ELS Reports Third Quarter Results

October 19, 2020

Strong Operating Performance

CHICAGO–(BUSINESS WIRE)–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, 2020.

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

Financial Results for the Quarter and Nine Months Ended September 30, 2020

For the quarter ended September 30, 2020, total revenues increased $13.8 million, or 5.1 percent, to $285.0 million compared to $271.2 million for the same period in 2019. For the quarter ended September 30, 2020, net income available for Common Stockholders decreased $13.9 million, or $0.07 per Common Share, to $50.6 million, or $0.28 per Common Share, compared to $64.5 million, or $0.35 per Common Share, for the same period in 2019.

For the nine months ended September 30, 2020, total revenues increased $41.0 million, or 5.3 percent, to $819.6 million compared to $778.6 million for the same period in 2019. For the nine months ended September 30, 2020, net income available for Common Stockholders decreased $60.6 million, or $0.34 per Common Share, to $163.6 million, or $0.90 per Common Share, compared to $224.2 million, or $1.24 per Common Share, for the same period in 2019. The financial results for 2019 included a gain of $52.5 million on the sale of five all-age MH communities.

Non-GAAP Financial Measures and Portfolio Performance

For the quarter ended September 30, 2020, Funds from Operations (“FFO”) available for Common Stock and OP Unit holders decreased $12.8 million, or $0.06 per Common Share, to $95.8 million, or $0.50 per Common Share, compared to $108.6 million, or $0.56 per Common Share, for the same period in 2019. For the nine months ended September 30, 2020, FFO available for Common Stock and OP Unit holders decreased $8.8 million, or $0.05 per Common Share, to $297.6 million, or $1.55 per Common Share, compared to $306.4 million, or $1.60 per Common Share, for the same period in 2019.

For the quarter ended September 30, 2020, Normalized Funds from Operations (“Normalized FFO”) available for Common Stock and OP Unit holders increased $2.8 million, or $0.02 per Common Share, to $105.5 million, or $0.55 per Common Share, compared to $102.7 million, or $0.53 per Common Share, for the same period in 2019. For the nine months ended September 30, 2020, Normalized FFO available for Common Stock and OP Unit holders increased $7.5 million, or $0.03 per Common Share, to $309.8 million, or $1.61 per Common Share, compared to $302.3 million, or $1.58 per Common Share, for the same period in 2019.

For the quarter ended September 30, 2020, property operating revenues, excluding deferrals, increased $16.7 million to $272.9 million compared to $256.2 million for the same period in 2019. For the nine months ended September 30, 2020, property operating revenues, excluding deferrals, increased $41.7 million to $789.5 million compared to $747.8 million for the same period in 2019. For the quarter ended September 30, 2020, income from property operations, excluding deferrals and property management, increased $5.3 million to $150.6 million compared to $145.3 million for the same period in 2019. For the nine months ended September 30, 2020, income from property operations, excluding deferrals and property management, increased $19.5 million to $453.9 million compared to $434.4 million for the same period in 2019.

For the quarter ended September 30, 2020, Core property operating revenues, excluding deferrals, increased approximately 4.9 percent and Core income from property operations, excluding deferrals and property management, increased approximately 1.8 percent compared to the same period in 2019. For the nine months ended September 30, 2020, Core property operating revenues, excluding deferrals, increased approximately 3.7 percent and Core income from property operations, excluding deferrals and property management, increased approximately 2.7 percent compared to the same period in 2019.

Business Updates

Page 1 of this Earnings Release and Supplemental Financial Information provides an operations update.

Balance Sheet Activity

During the quarter ended September 30, 2020, we closed on a financing transaction with Fannie Mae generating gross proceeds of $386.9 million. The loan is secured by ten manufactured home (“MH”) communities and consists of two tranches with a weighted average interest rate of 2.55% per annum and a weighted average maturity of 13.4 years. The net proceeds from the transaction were primarily used to repay our $200.0 million unsecured term loan scheduled to mature in 2023 and secured loans scheduled to mature in 2021. We incurred early debt retirement costs of $9.7 million related to these financing transactions.

Investment Activity

In October 2020, we completed the acquisition of Marina Dunes RV Park, an 89-site RV community located in Marina, California, and we completed the acquisition of Acorn Campground, a 323-site RV community in Green Creek, New Jersey. The total aggregate purchase price for these properties was $36.0 million, which was funded with available cash.

In October 2020, we also completed the acquisitions of two development properties, The Resort at Tranquility Lake, a planned 500-site RV community located in Cape Coral, Florida and Bayport, a planned 900-site RV community located in Jamaica, Virginia, for a total aggregate purchase price of $16.3 million. These acquisitions were funded with available cash.

As part of our strategy to expand owned communities with additional developed sites, in September and October 2020, we completed the acquisitions of five parcels of land adjacent to four of our properties for a total aggregate purchase price of $6.4 million, which was funded with available cash.

About Equity LifeStyle Properties

We are a self-administered, self-managed real estate investment trust (“REIT”) with headquarters in Chicago. As of October 19, 2020, we own or have an interest in 415 quality properties in 33 states and British Columbia consisting of 157,690 sites.

For additional information, please contact our Investor Relations Department at (800) 247-5279 or at investor_relations@equitylifestyle.com.

Conference Call

A live webcast of our conference call discussing these results will take place tomorrow, Tuesday, October 20, 2020, at 10:00 a.m. Central Time. Please visit the Investor Relations section at www.equitylifestyleproperties.com for the link. A replay of the webcast will be available for two weeks at this site.

Forward-Looking Statements

In addition to historical information, this press release includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. When used, words such as “anticipate,” “expect,” “believe,” “project,” “intend,” “may be” and “will be” and similar words or phrases, or the negative thereof, unless the context requires otherwise, are intended to identify forward-looking statements and may include without limitation, information regarding our expectations, goals or intentions regarding the future, and the expected effect of our acquisitions. These forward-looking statements are subject to numerous assumptions, risks and uncertainties, including, but not limited to:

our ability to control costs and real estate market conditions, our ability to retain customers, the actual use of sites by customers and our success in acquiring new customers at our properties (including those that we may acquire);
our ability to maintain historical or increase future rental rates and occupancy with respect to properties currently owned or that we may acquire;
our ability to attract and retain customers entering, renewing and upgrading membership subscriptions;
our assumptions about rental and home sales markets;
our assumptions and guidance concerning 2021Core MH and Core RV annual rate growth;
our ability to manage counterparty risk;
our ability to renew our insurance policies at existing rates and on consistent terms;
in the age-qualified properties, home sales results could be impacted by the ability of potential home buyers to sell their existing residences as well as by financial, credit and capital markets volatility;
results from home sales and occupancy will continue to be impacted by local economic conditions, lack of affordable manufactured home financing and competition from alternative housing options including site-built single-family housing;
impact of government intervention to stabilize site-built single-family housing and not manufactured housing;
effective integration of recent acquisitions and our estimates regarding the future performance of recent acquisitions;
the completion of future transactions in their entirety, if any, and timing and effective integration with respect thereto;
unanticipated costs or unforeseen liabilities associated with recent acquisitions;
our ability to obtain financing or refinance existing debt on favorable terms or at all;
the effect of interest rates;
the effect from any breach of our, or any of our vendors’, data management systems;
the dilutive effects of issuing additional securities;
the outcome of pending or future lawsuits or actions brought against us, including those disclosed in our filings with the Securities and Exchange Commission; and
other risks indicated from time to time in our filings with the Securities and Exchange Commission.

In addition, these forward-looking statements and our preliminary guidance on Core MH and Core RV annual rate growth are subject to risks related to the COVID-19 pandemic, many of which are unknown, including the duration of the pandemic, the extent of the adverse health impact on the general population and on our residents, customers, and employees in particular, its impact on the employment rate and the economy, the extent and impact of governmental responses, and the impact of operational changes we have implemented and may implement in response to the pandemic.

For further information on these and other factors that could impact us and the statements contained herein, refer to our filings with the Securities and Exchange Commission, including the “Risk Factors” section in our most recent Annual Report on Form 10-K and subsequent quarterly reports on Form 10-Q.

These forward-looking statements are based on management’s present expectations and beliefs about future events. As with any projection or forecast, these statements are inherently susceptible to uncertainty and changes in circumstances. We are under no obligation to, and expressly disclaim any obligation to, update or alter our forward-looking statements whether as a result of such changes, new information, subsequent events or otherwise.

Supplemental Financial Information

Operations Update

All properties continue to be open subject to state and local guidelines.
- Some of the amenities at certain properties remain closed at this time due to state and local guidelines.
- All RV properties continue to be open to transient customers.

Hurricanes Hanna and Isaias made landfall during the third quarter of 2020 and impacted some of our communities in Texas, North Carolina, Delaware, New Jersey and Pennsylvania. The affected properties resumed operations shortly after the storms passed. Our current aggregate property damage estimate is approximately $9.0 million. During the quarter ended September 30, 2020, we recorded expenses of $2.8 million with offsetting insurance recovery revenue of $2.3 million.

Preliminary 2021 rent rate growth assumptions

By October month-end we will have sent 2021 rent increase notices to 48% of our MH residents. The average rent increase of these notices support our preliminary expectations for 2021 Core MH rate growth of 4.0%.⁽¹⁾

We have set RV annual rates for the 2021 season for 90% of our annual sites. These rates support our preliminary expectations for 2021 Core RV annual rate growth of 4.0%. ⁽¹⁾______________________

^{1. Actual results may differ. See Forward Looking Statements for risks that may impact our actual results.}

Investor Information
Equity Research Coverage⁽¹⁾
Bank of America Securities	BMO Capital Markets	Citi Research
Jeffrey Spector/ Joshua Dennerlein	John Kim	Michael Bilerman/ Nick Joseph

Evercore ISI	Green Street Advisors	Robert W. Baird & Company
Steve Sakwa/ Samir Khanal	John Pawlowski	Peter Hermann

Wells Fargo Securities
Todd Stender

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

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

	As of and for the Three Months Ended
	Sept 30, 2020			Jun 30, 2020			Mar 31, 2020			Dec 31, 2019			Sept 30, 2019
Operating Information
Total revenues	$	285.0		$	254.1		$	280.5		$	258.6		$	271.2
Net income	$	53.5		$	48.9		$	70.7		$	58.1		$	68.2
Net income available for Common Stockholders	$	50.6		$	46.2		$	66.9		$	55.0		$	64.5
Adjusted EBITDAre ⁽¹⁾	$	129.7		$	116.2		$	138.2		$	124.5		$	127.0
FFO available for Common Stock and OP Unit holders ⁽¹⁾⁽²⁾	$	95.8		$	89.5		$	112.3		$	99.5		$	108.6
Normalized FFO available for Common Stock and OP Unit holders ⁽¹⁾⁽²⁾	$	105.5		$	90.9		$	113.3		$	99.5		$	102.7
Funds Available for Distribution (“FAD”) for Common Stock and OP Unit holders ⁽¹⁾⁽²⁾	$	90.0		$	75.6		$	101.8		$	84.6		$	88.4

*Common Stock and OP Units Outstanding (In thousands)* and Per Share Data**
Common Stock and OP Units, end of the period	192,704			192,636			192,627			192,581			192,574
Weighted average Common Stock and OP Units outstanding – Fully Diluted	192,537			192,542			192,564			192,458			192,400
Net income per Common Share – Fully Diluted⁽³⁾	$	0.28		$	0.25		$	0.37		$	0.30		$	0.35
FFO per Common Share and OP Unit – Fully Diluted.	$	0.50		$	0.47		$	0.58		$	0.52		$	0.56
Normalized FFO per Common Share and OP Unit – Fully Diluted	$	0.55		$	0.47		$	0.59		$	0.52		$	0.53
Dividends per Common Share	$	0.3425		$	0.3425		$	0.3425		$	0.3063		$	0.3063

Balance Sheet
Total assets	$	4,260		$	4,268		$	4,212		$	4,151		$	4,137
Total liabilities	$	2,961		$	2,961		$	2,892		$	2,829		$	2,818

Market Capitalization
Total debt ⁽⁴⁾	$	2,529		$	2,522		$	2,486		$	2,432		$	2,406
Total market capitalization⁽⁵⁾	$	14,342		$	14,558		$	13,558		$	15,988		$	15,270

Ratios
Total debt / total market capitalization	17.6		%	17.3		%	18.3		%	15.2		%	15.8		%
Total debt / Adjusted EBITDAre ⁽⁶⁾	5.0			5.0			4.9			4.8			4.9
Interest coverage ⁽⁷⁾	4.9			4.9			4.9			4.9			4.8
Fixed charges⁽⁸⁾	4.9			4.9			4.9			4.8			4.7

______________________

1.		See Non-GAAP Financial Measures Definitions and Other Terms at the end of the supplemental financial information for definitions of Adjusted EBITDAre, FFO, Normalized FFO and FAD and a reconciliation of Consolidated net income to Adjusted EBITDAre.
2.		See page 8 for a reconciliation of Net income available for Common Stockholders to Non-GAAP financial measures FFO available for Common Stock and OP Unit holders, Normalized FFO available for Common Stock and OP Unit holders and FAD for Common Stock and OP Unit holders.
3.		Net income per Common Share – Fully Diluted is calculated before Income allocated to non-controlling interest – Common OP Units.
4.		Excludes deferred financing costs of approximately $28.3 million as of September 30, 2020.
5.		See page 15 for the calculation of market capitalization as of September 30, 2020.
6.		Calculated using trailing twelve months Adjusted EBITDAre.
7.		Calculated by dividing trailing twelve months Adjusted EBITDAre by the interest expense incurred during the same period.
8.		See Non-GAAP Financial Measures Definitions and Other Terms at the end of the supplemental financial information for a definition of fixed charges. This ratio is calculated by dividing trailing twelve months Adjusted EBITDAre by the sum of fixed charges and preferred stock dividends, if any, during the same period.

Consolidated Balance Sheets
*(In thousands, except share and per share data)*

	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:
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

Consolidated Income Statements
*(In thousands, unaudited)*

	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

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 8 and Non-GAAP Financial Measures Definitions and Reconciliations on pages 17 – 19.

Selected Non-GAAP Financial Measures
*(In millions, except per share data, unaudited)*

	Quarter Ended
	September 30, 2020
Income from property operations, excluding deferrals and property management – 2020 Core ⁽¹⁾	$	146.5
Income from property operations, excluding deferrals and property management – Non-Core ⁽¹⁾	4.1
Property management and general and administrative	(24.2		)
Other income and expenses	4.3
Interest and related amortization	(25.2		)
Normalized FFO available for Common Stock and OP Unit holders ⁽²⁾	105.5
Early debt retirement	(9.7		)
FFO available for Common Stock and OP Unit holders⁽²⁾	$	95.8

FFO per Common Share and OP Unit – Fully Diluted		$0.50
Normalized FFO per Common Share and OP Unit – Fully Diluted		$0.55


Normalized FFO available for Common Stock and OP Unit holders ⁽²⁾	$	105.5
Non-revenue producing improvements to real estate	(15.5		)
FAD for Common Stock and OP Unit holders ⁽²⁾	$	90.0

Weighted average Common Stock and OP Units – Fully Diluted	192.5

______________________

1.		See page 10 for details of the Core Income from Property Operations, excluding deferrals and property management. See page 11 for details of the Non-Core Income from Property Operations, excluding deferrals and property management.
2.		See page 8 for a reconciliation of Net income available for Common Stockholders to FFO available for Common Stock and OP Unit holders, Normalized FFO available for Common Stock and OP Unit holders and FAD for Common Stock and OP Unit holders.