EX-99.2 3 d244803dex992.htm THIRD QUARTER 2011 SUPPLEMENTAL OPERATING AND FINANCIAL INFORMATION THIRD QUARTER 2011 SUPPLEMENTAL OPERATING AND FINANCIAL INFORMATION

Exhibit 99.2

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Overview

The Company

Equity LifeStyle Properties, Inc. (“ELS”, “we”, ‘us”, “our” or the “Company”) (NYSE:ELS) was formed in December 1992 as a Maryland corporation to continue the property operations, business objectives and acquisition strategies of an entity that had owned and operated properties since 1969. We have been a public company since 1993 and have elected to be taxed as a real estate investment trust, or a REIT, for U.S. federal income tax purposes commencing with our taxable year ended December 31, 1993.

We are a fully integrated owner and operator of lifestyle-oriented properties (“Properties”). We lease individual developed areas, or sites, with access to utilities for placement of factory-built homes, cottages, cabins or recreational vehicles (“RVs”). Customers may lease individual sites or enter right-to-use contracts providing the customer access to specific Properties for limited stays. As of October 17, 2011, we owned or had an ownership interest in a portfolio of 368 Properties located throughout the United States and Canada containing 136,100 residential sites. These Properties are located in 32 states and British Columbia.

This Supplemental Package was prepared to provide (1) certain operational information about the Company for the periods ended September 30, 2011 and 2010, (2) details of the Company’s guidance assumptions for 2012 and the remainder of 2011 and (3) information about the Acquisition.

On May 31, 2011, through our operating partnership, we entered into purchase agreements to acquire a portfolio of 75 manufactured home communities and one RV resort (the “Acquisition Properties”) containing 31,167 sites on approximately 6,500 acres located in 16 states and certain manufactured homes and loans secured by manufactured homes located at the Acquisition Properties for a stated purchase price of $1.43 billion (the “Acquisition”).

As of October 17, 2011, we closed on 61 Acquisition Properties and expect to close on 14 of the remaining Acquisition Properties on or before November 1, 2011. Please refer to footnote 1 on page 20 for a discussion of the status of the Clinton Acquisition Property and pages 18-20 for details on the conditions to closing on the remainder of the Acquisition. Additional details on the Acquisition can be found in the Company’s Current Reports on Form 8-K dated May 31, 2011, July 1, 2011, August 1, 2011, September 1, 2011, October 3, 2011, and October 11, 2011.

Certain statements made within this Supplemental Package may include 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 the Company’s expectations, goals or intentions regarding the future, statements regarding the anticipated closing of the Company’s pending Acquisition and the expected effect of the Acquisition on the Company. These forward-looking statements are subject to numerous assumptions, risks and uncertainties, including, but not limited to:

 

  •  

the Company’s ability to control costs, real estate market conditions, the actual rate of decline in customers, the actual use of sites by customers and its success in acquiring new customers at its Properties (including those that it may acquire);

 

  •  

the Company’s ability to maintain historical rental rates and occupancy with respect to Properties currently owned or that the Company may acquire;

 

  •  

the Company’s assumptions about rental and home sales markets;

 

  •  

the Company’s assumptions and guidance concerning 2011 and 2012 estimated net income and funds from operations;

 

  •  

in the age-qualified Properties, home sales results could be impacted by the ability of potential homebuyers 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;

 

  •  

the completion of the Acquisition in its entirety and future acquisitions, if any, the timing and effective integration with respect thereto and the Company’s estimates regarding the future performance of the Acquisition Properties;

 

  •  

unanticipated costs or unforeseen liabilities associated with the Acquisition;

 

  •  

ability to obtain financing or refinance existing debt on favorable terms or at all;

 

  •  

the effect of interest rates;

 

  •  

the dilutive effects of issuing additional securities;

 

  •  

the effect of accounting for the sale of agreements to customers representing a right-to-use the Properties under the Codification Topic “Revenue Recognition;” and

 

  •  

other risks indicated from time to time in the Company’s filings with the Securities and Exchange Commission.

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. The Company is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements whether as a result of such changes, new information, subsequent events or otherwise.

 

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Table of Contents

 

     Page  

Select Financial Data for the three months ended September 30, 2011

      4   

Three and Nine Months Ended September 30, 2011 and 2010

   

Consolidated Income from Property Operations

      5   

Core Income from Property Operations

      6   

2011 Acquisitions - Income from Property Operations

      7   

Core Income from Rental Operations

      8   

2011 Guidance

   

2011 Guidance – Selected Financial Data

      9   

Fourth Quarter 2011 Guidance - Selected Financial Data

      10   

2011 Core Guidance Assumptions

      11   

2011 Acquisition Assumptions

      12   

2012 Preliminary Guidance

   

2012 Preliminary Guidance - Selected Financial Data

      13   

2012 Core Growth Assumptions

      14   

2011 Acquisition Assumptions for 2012

      15   

Other

   

2011 Acquisition Properties - Income from Property Operations

      17   

2011 Acquisition Properties

      18   

Debt Maturity Table – As Adjusted

      21   

Non-GAAP Financial Measures

      22   

 

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Third Quarter 2011 - Selected Financial Data

 

(In $US Millions, except per share data, unaudited)    ELS     2011
Acquisitions		     Consolidated
Total		  

Income from Property Operations - 2011 Core (1)

    $ 70.6      $ —        $ 70.6   

Income from Property Operations - Acquisition properties (2)

      —          14.5        14.5   

Property Management and general and administrative

      (14.5 )      (1.1 )      (15.6 ) 

Other Income and Expenses

      6.6        1.0        7.6   

Financing Costs and Other

      (25.0 )      (5.1 )      (30.1 ) 
  

 

 

    

 

 

    

 

 

  

Funds from Operations (FFO), excluding transaction costs(3)

      37.7        9.3        47.0   

2011 Acquisition Transaction Costs

      —          (15.2 )      (15.2 ) 
  

 

 

    

 

 

    

 

 

  

Funds from Operations (FFO) (3)

      37.7        (5.9 )      31.8   

Depreciation on Real Estate and Other

      (17.6 )      (4.4 )      (22.0 ) 

Amortization of In-Place Leases

      —          (10.8 )      (10.8 ) 

Deferral of right-to-use contract sales revenue and commission, net

      (1.7 )      —          (1.7 ) 

(Income) Loss Allocated to OP Units

      (1.6 )      1.9        0.3   

(Income) Allocated to ELS Series B preferred

      —          (0.5 )      (0.5 ) 
  

 

 

    

 

 

    

 

 

  

Net Income (Loss) Available to Common Shares

    $ 16.8      $ (19.7 )    $ (2.9 ) 
  

 

 

    

 

 

    

 

 

  

Net Income (Loss) Per Common Share - Basic and Fully Diluted (4)

        $ (0.07 ) 

FFO Per Share, excluding transaction costs - Fully Diluted

        $ 1.08   

FFO Per Share - Fully Diluted

        $ 0.73   

Weighted Average Common Shares Outstanding - Basic (4)

          38.3   

Weighted Average Shares Outstanding - Fully Diluted

          43.6   

 

1) See page 6 for 2011 Core income from property operations detail.
2) See page 7 for 2011 Acquisition income from property operations. Represents actual performance of Acquisition Properties acquired by the Company during the three months ended September 30, 2011 and excludes Acquisition Properties acquired on or after October 1, 2011. The Company’s guidance issued on July 18, 2011 for the quarter ended September 30, 2011 was approximately $15.1 million and included certain assumptions about the timing of closings on Acquisition Properties during the quarter. Certain properties scheduled to close on August 1st and September 1st were delayed and two properties scheduled to close on October 1st were accelerated to close during the third quarter.
3) See page 22 for definition of FFO.
4) As a result of the Net loss available for Common Shares, both the Company’s common OP Units and the newly issued shares of Series B Preferred Stock are considered anti-dilutive, and therefore both were excluded from the computation of the Net Loss Per Common Share – Basic and Fully Diluted.

 

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Consolidated Income from Property Operations (1)

 

(In $US Millions, unaudited)                            
     Three
Months
Ended
30-Sep-11		      Three
Months
Ended
30-Sep-10		      Nine
Months
Ended
30-Sep-11		      Nine
Months
Ended
30-Sep-10		  

Community base rental income

    $ 87.2       $ 65.0       $ 219.7       $ 194.1   

Resort base rental income (2)

      36.1         36.0         101.9         101.4   

Right-to-use annual payments

      12.4         12.6         37.0         37.6   

Right-to-use contracts current period, gross

      4.4         4.5         13.1         15.2   

Utility and other income

      14.5         12.5         40.0         37.3   
  

 

 

     

 

 

     

 

 

     

 

 

  

Property operating revenues

      154.6         130.6         411.7         385.6   

Property operating expenses

      69.7         62.5         183.2         176.4   
  

 

 

     

 

 

     

 

 

     

 

 

  

Income from property operations

    $ 84.9       $ 68.1       $ 228.5       $ 209.2   
  

 

 

     

 

 

     

 

 

     

 

 

  

 

1) See October 17, 2011 ELS press release for a complete Consolidated Statement of Operations. The line items that the Company includes in property operating revenues are also individually included in our Consolidated Statement of Operations. Property operating expenses above include the captions property operating and maintenance, real estate taxes and sales and marketing, gross that each appear on our Consolidated Statement of Operations.
2) Resort base rental income is comprised of the following:

 

     Three
Months
Ended
30-Sep-11		      Three
Months
Ended
30-Sep-10		      Nine
Months
Ended
30-Sep-11		      Nine
Months
Ended
30-Sep-10		  

Annual

    $ 21.0       $ 20.2       $ 62.0       $ 59.5   

Seasonal

      2.5         2.4         16.7         17.4   

Transient

      12.6         13.4         23.2         24.5   

 

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Core (1) Income from Property Operations

 

(In $US Millions, unaudited)                                         
     Three
Months
Ended
30-Sep-11		      Three
Months
Ended
30-Sep-10		      %
Change  (2)		     Nine
Months
Ended
30-Sep-11		      Nine
Months
Ended
30-Sep-10		      %
Change  (2)		  

Community base rental income

    $ 66.8       $ 65.0         2.8 %    $ 199.4       $ 194.0         2.8 % 

Resort base rental income (3)

      36.0         35.8         0.4 %      101.5         101.3         0.2 % 

Right-to-use annual payments

      12.4         12.6         -0.9 %      37.0         37.6         -1.8 % 

Right-to-use contracts current period, gross

      4.4         4.6         -3.6 %      13.1         15.2         -13.7 % 

Utility and other income

      12.8         12.4         2.2 %      38.2         37.3         2.6 % 
  

 

 

     

 

 

       

 

 

     

 

 

     

Property operating revenues

      132.4         130.4         1.5 %      389.2         385.4         1.0 % 

Property operating expenses

      61.8         62.2         -0.6 %      174.7         176.1         -0.8 % 
  

 

 

     

 

 

       

 

 

     

 

 

     

Income from property operations

    $ 70.6       $ 68.2         3.5 %    $ 214.5       $ 209.3         2.5 % 
  

 

 

     

 

 

       

 

 

     

 

 

     

 

1) 2011 Core properties include properties we expect to own and operate during all of 2010 and 2011. Excludes property management expenses and the GAAP deferral of right to use contract upfront payments and related commissions, net.
2) Calculations prepared using unrounded numbers.
3) Resort base rental income is comprised of the following:

 

     Three
Months
Ended
30-Sep-11		      Three
Months
Ended
30-Sep-10		      %
Change  (2)		     Nine
Months
Ended
30-Sep-11		      Nine
Months
Ended
30-Sep-10		      %
Change  (2)		  

Annual

    $ 21.0       $ 20.2         4.2 %    $ 62.0       $ 59.5         4.3 % 

Seasonal

      2.4         2.3         3.5 %      16.5         17.4         -5.1 % 

Transient

      12.6         13.3         -5.8 %      23.0         24.4         -5.9 % 

 

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2011 Acquisition - Income from Property Operations (1)

 

(In $US Millions, unaudited)       
     Three and Nine
Months Ended
September 30, 2011		  

Community base rental income

    $ 20.3   

Utility income and other property income

      1.8   
  

 

 

  

Property operating revenues

      22.1   

Property operating expenses

      7.6   
  

 

 

  

Income from property operations (2)

    $ 14.5   
  

 

 

  

 

1) Represents actual performance of Acquisition Properties acquired by the Company during the three months ended September 30, 2011. The Company acquired (i) 35 Acquisition Properties on July 1, 2011, (ii) 16 Acquisition Properties on August 1, 2011, and (iii) 7 Acquisition Properties on September 1, 2011.
2) Excludes property management expenses.

 

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Core Income from Rental Operations

 

(In $US Millions except occupied rentals, unaudited)                         
     Three
Months
Ended
30-Sep-11		     Three
Months
Ended
30-Sep-10		     Nine
Months
Ended
30-Sep-11		     Nine
Months
Ended
30-Sep-10		  

Manufactured homes:

         

New Home

    $ 3.3      $ 2.1      $ 8.8      $ 5.8   

Used Home

      4.1        3.0        11.4        8.5   
  

 

 

    

 

 

    

 

 

    

 

 

  

Rental operations revenues (1)

      7.4        5.1        20.2        14.3   

Rental operations expense

      (1.4 )      (0.6 )      (3.1 )      (2.0 ) 

Depreciation

      (1.0 )      (0.7 )      (2.8 )      (2.0 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Income from rental operations

    $ 5.0      $ 3.8      $ 14.3      $ 10.3   
  

 

 

    

 

 

    

 

 

    

 

 

  

Net basis in new manufactured home rental units as of:

    $ 71.0      $ 54.5       

Net basis in used manufactured home rental units as of:

    $ 25.6      $ 19.7       

Number of occupied rentals - new, end of period:

      1,204        695       

Number of occupied rentals - used, end of period:

      1,888        1,581       

 

1) For the three and nine months ended September 30, 2011, approximately $5.6 million and $15.4 million, respectively, are included in Community base rental income in the Income from Property Operations table on pages 5 and 6. For the three and nine months ended September 30, 2010, approximately $4.0 million and $11.0 million, respectively, are included in Community base rental income in the Income from Property Operations table on pages 5 and 6. The remainder of the Income from rental operations activity is included in the caption “Ancillary services revenues, net” on our Consolidated Statement of Operations.

 

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2011 Guidance - Selected Financial Data (1)

The Company’s guidance acknowledges the existence of volatile economic conditions, which may impact our current guidance assumptions. Factors impacting 2011 guidance 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 sites; (iii) scheduled or implemented rate increases on community and resort sites; (iv) scheduled or implemented rate increases of annual payments under right-to-use contracts, (v) occupancy changes; (vi) our ability to retain and attract customers renewing or entering right-to-use contracts, (vii) completion of the Acquisition in its entirety and on the schedule assumed, (viii) transaction costs associated with the Acquisition, and (ix) our ability to integrate and operate the Acquisition Properties in accordance with our estimates.

 

(In $US Millions, except per share data, unaudited)                   
     ELS
2011
Guidance		     2011
Acquisitions  (3)		     Total  

Income from Property Operations - 2011 Core (2)

    $ 282.9      $ —        $ 282.9   

Income from Property Operations -2011 Acquisition properties

      —          37.9        37.9   

Property Management and general and administrative

      (57.4 )      (2.9 )      (60.3 ) 

Other Income and Expenses

      13.0        2.5        15.5   

Financing Costs and Other

      (100.7 )      (15.0 )      (115.7 ) 
  

 

 

    

 

 

    

 

 

  

Funds from Operations (FFO), excluding transaction costs (4)

    $ 137.8      $ 22.5      $ 160.3   

2011 Acquisition Transaction Costs (5)

      —          (22.0 )      (22.0 ) 
  

 

 

    

 

 

    

 

 

  

Funds from Operations (FFO) (4)

    $ 137.8      $ 0.5      $ 138.3   

Depreciation on Real Estate and Other

      (70.3 )      (11.8 )      (82.1 ) 

Amortization of In-Place Leases

      —          (28.0 )      (28.0 ) 

Deferral of right-to-use contract sales revenue and commission, net (6)

      (7.2 )      —          (7.2 ) 

(Income) Loss allocated to Common OP Units

      (5.5 )      3.7        (1.8 ) 

(Income) allocated to ELS Series B preferred

      —          (1.1 )      (1.1 ) 
  

 

 

    

 

 

    

 

 

  

Net Income (Loss) Available to Common Shares

    $ 54.8      $ (36.7 )    $ 18.1   
  

 

 

    

 

 

    

 

 

  

Net Income Per Common Share - Fully Diluted

        $ 0.52   

FFO Per Share, excluding transaction costs - Fully Diluted

        $ 3.97   

FFO Per Share - Fully Diluted

        $ 3.42   

Weighted Average Shares Outstanding - Fully Diluted

          40.4   

 

1) Each line item represents the mid-point of a range of possible outcomes and reflects management’s best estimate of the most likely outcome. Actual FFO, FFO per share, Net Income and Net Income per share could vary materially from amounts presented above if any of our assumptions are incorrect. The guidance estimate reflects the historical results for the nine months ended September 30, 2011 plus an estimate for the three months ended December 31, 2011.
2) See page 11 for Core growth assumptions. Amount represents 2010 Core Income from property operations for the 2011 Core of $276.3 million multiplied by an estimated growth rate of 2.4%.
3) 2011 Acquisitions guidance makes certain assumptions about the timing of the Acquisition. There can be no assurances that our estimates will reflect actual timing. See page 12 for 2011 Acquisition assumptions.
4) See page 22 for definition of FFO.
5) Amount represents the Company’s estimate of costs for the Acquisition of which $17.3 million was incurred during the nine months ended September 30, 2011. Estimate assumes the Company acquires 18 Acquisition Properties during the quarter. If the Company does not acquire the Clinton property before January 1, 2012 (see footnote 1 on page 20 for further details), transaction costs will be reduced by approximately $2.0 million. The Clinton property transaction costs include a portion of the seller’s debt defeasance costs.
6) Due to the uncertain timing and extent of right to use upfront payments and the resulting deferrals, actual income could differ materially from expected net income.

 

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Fourth Quarter 2011 Guidance - Selected Financial Data (1)

The Company’s guidance acknowledges the existence of volatile economic conditions, which may impact our current guidance assumptions. Factors impacting 2011 guidance 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 sites; (iii) scheduled or implemented rate increases on community and resort sites; (iv) scheduled or implemented rate increases of annual payments under right-to-use contracts, (v) occupancy changes; (vi) our ability to retain and attract customers renewing or entering right-to-use contracts, (vii) completion of the Acquisition in its entirety and on the schedule assumed, (viii) transaction costs associated with the Acquisition, and (ix) our ability to integrate and operate the Acquisition Properties in accordance with our estimates.

 

(In $US Millions, except per share data, unaudited)    ELS
Fourth
Quarter
2011		     2011
Acquisitions  (3)		     Total  

Income from Property Operations - 2011 Core (2)

    $ 68.4      $ —        $ 68.4   

Income from Property Operations - Acquisition properties

      —          23.4        23.4   

Property Management and general and administrative

      (14.5 )      (1.8 )      (16.3 ) 

Other Income and Expenses

      1.0        1.5        2.5   

Financing Costs and Other

      (24.7 )      (10.0 )      (34.7 ) 
  

 

 

    

 

 

    

 

 

  

Funds from Operations (FFO), excluding transaction costs(4)

    $ 30.2      $ 13.1      $ 43.3   

2011 Acquisition Transaction Costs (5)

      —          (4.7 )      (4.7 ) 
  

 

 

    

 

 

    

 

 

  

Funds from Operations (FFO) (4)

    $ 30.2      $ 8.4      $ 38.6   

Depreciation on Real Estate and Other

      (17.6 )      (7.4 )      (25.0 ) 

Amortization of In-Place Leases

      —          (17.3 )      (17.3 ) 

Deferral of right-to-use contract sales revenue and commission, net (6)

      (1.8 )      —          (1.8 ) 

(Income) Allocated to OP Units

      (1.0 )      1.6        0.6   

(Income) Allocated to ELS Series B preferred

      —          (0.7 )      (0.7 ) 
  

 

 

    

 

 

    

 

 

  

Net Income (Loss) Available to Common Shares (5)

    $ 9.8      $ (15.4 )    $ (5.6 ) 
  

 

 

    

 

 

    

 

 

  

Net Income (Loss) Per Common Share - Basic and Fully Diluted (7)

        $ (0.14 ) 

FFO Per Share, excluding transaction costs - Fully Diluted

        $ 0.96   

FFO Per Share - Fully Diluted

        $ 0.85   

Weighted Average Common Shares Outstanding - Basic (7)

          39.1   

Weighted Average Shares Outstanding - Fully Diluted

          45.3   

 

1) Each line item represents the mid-point of a range of possible outcomes and reflects management’s best estimate of the most likely outcome. Actual FFO, FFO per share, Net Income and Net Income per share could vary materially from amounts presented above if any of our assumptions are incorrect.
2) See page 11 for Core growth assumptions. Amount represents Core Income from property operations for the 2011 Core of $67.0 million multiplied by an estimated growth rate of 2.1%.
3) 2011 Acquisitions guidance makes certain assumptions about the timing of the Acquisition. There can be no assurances that our estimates will reflect actual timing. See page 12 for 2011 Acquisition assumptions.
4) See page 22 for definition of FFO.
5) Amount represents the Company’s estimate of costs for the Acquisition to be incurred during the fourth quarter of 2011. Estimate assumes the Company acquires 18 Acquisition Properties during the quarter. If the Company does not acquire Clinton before January 1, 2012 (see footnote 1 on page 20 for further details), transaction costs will be reduced by approximately $2 million. Clinton transaction costs include a portion of the seller’s debt defeasance costs.
6) Due to the uncertain timing and extent of right to use upfront payments and the resulting deferrals, actual income could differ materially from expected net income.
7) As a result of the estimated Net loss available for Common Shares, both the Company’s common OP Units and the newly issued shares of Series B Preferred Stock are considered anti-dilutive, and therefore both were excluded from the computation of the Net Loss Per Common Share – Basic and Fully Diluted.

 

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2011 Core (1) Guidance Assumptions - Income from Property Operations

 

(In $US Millions, unaudited)                         
     Year
ended
12/31/2010		     2011
Growth
Factors  (2)		     Quarter
ended
12/31/2010		     4Q 2011
Growth
Factors (2)		  

Community Base Rental Income

    $ 259.3        2.8 %    $ 65.3        2.7 % 

Resort Base Rental Income (3)

      129.2        0.4 %      27.9        0.9 % 

Right to Use Annual Payments

      49.8        -1.4 %      12.2        -0.3 % 

Right to Use Contracts

      19.5        -9.7 %      4.3        4.2 % 

Utility and Other Income

      48.3        2.1 %      11.0        0.7 % 
  

 

 

      

 

 

    

Property Operating Revenues

      506.1        1.2 %      120.7        1.9 % 

Property Operating Expenses

      (229.8 )      -0.2 %      (53.7 )      1.6 % 
  

 

 

      

 

 

    

Income from Property Operations

    $ 276.3        2.4 %    $ 67.0        2.1 % 
  

 

 

      

 

 

    

 

1) 2011 Core properties include properties we expect to own and operate during all of 2010 and 2011. Excludes property management expenses and the GAAP deferral of right to use contract upfront payments and related commissions, net.
2) Management’s estimate of the growth of the 2011 Core in 2011 compared to actual 2010 performance. Represents the mid-point of a range of possible outcomes. Calculations prepared using unrounded numbers.
3) Resort base rental income is comprised of the following:

 

     Year
ended
12/31/2010		      2011
Growth
Factors  (2)		     Quarter
ended
12/31/2010		      4Q 2011
Growth
Factors (2)		  

Annual

    $ 79.8         4.1 %    $ 20.4         3.7 % 

Seasonal

      21.6         -5.0 %      4.1         -4.8 % 

Transient

      27.8         -6.2 %      3.4         -8.8 % 

 

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2011 Acquisition Assumptions (1)

 

(In $US Millions, unaudited)             
     Year ended
December 31,
2011		     Quarter
ended
December 31,
2011		  

Community base rental income

    $ 52.3      $ 32.0   

Resort base rental income

      0.2        0.2   

Utility income and other property income

      4.6        2.8   
  

 

 

    

 

 

  

Property operating revenues

      57.1        35.0   

Property operating expenses

      (19.2 )      (11.6 ) 
  

 

 

    

 

 

  

Income from property operations (2)

    $ 37.9      $ 23.4   
  

 

 

    

 

 

  

Property management and general and administrative

      (2.9 )      (1.8 ) 

Other income and expenses (3)

      2.5        1.5   

Financing costs and other

      (15.0 )      (10.0 ) 

Depreciation of real estate and other

      (11.8 )      (7.4 ) 

Amortization of in-place leases

      (28.0 )      (17.3 ) 

 

1) Each line item represents our estimate of the mid-point of a possible range of outcomes. Guidance also makes certain assumptions about the timing of the Acquisition and mortgage debt assumption approvals. There can be no assurances that our estimates will be reflected in actual results. The guidance estimate for the year ended December 31, 2011 reflects the historical results for the nine months ended September 30, 2011 plus an estimate for the three months ended December 31, 2011.
2) Estimates were based on 2011 budgets provided to us by the seller and exclude property management expenses. Seller’s budgets may not be reflective of the Company’s accounting policies, which may impact the timing and amount of actual income from property operations as compared to seller’s budgets. Estimated 2011 income from property operations includes 61 Acquisition Properties acquired on or before October 17, 2011 and 14 Acquisition Properties that we expect to acquire during the fourth quarter of 2011. One Acquisition Property, Clinton, as discussed in footnote 1 on page 20 is excluded from 2011 guidance.
3) See footnote 4 on page 16 for discussion of the interest income on recently purchased chattel notes receivable.

 

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2012 Preliminary Guidance - Selected Financial Data (1)

The Company’s guidance acknowledges the existence of volatile economic conditions, which may impact our current guidance assumptions. Factors impacting 2012 guidance 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 sites; (iii) scheduled or implemented rate increases on community and resort sites; (iv) scheduled or implemented rate increases of annual payments under right-to-use contracts, (v) occupancy changes; (vi) our ability to retain and attract customers renewing or entering right-to-use contracts, (vii) completion of the Acquisition in its entirety and on the schedule assumed, and (viii) our ability to integrate and operate the Acquisition Properties in accordance with our estimates.

 

(In $US Millions, except per share data, unaudited)                   
     2012
Core		     2011
Acquisitions  (3)		     Total (1)  

Income from Property Operations - 2012 Core (2)

    $ 288.4      $ —        $ 288.4   

Income from Property Operations - 2011 Acquisition properties

      —          101.3        101.3   

Property Management and general and administrative

      (58.3 )      (7.1 )      (65.4 ) 

Other Income and Expenses

      10.8        6.9        17.7   

Financing Costs and Other

      (98.9 )      (42.2 )      (141.1 ) 
  

 

 

    

 

 

    

 

 

  

Funds from Operations (FFO) (4)

    $ 142.0      $ 58.9      $ 200.9   

Depreciation on Real Estate and Other

      (70.3 )      (31.7 )      (102.0 ) 

Amortization of In-Place Leases

      —          (48.0 )      (48.0 ) 

Deferral of right-to-use contract sales revenue and commission, net (5)

      (7.3 )      —          (7.3 ) 

(Income) Loss Allocated to OP Units

      (5.9 )      2.2        (3.7 ) 

(Income) Allocated to ELS Series B preferred

      —          (3.0 )      (3.0 ) 
  

 

 

    

 

 

    

 

 

  

Net Income (Loss) Available to Common Shares

    $ 58.5      $ (21.6 )    $ 36.9   
  

 

 

    

 

 

    

 

 

  

Net Income (Loss) Per Common Share - Fully Diluted

        $ 0.89   

FFO Per Share - Fully Diluted

        $ 4.42   

Weighted Average Shares Outstanding - Fully Diluted

          45.4   

 

1) Each line item represents the mid-point of a range of possible outcomes and reflects management’s best estimate of the most likely outcome. Actual FFO, FFO per share, Net Income and Net Income per share could vary materially from amounts presented above if any of our assumptions are incorrect.
2) See page 14 for 2012 Core growth assumptions. Amount represents estimated 2012 Core income from property operations in 2011 of $282.4 million multiplied by an estimated growth rate of 2.2%.
3) 2011 Acquisitions guidance makes certain assumptions about the timing of the Acquisition. There can be no assurances that our estimates will reflect actual timing. See page 15 for 2011 Acquisition assumptions.
4) See page 22 for definition of FFO.
5) Due to the uncertain timing and extent of right to use upfront payments and the resulting deferrals, actual income could differ materially from expected net income.

 

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2012 Core (1) Growth Assumptions - Income from Property Operations

 

(In $US Millions, unaudited)             
     Estimated
2011		     2012
Growth
Factors  (2)		  

Community Base Rental Income

    $ 266.4        2.3 % 

Resort Base Rental Income (3)

      130.2        2.3 % 

Right to Use Annual Payments

      49.1        0.0 % 

Right to Use Contracts

      17.6        2.3 % 

Utility and Other Income

      49.5        1.9 % 
  

 

 

    

Property Operating Revenues

      512.8        2.1 % 

Property Operating Expenses

      (230.4 )      1.9 % 
  

 

 

    

Income from Property Operations

    $ 282.4        2.2 % 
  

 

 

    

 

1) 2012 Core properties include properties we expect to own and operate during all of 2011 and 2012. Excludes property management expenses and the GAAP deferral of right to use contract upfront payments and related commissions, net. The 2011 estimate reflects the historical results for the 2012 Core for the nine months ended September 30, 2011 plus an estimate for the three months ended December 31, 2011.
2) Management’s estimate of the growth of the 2012 Core in 2012 compared to estimated 2011 performance. Represents the mid-point of a range of possible outcomes and was calculated using unrounded numbers.
3) Resort base rental income is comprised of the following:

 

     Estimated
2011		      2012
Growth
Factors  (2)		  

Annual

    $ 83.2         3.6 % 

Seasonal

      20.6         -0.3 % 

Transient

      26.4         0.1 % 

 

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2011 Acquisition Assumptions for 2012 (1)

 

(In $US Millions)       
     2012  

Community base rental income

    $ 141.8   

Resort base rental income

      0.7   

Utility income and other property income

      13.1   
  

 

 

  

Property operating revenues

      155.6   

Property operating expenses

      (54.3 ) 
  

 

 

  

Income from property operations

    $ 101.3   
  

 

 

  

Property management and general and administrative

      (7.1 ) 

Other income and expenses (2)

      6.9   

Financing costs and other

      (42.2 ) 

Depreciation of real estate and other

      (31.7 ) 

Amortization of in-place leases

      (48.0 ) 

 

1) Each line item represents our estimate of the mid-point of a possible range of outcomes. 2012 guidance assumes the Acquisition is complete on or before January 1, 2012.

Footnotes continued on page 16.

 

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2012 Acquisition Assumptions Footnotes (cont.)

 

2) Includes interest income of approximately $6.5 million for the year ended December 31, 2012 from Notes Receivable acquired from the seller. The Notes Receivable are secured by manufactured homes located at the Acquisition Properties. As of September 30, 2011 the Company’s carrying value of the Notes Receivable was approximately $29 million and the face amount was approximately $80 million. The Company’s carrying value is based on a third party valuation utilizing recent market transactions. Factors used in determining the carrying value included delinquency status, market interest rates and recovery assumptions. The Company expects to acquire an additional $12 million of Notes Receivable on or before January 1, 2012.

 

Summary of loans to be acquired in the Acquisition

       

Contractual cash flows to maturity

    $ 214.3   

Expected cash flows to maturity

      99.5   

Face value of loans

      114.7   

Carrying value of loans (purchase price)

      42.6   

Expected interest income over life of loans

      56.9   

The amounts expected to be acquired are subject to change based on closing dates of the Acquisition Properties and subsequent performance on the Notes Receivable. An increase in the estimate of expected cash flows would generally result in additional interest income to be recognized over the remaining life of the underlying pool of loans. A decrease in the estimate of expected cash flows could result in an impairment loss to the carrying value of the loans. The following summarizes our assumptions with respect to the preliminary interest income guidance for 2012.

 

Assumptions

       

Defaults per year, for eight years

      10 % 

Recoveries as percentage of defaults

      25 % 

Expected yield

      17 % 

 

Preliminary Guidance Estimates

    2012  

Average carrying amount of loans

    $ 37.9   

Contractual principal pay downs

      3.9   

Contractual interest income

      8.5   

Expected cash flows applied to principal

      4.7   

Expected cash flows applied to interest income

      6.5   

 

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2011 Acquisition Properties - Income from Property Operations (1)

 

(In $US Millions, unaudited)    Three Months
Ended
Sep. 30, 2011		      Three Months
Ended
Sep. 30, 2010		      Nine Months
Ended
Sep. 30, 2011		      Nine Months
Ended
Sep. 30, 2010		  

Rental income

    $ 34.1       $ 33.6       $ 102.2       $ 101.4   

Utility income and other property income

      3.1         3.1         9.4         9.2   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total property operating revenues - Acquisition Core

      37.2         36.7         111.6         110.6   

Total property operating expenses - Acquisition Core

      12.0         12.2         36.3         36.2   
  

 

 

     

 

 

     

 

 

     

 

 

  

Income from property operations - Acquisition Core (2)

      25.2         24.5         75.3         74.4   

Income from property operations - Acquisition Non-Core (3)

      0.5         0.0         1.2         0.0   
  

 

 

     

 

 

     

 

 

     

 

 

  

Income from property operations - Total

    $ 25.7       $ 24.5       $ 76.5       $ 74.4   
  

 

 

     

 

 

     

 

 

     

 

 

  

 

1)

Table above includes amounts for all 76 Acquisition Properties. Amounts were provided by both the Company and the seller of the Acquisition Properties and excludes property management expense. Income from property operations after the Company acquired the Acquisition Properties were provided by the Company. Income from property operations includes amounts provided by the seller i) for each period presented in 2010, ii) for Acquisition Properties not owned by the Company at any time during the three months ended September 30, 2011 and iii) from July 1st through the Company’s acquisition date for Acquisition Properties acquired by the Company during the quarter ended September 30, 2011. Actual results of the Acquisition Properties reported by the seller may not be representative of the performance of the Acquisition Properties once acquired by the Company.

2) Acquisition Core includes 73 Acquisition Properties that were owned during both periods presented.
3) Acquisition Non-Core includes two Acquisition Properties acquired by the seller in January 2011 and one Acquisition Property acquired by the seller in May 2011.

 

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2011 Acquisition Properties

The following table sets forth certain information relating to the 76 Acquisition Properties. The table is categorized according to major markets and was provided to the Company by the seller. The accompanying footnotes are an integral part of the table.

 

Property

   

Address

   

City

   

State

    ZIP      Acres      Sites     

Closing

Schedule (3)

Florida

                     

Audubon

   

6565 Beggs Road

    Orlando    FL      32810         40         280       September 1

Beacon Hill Colony

   

1112 W. Beacon Road

    Lakeland    FL      33803         31         201       November 1 (4)

Beacon Terrace

   

2425 Harden Blvd.

    Lakeland    FL      33803         55         297       August 1

Carefree Village

   

8000 Sheldon Road

    Tampa    FL      33615         58         406       July 1

Cheron Village

   

13222 SW 9th Court

    Davie    FL      33325         30         202       July 1

Clover Leaf Farms

   

900 N. Broad Street

    Brooksville    FL      34601         227         780       November 1 (4)

Clover Leaf Forest (2)

   

900 N. Broad Street

    Brooksville    FL      34601         30         277       November 1 (4)

Colony Cove

   

101 Amsterdam Ave

    Ellenton    FL      34222         531         2,211       August 1

Covington Estates

   

3400 Glenwick Ct.

    Saint Cloud    FL      34772         59         241       July 1

Crystal Lakes-Zephyrhills

   

4604 Lake Crystal Blvd.

    Zephyrhills    FL      33541         146         318       July 1

Emerald Lake

   

24300 Airport Road

    Punta Gorda    FL      33950         34         201       August 1

Featherock

   

2200 Highway 60 East

    Valrico    FL      33594         84         521       October 11

Foxwood

   

4705 NW 20th Street

    Ocala    FL      34482         56         375       July 1

Haselton Village

   

14 Coral Street

    Eustis    FL      32726         52         292       September 1

Heron Cay

   

1400 90th Avenue

    Vero Beach    FL      32966         130         597       September 1

Hidden Valley

   

8950 Polynesian Lane

    Orlando    FL      32836         50         303       July 1

Kings & Queens

   

2808 N. Florida Avenue

    Lakeland    FL      33805         18         107       July 1

Lake Village

   

400 Lake Drive

    Nokomis    FL      34275         65         391       October 3

Lake Worth Village

   

4041 Roberts Way #3

    Lake Worth    FL      33463         117         826       November 1 (4)

Lakeland Harbor

   

4747 North Road 33

    Lakeland    FL      33805         65         504       August 1

Lakeland Junction

   

202 E. Griffin Road

    Lakeland    FL      33805         23         193       July 1

Lakeside Terrace

   

24 Sunrise Lane

    Fruitland Park    FL      34731         39         241       July 1

Orange Lake

   

15840-32 SR 50

    Clermont    FL      34711         38         242       July 1

Palm Beach Colony

   

2000 N. Congress Avenue

    West Palm Beach    FL      33409         48         285       August 1

Parkwood Communities

   

414 Springlake Road

    Wildwood    FL      34785         121         695       July 1

Ridgewood Estates

   

101 Amsterdam Ave

    Ellenton    FL      34222         77         381       November 1 (4)

Shady Oaks

   

15777 Bolesta Road

    Clearwater    FL      33760         31         250       July 1

Shady Village

   

15777 Bolesta Road

    Clearwater    FL      33760         19         156       July 1

Starlight Ranch

   

6000 East Pershing Ave

    Orlando    FL      32822         130         783       July 1

Tarpon Glen

   

1038 Sparrow Lane

    Tarpon Springs    FL      34689         24         170       July 1

Vero Palm

   

1400 90th Avenue

    Vero Beach    FL      32966         64         285       September 1 (4)

Village Green

   

7300 20th Street

    Vero Beach    FL      32966         174         781       August 1

Whispering Pines - Largo

   

7501 142nd Ave North

    Largo    FL      33771         55         392       November 1 (4)

Florida Total

                  2,719         14,184      

See page 20 for footnotes to this table.

 

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2011 Acquisition Properties (continued)

 

Property

   

Address

   

City

    State      ZIP      Acres      Sites     

Closing

Schedule (3)

Northeast

                     

Stonegate Manor

   

1 Stonegate Drive

    North Windham      CT         06256         114         372       July 1

The Glen

   

31 Leisurewoods

    Norwell      MA         02370         24         36       August 1

Hillcrest

   

31 Leisurewoods

    Rockland      MA         02370         19         83       August 1

Fernwood

   

1901 Fernwood Drive

    Capitol Heights      MD         20743         40         329       November 1 (4)

Williams Estates and Peppermint Woods

   

3300 Eastern Blvd

    Middle River      MD         21200         121         804       August 1

Pine Ridge at Crestwood

   

2 Fox Street

    Whiting      NJ         08759         188         1,035       September 1

The Woodlands

   

6237 South Transit

    Lockport      NY         14094         225         1,183       October 3

Greenbriar Village

   

63A Greenbriar Drive

    Bath      PA         18014         63         319       November 1 (4)

Lil Wolf

   

3411 Li’l Wolf Drive

    Orefield      PA         18069         56         271       November 1 (4)

Mountain View - PA

   

4 East Zimmer Drive

    Walnutport      PA         18088         45         189       August 1

Regency Lakes

   

216 Regency Lakes Drive

    Winchester      VA         22603         165         523       July 1

Northeast Total

                  1,060         5,144      

West

                     

Apache East

   

3500 S. Tomahawk

    Apache Junction      AZ         85219         17         123       July 1

Denali Park

   

3405 S. Tomahawk

    Apache Junction      AZ         85219         33         162       July 1

Sunshine Valley

   

1650 S. Arizona Avenue

    Chandler      AZ         85286         55         380       September 1

Westpark

   

2501 W Wickenburg Way

    Wickenburg      AZ         85390         48         188       July 1

Los Ranchos

   

20843 Waalew Road

    Apple Valley      CA         92307         30         389       November 1 (4)

Mountain View - NV

   

148 Day Street

    Henderson      NV         89074         67         352       August 1

West Total

                  250         1,594      

Other Midwest / ID

                     

Coach Royale

   

8597 W. Irving Lane

    Boise      ID         83704         12         91       July 1

Maple Grove

   

8597 W. Irving Lane

    Boise      ID         83704         38         270       July 1

Shenandoah Estates

   

5603 Bullrun Lane

    Boise      ID         08081         24         154       November 1 (4)

West Meadow Estates

   

120 West Driftwood

    Boise      ID         83713         29         179       November 1 (4)

Hoosier Estates

   

830 Campbell Street

    Lebanon      IN         46052         60         288       November 1 (4)

North Glen Village

   

18200 US 31 N #292

    Westfield      IN         46074         88         289       November 1 (4)

Rockford Riverview Estates

   

135 Highview Road

    Rockford      MN         55373         88         428       August 1

Rosemount Woods

   

13925 Bunratty Ave

    Rosemount      MN         55068         50         182       July 1

Cedar Knolls

   

12571 Garland Ave

    Apple Valley      MN         55124         93         458       August 1

Cimarron Park

   

901 Lake Elmo Ave N

    Lake Elmo      MN         55042         230         505       August 1

Buena Vista

   

4301 El Tora Boulevard

    Fargo      ND         58103         76         400       August 1

Meadow Park

   

3220 12th Ave North

    Fargo      ND         58102         17         117       September 1

Other Midwest / ID Total

                  804         3,361      

Michigan

                     

Avon

   

2889 Sandpiper

    Rochester Hills      MI         48309         83         617       July 1

Chesterfield

   

49900 Fairchild Road

    Chesterfield      MI         48051         78         345       July 1

Clinton

   

38129 Deacroix

    Clinton Township      MI         48038         161         1,000                            (1)

Cranberry Lake

   

9620 Highland Road

    White Lake      MI         48386         54         328       July 1

Ferrand Estates

   

2680 44th Street

    Wyoming      MI         49519         80         420       September 1

Grand Blanc

   

8225 Embury Road

    Grand Blanc      MI         48439         221         478       July 1

Holly Hills

   

16181 Lancaster Way

    Holly      MI         48442         198         242       July 1

Lake in the Hills

   

2700 Shimmons Road

    Auburn Hills      MI         48326         51         238       July 1

Macomb

   

45301 Chateau Thierry Blvd.

    Macomb      MI         48044         400         1,426       July 1

Novi

   

41875 Carousel Street

    Novi      MI         48377         118         725       July 1

Old Orchard

   

10500 Lapeer Road

    Davison      MI         48423         41         200       July 1

Royal Estates

   

8300 Ravine Road

    Kalamazoo      MI         49009         63         183       July 1

Swan Creek

   

6988 McKean

    Ypsilanti      MI         48197         59         294       July 1

Westbrook

   

45013 Catalpa

    Macomb      MI         48044         79         388       July 1

Michigan Total

            MI Total            1,686         6,884      

Grand Total

                  6,519         31,167      

See page 20 for footnotes to this table.

 

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2011 Acquisition Properties Footnotes

 

1) The terms of the purchase agreement for the Acquisition provided for a July 1, 2011 closing for this property. As a result of underwriting issues related to this property, the parties agreed that the Company’s acquisition of the property would be deemed terminated but also agreed that the Company may reinstate the acquisition at any time on or before December 31, 2011. The Company is continuing to perform due diligence on the property. All 2012 guidance estimates assume that the Company will acquire this property on or before January 1, 2012. The guidance for transaction costs in the fourth quarter of 2011 assumes the Company will acquire the property on or before December 31, 2011, but any contribution from the operations of the property is excluded from 2011 guidance. There can be no assurance that the Company will acquire this property.
2) This property is a resort property with 146 annual sites.
3) In addition to the debt–related assumptions issues highlighted in footnote 4, all future closings are subject to customary closing conditions and due diligence.
4) Closing subject to completing loan assumption. Lender has acknowledged request for assumption approval, however lender due diligence and underwriting are not complete.

 

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Debt Maturity Table – As Adjusted (1)

 

(In $US Millions, unaudited)       

Year

    Amount  

2012

    $ 35   

2013

      118   

2014

      201   

2015

      600   

2016

      232   

2017

      293   

2018

      209   

2019

      218   

2020

      140   

2021+

      210   
  

 

 

  
   $ 2,256   

 

1) Represents the Company’s mortgage notes payable excluding net note premiums, and the Company’s $200 million term loan as of September 30, 2011 and is adjusted for the acquisition of each of the remaining 18 Acquisition Properties as if they were acquired on September 30, 2011.

 

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Non–GAAP Financial Measures

Funds from Operations (“FFO”) - a non-GAAP financial measure. The Company believes that FFO, as defined by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”), is generally an appropriate 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.

The Company defines FFO as net income, computed in accordance with GAAP, excluding gains or actual or estimated losses from sales of properties, plus real estate related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO on the same basis. The Company receives up-front non-refundable payments from the entry of right-to-use contracts. In accordance with GAAP, the upfront non-refundable payments and related commissions are deferred and amortized over the estimated customer life. Although the NAREIT definition of FFO does not address the treatment of nonrefundable right-to-use payments, the Company believes that it is appropriate to adjust for the impact of the deferral activity in its calculation of FFO. The Company believes that FFO is helpful to investors as one of several measures of the performance of an equity REIT. The Company further believes that by excluding the effect of depreciation, amortization and gains or actual or estimated losses from sales of real estate, all of which are based on historical costs and which may be of limited relevance in evaluating current performance, FFO can facilitate comparisons of operating performance between periods and among other equity REITs. The Company believes that the adjustment to FFO for the net revenue deferral of upfront non-refundable payments and expense deferral of right-to-use contract commissions also facilitates the comparison to other equity REITs. Investors should review FFO, along with GAAP net income and cash flow from operating activities, investing activities and financing activities, when evaluating the Company’s operating performance. The Company computes FFO in accordance with its interpretation of standards established by 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 the Company does. Investors should review FFO, along with GAAP net income and cash flow from operating activities, investing activities and financing activities, when evaluating the Company’s operating performance. FFO 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 the Company’s financial performance, or to cash flow from operating activities, determined in accordance with GAAP, as a measure of the Company’s liquidity, nor is it indicative of funds available to fund the Company’s cash needs, including its ability to make cash distributions.

 

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