Equity LifeStyle Properties Q1 2025 Earnings Call Transcript

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Provided by Quartr
April 22, 2025
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Operator

Day everyone and thank you all for joining us to discuss Equity Lifestyle Properties First Quarter twenty twenty five Results. Our featured speakers today are Marguerite Nader, our President and CEO Paul Sevey, our Executive Vice President and CFO and Patrick Waite, our Executive Vice President and COO. In advance of today's call, management release earnings. Today's call will consist of opening remarks and a question and answer session with management relating to the company's earnings release. For those who would like to participate in the question and answer session, management asks that you limit yourselves to two questions, so everyone who would like to participate has ample opportunity.

Operator

As a reminder, this call is being recorded. Certain matters discussed during this conference call may contain forward looking statements in the meanings of the federal securities laws. Our forward looking statements are subject to certain economic risks and uncertainties. The company assumes no obligation to update or supplement any statements that become untrue because of subsequent events. In addition, during today's call, we will discuss non GAAP financial measures as defined by SEC Regulation G.

Operator

Reconciliations of these non GAAP financial measures to the comparable GAAP financial measures are included in our earnings release, our supplemental information and our historical SEC filings. At this time, I'd like to turn the call over to Marguerite Nader, our President and CEO.

Marguerite Nader
Marguerite Nader
President and CEO at Equity LifeStyle Properties

Good morning, and thank you for joining us today. I am pleased to report the results for the first quarter of twenty twenty five. The quality of our cash flow, our in demand locations, the lack of new supply, and the strength of our balance sheet allow us to report impressive results. We continued our long term record of strong core operations and FFO growth, with growth in NOI of 3.8 and a 6.7% increase in normalized FFO per share in the first quarter. We are pleased with our outlook for the remainder of 2025.

Marguerite Nader
Marguerite Nader
President and CEO at Equity LifeStyle Properties

We have maintained our strong full year FFO guidance of $3.06 per share. Over the last ten years, our average core NOI grew 5.3% and normalized FFO grew nearly 8%, both outpacing the REIT industry average over that time. Our balance sheet is in terrific shape, with an average term to maturity of more than eight years. Nineteen percent of our debt is fully amortizing and not subject to refinance risk, and our debt maturity schedule through 2027 shows only 9% of our debt coming due, compared to the REIT average of 30%. During uncertain times, it's helpful to appreciate the stability of our business and the reasons it will continue to be stable.

Marguerite Nader
Marguerite Nader
President and CEO at Equity LifeStyle Properties

Our MH portfolio comprises approximately 60% of our total revenue, and our properties are 94% occupied. Our properties stand out due to their ability to maintain high occupancy levels once achieved. This is driven by the unique composition of our resident base. Homeowners occupy 97% of our MH portfolio, creating long term stability and reducing turnover. A high percentage of homeowners plays a key role in maintaining consistent cash flow.

Marguerite Nader
Marguerite Nader
President and CEO at Equity LifeStyle Properties

Our communities foster a strong sense of connection where residents are focused on building relationships and contributing to an engaged neighborhood environment. Within our RV footprint, our annual revenue grew 4.1% in the quarter. Our annual customers stay with us in park models, resort cottages, and RVs. We welcome many multi generational customers who consider our properties as part of their family history. Our transient stays serve as an important entry point for introducing new customers to our properties, laying the foundation for long term revenue growth.

Marguerite Nader
Marguerite Nader
President and CEO at Equity LifeStyle Properties

Turning to demand. Our offerings across our portfolio are unique. We offer great long term experiences in sought after locations at a fraction of the cost in those locations. We are engaging with our customers through traditional email campaigns, social media outreach, digital advertising, and ambassador programs. For the quarter, our websites attracted a combined 1,700,000 unique visitors and generated 72,000 online leads, reflecting strong engagement.

Marguerite Nader
Marguerite Nader
President and CEO at Equity LifeStyle Properties

The drivers of the lead generation are from our RV annual site lease campaigns and trip planning lead generation. Our social media strategy seeks to engage both customers and prospects in a wide variety of platforms. We have over 2,200,000 fans and followers across the social media networks. Over the past ten years, we have grown our social media fans and followers by an average of 30% annually. I want to thank our team members for a great start of the year.

Marguerite Nader
Marguerite Nader
President and CEO at Equity LifeStyle Properties

They've done an excellent job supporting our Snowbird guests, and now we're getting ready to welcome our customers for the upcoming spring and summer season. Our REIT leading performance is made possible because of the efforts of our 4,000 team members across the country. I will now turn it over to Patrick to provide more details about property operations.

Patrick Waite
Patrick Waite
Executive VP & COO at Equity LifeStyle Properties

Thanks, Marguerite. Our business is currently in its spring seasonal shift, with snowbirds in our Sunbelt locations beginning to head north and our northern locations preparing for the summer rush. This shoulder season is an opportunity to look at the elements that shaped our first quarter results, as well as what we see ahead for the summer season. The fundamentals of our business remain strong. New supply of manufactured home communities and RV resorts continues to be limited, with MH entitlements remaining most challenging.

Patrick Waite
Patrick Waite
Executive VP & COO at Equity LifeStyle Properties

Our portfolio of MH and RV properties offer prime locations and meet demand from home buyers and RV vacationers. First, I'll focus on our MH business. Our MH occupancy is at historically high levels, and on average, ELS homeowners pay $80,000 to $100,000 for a new home, and renters pay $1,500 per month. Our high homeowner count results in stable occupancy, with homeowners in our communities remaining an average of ten years. For perspective on the relative value of homes in our MH communities, I'll highlight three states, Florida, California, and Arizona, that comprise the largest share of our MH business.

Patrick Waite
Patrick Waite
Executive VP & COO at Equity LifeStyle Properties

In our primary submarkets in Florida, the average single family home price ranges from over $370,000 in Tampa St. Pete to nearly 460,000 in the Fort Lauderdale West Palm Beach submarket. Homes in Northern California, around San Francisco and San Jose, average over 1,400,000.0 and in Southern California, in Los Angeles and San Diego, it's just over 1,000,000. Homes in the Phoenix and Mesa submarket average more than 425,000. In each submarket, our communities offer great value to residents, both homeowners and renters.

Patrick Waite
Patrick Waite
Executive VP & COO at Equity LifeStyle Properties

Our largest market is Florida, and last quarter we discussed the impact of recent hurricanes on MH occupancy. The result of last season's hurricanes, we lost approximately 170 occupied sites in Q1, in addition to more than 90 occupied sites in Q4. We are ordering replacement homes, and we will see the positive impact on the community and cash flow in coming quarters. On the RV side of our business, we continue to see strength from our annual sites, where we saw 4.1% revenue growth in the quarter. Customers are averaging annual I'm sorry, leveraging annual sites for their RV or park model as an attractive and affordable path to a vacation home or lake house.

Patrick Waite
Patrick Waite
Executive VP & COO at Equity LifeStyle Properties

The annual site rent on one of our properties is a fraction of the cost of a mortgage on a second home, particularly on a home offering amenities like water access, a swimming pool, and a clubhouse with sports courts, among others. For many customers, their annual site rent, ranging from 5,000 to $6,000 in the North and averaging about $8,000 in the Sunbelt, is equivalent to the cost of their annual weeklong vacation, considering travel expenses and accommodations. Annual customers typically purchase a park model for $25,000 to $100,000 which compares favorably to vacation homes that often exceed $500,000 in submarkets where our properties are located. These annual sites provide a stable revenue base for our RV portfolio, accounting for more than 75% of our core RV revenue. While transient sites are an important element of our business, including serving a pipeline for annual sites and membership sales, we have less visibility into this revenue line as the time between booking and travel continues to be short.

Patrick Waite
Patrick Waite
Executive VP & COO at Equity LifeStyle Properties

More than half of our transient reservations are booked within thirty days of arrival. A majority of our full year transient revenue comes to us in Q2 and Q3 when we see historically high holiday demand. We're looking forward to our annual one hundred Days of Camping promotion, spanning from Memorial Day to Labor Day. This will be our eleventh season celebrating the one hundred Days of Camping. We see very high engagement levels with this promotion.

Patrick Waite
Patrick Waite
Executive VP & COO at Equity LifeStyle Properties

We saw more than 38,000,000 impressions for the campaign last summer. Now I'll turn it over to Paul.

Paul Seavey
Paul Seavey
Executive VP & CFO at Equity LifeStyle Properties

Thanks, Patrick, and good morning, everyone. I will review our first quarter twenty twenty five results and provide an overview of our second quarter and full year 2025 guidance. First quarter normalized FFO was $0.83 per share, in line with our guidance. Core portfolio NOI growth of 3.8% compared to prior year was in line with our expectations for the quarter. Core community based rental income increased 5.5% for the quarter compared to the same quarter in 2024.

Paul Seavey
Paul Seavey
Executive VP & CFO at Equity LifeStyle Properties

Rate growth of 5.7% was in line with our guidance, primarily as a result of noticed increases to renewing residents and market rent paid by new residents after resident turnover. Our high quality resident base consists of more than 97% homeowners with very low levels of bad debts written off, currently below 40 basis points on average. First quarter core resort and marina based rental income performed in line with our budget. Rent growth from annuals increased 4.1% for the quarter compared to prior year and was slightly higher than our guidance. Transient rent was down 9.1% compared to first quarter twenty twenty four.

Paul Seavey
Paul Seavey
Executive VP & CFO at Equity LifeStyle Properties

For the first quarter, the net contribution from our total membership business, which consists of annual subscription and upgrade revenues, offset by sales and marketing expenses, was $15,500,000 an increase of 4% compared to the prior year. Core utility and other income increased 3.9% compared to first quarter twenty twenty four. Our utility income recovery percentage was 47.6%, about 110 basis points higher than first quarter twenty twenty four. First quarter core operating expenses increased 1.5% compared to the same period in 2024. Property operating and maintenance and real estate tax expenses increased 2.6%.

Paul Seavey
Paul Seavey
Executive VP & CFO at Equity LifeStyle Properties

Membership sales and marketing expenses were in line with our budget and lower than prior year. We renewed our property and casualty insurance programs April 1, and the premium decrease year over year was approximately 6%. We are pleased with the result, which reflects no change in our property insurance program deductibles or coverage. Core property operating revenues increased 2.9%, while core property operating expenses increased 1.5%, resulting in growth in core NOI before property management of 3.8%. Our non core properties contributed $4,000,000 in the quarter, slightly higher than our expectations as a result of expense savings.

Paul Seavey
Paul Seavey
Executive VP & CFO at Equity LifeStyle Properties

JV income includes income recognition related to an expected distribution from one of our joint ventures. The press release and supplemental package provide an overview of twenty twenty five second quarter and full year earnings guidance. The following remarks are intended to provide context for our current estimate of future results. All growth rate ranges and revenue and expense projections are qualified by the risk factors included in our press release and supplemental package. Our guidance for 2025 full year normalized FFO is $3.06 per share at the midpoint of our guidance range of $3.01 to $3.11 We project core property operating income growth of 5% at the midpoint of our range of 4.5 to 5.5%.

Paul Seavey
Paul Seavey
Executive VP & CFO at Equity LifeStyle Properties

We project the non core properties will generate between $8,200,000 and $12,200,000 of NOI during 2025. Our property management and G and A expense guidance range is $119,000,000 to $125,000,000 In the core portfolio, we project the following full year growth rate ranges, 3.2% to 4.2% for core revenues, 1.5% to 2.5% for core expenses, and 4.5% to 5.5% for core NOI. Full year guidance assumes core MH rent growth in the range of 4.8% to 5.8%. Full year guidance for combined RV and Marina rent growth is 2.2% to 3.2%. Annual RV and Marina rent represents approximately 70% of the full year RV and Marina rent, and we expect 5% growth in rental income from annuals at the midpoint of our guidance range.

Paul Seavey
Paul Seavey
Executive VP & CFO at Equity LifeStyle Properties

Our full year expense growth assumption includes the impact of our April 1 insurance renewal for the rest of 2025. Our second quarter guidance assumes normalized FFO per share in the range of $0.66 to $0.72 That represents approximately 23% of full year normalized FFO per share. Core property operating income growth is projected to be in the range of 5.4% to 6% for the second quarter. Second quarter growth in MH rent is 5.3% at the midpoint of our guidance range. We project second quarter annual RV and Marina rent growth to be approximately 4.6% at the midpoint of our guidance range.

Paul Seavey
Paul Seavey
Executive VP & CFO at Equity LifeStyle Properties

Our guidance assumes second quarter seasonal and transient RV revenues perform in line with our current reservation pacing. Second quarter growth in core property operating expenses is projected to be in the range of 1.6% to 2.2% and includes the impact of our April 1 insurance renewal. I'll now provide some comments on our balance sheet and the financing market. Our balance sheet is well positioned to execute on capital allocation opportunities. As of the March, we have only $87,000,000 scheduled to mature before 2028 and our weighted average maturity for all debt is eight point four years.

Paul Seavey
Paul Seavey
Executive VP & CFO at Equity LifeStyle Properties

Our debt to EBITDAre is 4.4 times and interest coverage is 5.4 times. We have access to approximately $1,000,000,000 of capital from our combined line of credit and ATM programs. We continue to place high importance on balance sheet flexibility and we believe we have multiple sources of capital available to us. Current secured debt terms vary depending on many factors, including lender, borrower, sponsor, and asset type and quality. Current ten year loans are quoted between 5.56.25%, sixty % to 75% loan to value, and 1.4 to 1.6 times debt service coverage.

Paul Seavey
Paul Seavey
Executive VP & CFO at Equity LifeStyle Properties

We continue to see solid interest from life companies and GSEs to lend for ten year terms. High quality age qualified MH assets continue to command best financing terms. Now we would like to open it up for questions.

Operator

Certainly. We'd like to remind everyone to please limit yourselves to two questions each. One moment for our first question. And our first question comes from the line of Jamie Feldman from Wells Fargo. Your question please.

Cooper Clark
Cooper Clark
VP - Equity Research at Wells Fargo

Hey, this is Cooper Clark on for Jamie today. Thank you for taking the question. On the MH top line guidance cut and full year reduction, was there anything outside of the hurricane impact that drove this number lower? And also just wondering if you've seen any material changes in the MH mark to market on new leases recently. I believe it was roughly 14% last year.

Marguerite Nader
Marguerite Nader
President and CEO at Equity LifeStyle Properties

Good morning, Cooper. Patrick, maybe you could walk through that.

Patrick Waite
Patrick Waite
Executive VP & COO at Equity LifeStyle Properties

Yeah, sure. Let me just start by taking a step back to last October when we set our initial expectation for rate in the MH space, and we were at 5%. Our rate growth is now 5.6%. So, I think that shows strong demand across the resident base, you know, good consistent demand from our in place residents. And for the mark to market, it's running in the mid teens about 14% year to date.

Patrick Waite
Patrick Waite
Executive VP & COO at Equity LifeStyle Properties

The occupancy headwind is, noted, is the result of the hurricanes. We experienced a loss of 176 sites in the quarter as a result of the hurricanes. And just to put that in perspective, the Q1 occupancy is down 171. So if you control for the hurricanes, so take that out of the basic math, the occupancy for the portfolio was flat to slightly up, which again, I think underscores the consistency of the demand part.

Cooper Clark
Cooper Clark
VP - Equity Research at Wells Fargo

Thank you. And then earlier on the call, mentioned the average length of stay in the MH portfolio is ten years. Just wondering what that figure was pre COVID?

Patrick Waite
Patrick Waite
Executive VP & COO at Equity LifeStyle Properties

That was around ten years. It's pretty consistent.

Marguerite Nader
Marguerite Nader
President and CEO at Equity LifeStyle Properties

And that number, would say Cooper, has been consistent over the last thirty years, is that ten year mark.

Operator

Thank you. And our next question comes from the line of Eric Wolf from Citi. Your question, please.

Eric Wolfe
Eric Wolfe
Director at Citi

Hey, thanks. Just to follow-up on the MH question a second ago. I guess at the time you gave guidance you probably would have known about the storm damage. So I was just curious is it normally the people stay through the storm damage and this time they decided not to? Like what changed versus the original guidance and why? Because I think the guidance you gave was sort of at the January hurricanes were in 4Q.

Eric Wolfe
Eric Wolfe
Director at Citi

So just trying to understand like if the behavior among storm impacted tenants changed a bit versus what normally happens.

Patrick Waite
Patrick Waite
Executive VP & COO at Equity LifeStyle Properties

Yeah, don't know that I'd say that the behavior changed in, as you work your way through the aftermath of a hurricane, there are some homes that are significantly impacted and that's clear. And then there's a significant number of homes where the individuals who own those homes either haven't come down from up north yet, so they come down over some period of time and evaluate any damage, or they are living at the property and they're evaluating what their options are. They're reviewing what their options are to complete any repairs and if their home is repairable. That tends to play out over several months after we work our way through the initial assessment. So it can be difficult to get that visibility until the residents are actually making their final decision on whether or not they're going to repair their home or move on to whatever their next housing choice is going to be.

Marguerite Nader
Marguerite Nader
President and CEO at Equity LifeStyle Properties

And Eric, a clear indicator for us is certainly if they're paying us rent, which they were prior to making the decision to move their home, or no longer stay in the community. So that's the difference between January and now.

Eric Wolfe
Eric Wolfe
Director at Citi

Got it. Makes sense. And I know you've given some of this information out on calls a couple years ago, but could you just help us understand what your exposure is to the Canadian customer and whether you factored in any changes to that customer's behavior into your guidance or if you think it's probably unlikely to materially impact your guidance this year.

Paul Seavey
Paul Seavey
Executive VP & CFO at Equity LifeStyle Properties

Yeah, I think for just as a reminder, what we've talked about in the past is roughly 10% of the RV revenue comes from Canadian customers. Half of that roughly is annual rent and then the remaining 50% is split between seasonal and transient. The first quarter obviously is behind us and so the seasonal impact is really in the first quarter of the year and so we didn't make any change to guidance as a result of that. I think the next kind of meaningful impact that we would see would be into the first quarter of twenty twenty six. And just to circle back on the annual for a moment, those customers primarily have a park model or an owned unit in place and so if they decide not to return, there's transfer of ownership that occurs and our revenue stream remains uninterrupted as typically happens on turnover of customers.

Eric Wolfe
Eric Wolfe
Director at Citi

Thank you.

Operator

Thank Thank you.

Operator

And our next question comes from the line of Yana Gallen from Bank of America Securities. Your question, please.

Jana Galan
Jana Galan
Director at Bank of America

Thank you. Good morning.

Marguerite Nader
Marguerite Nader
President and CEO at Equity LifeStyle Properties

Good morning, Ana.

Jana Galan
Jana Galan
Director at Bank of America

Just curious, any chance that you could discuss the MH occupancy trends that you have embedded in the guidance for the second quarter through year end?

Paul Seavey
Paul Seavey
Executive VP & CFO at Equity LifeStyle Properties

Generally, have an assumption for a modest increase in occupancy for remainder of the year. Typically, don't forecast forward significant uptick in occupancy, and we've kept that consistent in 2025.

Jana Galan
Jana Galan
Director at Bank of America

Thank you. And then maybe just if you could provide some color on trends in MH home sales, kind of the mix of new and used and what you're seeing in the early spring selling season.

Patrick Waite
Patrick Waite
Executive VP & COO at Equity LifeStyle Properties

Yeah, sure. Well, we're in a bit of a shoulder season here. So, me just touch on Q1, where we saw some headwinds in Florida, that's basically hangover from the hurricanes that occurred late in the quarter. And as we're moving through the shoulder season, we're seeing consistent demand, including applications for new home sales, and as I referenced, that consistent mark to market as people are choosing to purchase a home on our property and accepting a 14% increase in the in place rent. With respect to the used home sales, it's a very small part of the business, and we see consistent demand there as well, but the larger driver of our overall occupancy is the new home sales.

Jana Galan
Jana Galan
Director at Bank of America

Great, thank you so much.

Marguerite Nader
Marguerite Nader
President and CEO at Equity LifeStyle Properties

Thanks, John.

Operator

Thank you. And our next question comes from the line of Steve Sakwa from Evercore ISI. Your question please.

Steve Sakwa
Senior Managing Director at Evercore ISI

Yes, great. Thanks. Can you maybe just talk a little bit more about the seasonal in transient RV? If I did my math right, I think you did reduce the revenue growth a little bit. So just curious, is that sort of an expectation that international travel may come down?

Steve Sakwa
Senior Managing Director at Evercore ISI

Is that just a little more cautiousness about The U. S. Consumer? Maybe what drove that?

Paul Seavey
Paul Seavey
Executive VP & CFO at Equity LifeStyle Properties

Well, maybe, Steve, I'll start by just reminding everybody of how we forecast our seasonal and transient, and then Patrick can step in with some more color. But in terms of our process, if you think about the first quarter, earned about 50% of that seasonal rent and about 20% of the transient rent. And then by the end of quarter two, we've earned about two thirds of our full year seasonal and almost 45% of the full year transient. And then in the third quarter, '40 percent of our transient rent comes in. Because of the short booking window, we've adopted a practice, and I think I mentioned it during the call in January, we used it when we prepared our budget.

Paul Seavey
Paul Seavey
Executive VP & CFO at Equity LifeStyle Properties

We focused on reservation pacing at the time for rent we anticipate earning in the coming quarter, and then we've left our budget assumption alone. So, the change in the forecast that you see is really our reservation pacing for the second quarter. Maybe, Patrick, you can address some comments.

Patrick Waite
Patrick Waite
Executive VP & COO at Equity LifeStyle Properties

Yes. Steve, I'd also just touch on for transients, as I mentioned in my opening comments, it's a short booking window and continues to be.

Patrick Waite
Patrick Waite
Executive VP & COO at Equity LifeStyle Properties

But just looking forward to the summer season, we have over 200 RV properties and 85% of them are pacing in line with the same time last year. So it's smaller subset of the portfolio that experiencing some headwinds when we're reviewing pacing. In the northern markets around the Wisconsin Dells, Coastal New Jersey, somewhat in Bar Harbor, Maine, we see lagging at a small number of properties. A common trend I would characterize as a normalizing of demand. And just for further perspective, in the case of Bar Harbor, we're seeing commentary around service level changes at Acadia National Park, potentially leading to fewer visits there, and that would have a marginal impact on our properties in that submarket.

Steve Sakwa
Senior Managing Director at Evercore ISI

Okay, great. Thanks. Maybe could you just touch on home sales? I think they were down. I know it's not a large number and not a huge revenue contributor, but home sales were down in the quarter.

Steve Sakwa
Senior Managing Director at Evercore ISI

Anything that you noticed there? And I guess any just sort of broad changes in your expectation about home sales over the balance of the year?

Patrick Waite
Patrick Waite
Executive VP & COO at Equity LifeStyle Properties

No, think the I touched on this last quarter and there's a little bit of carryover into Q1. The hurricanes in Florida were an impact. We feel like the demand profile in Florida is still very strong, but we've seen a recovery along the Gulf Coast that was impacted. And as we moved into the winter season, the winter up north was not particularly cold, that hampered some of our velocity in the Western Sunbelt for us. As we look forward to the summer season, I think we feel pretty good about the demand that we're seeing.

Patrick Waite
Patrick Waite
Executive VP & COO at Equity LifeStyle Properties

And, you know, I've touched on this frequently, just that the we've been through a period of elevated new home sales, A good year pre COVID would be, call it, five to six hundred. Last year, we were, for the full year, about seven fifty new home sales, and we were 117 for Q1, which as you pointed out is down 74 year over year. That's a lot of color, overarching, I think we feel pretty good about the demand profile for the MH portfolio.

Operator

Thank you. And our next question comes from the line of Michael Goldsmith from UBS. Your question please.

Michael Goldsmith
US REITs Analyst at UBS Securities LLC

Good morning. Thanks a for taking my question. My question is on the insurance renewal. What were you assuming in your guidance prior to it coming down 6%? And just what was the conversation with the insurance providers just given you've had a couple of incidents or storms over the last couple of years, which was taking things offline.

Michael Goldsmith
US REITs Analyst at UBS Securities LLC

So how are you able to drive a decrease of 6%? Thanks.

Paul Seavey
Paul Seavey
Executive VP & CFO at Equity LifeStyle Properties

Sure,

Paul Seavey
Paul Seavey
Executive VP & CFO at Equity LifeStyle Properties

Michael. So as I mentioned, our core expense growth assumptions include the impact of the renewal we disclosed in our earnings release as well as other changes to expense assumptions based on actual first quarter experience and insight into the remainder of the year. Our insurance premiums were down 6% compared to prior year. Negotiating insurance programs for our portfolio multiple parties involved. Consistent with past practice, we do not share our budget assumptions in order to help us secure the most favorable renewal terms for the current and future programs.

Paul Seavey
Paul Seavey
Executive VP & CFO at Equity LifeStyle Properties

Then with regard to the conversation with the carriers, I think there was, you know, certainly discussion of the events that you mentioned. There were two storms at the end of twenty twenty four. '1 was a far more modest storm that did not result in a claim. So there was one storm that did result in a claim.

Marguerite Nader
Marguerite Nader
President and CEO at Equity LifeStyle Properties

And then I think the other thing, Paul, you mentioned in your comments that there's no change there was no change in the deductibles or the coverage, which I think is an important point, Michael, to note.

Michael Goldsmith
US REITs Analyst at UBS Securities LLC

And then just as a follow-up, can you talk on the guidance? You took down the MH guidance, the annual MH guidance by 40 basis points, RV down by 50 basis points, but then the total same store revenue was down by 20 basis points. So can you talk about some of the offsetting factors? I assume that relates to memberships and some other factors, but can you provide a little bit more color on that? Thanks.

Paul Seavey
Paul Seavey
Executive VP & CFO at Equity LifeStyle Properties

Yeah, I think that as we mentioned, we have the occupancy impact on the MH and then discussed a little bit about the impact on the RV. We do have some adjustments to our other line items in the quarter. Some of it is timing related associated with insurance proceeds that we might recognize and just some other changes.

Michael Goldsmith
US REITs Analyst at UBS Securities LLC

Thank you very much. Good luck in the second quarter.

Paul Seavey
Paul Seavey
Executive VP & CFO at Equity LifeStyle Properties

Thank you.

Marguerite Nader
Marguerite Nader
President and CEO at Equity LifeStyle Properties

Thanks, Michael.

Operator

Thank you. And our next question comes from the line of Wesley Golladay from Baird. Your question please. Hey, good morning everyone.

Wesley Golladay
Senior Research Analyst at Robert W. Baird & Co

Are you seeing more Canadians listing their homes for sale? And can you give us your overall MH exposure to Canada?

Patrick Waite
Patrick Waite
Executive VP & COO at Equity LifeStyle Properties

Yeah, don't know that I have our overall exposure to Canadians in the MH space, I would directionally say that it's similar to what Paul covered earlier with respect to the RV business. And we are not seeing any trends coming through with respect to Canadian demand on the MH portfolio or listings of the existing residents in our MH portfolio from Canadians. You know, I've been on-site through several times through the Sunbelt season, and I can tell you that the Canadians were there all seem very happy to be there, and we're sharing their their interest in coming back next year.

Wesley Golladay
Senior Research Analyst at Robert W. Baird & Co

Thank you.

Operator

Thank you. And our next question comes from the line of John Kim from BMO Capital Markets. Your question please.

John Kim
John Kim
Managing Director - US Real Estate at BMO Capital Markets

Thank you. How long do you think it will take to regain the occupied sites, the two sixty lost in the last two quarters due to the hurricane? Will it be this year event, or will it take a couple of years to fully renew those think

Marguerite Nader
Marguerite Nader
President and CEO at Equity LifeStyle Properties

that as we see as we begin to repopulate those sites with homes, I think you'd see that take place over the next couple of years as we build up the occupancy in Florida.

John Kim
John Kim
Managing Director - US Real Estate at BMO Capital Markets

And so why would it take more than, I guess, twelve months? Like, why why would it take a couple years?

Marguerite Nader
Marguerite Nader
President and CEO at Equity LifeStyle Properties

It would take into the into 2026, I guess. I I think the rest of this year and into 2026.

John Kim
John Kim
Managing Director - US Real Estate at BMO Capital Markets

Okay. Great. And then my second question is on the the casual RV user, like, the seasonal transient and Thousand Trails. Why do you think it's continued to be weak? I guess you had to pull forward in '21 and '22 and now you've had three straight years where it's been either weak or declining.

John Kim
John Kim
Managing Director - US Real Estate at BMO Capital Markets

Do you think that seasonal transient goes back to 2019 levels? And can you maybe comment on any change in demand among generations? I think during COVID you had widespread increase from baby boomers all the way to Gen Z. Have you noticed anything different as those customers have pulled back?

Marguerite Nader
Marguerite Nader
President and CEO at Equity LifeStyle Properties

Yeah, I think recently our seasonal revenue has seen some pressure on the growth due to seasonal workers and displaced residents, so we're seeing that. But we think the demand remains very strong, and we look at that from the length of stay. The length of stay for a particular customer has been the same over the last few years, but it's just some of workers just no longer have the work that they were doing, and that causes a bit of a decline in that demand. And we're seeing the most of that happen in Florida. But overall, I think the demand is very strong, as you can see on the annual side of our business.

Marguerite Nader
Marguerite Nader
President and CEO at Equity LifeStyle Properties

We continue to show strength in being able to convert an annual and seasonal into I'm sorry, seasonal and a transient into an annual customer.

John Kim
John Kim
Managing Director - US Real Estate at BMO Capital Markets

Okay, thank you.

Marguerite Nader
Marguerite Nader
President and CEO at Equity LifeStyle Properties

Thanks, John.

Operator

Thank you. And our next question comes from the line of John Plaske from Green Street. Your question, please.

John Pawlowski
Managing Director at Green Street Advisors, LLC

Hey, good morning. Thank you for the time. Patrick, I still don't understand the cadence of manufactured housing occupancy throughout the quarter. So you told us a few months ago, occupancy was at 94.8 as of the January, which implies you lost 80 basis points of occupancy between January and March and 176 sites only shakes out like 25 bps of occupancy. So the occupancy loss throughout the quarter seems to be more than just storm.

John Pawlowski
Managing Director at Green Street Advisors, LLC

So can you help me understand what's what the moving pieces here?

Marguerite Nader
Marguerite Nader
President and CEO at Equity LifeStyle Properties

Sure, John. I think maybe Paul would be able to walk through that a little bit based on the guidance and the numbers.

Paul Seavey
Paul Seavey
Executive VP & CFO at Equity LifeStyle Properties

Yeah, John. I do think there's a little bit of confusion. So at the end of the quarter, core occupancy was 94.4%. You can see on pages eight and nine of the earnings release that occupied sites were nearly the same for the quarter average as at quarter end. What happened during the time period when we lost those occupied sites related to the storm events that Patrick mentioned, we completed expansion sites and added those to our core site count, which impacted the occupancy percentage.

John Pawlowski
Managing Director at Green Street Advisors, LLC

Okay. That makes some sense. And then on the actually one more follow-up there. Paul, said there you expect a modest uptick in occupancy. What's your definition of modest?

John Pawlowski
Managing Director at Green Street Advisors, LLC

Are we talking 10 to 20 bps? Is that the right ballpark to think about?

Paul Seavey
Paul Seavey
Executive VP & CFO at Equity LifeStyle Properties

Like, 25 to 50 sites.

John Pawlowski
Managing Director at Green Street Advisors, LLC

Okay. And then final questions on the annual RV revenue growth. I believe it was a little over 4% in the quarter, which is below the low end of the downwardly revised range. So one, what's driving the slightly softer than expected start of the year and annual RV? And then two, what are you seeing on the ground that gives you confidence that annual RV revenue growth will reaccelerate over the balance of the year?

Paul Seavey
Paul Seavey
Executive VP & CFO at Equity LifeStyle Properties

John, we have a in the first quarter, we have a bit of a leap year comparison, just FYI, compared to the remainder of the year. So 2024 was a leap year, so we had an extra day. 2025, that comp is more challenging in Q1. So it's like, excuse me, about 100 ish, 110 basis points that we'll adjust for the remainder of the year, just as an FYI.

Marguerite Nader
Marguerite Nader
President and CEO at Equity LifeStyle Properties

And then as it relates to just the guidance for the rest of the year, that really has to do with one property, one marina that is in the process of being brought back online. And it's taking longer than anticipated. So that's the driver of that.

John Pawlowski
Managing Director at Green Street Advisors, LLC

Okay. Thanks for all the color.

Paul Seavey
Paul Seavey
Executive VP & CFO at Equity LifeStyle Properties

Thank you.

Marguerite Nader
Marguerite Nader
President and CEO at Equity LifeStyle Properties

Thank you, John.

Operator

Thank you. And our next question comes from the line of Peter Abramowitz from Jefferies. Your question please. You might be

Peter Abramowitz
Peter Abramowitz
Equity Research Senior Associate at Jefferies

Thanks. Yes. Sorry about that. Thank you for taking the questions. I was just curious, you had some pretty solid results on the OpEx side and disclosed what looks like a pretty favorable result on your insurance renewal.

Peter Abramowitz
Peter Abramowitz
Equity Research Senior Associate at Jefferies

Just curious, there's been a lot of speculation about increased inflation, potentially if there is kind of an extended issue with the trade war here. Anything that gives you pause, whether it be on payroll or anything else on the inflation side when it comes to operating expenses and maybe how you're thinking about that internally as you updated your guidance assumptions?

Paul Seavey
Paul Seavey
Executive VP & CFO at Equity LifeStyle Properties

Yeah. We're we've watched those very closely. Roughly two thirds of our expenses are comprised of utilities, payroll, and repairs and maintenance. And the expected year over year growth for the rest of the year is slightly higher than the most recent headline CPI print of 2.4. So, you know, as we looked at it, our pay increases take effect April 1 each year, and so considering where CPI is right now, anticipating that we're slightly ahead of that going forward, We note the possibility that that changes and that there could be an acceleration, but we don't see an indication of that at this time.

Peter Abramowitz
Peter Abramowitz
Equity Research Senior Associate at Jefferies

Okay, that's helpful. And kind of in a similar vein, I guess, on conversions or possibly site additions, whether it be RV or MH, any pause when it comes to potential just cost inflation, whether that could impact just kind of the pacing of conversions or site additions, or if you think that could impact yields on those?

Marguerite Nader
Marguerite Nader
President and CEO at Equity LifeStyle Properties

Yeah, I think we're on track from a development perspective, as we've indicated throughout the year. Our returns have gone down over the last couple years as a result of increased cost pressures, but we don't see any large change in that.

Peter Abramowitz
Peter Abramowitz
Equity Research Senior Associate at Jefferies

Got it. That's all for me. Thank you.

Marguerite Nader
Marguerite Nader
President and CEO at Equity LifeStyle Properties

Thank you.

Operator

Thank you. One moment for our next question. Our next question comes from the line of Thomas Atsakyana from Deutsche Bank. Your question please.

Omotayo Okusanya
Omotayo Okusanya
Managing Director at Deutsche Bank

Yes. Good morning, everyone. Morning, Could we just follow-up on Peter's question there around OpEx? On the recurring CapEx side, is there anything we should be thinking about as it relates to tariffs, not just kind of regular OpEx?

Paul Seavey
Paul Seavey
Executive VP & CFO at Equity LifeStyle Properties

On the recurring CapEx side, excuse me, our budget is approximately $90,000,000 for the year. We had about $85,000,000 in recurring CapEx last year, anticipate about $90,000,000 this year, and, you know, similar to what we're seeing on the OpEx side, we're watching that very closely and aren't yet seeing any signs of pressure. I think that as the team manages through that, certainly as it relates to labor and projects, we're already into April, so contracts are already being signed for that type of work. So, don't anticipate a significant increase and would expect to manage to that budget number for the year.

Omotayo Okusanya
Omotayo Okusanya
Managing Director at Deutsche Bank

Great. That's helpful. And then a question on the RV side. Again, on the Marina side, sorry. Seeing again your your peers exit from that business, could you just talk about kind of implications, you know, for for your own business, whether it whether it validates valuation or how you kinda think about it?

Omotayo Okusanya
Omotayo Okusanya
Managing Director at Deutsche Bank

And also just from a competitive perspective, how did you see their exit kind of changing anything in regards to the competitive landscape?

Marguerite Nader
Marguerite Nader
President and CEO at Equity LifeStyle Properties

Sure. I'll take the first half of it, or the last half of it first, which is the competitive landscape. These marinas, the marinas that are in place right now have been around for a long time, so from a local on the ground perspective, there's really no change. But relative to just what does it mean in general in the Marina portfolio, we bought the loggerhead portfolio in, I think it was 2017, and subsequently we've added a couple We ordered a portfolio a few years later to our Marina portfolio.

Marguerite Nader
Marguerite Nader
President and CEO at Equity LifeStyle Properties

And those properties have performed in line with expectations, and we've really been able to seamlessly integrate them into our MH and RV portfolio. The assets that we've chosen are primarily annual leases with limited ancillary revenue. They're in strong markets with high demand for our slips. It's always good to see price points in the marketplace that support and enforce our valuations. But the properties have been doing very well, the team has done a great job operating them for the last five or six years.

Omotayo Okusanya
Omotayo Okusanya
Managing Director at Deutsche Bank

Thank you.

Marguerite Nader
Marguerite Nader
President and CEO at Equity LifeStyle Properties

Thank you.

Operator

Thank you. And our next question is a follow-up from the line of Eric Wolf from Citi. Your question, please.

Nick Joseph
Nick Joseph
Analyst at Citigroup

Thanks. It's Nick Joseph here with Eric. Just want to follow-up on the Canadian RV seasonal exposure. My understanding is that a certain percentage, we've talked 30% to 40% in the past, but please let me know if not typically booked for the following year when they leave this year. So curious where that reservation pace stands right now versus where it was either this year or historically.

Paul Seavey
Paul Seavey
Executive VP & CFO at Equity LifeStyle Properties

Nick, we do have roughly that level, that reserve typically. We do see a lower number this year than we've seen in the past. It's about, you know, 20% lower than it's been, but I would say that it's early and there's a fair amount of time between now and January when those customers arrive. So we'll watch and see what happens, but we're happy to see the level of early reservations that we have to date.

Nick Joseph
Nick Joseph
Analyst at Citigroup

Sounds good. Thank you. And then just one other question just on interest expense guidance. I think the current run rate is around 124,000,000 but you're guiding to $132,000,000 So just trying to bridge that gap. It seems like there's only about $87,000,000 of debt maturing in 2025.

Paul Seavey
Paul Seavey
Executive VP & CFO at Equity LifeStyle Properties

Yeah, we have the 87,000,000 that's maturing. We do have an assumption in the budget for some investments, some working capital investment that we plan to make in the properties and that's really the driver of the difference between first quarter and the run rate for the year.

Nick Joseph
Nick Joseph
Analyst at Citigroup

Thanks. So that's not external growth, that's more investment in existing properties?

Paul Seavey
Paul Seavey
Executive VP & CFO at Equity LifeStyle Properties

Yes. Yes.

Nick Joseph
Nick Joseph
Analyst at Citigroup

Great. Thank you very much.

Paul Seavey
Paul Seavey
Executive VP & CFO at Equity LifeStyle Properties

Thank you.

Operator

Thank you.

Operator

Since we have no more questions on the line at this time, I would like to turn it back to Marguerite Nader for closing comments.

Marguerite Nader
Marguerite Nader
President and CEO at Equity LifeStyle Properties

Thanks for joining today. We look forward to updating you on our next call. Take care.

Operator

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

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Key Takeaways

  • Equity Lifestyle reported Q1 2025 core NOI growth of 3.8% and a 6.7% increase in normalized FFO per share, while reaffirming full-year FFO guidance of $3.06 per share.
  • The manufactured housing portfolio—60% of total revenue—remains highly stable at 94% occupancy, driven by 97% homeowner residents who stay an average of 10 years and help sustain consistent cash flow.
  • The RV segment saw a 4.1% increase in annual site revenue, with over 75% of core RV income from annual leases offering an affordable alternative to second homes, and transient stays (more than half booked within 30 days) feeding its pipeline.
  • Prudent balance sheet management underpins stability, with an average debt maturity beyond eight years, just 9% of debt maturing through 2027 (versus a 30% REIT average), a debt/EBITDAre ratio of 4.4× and 5.4× interest coverage.
  • Limited new supply and strong marketing drove ongoing demand: websites attracted 1.7 million unique visitors generating 72 000 online leads, while social media followership grew to over 2.2 million fans.
AI Generated. May Contain Errors.
Earnings Conference Call
Equity LifeStyle Properties Q1 2025
00:00 / 00:00

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