Equity LifeStyle Properties (ELS) 20 Apr 212021 Q1 Earnings call transcript

Good day, everyone, and thank you all for joining us to discuss Equity LifeStyle Properties First Quarter 2021 Results.

Our featured speakers today are Marguerite Nader, our President and CEO; Paul Seavey, our Executive Vice President and CFO; and Patrick Waite, our Executive Vice President and COO. In advance of today's call management released earnings. Today's call will consist of opening remarks and a question-and-answer session with management relating to the company's earnings release.

As a reminder, this call is being recorded. this of may the during in forward-looking discussed meanings the Federal matters conference contain call statements Certain Securities laws.

are assumes update statements uncertainty. of subsequent that forward-looking subject economic because certain Our risks become The untrue company supplement no or to events. obligation any statements to and

our non-GAAP are the G. time, release, addition, these Reconciliations filings. earnings President In certain non-GAAP today's included comparable defined and and as financial SEC CEO. over to our we call, Marguerite measures during to to GAAP I turn of measures financial by in discuss measures information Nader, historical supplemental will financial SEC like our call would Regulation the our this At

report Good quarter the morning and you joining thank to results of the first for XXXX. us pleased for I'm today.

increased the for demand our shows performance Our properties.

continued of We share with and an FFO FFO the growth operations quarter. growth, core per in normalized in record X.X% strong our

to New customer results both and quarter. our in RV growth business in the the positive contributed MH

Our quarter in quality the of increased leads XX% new our websites to the occupancy ended at We by high grew from MH communities. core XX.X%. home Home occupancy portfolio by of sale contributed successful the with XX% in increase in in transient Within our RV in quarter a XX% some the the with platform, we business quarter. of revenue. the for quarter. loss with business offsetting were seasonal transient growth significant We ended sales

saw XXXX. demand over quarter. the strength upgrades quarter X,XXX an we was first the showed Our members Trails Trails the increase Pass Thousand for this Over an the Pass subscription-based increased In system. in XX% Camping Thousand of quarter, which Camp new of purchased

footprint. indicates customers. guests. this million the the customer members, and at the to and respondents XXX,XXX and approaching XXXX, get our our the from launch, Trails RV to a because safe were our of RV choice by with camping they family to our showed view access to The have expanded it guests last for adventures the chose a increased feedback and year. of an for checking this interaction. we that access season not to and reservation more intention our looking Summer safety responding their now completed able to have option travel of results members survey more an looking of Since with online were for The like In pace of by We sales. XX% encouraged responding survey completed customers we increase this to felt to our property. new XX% survey who Thousand year. safely launched we received to respondents plan process, XXX,XXX their help indicated a are the portfolio We're in saw show with camping members Our $X to XX% support to our survey that We year. again recently camp outdoors forward indicated year plan are they The time were results spending over that with direct and camp and camp friends. plane less do check also travel online our plan The to in new those those them quickly that a and support guests allowing and site

reduce interactions. in-person launching our program an teams to onsite the In with of number a addition, way communicate message guests their we provided text our to by during added visit

survey X. the first the guests properties. quarter Based levels Our results, on at questions reported by to out based satisfaction provided customer teams experience X.X responded guests rating of on our of with high our a experience

and environments the the guests our same. protect to where to play, we encourage work, continue do and live, and residents, We enhance and members

with Sustainability conservation updates provide will Report partnerships our on organizations. Annual Our focused

organizations conservation, leading with We supporting and have conservation. reforestation movement, the on water through ocean increased efforts partnerships focused our

Our Snowbird guests. residents safety and the and job of our team ensuring members wellbeing a did wonderful

instrumental in X,XXX has vaccination approximately team events at vaccinations response COVID arranging Our our XX been supplied properties individuals. that for

their will service will to summer focus walk explore Our turn numbers season towards now excellent attention Paul as members, to customer and detail. our this delivering properties summer. turn on the our guests, the over and in properties it through I'll operating now team they residents, to

and also good and the operator full-year our Thank provide I'll balance guidance discuss call Q&A. walk first sheet second the results you, XXXX. Marguerite, our everyone. opens quarter morning for through of I'll an our overview before and quarter for

to membership $X.XX upgrades outperformance guidance normalized share. in savings. and FFO the than per resulted quarter, expected reported quarter better expense For the The from we first performance transient

Marinas Annuals In and of guidance Southern combined RV addition, our from our was Core growth growth represents includes and MH and RV from Annuals the rental XX related Core gains. basis income line portfolio the from net rent assume of X.X% X.X% to points in RV contribution XX% the X.X% with approximately rental it X.X% Marina and acquisition. from Marina for rental income occupancy did rate increased not quarter. with rate. income expectations Annual

the demand and we Core the combined with million first The revenues increased increased approximately XX% million. COVID customer and result compared two-thirds travel quarter as closed in increased decline actual represents RV main climates. customers declining expectations. our February the in driving cold for from decline rental given favorable availability, portfolio, in Core $XX Transient guidance transient as income approximately and outperformed and January, Marina pattern seasonal to were estimated stays represented of The Marina total combined Within our XXXX. transient counts confidence $X outperformance. was revenues well weather case Marina a income. vaccine Included seasonal Annuals approximately Marina warmer of rental that this customer factors in from rent from assumptions,

increased first increased The approximately Upgrade our of compared XXX subscriptions First main The XXXX. upgrade well volume by contributor upgrades outperformed year. membership compared as outperformance demand sales to sold sales from contribution to XX% net strong last upgrade our quarter price was as for to units the expectations. products. quarter

quarter. XX% In for our more volume upgrades, the strong addition to Pass demand sales Camping during increased than

million tax the property increased average X.X%. estate and XXXX, core more core categories was income quarter, expenses the X.X% which and and expectations. real Utility these XXXX, increase the core of the across quarter Overall, flat estate million. quarter revenues G&A $X.X acquired is first to acquisition prior-year. maintenance quarter portfolio, lower in quarter million, Property than and payroll, sale higher first assets In travel Property than non-core mainly was slightly properties expenses $XX.X million from first expenses were first home prior-year. before compared approximately represent in corporate and taxes than combined A operating operating were key XX% expenses income and and in comparison First maintenance in and year-over-year repairs $X.X our management real and the management includes quarter XXXX, expense, summary, higher from amortization ancillary during operating X.X% increased $XX.X contributor property income. profits property core XXXX. NOI increased X.X%. the performed XXXX. to was Other line related and with Interest to

include XXXX. release earnings in overview full-year quarters resulting offset by press we to interest guidance. results activity, our The XXXX the accretive quarter closed expense provides of used first second XXXX the of an refinancings debt acquisition from and quarter The the first fund third and

keep current are the A financial to our the I for significant some rates information. represent information in our of provided, in growth transient provide provide level midpoints All future and the Factors our of mind my remarks and are press factor intended and range, expense we've remainder in included As in qualified guidance our our communities. supplemental release Risk estimate revenue the guidance projections XXXX context results. RV and by for is assumptions stays demand for of in

have reservation trends. based customer on our guidance We developed current

the While over on suggest impact to a that we're direction favorable manage if past guidance, the with our conditions will continue no no will intend results that be shown has actual macro change. heading assume obligation provide indicators circumstances monitor to to accordingly. daily closely can year situation We our our assurance We guidance COVID relative consistent update experience business life, we the change. to and our and of in

midpoint $X.XX an to X.X% X.X% share Core at projected to $X.XX represents is NOI X.X%. normalized The estimated XXXX. from the XXXX guidance midpoint of result NOI quarter of to increase the core our growth of to range FFO rate midpoint increase our range full-year of Normalized first our outperformance. X.X% the is compared at at rate per Our is the growth mainly FFO our of $X.XX. per share guidance prior

consistent Our through second expectation fourth our with for quarters the is budget.

reminder, As core a changes annually. portfolio our

information. of on You'll definition earnings XX find of the core our release and supplemental Page

quarter first including during readouts our We've includes quarter the the facility, I'll second acquisition the additional in Our highlighting discuss impact the the with for the activity closed assumptions. included the of impact guidance second credit the activity of no disclosed, we've which quarter unsecured for we've our after financing acquisitions full-year some also year. guidance of of assumptions and

our quarter share of approximately $XXX.X of We expect midpoint a FFO range range at $X.XX. with of the to per second million normalized $X.XX

the remain for was related consistent shelter-in-place growth and the and of our by growth quarter of RV and second guidance. XX% business quarter annual We our mind rate core the We COVID X.X% X.X%. RV orders. expect MH range assumptions transient travel to quarter restrictions full-year to significantly second NOI in to normalized full-year XXXX Keep prior FFO. rate with contribute project impacted second XX%

our demand third XXXX the RV anticipate and factors As built continued strong reservation to mentioned, We've across using compared platform. for both quarters revenue pace Marguerite second current RV we assumptions including and transient our XXXX.

XXXX. a This revenue core the for $X.X to second to guidance Our compared transient compared approximately million XXXX. approximately rate of growth increase a RV XX% quarter of represents assumes

I'll the and opening refinancing current some debt highlight Before conditions, on provide for our up balance call sheet. our activity, market question, secured year-to-date comments discuss

lenders. used repay The revolver amended have $XXX we and term matures closed executed term and million the matures early loan a loan will maturities. years qualified disclosed we on rate five loan. with interest fixed a years in debt $XXX secured During X% for swap to secured of were X.X%. The April, maturities. term rates that available in unsecured assets previously certain RV the well command we occupancy million as life options. proceeds fixed High six of acquisition continue as funded RV In to The with access the in to XX% assets competitively companies companies closed fully loan three from MH locks we interest and from an term terms XX% to best revolver annual month Current a facility two CMBS years. an for longer February. four a for and of including have quarter, assets with high to percentage extension range age XX-year X.X% terms. $XXX originated rate Life loans we've financing MH X.X% financing in quality, from a on quote million credit rate LTV, XX-year

on continue to multiple sheet capital place and sources we importance We balance we available high flexibility, have to us. of believe

average Our weighted times debt outstanding coverage is debt-to-EBITDAre X.X years. maturity interest and almost The of X.X XX our is times. our is secured

Now up open we like to it questions. would for

you. Thank Instructions]. [Operator

Our comes Capital Kim from BMO with John first Markets. question

Your line is now open.

on guidance. Thank your you. Couple of questions

quarter, that million projecting have at second clarity the in was you wondering reservation on pace, confident talked levels. increase But were XXXX in projections. first above quarter in RV, So see put transient projections? your moment. numbers how the $X.X which you've just quarter second an to wanted much your the I initial this it you're came about in know But above how well I you but

Yes.

indicator at as over we pace. million second the And reservation pace it time, look about guidance, quarter that normalized we've XXXX our look as XXXX. We've $X.X recognize can that a because is that's we the quite activity John, at XX% in our think XXXX. taken environment frankly change. think over challenging, at an XXXX, But look a to about of I definitely taken a increase over

estimate current this view the time. our change. at into anticipate that our it's given we've and quarter But best second So that may

as the you And are Trails. in expecting as growth Thousand far what the

membership with of remainder year? the pace quarter the and Do You for continuing see had that second quarter strong this you upgrades? demand in the

line I more uptick we And a tends quarter. over the new think look that to new our years, of when increase product. XX and that last you introduce then product if see in a this with tends in XX And rate you periods that upgrade revenue to after introduced days at to we history is historical fall biggest run launch it performance. product in line really XX a the our

the keep RV to the you the customer? or Marguerite, can goal you a that And seasonal is us, level goal remind to convert upgrade them to membership, once at is them

Sure.

bit it plans designed really to a Thousand offer We fewer So the on time, a used the that just an number period to or in who a of upgraded over -- Trails options extended upgrade, for options. really RV want the own of offers multiple or just travel of to go membership. number really a little who of It's to those camp locations single and restrictions. destination with flexibility history an

for So go and windows, advanced they're of resort the stays, to longer to booking looking resort. ability kind

board. so, I And of new they are some upgrade some to see that, upgrade continue continue as them of on as Annuals to to and becoming some of members come just we think wanting multiple those them and products upgraders, the

appetite is of the your total more, to my Okay. question to expectations final acquisition. more is is what and it's And also about X% on what acquire basically, And opportunities? Marina your sites, are now right your do the then what

Sure.

we be look we XX% the a lines to what of included about over think purchase with post-acquisition about million. acquisition on deal last revenue nicely in at what we've about the that would basis case continuing and like we'll strategy. from X% well And was grow And at, Marina The So our end space, at and the portfolio last to flips, I That our did XX% existing the space. it it the portfolio the into been we a year, see the look Marinas. of the of did with and up X,XXX is fit derived space, our we that annual deal over in a look fee that as where look and Marina since is -- call, MH -- Marina about very we last really our time sources. RV the simple I so -- looking presentation talk of we $XXX we at portfolio

cap the was portfolio? what And rate this on

was This cap. X.X deal a

Okay. Thank you.

John. Thanks,

Thank you.

Our Nick question from comes next with Joseph Citi.

line is open. now Your

and it pipeline and different like today, transaction compare then, The how acquisition verticals? three looks pipeline across the does

Sure.

immediate in So with it's flow deal we've the in really seen what past. line is the

billion I closed a on long-term dollars years, the that five think focused we've transactions last creating about over value. of really and

That closing I to this, Nick past, we'll our be on and we others think pandemic, and in fit talked assets the in become assessing these strategic that asset first transactions. continue quarter, I think it acquisition have only good deals But, as the from the heightens our marketed. during the owners the to and assets. very desire strong relationships -- our sought just of the a the does industry well and are as benefit job continues said, the team ELS. we've most after underwriting by being about for really the to of in class in performance And

continue to -- is there and think we we'll deals. close there I opportunities So update there are out as

across you three? different all towards the are it verticals? opportunities seeing weighted any Or Is of

seeing We're opportunities three. across all

long-term does just from level then you at perspective? enhancements, margins it property mentioned the impact a how does that all? technology And expenses And change Thanks.

anticipate I think shift long-term and some over those potential there in for will Nick, is reduction what we that the expenses. be

I to we initiatives near-term, self-serve transition back would contactless options the dedicated that. normalize about the the customers, we're As there's that up we But but I the that efforts. like those definitely resources frees through, over would the talk in to think a long-term, otherwise working for that be check-in, see operations think

you. Thank

Nick. Thanks

Thank you.

from question Carl next with Our Keegan Berenberg. comes

Your now line is open.

the maybe have we a Keegan, question? move And could Hello, we with to next circle one. do Keegan. could then you Operator, back Keegan.

Absolutely.

Golladay with Wes from comes Baird. question next Our

now Your open. line is

it to the XX%. that upgrade Marguerite? the mentioned, product, increased wanted good everyone. just Was introduction said of to Hi, like product new you price due go the back I sounds to morning, the you

Yes, it was.

a new upgraded there product the product. Adventure. additional price were in to The And the we So result. upgrade able we as it. benefits a is product And increase called some were

deal, guess, you mentioned still about I think remaining deals fourth close the and tend to then, comment Got the I that call, a you you. the pipeline quarter? first weighted was towards would surprised kind quarter little quarter that for the same And I hold last the in on bit that fourth of

that's mean think opportunity we an I addressed to it we the how I deal first was did what what that seen there -- we did that quarter. call the the that historically I I transaction in think have And, two Yes, last deal is deals close -- some in the close time. in

it's you but time, at -- year. there think up. XXX it's were years, I a roughly over the I Like said, over to of can it So we million lumpy course see lumpy the five ends XXX,XXX as quarters,

then seeing And one more a the any inflationary probably it. home on you sale? maybe business are last the in and Got one, specifically pressure

sure is Yes, Patrick. this

year-over-year, and sales some take continue across Let strength home With X% X% seeing prices lumber speak prices increasing U.S. the and and the sale base pressures, to that's pricing lumber, up times to homes. prices steel more X.X and in residential first, chain locations points up shortages But issues about just another differences The in to home of your to of pieces. priced We mix contribute fluctuations, for increase know I'll was price that's we issues. is in starting of some sales And major to that's in a cost. times our our new winter supply and that year-over-year, storm Commerce Florida portfolio. And and demand, other in crude really me then saw X.X copper. new the PVC higher quarter PVC year-over-year, Texas to recently, where the processing. Construction an and just materialize. is we're But disrupted yield quarter-over-quarter saw Index primary pipe that increases will we some times across petroleum XX% supply of steel, one, X.X is space. that prices That's respect for oil home to home based consistently Chamber broadly, due sale in were see to than couple on we're One broad XX%. up our

delivery. new seeing going some on So prices. on of there's through price as be for increases we're come home We're sale new the cost as our also price homes potentially timing impacts But sales. for to demand good seeing well home

taking the very demand The is is locations but to very demand the high. but it is the high, homes get longer us to

all Thank me. for That's Great. you.

you. Thank

Thank next Berenberg. our you. with Keegan from And question comes Carl

Your line open. is now

now? Everyone hear me

you We got now, Keegan. Hello.

about Sorry that.

No problem.

So our with And passes? of how just and do I the have you guess RV sales the ownership online rates into RV annual what metrics specifically explosion from conversion guys anticipate your trended? the memberships

Yes.

increase a on the time. sales we've So Pass over seen significant Camping

last So Camp year, from comes that Pass a from increase, I to compared increases of the they our, from vast the sales the channels. majority of XX% online the majority vast X,XXX and for the went quarter, think X,XXX

ago, So Camp our very a we are went now seamless online. portion of from face-to-face to all many a Pass it's significant process. we where were sales And done sales years

model. subscription-based a it's Something

the people people that become familiar that very through And push continue push we'll and are seen So other over opportunities want with we've online to channel. that to concept to continue through time.

a of a the XX. But picking that report are cohort new you age of To know space trending ownership? putting to your showing XX your follow-up average resident that, in RV the XX resident March a in actually the up the presentation, RVIA out I average was on in is said is age you seeing down? age

One side seeing transient corresponding to in seeing demand across portfolio. we've than over comments. QX as that out space age I QX additional is familiar coming parts booked much on in There's results pointed reservations we're their and that being we're and the the thing study. with Patrick. in see this have seen time customers also it's what Paul Yes, Marguerite may lower in the And contributed we earlier new past. in significant I'm months different the of anticipate would the into

with time a there's safe manner, that users and family for exposure a and people get with friends desire RV the with So space. time COVID out it in and time to first real first spend distanced people to bringing is socially

may coming we into come new see space So, in anticipate quarters. to the customers some younger,

average seen our it's that We a come expectation. age this haven't through But reasonable point. at

a take average lot it change. to for And would the age

for time take it'll our to So that within change forecast.

X, down you range how a one times you've times at highest one me, an bit. to you leverage, performed quite just come this final five during back for actually with now pandemic? obviously, some higher guys this been And comfortable is do more leverage going is then, X.X or the expectation, Is given in there to

level strength think comfortable level that sheets. when the have done leverage, I balance we've target to And perfectly long aiming our leverage about I it's think we're [ph] of meet. of a we're think a of -- higher I we -- don't talked with higher

Right, Thanks, that's it me. everyone. for

Thanks Keegan.

you, Thank Keegan.

you. Thank

Our Bank next question comes with America. of from Joshua Dennerlein

Your is open. now line

Hey, Marguerite, hey Paul. How are you?

Good mining, Josh.

we're Yes, well. doing

an Thousand had product had Or because opportunity this the the was unique of that a that side? saw On something kind offer planned new was to for you you Trails been COVID something that on or planning of update, while? in

Yes.

a customer product our the base, we was -- weakness do continued every But we on really, the and we stream, with So current the just our last new seeing there revenue of travel was as built focused the seasonal were from few issues access. demand demand and we base, we -- couldn't restrictions Canadian there, we continued they had customer fall in years. saw program rollout course,

issues able So what the booking saw we more we on we were seeing rollout border ways I to windows, program in of limited that, saw that front people front. and seasonal just as have with some and to advanced mentioned saw Canadian people, access just we weaker to anticipation properties, so

and build And you you see additional in them? expect of then strengthen kind right. XQ the upgrades to do then All Okay. in

-- historical then with as uptick goes that I run I that as more Yes, to rate. tends line goes soon there's see is, first I it new think an mean the our you and mentioned I in out fall the think what product in

seem okay. the some for you're into that weakness, to transient they days on does has of the trend better offsetting in revenues, continued the how like the the And much quarter XQ? early come side, that and Okay, of than across XQ seasonal of then trend expected expecting kind in

March mean, the you the the I weather of really that in as of north, then really properties was February, in highlight we quarter, saw demand activity got was what and more saw just into up at towards strong the March, April. end bad quarter when and our the we saw really it is continuing

more awesome. Was down? Okay, maybe COVID it weather coming driven cases or

think was that little it had property saw of you availability of it bit the weather But it we that so saw coincide bit they've certainly the little happened our -- I you Yes, vaccine really strong that time. as demand in And and was And a strong and the helps. was then a that of difficult. then demand both. to Keys at

Appreciate awesome. color. Okay, the

Josh. Thanks,

Thank you.

with comes Pawlowski question John Street. Green next Our from

open. now is line Your

pricing, back terms on stock? just pricing irrational for transaction and time. question you'd private point start assets Maybe looking types and a is in market buy in follow-up MH getting to Thanks at of to maybe different sell where product, RV a market. the of the you're When where borderline pricing,

there the we make sense Yes, are from for long-term. the are there trading there's I in we've makes us that But I out us because would certainly accretive pricing deals think to in invest deals think for mean I away that opportunities sense. that don't think that still do a lot some walked of that

So I'd continue say pursue deals. we would to those

a across question, bigger your maybe follow-up price RV kind and screening than the right more guess, MH is now? and I share a of bigger of private direct swaps market attractive

now best to use invest in acquisitions. is and think I development, that our mean, in in properties, invest, invest of continue our invest I capital Yes, to right the future

on in question than Is membership Okay. trending opening balance just businesses XQ this few remarks the to trends And and this about next continue the be your better but expected, transient there's then line with Paul, of that it is expectations. upside year interpretation positive the on fair quarters? prior if one the follow-up coming additional going is

unreasonable statement an not It's make. to

you Thank the Okay. time. for

Thanks, John

Thanks, John.

[Operator Instructions]. you. Thank

with comes question Wells Todd next Our Fargo. from Stender

open. is line now Your

deal the morning. marketed about advantageous discussion any Good this, units I tax OP other was missed Not widely using a or Marina any sure deal currency? if and

was not it year, with like would so were The other a in. I deal that And we'd there widely OP were marketed was working widely the that sellers something interested maybe deal I that towards as were certainly, end that not certainly last people said discussed the Sure. Marina units, far other, as was been marketed say on of was interested.

So point. it not a was discussion

cash. just Okay,

Okay.

Yes.

assumptions underwriting share how now? you annual right in your RV you're can And compares growth the underwriting rate maybe and that and MH how to

Let me -- this is Patrick.

the RV me Let cover business broadly.

slip some opportunity. top-line estate real of other comes up X%, income. base. customer types to in annual growth pressures taxes. of from And Loggerhead and referenced, on in upside seeing range the NOI on periodic some that's two the We as heavily Paul with XX% portfolios that revenue rate with occupancy from are mentioned the is high to comes particular, to property type insurance our Marguerite we're as and X% XX% subject expense growth of X% Florida. and that our line Coastal, of really in very to our same our portfolio, similarly very the really Southern And some The Overall and experience like weighted Loggerhead, it's similar translating stable see rate overall occupancy. annual

because such a property Maybe required maintenance Patrick. any deferred what's into It's just type? comment on new going on maybe just comments CapEx, helpful, Any it? it's

the similar through wouldn't diligence. from to across it that call is and load to due of to perspective, the say a a somewhere I roll and that improvements flow on our X% X% Yes, rate depending gross it's But particular more a work deferred will as issue we run the forward revenue capital RV portfolio. MH maintenance than on ebb neighborhood of basis, way in

high, Okay. but as Are the spoke outpace question, behavior, paying buying back in all know you because sales the last maybe as home Probably home sales. they continue new your you stick just think with home we characterize sales, cash? they Patrick, used to to so demand Are I just just are? buyers you to is can to liquid

consistently in Yes. as point just has from the make XX% XX% historically to it buyers. home, years. reduced six the year-over-year. rental perspective, to been our home used trend, us same a part used It's five on for I'll the last the are down we've And inventory And pretty it cash of call XX%, over

homes to sale. a So some that used be actually for on the driver of going that is just are available

is But mobility it reduce that's a time of been quarter Another at normalizing two. part last or over to just the of COVID.

Got you. Thank it.

Todd. Thanks,

Todd. Thanks,

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

us for you forward call. updating look care. quarter's Take Thank We you next the all to joining on today.

conference This for concludes you call. today's participating. Thank

may disconnect. You now