and cannot be reasonably predicted. These unavailable reconciling items could significantly impact our future financial results.
Contacts
Paul Seavey
(800) 247-5279
