ELS Reports Q3 Results, MH Rental Income Up by 6.2% – RVBusiness – Breaking RV Industry News
CHICAGO – Equity LifeStyle Properties, Inc. (NYSE: ELS) today announced results for the quarter and nine months ended September 30, 2024. All per share results are reported on a fully diluted basis unless otherwise noted.
Operations Update
Normalized FFO per Common Share and OP Unit for the quarter ended September 30, 2024 was $0.72, representing a 4.9% increase compared to the same period in 2023, performing at the midpoint of our guidance range of $0.72. Normalized FFO for the nine months ended September 30, 2024, was $2.16 per Common Share and OP Unit, representing a 5.6% increase compared to the same period in 2023. Core property operating revenues increased 4.4% and Core income from property operations, excluding property management increased 5.8% for the quarter ended September 30, 2024, compared to the same period in 2023. For the nine months ended September 30, 2024, Core property operating revenues increased 4.9% and Core income from property operations, excluding property management increased 6.2% compared to the same period in 2023.
MH
Core MH base rental income for the quarter ended September 30, 2024 increased 6.2% compared to the same period in 2023, which reflects 5.8% growth from rate increases and 0.4% from occupancy gains. Core MH homeowners increased by 111, and we sold 173 new homes during the quarter ended September 30, 2024. The average sales price of new homes sold was approximately $88,000. Core MH base rental income for the nine months ended September 30, 2024 increased 6.2% compared to the same period in 2023, which reflects 6.0% growth from rate increases and 0.2% from occupancy gains.
RV and Marina
Core RV and marina base rental income for the quarter ended September 30, 2024 increased 1.3% compared to the same period in 2023. Core RV and marina annual base rental income increased 6.2% for the quarter ended September 30, 2024, compared to the same period in 2023. Core RV and marina base rental income for the nine months ended September 30, 2024 increased 3.0% compared to the same period in 2023. Core RV and marina annual base rental income increased 6.9% for the nine months ended September 30, 2024, compared to the same period in 2023.
Property Operating Expenses
Core property operating expenses, excluding property management for the quarter ended September 30, 2024 increased 2.8% compared to the same period in 2023. For the nine months ended September 30, 2024, Core property operating expenses, excluding property management increased 3.4% compared to same period in 2023.
Balance Sheet Activity
In October 2024, we sold approximately 4.5 million shares of our common stock at a price of $70.00 from our at-the-market (“ATM”) offering program. The net proceeds of $314.2 million were used to repay our $300.0 million unsecured term loan (the “$300 million Term Loan”) and to terminate the interest rate swaps, which fixed the interest rate of the $300 million Term Loan at 6.05% until maturity in April 2026.
Storm Events
Following Hurricane Helene which made landfall on September 26, 2024 we accrued approximately $1.0 million of expenses related to debris removal and clean up, which is reflected in Casualty-related charges/(recoveries), net on the consolidated income statement, and we recorded a $1.8 million reduction to the carrying value of certain assets, which is included in Loss on sale of real estate and impairment, net in the Consolidated Statements of Income on page 3.
Following Hurricane Milton which made landfall on October 9, 2024, we have continued clean up efforts at impacted properties. We believe that we have adequate insurance, subject to deductibles, including business interruption coverage, and at this time, we do not believe that Hurricane Milton will have a significant adverse impact on our results of operations or our financial condition on a consolidated basis.
Guidance Update (1)
Consistent with our historical practice at this time of year, we have updated and narrowed the full year guidance range. The full year guidance range of $0.06 per share is the same as the fourth quarter guidance range.
The updated guidance does not include assumptions related to debris removal and restoration costs, and possible business interruption losses, asset impairments or insurance recoveries related to Hurricane Milton. We believe we have adequate insurance coverage, subject to deductibles, for losses related to Hurricane Milton, but we are unable to predict the timing or amount of recovery. Furthermore, in accordance with GAAP, insurance reimbursement for business interruption losses is to be recognized as revenue only upon receipt.
Preliminary 2025 Rent Rate Growth Assumptions (1)
- By October month-end, we anticipate sending 2025 rent increase notices to approximately 50% of our MH residents. The average expected rate increase of these notices is approximately 5.0%.
- We have set RV annual rates for 2025 for more than 95% of our annual sites. The average rate increase for these annual sites is approximately 5.5%.
- Fourth quarter and full year 2024 guidance represent management’s estimate of a range of possible outcomes. The midpoint of the ranges and the preliminary 2025 rent rate growth assumptions reflect management’s estimate of the most likely outcome based on our current view of existing market conditions and assumptions. Actual results could vary materially from management’s estimates presented above if any of our assumptions, including occupancy and rate changes, our ability to manage expenses in an inflationary environment, our ability to integrate and operate recent acquisitions and costs to restore property operations and potential revenue losses following storms or other unplanned events, are incorrect. See Forward-Looking Statements in this press release for additional factors impacting our 2024 and 2025 guidance assumptions. See Non-GAAP Financial Measures Definitions and Reconciliations at the end of the supplemental financial information for definitions of FFO and Normalized FFO and a reconciliation of Net income per Common Share – Fully Diluted to FFO per Common Share and OP Unit – Fully Diluted and Normalized FFO per Common Share and OP Unit – Fully Diluted.
- Core RV and marina annual revenue represents approximately 77.8% and 70.4% of fourth quarter 2024 and full year 2024 RV and marina base rental income guidance, respectively. Core RV and marina annual revenue fourth quarter 2024 growth rate range is 5.8% to 6.4% and the full year 2024 growth rate range is 6.4% to 7.0%.
