Equity Lifestyle Properties Inc 10-Q for FY2020 Q3

Equity Lifestyle Properties Inc (ELS)

10-Q 2020-10-27 For: 2020-09-30

Added on April 12, 2026

About this 10-Q

Equity Lifestyle Properties Inc filed this 10-Q on October 27, 2020, covering the quarter ended September 30, 2020 (FY2020 Q3).

Headline figures

Quarter ended September 30, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $284.99M; up 5.1% from $271.16M a year earlier
Net income: $53.47M; down 21.6% from net income of $68.18M a year earlier
Diluted EPS: $0.28; down 20.0% from $0.35 a year earlier

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Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐


	As of		As of
	September 30, 2020		December 31, 2019
	(unaudited)
Assets
Investment in real estate:
Land	$	1,531,313	$	1,525,407
Land improvements	3,434,393		3,336,070
Buildings and other depreciable property	905,679		881,572
	5,871,385		5,743,049
Accumulated depreciation	(1,886,768)		(1,776,224)
Net investment in real estate	3,984,617		3,966,825
Cash and restricted cash	114,218		28,860
Notes receivable, net	36,230		37,558
Investment in unconsolidated joint ventures	19,933		20,074
Deferred commission expense	42,220		41,149
Other assets, net	63,195		56,809
Total Assets	$	4,260,413	$	4,151,275

Liabilities and Equity
Liabilities:
Mortgage notes payable, net	$	2,450,783	$	2,049,509
Term loan, net	—		198,949
Unsecured line of credit	50,000		160,000
Accounts payable and other liabilities	148,034		124,665
Deferred revenue – upfront payments from membership upgrade sales	136,194		126,814
Deferred revenue – annual membership subscriptions	12,035		10,599
Accrued interest payable	8,055		8,639
Rents and other customer payments received in advance and security deposits	90,219		91,234
Distributions payable	66,001		58,978
Total Liabilities	2,961,321		2,829,387
Equity:
Stockholders' Equity:
Preferred stock, $0.01 par value, 10,000,000 shares authorized as of September 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 September 30, 2020 and December 31, 2019, respectively; 182,222,007 and 182,089,595 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively.	1,812		1,812
Paid-in capital	1,408,253		1,402,696
Distributions in excess of accumulated earnings	(181,754)		(154,318)
Accumulated other comprehensive income (loss)	—		(380)
Total Stockholders’ Equity	1,228,311		1,249,810
Non-controlling interests – Common OP Units	70,781		72,078
Total Equity	1,299,092		1,321,888
Total Liabilities and Equity	$	4,260,413	$	4,151,275


	Quarters Ended September 30,						Nine Months Ended September 30,
	2020		2019		2020		2019
Revenues:
Rental income	$	238,869	$	225,116	$	696,178	$	660,689
Annual membership subscriptions	13,442		13,150		39,476		38,052
Membership upgrade sales current period, gross	6,631		5,730		16,522		14,609
Membership upgrade sales upfront payments, deferred, net	(4,171)		(3,530)		(9,379)		(8,213)
Other income	12,268		11,263		33,007		31,898
Gross revenues from home sales	13,070		8,438		33,245		22,738
Brokered resale and ancillary services revenues, net	1,648		2,133		2,011		4,564
Interest income	1,801		1,831		5,399		5,385
Income from other investments, net	1,428		7,029		3,093		8,894
Total revenues	284,986		271,160		819,552		778,616
Expenses:
Property operating and maintenance	99,566		90,765		268,465		253,581
Real estate taxes	15,981		15,166		49,490		45,596
Sales and marketing, gross	5,054		4,063		13,308		11,686
Membership sales commissions, deferred, net	(630)		(313)		(1,327)		(893)
Property management	14,527		14,605		44,344		42,675
Depreciation and amortization	38,581		37,032		115,937		112,785
Cost of home sales	12,866		8,434		33,627		23,230
Home selling expenses	1,241		1,033		3,535		3,218
General and administrative	9,692		8,710		31,156		27,844
Other expenses	658		1,460		1,885		2,427
Early debt retirement	9,732		—		10,786		1,491
Interest and related amortization	25,218		25,547		77,540		77,964
Total expenses	232,486		206,502		648,746		601,604
Gain on sale of real estate, net	—		—		—		52,507
Income before equity in income of unconsolidated joint ventures	52,500		64,658		170,806		229,519
Equity in income of unconsolidated joint ventures	968		3,518		2,239		8,277
Consolidated net income	53,468		68,176		173,045		237,796

Income allocated to non-controlling interests – Common OP Units	(2,908)		(3,715)		(9,415)		(13,617)
Redeemable perpetual preferred stock dividends	—		—		(8)		(8)
Net income available for Common Stockholders	$	50,560	$	64,461	$	163,622	$	224,171

Consolidated net income	$	53,468	$	68,176	$	173,045	$	237,796
Other comprehensive income (loss):
Adjustment for fair market value of swap	1,161		(257)		380		(2,798)
Consolidated comprehensive income	54,629		67,919		173,425		234,998
Comprehensive income allocated to non-controlling interests – Common OP Units	(2,971)		(3,701)		(9,436)		(13,460)
Redeemable perpetual preferred stock dividends	—		—		(8)		(8)
Comprehensive income attributable to Common Stockholders	$	51,658	$	64,218	$	163,981	$	221,530

Earnings per Common Share – Basic	$	0.28	$	0.35	$	0.90	$	1.24

Earnings per Common Share – Fully Diluted	$	0.28	$	0.35	$	0.90	$	1.24

Weighted average Common Shares outstanding – Basic	181,869		181,649		181,811		180,515
Weighted average Common Shares outstanding – Fully Diluted	192,537		192,400		192,548		191,840


	Common Stock		Paid-in Capital		Redeemable Perpetual Preferred Stock		Distributions in Excess of Accumulated Earnings		Accumulated Other Comprehensive Income (Loss)		Non-controlling Interests – Common OP Units		Total Equity
Balance as of December 31, 2019	$	1,812	$	1,402,696	$	—	$	(154,318)	$	(380)	$	72,078	$	1,321,888
Cumulative effect of change in accounting principle (ASU 2016-13, Financial Instruments - Credit Losses (Topic 326))	—		—		—		(3,875)		—		—		(3,875)
Balance as of January 1, 2020	1,812		1,402,696		—		(158,193)		(380)		72,078		1,318,013
Exchange of Common OP Units for Common Stock	—		63		—		—		—		(63)		—

Issuance of Common Stock through employee stock purchase plan	—		619		—		—		—		—		619

Compensation expenses related to restricted stock and stock options	—		2,964		—		—		—		—		2,964
Repurchase of Common Stock or Common OP Units	—		(3,962)		—		—		—		—		(3,962)
Adjustment for Common OP Unitholders in the Operating Partnership	—		277		—		—		—		(277)		—
Adjustment for fair market value of swap	—		—		—		—		(1,333)		—		(1,333)
Consolidated net income	—		—		—		66,875		—		3,849		70,724
Distributions	—		—		—		(62,385)		—		(3,590)		(65,975)
Other	—		(143)		—		—		—		—		(143)
Balance as of March 31, 2020	1,812		1,402,514		—		(153,703)		(1,713)		71,997		1,320,907


Issuance of Common Stock through employee stock purchase plan	—		531		—		—		—		—		531

Compensation expenses related to restricted stock and stock options	—		2,669		—		—		—		—		2,669

Adjustment for Common OP Unitholders in the Operating Partnership	—		193		—		—		—		(193)		—
Adjustment for fair market value of swap	—		—		—		—		552		—		552
Consolidated net income	—		—		8		46,187		—		2,658		48,853
Distributions	—		—		(8)		(62,387)		—		(3,591)		(65,986)
Other	—		(143)		—		—		—		—		(143)
Balance as of June 30, 2020	1,812		1,405,764		—		(169,903)		(1,161)		70,871		1,307,383


Issuance of Common Stock through employee stock purchase plan	—		528		—		—		—		—		528

Compensation expenses related to restricted stock and stock options	—		2,878		—		—		—		—		2,878

Adjustment for Common OP Unitholders in the Operating Partnership	—		(592)		—		—		—		592		—
Adjustment for fair market value of swap	—		—		—		—		1,161		—		1,161
Consolidated net income	—		—		—		50,560		—		2,908		53,468
Distributions	—		—		—		(62,411)		—		(3,590)		(66,001)
Other	—		(325)		—		—		—		—		(325)
Balance as of September 30, 2020	$	1,812	$	1,408,253	$	—	$	(181,754)	$	—	$	70,781	$	1,299,092


	Common Stock		Paid-in Capital		Redeemable Perpetual Preferred Stock		Distributions in Excess of Accumulated Earnings		Accumulated Other Comprehensive Income (Loss)		Non-controlling interests – Common OP Units		Total Equity
Balance as of January 1, 2019	$	1,792	$	1,328,495	$	—	$	(211,034)	$	2,299	$	71,792	$	1,193,344
Exchange of Common OP Units for Common Stock	—		66		—		—		—		(66)		—
Issuance of Common Stock through exercise of options	—		53		—		—		—		—		53
Issuance of Common Stock through employee stock purchase plan	—		652		—		—		—		—		652
Compensation expenses related to restricted stock and stock options	—		2,420		—		—		—		—		2,420
Repurchase of Common Stock or Common OP Units	—		(53)		—		—		—		—		(53)
Adjustment for Common OP Unitholders in the Operating Partnership	—		(56)		—		—		—		56		—
Adjustment for fair market value of swap	—		—		—		—		(931)		—		(931)
Consolidated net income	—		—		—		113,309		—		7,226		120,535
Distributions	—		—		—		(55,123)		—		(3,516)		(58,639)
Other	—		(63)		—		—		—		—		(63)
Balance as of March 31, 2019	1,792		1,331,514		—		(152,848)		1,368		75,492		1,257,318
Exchange of Common OP Units for Common Stock	10		6,425		—		—		—		(6,435)		—
Issuance of Common Stock through employee stock purchase plan	—		587		—		—		—		—		587
Issuance of Common Stock through our ATM equity offering program	10		59,309		—		—		—		—		59,319
Compensation expenses related to restricted stock and stock options	—		2,625		—		—		—		—		2,625
Adjustment for Common OP Unitholders in the Operating Partnership	—		(2,883)		—		—		—		2,883		—
Adjustment for fair market value of swap	—		—		—		—		(1,610)		—		(1,610)
Consolidated net income	—		—		8		46,401		—		2,676		49,085
Distributions	—		—		(8)		(55,757)		—		(3,215)		(58,980)
Other	—		(870)		—		—		—		—		(870)
Balance as of June 30, 2019	1,812		1,396,707		—		(162,204)		(242)		71,401		1,307,474
Exchange of Common OP Units for Common Stock	—		33		—		—		—		(33)		—
Issuance of Common Stock through employee stock purchase plan	—		698		—		—		—		—		698
Compensation expenses related to restricted stock and stock options	—		2,734		—		—		—		—		2,734
Adjustment for Common OP Unitholders in the Operating Partnership	—		(165)		—		—		—		165		—
Adjustment for fair market value of swap	—		—		—		—		(257)		—		(257)
Consolidated net income	—		—		—		64,461		—		3,715		68,176
Distributions	—		—		—		(55,762)		—		(3,214)		(58,976)
Other	—		(56)		—		—		—		—		(56)
Balance as of September 30, 2019	$	1,812	$	1,399,951	$	—	$	(153,505)	$	(499)	$	72,034	$	1,319,793


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Balance net of allowance	Balance Sheet Location	Balance at December 31, 2019		Adjustment due to ASU 2016-13 Adoption		Balance at January 1, 2020		Balance at September 30, 2020
(amounts in thousands)
Annual membership subscriptions	Other assets, net	$	2,394	$	(1,361)	$	1,033	$	1,649
Membership upgrades	Notes receivable, net	$	25,236	$	(2,514)	$	22,722	$	25,123


(amounts in thousands)	As of September 30, 2020
2020	$	22,649
2021	91,467
2022	57,035
2023	34,989
2024	35,598
Thereafter	71,532
Total	$	313,270


	As of September 30, 2020
(amounts in thousands)	Ground Leases		Office and Other Leases		Total
2020	$	487	$	1,015	$	1,502
2021	1,949		3,074		5,023
2022	1,479		1,399		2,878
2023	534		1,182		1,716
2024	534		911		1,445
Thereafter	4,984		2,899		7,883
Total undiscounted rental payments	9,967		10,480		20,447
Less imputed interest	(2,116)		(998)		(3,114)
Total lease liabilities	$	7,851	$	9,482	$	17,333


	Quarters Ended September 30,						Nine Months Ended September 30,
(amounts in thousands, except per share data)	2020		2019		2020		2019
Numerators:
Net income available for Common Stockholders – Basic	$	50,560	$	64,461	$	163,622	$	224,171
Amounts allocated to dilutive securities	2,908		3,715		9,415		13,617
Net income available for Common Stockholders – Fully Diluted	$	53,468	$	68,176	$	173,037	$	237,788
Denominators:
Weighted average Common Shares outstanding – Basic	181,869		181,649		181,811		180,515
Effect of dilutive securities:
Exchange of Common OP Units for Common Shares	10,482		10,496		10,485		11,084
Stock options and restricted stock	186		255		252		241
Weighted average Common Shares outstanding – Fully Diluted	192,537		192,400		192,548		191,840

Earnings per Common Share – Basic	$	0.28	$	0.35	$	0.90	$	1.24

Earnings per Common Share – Fully Diluted	$	0.28	$	0.35	$	0.90	$	1.24


	Nine Months Ended September 30,
(amounts in thousands, except share data)	2019
Shares of Common Stock sold	1,010,472
Weighted average price	$	58.71
Total gross proceeds	$	59,319
Commissions paid to sales agents	$	771


						Investment as of						Income/(Loss) for Nine Months Ended
Investment	Location	Number of Sites	Economic Interest ^(a)			September 30, 2020		December 31, 2019		September 30, 2020		September 30, 2019
Meadows	Various (2,2)	1,077	50	%		$	—	$	146	$	1,404	$	1,200
Lakeshore	Florida (3,3)	721	(b)			2,328		2,467		313		183
Voyager	Arizona (1,1)	1,801	50	%	^(c)	373		599		153		2,938
Loggerhead	Florida	2,343	—	%	^(d)	—		—		—		3,501
ECHO JV	Various	—	50	%		17,232		16,862		369		455
		5,942				$	19,933	$	20,074	$	2,239	$	8,277


	As of September 30, 2020						As of December 31, 2019
(amounts in thousands)	Fair Value		Carrying Value		Fair Value		Carrying Value
Mortgage notes payable, excluding deferred financing costs	$	2,681,820	$	2,479,066	$	2,227,185	$	2,072,416


		As of September 30,		As of December 31,
(amounts in thousands)	Balance Sheet Location	2020		2019
Interest Rate Swap	Accounts payable and other liabilities	$	—	$	380


Derivatives in Cash Flow Hedging Relationship	Amount of (gain)/loss recognized in OCI on derivative for the nine months ended September, 30					Location of (gain)/ loss reclassified from accumulated OCI into income		Amount of (gain)/loss reclassified from accumulated OCI into income for the nine months ended September 30,
(amounts in thousands)	2020		2019		(amounts in thousands)	2020		2019
Interest Rate Swap	$	1,561	$	1,957	Interest Expense	$	1,941	$	(841)


						Total Sites as of September 30, 2020
MH Sites						72,500
RV Sites:
Annual						29,900
Seasonal						10,200
Transient						14,100
Marina Slips						2,300
Membership ⁽¹⁾						24,600
Joint Ventures ⁽²⁾						3,600
Total ⁽³⁾						157,300


	Core Portfolio														Total Portfolio
	Quarters Ended September 30,														Quarters Ended September 30,
(amounts in thousands)	2020		2019		Variance		% Change		2020		2019		Variance		% Change
MH base rental income ⁽¹⁾	$	143,469	$	137,596	$	5,873	4.3	%	$	143,512	$	137,596	$	5,916	4.3	%
Rental home income ⁽¹⁾	4,153		3,810		343		9.0	%	4,158		3,810		348		9.1	%
RV and marina base rental income ⁽¹⁾⁽²⁾	72,326		68,783		3,543		5.2	%	78,979		71,665		7,314		10.2	%
Annual membership subscriptions	13,413		13,150		263		2.0	%	13,442		13,150		292		2.2	%
Membership upgrades sales current period, gross	6,631		5,730		901		15.7	%	6,631		5,730		901		15.7	%
Utility and other income ⁽¹⁾	25,475		23,931		1,544		6.5	%	26,130		24,252		1,878		7.7	%
Property operating revenues, excluding deferrals	265,467		253,000		12,467		4.9	%	272,852		256,203		16,649		6.5	%

Property operating and maintenance ⁽¹⁾⁽³⁾	96,470		88,419		8,051		9.1	%	99,490		90,106		9,384		10.4	%
Real estate taxes	15,761		14,973		788		5.3	%	15,981		15,166		815		5.4	%
Rental home operating and maintenance	1,711		1,603		108		6.7	%	1,718		1,603		115		7.2	%
Sales and marketing, gross	5,053		4,060		993		24.5	%	5,054		4,063		991		24.4	%
Property operating expenses, excluding deferrals and property management	118,995		109,055		9,940		9.1	%	122,243		110,938		11,305		10.2	%
Income from property operations, excluding deferrals and property management ⁽⁴⁾	146,472		143,945		2,527		1.8	%	150,609		145,265		5,344		3.7	%
Property management	14,527		14,605		(78)		(0.5)	%	14,527		14,605		(78)		(0.5)	%
Income from property operations, excluding deferrals⁽⁴⁾	131,945		129,340		2,605		2.0	%	136,082		130,660		5,422		4.1	%
Membership upgrade sales upfront payments and membership sales commission, deferred, net	3,541		3,217		324		10.1	%	3,541		3,217		324		10.1	%
Income from property operations ⁽⁴⁾	$	128,404	$	126,123	$	2,281	1.8	%	$	132,541	$	127,443	$	5,098	4.0	%


	Core Portfolio														Total Portfolio
	Quarters Ended September 30,														Quarters Ended September 30,
(amounts in thousands)	2020		2019		Variance		% Change		2020		2019		Variance		% Change
Annual	$	42,866	$	40,744	$	2,122	5.2	%	$	48,194	$	42,581	$	5,613	13.2	%
Seasonal	5,093		5,334		(241)		(4.5)	%	5,159		5,424		(265)		(4.9)	%
Transient	24,367		22,705		1,662		7.3	%	25,626		23,660		1,966		8.3	%
RV and marina base rental income ⁽¹⁾	$	72,326	$	68,783	$	3,543	5.2	%	$	78,979	$	71,665	$	7,314	10.2	%


(amounts in thousands)	Property Operations		Home Sales and Rentals Operations		Consolidated
Operations revenues	$	264,284	$	17,473	$	281,757
Operations expenses	(132,780)		(15,825)		(148,605)
Income from segment operations	131,504		1,648		133,152
Interest income	1,104		694		1,798
Depreciation and amortization	(35,878)		(2,703)		(38,581)

Income (loss) from operations	$	96,730	$	(361)	$	96,369
Reconciliation to consolidated net income:
Corporate interest income					3
Income from other investments, net					1,428
General and administrative					(9,692)
Other expenses					(658)
Interest and related amortization					(25,218)
Equity in income of unconsolidated joint ventures					968
Early debt retirement					(9,732)
Consolidated net income					$	53,468

Total assets	$	3,997,064	$	263,349	$	4,260,413
Capital improvements	$	40,387	$	11,527	$	51,914


	Quarters Ended September 30,
(amounts in thousands, except home sales volumes)	2020		2019		Variance		% Change
Gross revenues from new home sales ⁽¹⁾	$	11,929	$	6,864	$	5,065	73.8	%
Cost of new home sales ⁽¹⁾	11,398		6,499		4,899		75.4	%
Gross profit from new home sales	531		365		166		45.5	%

Gross revenues from used home sales	1,141		1,574		(433)		(27.5)	%
Cost of used home sales	1,468		1,935		(467)		(24.1)	%
Loss from used home sales	(327)		(361)		34		9.4	%

Brokered resale and ancillary services revenues, net	1,648		2,133		(485)		(22.7)	%
Home selling expenses	1,241		1,033		208		20.1	%

Income (loss) from home sales and other	$	611	$	1,104	$	(493)	(44.7)	%

Home sales volumes
Total new home sales ⁽²⁾	183		128		55		43.0	%
New Home Sales Volume - ECHO JV	15		19		(4)		(21.1)	%
Used home sales	120		198		(78)		(39.4)	%
Brokered home resales	167		270		(103)		(38.1)	%


	Quarters Ended September 30,
(amounts in thousands, except rental unit volumes)	2020		2019		Variance		% Change
Rental operations revenue ⁽¹⁾	$	12,032	$	11,670	$	362	3.1	%
Rental home operating and maintenance	1,711		1,603		108		6.7	%
Income from rental operations	10,321		10,067		254		2.5	%
Depreciation on rental homes ⁽²⁾	2,703		2,758		(55)		(2.0)	%
Income from rental operations, net of depreciation	$	7,618	$	7,309	$	309	4.2	%

Gross investment in new manufactured home rental units ⁽³⁾	$	231,192	$	220,669	$	10,523	4.8	%
Gross investment in used manufactured home rental units	$	16,299	$	23,454	$	(7,155)	(30.5)	%

Net investment in new manufactured home rental units	$	192,247	$	195,626	$	(3,379)	(1.7)	%
Net investment in used manufactured home rental units	$	6,798	$	10,418	$	(3,620)	(34.7)	%

Number of occupied rentals – new, end of period ⁽⁴⁾	3,314		3,079		235		7.6	%
Number of occupied rentals – used, end of period	588		914		(326)		(35.7)	%


	Quarters Ended September 30,
(amounts in thousands, expenses shown as negative)	2020		2019		Variance		% Change
Depreciation and amortization	$	(38,581)	$	(37,032)	$	(1,549)	(4.2)	%
Interest income	1,801		1,831		(30)		(1.6)	%
Income from other investments, net	1,428		7,029		(5,601)		(79.7)	%
General and administrative	(9,692)		(8,710)		(982)		(11.3)	%
Other expenses	(658)		(1,460)		802		54.9	%
Early debt retirement	(9,732)		—		(9,732)		—	%
Interest and related amortization	(25,218)		(25,547)		329		1.3	%
Total other income and expenses, net	$	(80,652)	$	(63,889)	$	(16,763)	(26.2)	%


31.1			Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2			Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1			Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.
32.2			Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350.
101.INS			XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH			Inline XBRL Taxonomy Extension Schema Document
101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB			Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE			Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF			Inline XBRL Taxonomy Extension Definition Linkbase Document
104			Cover Page Interactive Data File included as Exhibit 101 (embedded within the Inline XBRL document)


	EQUITY LIFESTYLE PROPERTIES, INC.

Date: October 27, 2020	By:	/s/ Marguerite Nader
		Marguerite Nader
		President and Chief Executive Officer
		(Principal Executive Officer)

Date: October 27, 2020	By:	/s/ Paul Seavey
		Paul Seavey
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)

Date: October 27, 2020	By:	/s/ Valerie Henry
		Valerie Henry
		Vice President and Chief Accounting Officer
		(Principal Accounting Officer)