Stable Core Performance
CHICAGO--(Business Wire)--
Equity LifeStyle Properties, Inc. (NYSE: ELS) today announced
results for the quarter and six months ended June 30, 2008.
a) Financial Results
For the second quarter 2008, Funds From Operations ("FFO") were
$21.7 million, or $0.71 per share on a fully-diluted basis, compared
to $18.1 million, or $0.59 per share on a fully-diluted basis for the
same period in 2007. For the six months ended June 30, 2008, FFO was
$54.3 million, or $1.78 per share on a fully-diluted basis, compared
to $49.6 million, or $1.63 per share on a fully-diluted basis for the
same period in 2007.
Net income available to common stockholders totaled $4.1 million,
or $0.17 per share on a fully-diluted basis for the quarter ended June
30, 2008. This compares to net income available to common stockholders
of $1.6 million, or $0.07 per share on a fully-diluted basis for the
same period in 2007. Net income available to common stockholders
totaled $16.8 million, or $0.68 per share on a fully-diluted basis for
the six months ended June 30, 2008. This compares to net income
available to common stockholders of $17.8 million, or $0.73 per share
on a fully-diluted basis for the six months ended June 30, 2007.
See the attachment to this press release for reconciliation of FFO
and FFO per share to net income available to common shares and net
income per common share, respectively, the most directly comparable
GAAP measures.
b) Portfolio Performance
Second quarter 2008 property operating revenues were $94.3
million, compared to $90.3 million in the second quarter of 2007. Our
property operating revenues for the six months ended June 30, 2008
were $200.7 million, in comparison revenues were $190.9 million for
the six months ended June 30, 2007.
For the quarter ended June 30, 2008, our Core property operating
revenues increased approximately 3.7 percent and Core property
operating expenses increased approximately 5.2 percent, resulting in
an increase of approximately 2.3 percent to income from Core property
operations over the quarter ended June 30, 2007. For the six months
ended June 30, 2008, our Core property operating revenues increased
approximately 4.0 percent and Core property operating expenses
increased approximately 4.7 percent, resulting in an increase of
approximately 3.4 percent to income from Core property operations over
the six months ended June 30, 2007.
For the quarter ended June 30, 2008, the Company had 112 new home
sales (including 21 third-party dealer sales); a 2.6 percent decrease
as compared to the quarter ended June 30, 2007. Gross revenues from
home sales were $6.8 million for the quarter ended June 30, 2008,
compared to $9.2 million for the quarter ended June 30, 2007. Net loss
from home sales and other was ($1.7) million for the quarter ended
June 30, 2008, compared to a net loss from home sales and other of
($0.4) million for the same period last year. For the six months ended
June 30, 2008, the Company had 236 new home sales (including 45
third-party dealer sales), a 1.3 percent increase over the same period
in 2007. Gross revenues from home sales were $13.0 million for the six
months ended June 30, 2008, compared to $18.3 million for the same
period in 2007. Net loss from home sales and other was ($2.0) million
for the six months ended June 30, 2008 compared to a net income from
home sales and other of $0.4 million for the six months ended June 30,
2007.
c) Asset-related Transactions
During the quarter ended June 30, 2008, the Company sold its 25
percent interest in the four Morgan portfolio joint ventures known as
New Point in New Point, Virginia, Virginia Park in Old Orchard Beach,
Maine, Club Naples in Naples, Florida and Gwynn's Island in Gwynn,
Virginia. A gain on sale of approximately $1.6 million was recognized
and is included in Equity in income of unconsolidated joint ventures.
We currently have two all-age properties held for disposition,
which are in various stages of negotiations for sale. The Company
plans to reinvest the proceeds from the sales of these properties or
reduce its outstanding lines of credit.
On July 15, 2008, Tropical Palms, a 541-site property located in
Kissimmee, Florida, will be leased to a new operator for 12 years. The
lease provides for an initial fixed annual lease payment of $1.6
million, which escalates at the greater of CPI or three percent.
Percentage rent payments are provided for beginning in 2010, subject
to gross revenue floors. On July 14, 2008, the Company paid off the
Tropical Palms mortgage of approximately $12 million that had a stated
interest rate of LIBOR plus two percent per annum. For the year ended
December 31, 2007, Tropical Palms property operating revenues were
approximately $4.0 million and its property operating expenses were
approximately $2.5 million.
During the quarter ended June 30, 2008, we accrued approximately
$0.4 million of potential future estimated costs associated with the
testing and expected remediation of contamination in the soil at
certain locations within Appalachian, a 357-site resort property
located in Shartlesville, Pennsylvania. As previously announced, in
April 2008, we temporarily closed the property while we perform
further testing of the soil and determine the best course of action.
Both Tropical Palms and Appalachian are excluded from Core operating
results discussed above.
d) Privileged Access
Due to the Company's more favorable view regarding the
qualification of membership income for REIT gross income test
purposes, the Company has commenced negotiations for the acquisition
of the assets and operations of Privileged Access and its
subsidiaries. There can be no assurance of a potential transaction.
e) Balance Sheet
Our average long-term secured debt balance was approximately $1.6
billion in the quarter, with a weighted average interest rate,
including amortization, of approximately 6.1 percent per annum. Our
unsecured debt balance currently consists of approximately $81.5
million outstanding on our lines of credit, which have a current
availability of approximately $288.5 million. Interest coverage was
approximately 2.1 times in the quarter ended June 30, 2008.
The Company has approximately $190 million of secured mortgage
debt that will mature in the last six months of 2008. We locked rate
on approximately $114 million of financing with Fannie Mae on seven
manufactured home properties and expect to close on this $114 million
financing at 5.91 percent per annum when some of our existing loans
mature in August 2008. We expect to use the proceeds from the
anticipated financing to pay down amounts outstanding on our lines of
credit and to pay off maturing mortgage debt. However, there can be no
assurance as to the amounts, timing and terms of our anticipated
financing.
On May 1, 2008, the Company paid off a maturing mortgage of
approximately $3.4 million on Mesa Verde in Yuma, Arizona that had a
stated interest rate of 4.94 percent per annum. On July 1, 2008, the
Company paid off a maturing mortgage of approximately $7.3 million on
Down Yonder, in Largo, Florida that had a stated interest rate of 7.19
percent per annum.
f) Guidance
ELS management continues to project 2008 FFO per share, on a
fully-diluted basis, to be in the range of $3.15 to $3.30 for the year
ended December 31, 2008. The Company expects Core property operating
revenue for 2008 to grow at approximately 3.5 to 4.0 percent over
2007, assuming stable occupancy. In 2008, the Company expects income
from Core property operations to grow from approximately 2.5 to 3.0
percent over 2007. The Company expects non-Core properties will
contribute approximately $2.0 million to income from property
operations in 2008. Our 2008 guidance assumes our sales operation
performance for the second half of 2008 will be similar to the results
for the six months ended June 30, 2008.
In 2008, other income and expenses are expected to be
approximately $10.5 million. For the second half of 2008, the
Company's projected interest expense assumes an average outstanding
mortgage loan balance of approximately $1.56 billion at an overall
interest rate (including amortization) of 6.1 percent per annum. In
addition, it is anticipated that the Company's average balance on its
lines of credit will be approximately $85 million at an overall
interest rate of approximately 4.5 percent per annum.
The Company's guidance range acknowledges the existence of
volatile economic conditions, which may impact our current guidance
assumptions. The guidance range does not include any assumptions
regarding a potential future transaction with Privileged Access.
Factors impacting 2008 guidance include i) the mix of site usage
within the portfolio; ii) yield management on our short-term resort
sites; iii) scheduled or implemented rate increases; and iv) occupancy
changes. Results for 2008 also may be impacted by, among other things
i) continued competitive housing options and new home sales
initiatives impacting occupancy levels at certain properties; ii)
variability in income from home sales operations, including
anticipated expansion projects; iii) potential effects of
uncontrollable factors such as environmental remediation costs and
hurricanes; iv) potential acquisitions, investments and dispositions;
v) refinancing of mortgage debt maturing during the remainder of 2008;
vi) changes in interest rates; and vii) continued initiatives
regarding rent control legislation in California and related legal
fees. Quarter-to-quarter results during the year are impacted by the
seasonality at certain of the properties.
Equity LifeStyle Properties, Inc. owns or has an interest in 309
quality properties in 28 states and British Columbia consisting of
112,002 sites. The Company is a self-administered, self-managed, real
estate investment trust (REIT) with headquarters in Chicago.
A live webcast of Equity LifeStyle Properties, Inc.'s conference
call discussing these results will be available via the Company's
website in the Investor Info section at www.equitylifestyle.com at
10:00 a.m. Central time on July 15, 2008.
This news release includes certain "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of
1995. When used, words such as "anticipate," "expect," "believe,"
"project," "intend," "may be" and "will be" and similar words or
phrases, or the negative thereof, unless the context requires
otherwise, are intended to identify forward-looking statements. These
forward-looking statements are subject to numerous assumptions, risks
and uncertainties, including, but not limited to:
-- 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 markets
volatility;
-- in the all-age properties, 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;
-- our ability to maintain rental rates and occupancy with
respect to properties currently owned or pending acquisitions;
-- our assumptions about rental and home sales markets;
-- the completion of pending acquisitions and timing with respect
thereto;
-- ability to obtain financing or refinance existing debt;
-- the effect of interest rates;
-- whether we will consolidate Privileged Access and the effects
on our financials if we do so; and
-- other risks indicated from time to time in our 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.
Tables follow:
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Equity LifeStyle Properties, Inc.
Selected Financial Data
(Unaudited)
(Amounts in thousands except for per share data)
Quarters Ended Six Months Ended
June 30, June 30, June 30, June 30,
2008 2007 2008 2007
--------- --------- --------- ---------
Property Operations:
Community base rental income $ 61,430 $ 59,025 $122,464 $117,824
Resort base rental income 23,033 22,058 57,630 53,779
Utility and other income 9,859 9,178 20,650 19,278
--------- --------- --------- ---------
Property operating
revenues 94,322 90,261 200,744 190,881
Property operating and
maintenance 33,930 31,240 67,699 62,429
Real estate taxes 7,478 7,251 14,918 14,609
Property management 5,243 4,706 10,537 9,364
--------- --------- --------- ---------
Property operating
expenses 46,651 43,197 93,154 86,402
--------- --------- --------- ---------
Income from property
operations 47,671 47,064 107,590 104,479
Home Sales Operations:
Gross revenues from
inventory home sales 6,799 9,177 12,994 18,284
Cost of inventory home sales (6,859) (8,130) (13,609) (16,247)
--------- --------- --------- ---------
Gross (loss) profit from
inventory home sales (60) 1,047 (615) 2,037
Brokered resale revenues,
net 301 450 668 943
Home selling expenses (1,635) (1,749) (3,148) (4,000)
Ancillary services revenues,
net (327) (116) 1,121 1,424
--------- --------- --------- ---------
(Loss) income from home
sales and other (1,721) (368) (1,974) 404
Other Income and Expenses:
Interest income 294 425 681 962
Income from other
investments, net 6,705 5,118 13,615 10,084
Equity in income of
unconsolidated joint
ventures 2,810 359 4,286 2,044
General and administrative (4,834) (3,680) (10,233) (7,351)
Rent control initiatives (518) (999) (1,865) (1,435)
--------- --------- --------- ---------
Operating income (EBITDA) 50,407 47,919 112,100 109,187
Interest and related
amortization (24,690) (25,685) (49,674) (51,478)
Income from discontinued
operations 88 18 145 138
Depreciation on corporate
assets (84) (111) (182) (221)
Income allocated to
Preferred OP Units (4,040) (4,039) (8,072) (8,070)
--------- --------- --------- ---------
Funds from operations
(FFO) $ 21,681 $ 18,102 $ 54,317 $ 49,556
Depreciation on real estate
and other costs (16,258) (15,707) (32,532) (31,331)
Depreciation on
unconsolidated joint
ventures (311) (368) (903) (734)
(Loss)/gain on sale of
properties (39) --- (80) 4,586
Income allocated to Common
OP Units (964) (393) (3,968) (4,283)
--------- --------- --------- ---------
Net Income available to
Common Shares $ 4,109 $ 1,634 $ 16,834 $ 17,794
========= ========= ========= =========
Net income per Common Share -
Basic $ 0.17 $ 0.07 $ 0.69 $ 0.74
Net income per Common Share -
Fully Diluted $ 0.17 $ 0.07 $ 0.68 $ 0.73
--------- --------- --------- ---------
FFO per Common Share - Basic $ 0.72 $ 0.60 $ 1.81 $ 1.66
FFO per Common Share - Fully
Diluted $ 0.71 $ 0.59 $ 1.78 $ 1.63
--------- --------- --------- ---------
Average Common Shares - Basic 24,370 24,133 24,285 24,023
Average Common Shares and OP
Units - Basic 30,147 29,971 30,087 29,927
Average Common Shares and OP
Units - Fully Diluted 30,540 30,431 30,478 30,403
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Equity LifeStyle Properties, Inc.
(Unaudited)
As Of As Of
June 30, December 31,
Total Common Shares and OP Units Outstanding: 2008 2007
----------- ------------
Total Common Shares Outstanding 24,625,812 24,348,517
Total Common OP Units Outstanding 5,765,176 5,836,043
Selected Balance Sheet Data: June 30, December 31,
2008 2007
(amounts in (amounts in
000s) 000s)
----------- ------------
Total real estate, net (1) $ 1,916,200 $ 1,901,904
Cash and cash equivalents $ 11,185 $ 5,785
Total assets $ 2,029,805 $ 2,032,976
Mortgage notes payable $ 1,561,799 $ 1,556,392
Unsecured debt $ 61,500 $ 103,000
Total liabilities $ 1,726,716 $ 1,744,259
Minority interest $ 220,204 $ 217,776
Total stockholders' equity $ 82,885 $ 70,941
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Manufactured Home Site Figures and Quarters Ended Six Months Ended
Occupancy Averages: (2) June 30, June 30, June 30, June 30,
2008 2007 2008 2007
-------- -------- -------- --------
Total Sites 44,159 44,156 44,159 44,154
Occupied Sites 39,942 39,897 39,957 39,931
Occupancy % 90.5% 90.3% 90.5% 90.4%
Monthly Base Rent Per Site $ 513 $ 493 $ 511 $ 492
Core (3) Monthly Base Rent Per
Site $ 513 $ 499 $ 511 $ 498
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Quarters Ended Six Months Ended
June 30, June 30, June 30, June 30,
Home Sales: (2) 2008 2007 2008 2007
-------- -------- -------- --------
New Home Sales Volume (4) 112 115 236 233
New Home Sales Gross Revenues $5,941 $8,527 $11,741 $17,026
Used Home Sales Volume (5) 107 81 168 155
Used Home Sales Gross Revenues $ 858 $ 650 $ 1,253 $ 1,258
Brokered Home Resale Volume 217 268 457 567
Brokered Home Resale Revenues, net $ 301 $ 450 $ 668 $ 943
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(1) During the quarter ended June 30, 2008, the Company reclassified
approximately $31.1 million of new and used manufactured home
inventory to depreciable real estate. The inventory reclassed is
primarily rented to customers on an annual basis.
(2) Results of continuing operations, excludes discontinued operations
(3) Core properties are those properties owned and operated for the
same period in both years. However, the Core excludes Appalachian, a
property that is temporarily closed to customers and Tropical Palms,
a property that will no longer be operated by the Company beginning
July 15, 2008.
(4) Quarter and six months ended June 30, 2008 includes 21 and 45
third-party dealer sales, respectively. Quarter and six months ended
June 30, 2007 include 13 and 23 third-party dealer sales,
respectively.
(5) Quarter and six months ended June 30, 2008 includes one and one
third-party dealer sales, respectively. Quarter and six months ended
June 30, 2007 includes three and five third-party dealer sales,
respectively.
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Equity LifeStyle Properties, Inc.
(Unaudited)
Summary of Total Sites as of June 30, 2008:
Sites
-------
Community sites (1) 44,800
Resort sites:
Annuals 20,100
Seasonal 8,800
Transient 8,800
Membership (2) 24,300
Joint Ventures (3) 5,200
-------
112,000
=======
(1) Includes 655 sites from discontinued operations.
(2) All sites are currently leased to Privileged Access.
(3) Joint Venture income is included in Equity in income from
unconsolidated joint ventures.
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Funds available for distribution
(FAD): Quarters Ended Six Months Ended
(amounts in 000s, except for per
share data) June 30, June 30, June 30, June 30,
2008 2007 2008 2007
-------- -------- -------- --------
Funds from operations $21,681 $18,102 $54,317 $49,556
Non-revenue producing improvements
to real estate (3,201) (3,769) (5,288) (6,383)
-------- -------- -------- --------
Funds available for distribution $18,480 $14,333 $49,029 $43,173
======== ======== ======== ========
FAD per Common Share - Basic $ 0.61 $ 0.48 $ 1.63 $ 1.44
FAD per Common Share - Fully
Diluted $ 0.61 $ 0.47 $ 1.61 $ 1.42
-------- -------- -------- --------
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Earnings and FFO per Common Share Guidance
on a fully-diluted basis (unaudited): Full Year 2008
Low High
----- ------
Projected net income 0.81 0.94
Projected depreciation 2.14 2.14
Projected income allocated to common OP units 0.20 0.22
----- ------
Projected FFO available to common shareholders $3.15 $3.30
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Funds from Operations ("FFO") is 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
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.
FFO is defined as net income, computed in accordance with GAAP,
excluding gains or 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 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 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. Investors should review FFO, along with GAAP
net income and cash flow from operating activities, investing
activities and financing activities, when evaluating an equity REIT's
operating performance. The Company computes FFO in accordance with
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 we do. Funds available for distribution
("FAD") is a non-GAAP financial measure. FAD is defined as FFO less
non-revenue producing capital expenditures. Investors should review
FFO and FAD, along with GAAP net income and cash flow from operating
activities, investing activities and financing activities, when
evaluating an equity REIT's operating performance. FFO and FAD do not
represent cash generated from operating activities in accordance with
GAAP, nor do they represent cash available to pay distributions and
should not be considered as an alternative to net income, determined
in accordance with GAAP, as an indication of our financial
performance, or to cash flow from operating activities, determined in
accordance with GAAP, as a measure of our liquidity, nor is it
indicative of funds available to fund our cash needs, including our
ability to make cash distributions.
Equity LifeStyle Properties, Inc.
Michael Berman
(312) 279-1496
Copyright Business Wire 2008
