UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________________________________

FORM 10-Q

_________________________________________________________



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, ~~2016~~2017



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 1-11718

_________________________________________________________

EQUITY LIFESTYLE PROPERTIES, INC.

(Exact Name of Registrant as Specified in Its Charter)

_________________________________________________________



Maryland	36-3857664
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

Two North Riverside Plaza, Suite 800, Chicago, Illinois	60606
(Address of Principal Executive Offices)	(Zip Code)

(312) 279-1400

(Registrant’s Telephone Number, Including Area Code)

_________________________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated ~~filer” and~~filer,” “smaller reporting ~~company”~~company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer	x	Accelerated filer	o
Non-accelerated filer	o (Do not check if a smaller reporting company)	Smaller reporting company	o
		Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

~~85,296,903~~87,005,128 shares of Common Stock as of July ~~25, 2016.~~24, 2017.

Equity LifeStyle Properties, Inc.

Table of Contents



		Page
Part I - Financial Information
Item 1.	Financial Statements
Index To Financial Statements
Consolidated Balance Sheets as of June 30, ~~2016~~2017 (unaudited) and December 31, ~~2015~~2016		23
Consolidated Statements of Income and Comprehensive Income for the quarters and six months ended June 30, ~~2016~~2017 and ~~2015~~2016 (unaudited)		4
Consolidated ~~Statements~~Statement of Changes in Equity for the six months ended June 30, ~~2016~~2017 (unaudited)		6
Consolidated Statements of Cash Flows for the six months ended June 30, ~~2016~~2017 and ~~2015~~2016 (unaudited)		7
Notes to Consolidated Financial Statements		9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2418
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4033
Item 4.	Controls and Procedures	4033
Part II - Other Information
Item 1.	Legal Proceedings	4134
Item 1A.	Risk Factors	4134
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4134
Item 3.	Defaults Upon Senior Securities	4134
Item 4.	Mine Safety Disclosure	4134
Item 5.	Other Information	4134
Item 6.	Exhibits	4235

Equity LifeStyle Properties, Inc.

Consolidated Balance Sheets

As of June 30, ~~2016~~2017 and December 31, ~~2015~~2016

(amounts in thousands, except share and per share data)


	June 30, 2016			December 31, 2015			June 30, 2017			December 31, 2016
	(unaudited)						(unaudited)
Assets
Investment in real estate:
Land	$	1,142,651		$	1,101,676		$	1,167,510		$	1,163,987
Land improvements	2,867,006			2,787,882			2,922,201			2,893,759
Buildings and other depreciable property	608,204			588,041			641,931			627,590
	4,617,861			4,477,599			4,731,642			4,685,336
Accumulated depreciation	(1,339,298		)	(1,282,423		)	(1,459,931		)	(1,399,531		)
Net investment in real estate	3,278,563			3,195,176			3,271,711			3,285,805
Cash	74,871			80,258			67,740			56,340
Notes receivable, net	33,837			35,463			48,253			34,520
Investment in unconsolidated joint ventures	23,223			17,741			21,766			19,369
Deferred commission expense	31,084			30,865			31,453			31,375
Escrow deposits, goodwill, and other assets, net	43,997			40,897			44,435			51,578
Total Assets	$	3,485,575		$	3,400,400		$	3,485,358		$	3,478,987
Liabilities and Equity
Liabilities:
Mortgage notes payable	$	1,915,834		$	1,926,880
Mortgage notes payable, net							$	1,855,028		$	1,891,900
Term loan	199,276			199,172			199,483			199,379
Unsecured lines of credit	—			—			—			—
Accrued expenses and accounts payable	79,418			76,044			93,451			89,864
Deferred revenue – upfront payments from right-to-use contracts	79,505			78,405			83,580			81,484
Deferred revenue – right-to-use annual payments	13,017			9,878			12,559			9,817
Accrued interest payable	8,488			8,715			8,044			8,379
Rents and other customer payments received in advance and security deposits	84,821			74,300			88,543			76,906
Distributions payable	39,300			34,315			45,259			39,411
Total Liabilities	2,419,659			2,407,709			2,385,947			2,397,140
Equity:
Stockholders’ Equity:
Preferred stock, $0.01 par value, 9,945,539 shares authorized as of June 30, 2016 and December 31, 2015; none issued and outstanding.	—			—
6.75% Series C Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value, 54,461 shares authorized and 54,458 issued and outstanding as of June 30, 2016 and December 31, 2015 at liquidation value	136,144			136,144
Common stock, $0.01 par value, 200,000,000 shares authorized as of June 30, 2016 and December 31, 2015; 85,295,182 and 84,253,065 shares issued and outstanding as of June 30, 2016 and December 31, 2015, respectively	852			843
Preferred stock, $0.01 par value, 9,945,539 shares authorized as of June 30, 2017 and December 31, 2016; none issued and outstanding.							—			—
6.75% Series C Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value, 54,461 shares authorized and 54,458 issued and outstanding as of June 30, 2017 and December 31, 2016 at liquidation value							136,144			136,144
Common stock, $0.01 par value, 200,000,000 shares authorized as of June 30, 2017 and December 31, 2016; 87,004,507 and 85,529,386 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively							868			854
Paid-in capital	1,094,152			1,039,140			1,121,307			1,103,048
Distributions in excess of accumulated earnings	(236,623		)	(250,506		)	(219,641		)	(231,276		)
Accumulated other comprehensive loss	(1,197		)	(553		)
Accumulated other comprehensive loss/(income)							30			(227		)
Total Stockholders’ Equity	993,328			925,068			1,038,708			1,008,543
Non-controlling interests – Common OP Units	72,588			67,623			60,703			73,304
Total Equity	1,065,916			992,691			1,099,411			1,081,847
Total Liabilities and Equity	$	3,485,575		$	3,400,400		$	3,485,358		$	3,478,987

The accompanying notes are an integral part of ~~the financial statements.~~these Consolidated Financial Statements.

Equity LifeStyle Properties, Inc.

Consolidated Statements of Income and Comprehensive Income

For the Quarters Ended and Six Months EndedJune 30, ~~2016~~2017 and ~~2015~~2016

(amounts in thousands, except per share data)

(unaudited)


	Quarters Ended						Six Months Ended						Quarters Ended						Six Months Ended
	June 30, 2016			June 30, 2015			June 30, 2016			June 30, 2015			June 30, 2017			June 30, 2016			June 30, 2017			June 30, 2016
Revenues:
Community base rental income	$	115,385		$	110,073		$	229,461		$	219,343		$	121,964		$	115,385		$	242,656		$	229,461
Rental home income	3,543			3,559			7,088			7,113			3,632			3,543			7,237			7,088
Resort base rental income	44,732			41,427			100,166			93,072			50,055			44,732			111,123			100,166
Right-to-use annual payments	11,187			10,945			22,241			21,926			11,350			11,187			22,602			22,241
Right-to-use contracts current period, gross	3,086			3,578			5,618			6,375			3,798			3,086			7,004			5,618
Right-to-use contract upfront payments, deferred, net	(798		)	(1,455		)	(1,100		)	(2,228		)	(1,321		)	(798		)	(2,096		)	(1,100		)
Utility and other income	19,523			18,901			40,316			37,983			20,650			19,523			42,776			40,316
Gross revenues from home sales	9,130			9,526			17,344			16,463			7,833			9,130			14,860			17,344
Brokered resale revenues and ancillary services revenues, net	398			1,012			1,816			2,994			444			398			2,105			1,816
Interest income	1,625			1,736			3,285			3,556			1,798			1,625			3,568			3,285
Income from other investments, net	2,270			2,178			3,993			3,297			1,109			2,270			1,866			3,993
Total revenues	210,081			201,480			430,228			409,894			221,312			210,081			453,701			430,228
Expenses:
Property operating and maintenance	66,647			64,178			129,601			125,295			72,901			66,647			140,955			129,601
Rental home operating and maintenance	1,581			1,689			3,106			3,358			1,657			1,581			3,208			3,106
Real estate taxes	12,869			12,652			26,067			25,246			13,943			12,869			27,980			26,067
Sales and marketing, gross	2,931			3,512			5,424			6,034			2,894			2,931			5,584			5,424
Right-to-use contract commissions, deferred, net	(116		)	(764		)	(12		)	(1,007		)	(112		)	(116		)	(196		)	(12		)
Property management	12,044			11,099			23,807			22,389			13,023			12,044			25,583			23,807
Depreciation on real estate assets and rental homes	29,029			28,335			57,684			56,451			30,247			29,029			60,357			57,684
Amortization of in-place leases	428			669			763			1,334			958			428			1,990			763
Cost of home sales	9,481			9,093			17,762			15,817			7,895			9,481			15,014			17,762
Home selling expenses	805			720			1,639			1,525			929			805			1,854			1,639
General and administrative	8,255			7,541			15,663			14,947			8,461			8,255			15,834			15,663
Property rights initiatives and other	527			694			1,181			1,247
Early debt retirement	—			(69		)	—			16,922
Property rights initiatives and other, net													271			527			490			1,181
Interest and related amortization	25,561			26,145			51,195			53,421			24,822			25,561			49,701			51,195
Total expenses	170,042			165,494			333,880			342,979			177,889			170,042			348,354			333,880
Income before equity in income of unconsolidated joint ventures	40,039			35,986			96,348			66,915			43,423			40,039			105,347			96,348
Equity in income of unconsolidated joint ventures	765			840			1,646			1,724			1,040			765			2,190			1,646
Consolidated net income	40,804			36,826			97,994			68,639			44,463			40,804			107,537			97,994

Income allocated to non-controlling interests – Common OP Units	(2,998		)	(2,724		)	(7,308		)	(5,054		)	(2,649		)	(2,998		)	(6,539		)	(7,308		)
Series C Redeemable Perpetual Preferred Stock Dividends	(2,316		)	(2,316		)	(4,613		)	(4,613		)	(2,316		)	(2,316		)	(4,613		)	(4,613		)
Net income available for Common Stockholders	$	35,490		$	31,786		$	86,073		$	58,972		$	39,498		$	35,490		$	96,385		$	86,073

Consolidated net income	$	40,804		$	36,826		$	97,994		$	68,639		$	44,463		$	40,804		$	107,537		$	97,994
Other comprehensive (loss) income (“OCI”):
Other comprehensive income (loss) (“OCI”):
Adjustment for fair market value of swap	(36		)	204			(644		)	(653		)	30			(36		)	257			(644		)
Consolidated comprehensive income	40,768			37,030			97,350			67,986			44,493			40,768			107,794			97,350
Comprehensive income allocated to non-controlling interests – Common OP Units	(2,995		)	(2,740		)	(7,257		)	(5,003		)	(2,651		)	(2,995		)	(6,555		)	(7,257		)
Series C Redeemable Perpetual Preferred Stock Dividends	(2,316		)	(2,316		)	(4,613		)	(4,613		)	(2,316		)	(2,316		)	(4,613		)	(4,613		)
Comprehensive income attributable to Common Stockholders	$	35,457		$	31,974		$	85,480		$	58,370		$	39,526		$	35,457		$	96,626		$	85,480

The accompanying notes are an integral part of ~~the financial statements.~~these Consolidated Financial Statements.

Equity LifeStyle Properties, Inc.

Consolidated Statements of Income and Comprehensive Income (Continued)

For the Quarters Ended ~~and Six Months Ended~~ June 30, ~~2016~~2017 and ~~2015~~2016

(amounts in thousands, except per share data)

(unaudited)


	Quarters Ended				Six Months Ended				Quarters Ended				Six Months Ended
	June 30, 2016		June 30, 2015		June 30, 2016		June 30, 2015		June 30, 2017		June 30, 2016		June 30, 2017		June 30, 2016
Earnings per Common Share – Basic:
Net income available for Common Stockholders	$	0.42	$	0.38	$	1.02	$	0.70	$	0.46	$	0.42	$	1.12	$	1.02
Earnings per Common Share – Fully Diluted:
Net income available for Common Stockholders	$	0.42	$	0.38	$	1.01	$	0.70	$	0.45	$	0.42	$	1.11	$	1.01

Distributions declared per Common Share outstanding	$	0.425	$	0.375	$	0.850	$	0.750	$	0.488	$	0.425	$	0.975	$	0.850
Weighted average Common Shares outstanding – basic	84,516		84,031		84,419		83,996		86,763		84,516		86,408		84,419
Weighted average Common Shares outstanding – fully diluted	92,264		91,851		92,163		91,829		93,063		92,264		93,041		92,163

The accompanying notes are an integral part of ~~the financial statements.~~these Consolidated Financial Statements.

Equity LifeStyle Properties, Inc.

Consolidated ~~Statements~~Statement of Changes in Equity

For the Six Months EndedJune 30, ~~2016~~2017

(amounts in thousands)

(unaudited)


	Common Stock		Paid-in Capital			6.75% Series C Cumulative Redeemable Perpetual Preferred Stock			Distributions in Excess of Accumulated Earnings			Non- controlling interests – Common OP Units			Accumulated Other Comprehensive Loss			Total Equity			Common Stock		Paid-in Capital			6.75% Series C Cumulative Redeemable Perpetual Preferred Stock			Distributions in Excess of Accumulated Earnings			Non- controlling interests – Common OP Units			Accumulated Other Comprehensive Loss/(Income)			Total Equity
Balance, December 31, 2015	$	843	$	1,039,140		$	136,144		$	(250,506	)	$	67,623		$	(553	)	$	992,691
Balance, December 31, 2016																					$	854	$	1,103,048		$	136,144		$	(231,276	)	$	73,304		$	(227	)	$	1,081,847
Conversion of Common OP Units to Common Stock	—		38			—			—			(38		)	—			—			14		16,423			—			—			(16,437		)	—			—
Issuance of Common Stock through exercise of options	2		5,230			—			—			—			—			5,232
Issuance of Common Stock through employee stock purchase plan	—		275			—			—			—			—			275			—		764			—			—			—			—			764
Issuance of Common Stock	7		49,993			—			—			—			—			50,000
Compensation expenses related to restricted stock	—		4,393			—			—			—			—			4,393			—		4,257			—			—			—			—			4,257
Repurchase of Common Stock or Common OP units	—		(274		)	—			—			—			—			(274		)
Adjustment for Common OP Unitholders in the Operating Partnership	—		(3,820		)	—			—			3,820			—			—			—		(3,037		)	—			—			3,037			—			—
Adjustment for fair market value of swap	—		—			—			—			—			(644		)	(644		)	—		—			—			—			—			257			257
Net income	—		—			4,614			86,073			7,308			—			97,995			—		—			4,613			96,385			6,539			—			107,537
Distributions	—		—			(4,614		)	(72,190		)	(6,125		)	—			(82,929		)	—		—			(4,613		)	(84,750		)	(5,740		)	—			(95,103		)
Other	—		(823		)	—			—			—			—			(823		)	—		(148		)	—			—			—			—			(148		)
Balance, June 30, 2016	$	852	$	1,094,152		$	136,144		$	(236,623	)	$	72,588		$	(1,197	)	$	1,065,916
Balance, June 30, 2017																					$	868	$	1,121,307		$	136,144		$	(219,641	)	$	60,703		$	30		$	1,099,411

The accompanying notes are an integral part of ~~the financial statements.~~these Consolidated Financial Statements.

Equity LifeStyle Properties, Inc.

Consolidated Statements of Cash Flows

For the Six Months Ended June 30, ~~2016~~2017 and ~~2015~~2016

(amounts in thousands)

(unaudited)


	June 30, 2016			June 30, 2015			June 30, 2017			June 30, 2016
Cash Flows From Operating Activities:
Consolidated net income	$	97,994		$	68,639		$	107,537		$	97,994
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Early debt retirement	—			16,922
Depreciation	58,242			56,989			60,960			58,242
Amortization of in-place leases	763			1,334			1,990			763
Amortization of loan costs	1,876			2,103			1,788			1,876
Debt premium amortization	(1,730		)	(2,094		)	(1,166		)	(1,730		)
Equity in income of unconsolidated joint ventures	(1,646		)	(1,724		)	(2,190		)	(1,646		)
Distributions of income from unconsolidated joint ventures	1,041			1,161			1,800			1,041
Amortization of stock-related compensation	4,393			3,960
Stock-based compensation							4,257			4,393
Revenue recognized from right-to-use contract upfront payments	(4,518		)	(4,147		)	(4,908		)	(4,518		)
Commission expense recognized related to right-to-use contracts	2,019			1,696			2,202			2,019
Long term incentive plan compensation	(3,852		)	657			674			(3,852		)
Recovery of uncollectible rents receivable	(679		)	(344		)
Recovery for uncollectible rents receivable							214			(679		)
Changes in assets and liabilities:
Notes receivable activity, net	361			(101		)	(282		)	361
Deferred commission expense	(2,238		)	(3,067		)	(2,280		)	(2,238		)
Escrow deposits, goodwill and other assets	13,137			27,540			21,814			13,137
Accrued expenses and accounts payable	2,453			18,475			316			2,453
Deferred revenue – upfront payments from right-to-use contracts	5,618			6,375			7,004			5,618
Deferred revenue – right-to-use annual payments	3,139			3,492			2,742			3,139
Rents received in advance and security deposits	10,434			12,080			11,630			10,434
Net cash provided by operating activities	186,807			209,946			214,102			186,807
Cash Flows From Investing Activities:
Real estate acquisition	(76,203		)	(23,687		)	(2,053		)	(76,203		)
Investment in unconsolidated joint ventures	(5,000		)	(4,000		)	(2,267		)	(5,000		)
Repayments of notes receivable	5,176			5,366			5,054			5,176
Issuance of notes receivable	(4,356		)	(4,035		)	(18,696		)	(4,356		)
Capital improvements	(55,707		)	(42,259		)	(53,464		)	(55,707		)
Net cash used in investing activities	(136,090		)	(68,615		)	(71,426		)	(136,090		)
Cash Flows From Financing Activities:
Proceeds from stock options and employee stock purchase plan	5,233			4,252			764			5,331
Share based award tax withholding							—			(98		)
Gross proceeds from sale of Common Stock	50,000			—			—			50,000
Distributions:
Common Stockholders	(67,565		)	(58,862		)	(78,699		)	(67,565		)
Common OP Unitholders	(5,766		)	(5,057		)	(5,942		)	(5,766		)
Preferred Stockholders	(4,613		)	(4,613		)	(4,613		)	(4,613		)
Principal payments and mortgage debt payoff	(32,564		)	(437,279		)	(42,637		)	(32,564		)
New mortgage notes payable financing proceeds	—			395,323
Debt issuance and defeasance costs	(5		)	(23,541		)	—			(5		)
Other	(824		)	(323		)	(149		)	(824		)
Net cash used in financing activities	(56,104		)	(130,100		)	(131,276		)	(56,104		)
Net (decrease) increase in cash and cash equivalents	(5,387		)	11,231
Net increase (decrease) in cash							11,400			(5,387		)
Cash, beginning of period	80,258			73,714			56,340			80,258
Cash, end of period	$	74,871		$	84,945		$	67,740		$	74,871

The accompanying notes are an integral part of ~~the financial statements.~~these Consolidated Financial Statements.

Equity LifeStyle Properties, Inc.

Consolidated Statements of Cash Flows (continued)

For the Six Months Ended June 30, ~~2016~~2017 and ~~2015~~2016

(amounts in thousands)

(unaudited)


	June 30, 2016			June 30, 2015			June 30, 2017			June 30, 2016
Supplemental Information:
Cash paid during the period for interest	$	53,121		$	54,330		$	51,135		$	53,121
Capital improvements – used homes acquired by repossessions	$	445		$	443		192			445
Net repayments of notes receivable – used homes acquired by repossessions	$	(445	)	$	(443	)	(192		)	(445		)
Building and other depreciable property – reclassification of rental homes	$	15,986		$	14,046		15,322			15,986
Escrow deposits and other assets – reclassification of rental homes	$	(15,986	)	$	(14,046	)	(15,322		)	(15,986		)

Real estate acquisitions:
Investment in real estate	$	(100,148	)	$	(23,900	)
Investment in real estate, fair value							$	(7,985	)	$	(100,148	)
Escrow deposits and other assets	(20		)	(53		)	—			(20		)
Debt assumed and financed on acquisition	22,010			—
Debt assumed							5,900			22,010
Accrued expenses and accounts payable	1,955			62			32			1,955
Rents and other customer payments received in advance and security deposits	—			204
Real estate acquisitions, net	$	(76,203	)	$	(23,687	)	$	(2,053	)	$	(76,203	)

The accompanying notes are an integral part of ~~the financial statements.~~these Consolidated Financial Statements.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

~~Definition~~

Note 1 – Basis of ~~Terms~~Presentation

Equity LifeStyle Properties, Inc., a Maryland corporation, together with MHC Operating Limited Partnership (the “Operating Partnership”) and other consolidated subsidiaries (“Subsidiaries”) are referred to herein as “we,” “us,” and “our.” Capitalized terms used but not defined herein are as defined in our Annual Report on Form 10-K (“~~2015~~2016 Form 10-K”) for the year ended December 31, ~~2015.~~2016. These unaudited Consolidated Financial Statements have been prepared pursuant to Securities and Exchange Commission (“SEC”) rules and regulations. Accordingly, they do not include all of the information and note disclosures required by U.S. Generally Accepted Accounting Principles ("GAAP") for complete financial statements and should be read in conjunction with the financial statements and notes thereto included in the 2016 Form 10-K.

The following notes to the Consolidated Financial Statements highlight significant changes to the notes included in the 2016 Form 10-K and present interim disclosures as required by the SEC. The accompanying Consolidated Financial Statements reflect, in the opinion of management, all adjustments and estimates necessary for a fair presentation of the interim financial statements, which are of a normal, recurring nature. Revenues and expenses are subject to seasonal fluctuations and accordingly, quarterly interim results may not be indicative of full year results.

Note 12 – Summary of Significant Accounting Policies


(a)	~~Basis of Presentation and Principles of~~ Consolidation

We ~~follow accounting standards set by the Financial Accounting Standards Board, commonly referred to as the “FASB.” The FASB sets generally accepted accounting principles (“GAAP”),~~consolidate our majority-owned Subsidiaries in which we ~~follow~~have the ability to ~~ensure that we consistently report our financial condition, results of~~control the operations and ~~cash flows. References~~all variable interest entities with respect to ~~GAAP issued by~~which we are the ~~FASB~~primary beneficiary. We also consolidate entities in ~~these footnotes are to the FASB Accounting Standards Codification (the “Codification”).~~

~~These unaudited Consolidated Financial Statements~~which we have been prepared pursuant to Securities and Exchange Commission (“SEC”) rules and regulations. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the financial statements and notes thereto included in the 2015 Form 10-K. The following notes to the Consolidated Financial Statements highlight significant changes to the notes included in the 2015 Form 10-K and present interim disclosures as required by the SEC. The accompanying Consolidated Financial Statements reflect, in the opinion of management, all adjustments and estimates necessary for a fair presentation of the interim financial statements, which are of a normal, recurring nature. Revenues are subject to seasonal fluctuations and accordingly, quarterly interim results may not be indicative of full year results.

~~The accompanying Consolidated Financial Statements include the consolidation of our accounts. We do not have~~direct or indirect controlling interests in any of our joint ventures (“JV”), which are therefore treated under the equity method of accounting and not consolidated in our financial statements. The holders of limited partnership interests in the Operating Partnership (“Common OP Unitholders”) receive an allocation of net income that is based on their respective ownership percentage of the Operating Partnership which is shown in our Consolidated Financial Statements as Non-controlling interests-Common OP Units.or voting interest. All significant intercompany balances and transactions have been eliminated in consolidation.

Effective January 1, 2016, we adopted (“ASU 2015-02”) Consolidation (Topic 810): Amendments to the Consolidation Analysis. ASU 2015-02 required us to evaluate whether we should consolidate certain legal entities. ~~Principally,~~The adoption of this standard did not result in any changes to our accounting of interests in less than wholly-owned joint ventures; however, the ~~new consolidation standard modified~~Operating Partnership now meets the evaluation of whether limited partnerships and similar legal entities are variable interest entities ("VIE") or voting interest entities. Based on our review and subsequent analysis of the structure of our legal entities, wecriteria as a VIE. We concluded that the Operating Partnership is a VIE because ~~the limited partners of the Operating Partnership do not have substantive kick-out or participating rights. We~~we are the general partner and controlling owner of approximately ~~92.2%~~93.7% of the Operating Partnership and the limited partners do not have substantive kick-out or participating rights. Our sole significant asset is our investment in the Operating Partnership, and consequently, substantially all of our assets and liabilities represent those assets and liabilities of the Operating Partnership. The Company has the power to direct the VIE's activities and the obligation to absorb its losses or the right to receive its benefits, which are significant to the VIE. Accordingly, we are the primary beneficiary and we will continue to consolidate the Operating Partnership under this new guidance. ~~With~~

We apply the equity method of accounting to entities in which we do not have a direct or indirect controlling interest or for variable interest entities where we are not considered the primary beneficiary, but can exercise influence over the entity with respect to ~~our investment in unconsolidated joint ventures, the new consolidation standard did not have an impact on our previous consolidation conclusions.~~

~~Effective January 1, 2016, we adopted (“ASU 2015-03”)~~ ~~Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs~~its operations and (~~“ASU 2015-15”)~~ ~~Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements~~. ASU 2015-03 requires that debt issuance costs be deducted from the carrying value of the financial liability and not recorded as separate assets, previously classified as deferred financing costs. The recognition and measurement guidance for debt issuance costs are not affected by ASU 2015-03. ASU 2015-15 states that presentation of costs associated with securing a revolving line of credit as an asset is permitted, regardless of whether a balance is outstanding. ASU 2015-03 and 2015-15 require retrospective adoption and as a result we reclassified deferred financing costs on our Consolidated Balance Sheets as of December 31, 2015, as presented herein (See Note 7 to the Consolidated Financial Statements for further details).major decisions.


(b)	Identified Intangibles and Goodwill

As of both June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, the gross carrying amount of identified intangible assets and goodwill, a component of escrow deposits, goodwill and other assets, net on our consolidated balance sheets, was approximately $12.1 million. As of both June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, this amount was comprised of approximately $4.3 million of identified intangible assets and approximately $7.8 million of goodwill. Accumulated amortization of identified intangible assets was approximately ~~$2.7~~$2.9 million and ~~$2.6~~$2.8 million as of June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively. ~~For the quarters and six months ended~~

As of both June 30, 2017 and December 31, 2016, the gross carrying amount of in-place lease intangible assets, a component of buildings and ~~2015,~~other depreciable property on our consolidated balance sheets, was approximately $76.7 million. Accumulated amortization ~~expense for the identified~~of in-place lease intangible assets was approximately ~~$0.1 million.~~$75.9 million and $74.0 million as of June 30, 2017 and December 31, 2016, respectively.


(c)	Restricted Cash

Cash as of both June 30, 2017 and December 31, 2016 included approximately $5.3 million of restricted cash for the payment of capital improvements, insurance or real estate taxes.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 12 – Summary of Significant Accounting Policies (continued)


~~(c)~~	~~Restricted Cash~~

Our cash balance as of June 30, 2016 and December 31, 2015 included approximately $5.3 million and $5.0 million respectively, of restricted cash for the payment of capital improvements, insurance or real estate taxes.


(d)	Fair Value of Financial Instruments

Our financial instruments include notes receivable, accounts receivable, accounts payable, other accrued expenses, interest rate swaps and mortgage notes payable. We disclose the estimated fair value of our financial instruments according to a fair value hierarchy (Level 1, 2 and 3).

Our mortgage notes payable and term loan, excluding deferred financing costs of approximately ~~$18.9~~$17.8 million and ~~$19.7~~$18.9 million, respectively, had aan aggregate carrying value of approximately ~~$2.1 billion~~$2,072.3 million and $2,110.2 million as of June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively, and a fair value of approximately ~~$2.2 billion~~$2,106.4 million and $2,081.2 million as of June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively. The fair value iswas measured using quoted prices and observable inputs from similar liabilities (Level 2). At June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, our cash flow hedge of interest rate risk included in accrued expenses and accounts payable was measured using quoted prices and observable inputs from similar assets and liabilities (Level 2). We consider our own credit risk as well as the credit risk of our counterparties when evaluating the fair value of our derivative. The fair values of our notes receivable approximate their carrying or contract values. We also utilize Level 2 and Level 3 inputs as part of our determination of the purchase price allocation for our ~~acquisitions, as discussed in Note 4 to the Consolidated Financial Statements.~~acquisitions.


(e)	~~Deferred Financing Costs, net~~

Deferred financing costs includes fees and costs incurred to obtain long-term financing and are amortized over the terms of the respective loans on a basis that approximates level yield. Unamortized deferred financing fees are written-off when debt is retired before the maturity date. Upon amendment of the line of credit or refinancing of mortgage debt, unamortized deferred financing fees are accounted for in accordance with Codification Sub-Topic ~~Modifications and Extinguishments~~ ~~(“FASB ASC 470-50-40”). Accumulated amortization for such costs was $35.6 million and $33.7 million at June 30, 2016 and December 31, 2015, respectively.~~


~~(f)~~	~~Recent~~New Accounting Pronouncements

In January 2017, the FASB issued ("ASU 2017-01") Business Combinations (Topic 805): Clarifying the Definition of a Business. ASU 2017-01 clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU 2017-01 will be effective for annual reporting beginning after December 15, 2017. We are currently in the process of evaluating the potential impact that the adoption of this standard may have on our consolidated financial statements and related disclosures.

In August 2016, the FASB issued (“ASU 2016-15”) Statement of Cash Flows (Topic 230). ASU 2016-15 provides guidance on how certain cash receipts and cash payments are to be presented and classified in the statement of cash flows. ASU 2016-15 will be effective for annual reporting periods beginning after December 15, 2017. Early adoption is permitted. We are currently in the process of evaluating the potential impact, if any, that adoption of this standard may have on our consolidated financial statements and related disclosures.

In June 2016, the FASB issued (“ASU 2016-13”) Financial Instruments - Credit Losses (Topic 326). ASU 2016-13 requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Entities will now use forward-looking information to better form their credit loss estimates. ASU 2016-13 also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. ASU 2016-13 will be effective for annual reporting periods beginning after December 15, 2019. Early adoption is permitted. We are currently in the process of evaluating the potential impact, if any, that adoption of this standard may have on our consolidated financial statements and related disclosures.

In February 2016, the FASB issued ("ASU 2016-02") Leases. ASU 2016-02 amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU 2016-02 requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. ASU 2016-02 will continue to classify leases as either finance or operating, with classification affecting the pattern of expense recognition in the statement of income. ASU 2016-02 will be effective for annual reporting periods beginning after December 15, 2018. Early adoption is permitted. We are currently in the process of evaluating the potential impact this standard may have on our consolidated financial statements and related disclosures.

In May 2014, the FASB issued ("ASU 2014-09") Revenue from Contracts with Customers which along with related subsequent amendments will replace most existing revenue recognition guidance in ~~U.S.~~ GAAP. The core principle of ASU 2014-09 is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. ASU 2014-09 requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. ~~ASU 2014-09 does not apply to lease contracts accounted~~The new standard will be effective for ~~under ASC 840, Leases. Entities can~~the Company beginning on January 1, 2018. The standard permits the use of either the full retrospective or modified retrospective transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. On July 9, 2015, the FASB deferred the effective date by one year for annual reporting periods beginning after December 15, 2017. The FASB will permit early adoption of themethod.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 12 – Summary of Significant Accounting Policies (continued)

~~standard, but not before~~We expect to adopt ASU 2014-09 on January 1, 2018, using the ~~original effective date of December 15, 2016.~~modified retrospective transition method. We are ~~currently~~evaluating the complete impact of the adoption to our consolidated financial results. Our primary source of revenue is generated through leasing arrangements, which are excluded from ASU 2014-09. We continue to evaluate and are in the process of ~~evaluating~~quantifying the impact, ~~that~~if any, the adoption of ~~the standard~~ASU 2014-09 will have on our ~~consolidated financial statements~~non-lease revenue streams, including right-to-use annual payments, right-to-use contracts, and ~~related disclosures.~~utility and other income.

Note 23 – Earnings Per Common Share

The following table sets forth the computation of ~~the~~ basic and diluted earnings per Common Share for the quarters and six months ended June 30, ~~2016~~2017 and ~~2015~~2016 (amounts in thousands, except per share data):


	Quarters Ended				Six Months Ended				Quarters Ended				Six Months Ended
	June 30,				June 30,				June 30,				June 30,
	2016		2015		2016		2015		2017		2016		2017		2016
Numerators:
Numerator:
Net Income Available for Common Stockholders:
Net income available for Common Stockholders – basic	$	35,490	$	31,786	$	86,073	$	58,972	$	39,498	$	35,490	$	96,385	$	86,073
Amounts allocated to dilutive securities	2,998		2,724		7,308		5,054		2,649		2,998		6,539		7,308
Net income available for Common Stockholders – fully diluted	$	38,488	$	34,510	$	93,381	$	64,026	$	42,147	$	38,488	$	102,924	$	93,381
Denominator:
Weighted average Common Shares outstanding – basic	84,516		84,031		84,419		83,996		86,763		84,516		86,408		84,419
Effect of dilutive securities:
Redemption of Common OP Units for Common Shares	7,205		7,221		7,206		7,223
Conversion of Common OP Units to Common Shares									5,886		7,205		6,235		7,206
Stock options and restricted shares	543		599		538		610		414		543		398		538
Weighted average Common Shares outstanding – fully diluted	92,264		91,851		92,163		91,829		93,063		92,264		93,041		92,163

Earnings per Common Share – Basic:
Net income available for Common Stockholders	$	0.42	$	0.38	$	1.02	$	0.70	$	0.46	$	0.42	$	1.12	$	1.02

Earnings per Common Share – Fully Diluted:
Net income available for Common Stockholders	$	0.42	$	0.38	$	1.01	$	0.70	$	0.45	$	0.42	$	1.11	$	1.01

Note 34 – Common Stock and Other Equity Related Transactions

Dividends

The following ~~regular~~ quarterly distributions have been declared on our depositary shares (each representing 1/100 of a share of our Series C Preferred Stock) and paid to our preferred ~~shareholders~~stockholders for the six months endedJune 30, ~~2016:~~2017.



~~Distribution Amount Per Share~~	~~For the Quarter Ending~~	~~Stockholder Record Date~~	~~Payment Date~~
~~$0.421875~~	~~March 31, 2016~~	~~March 21, 2016~~	~~March 31, 2016~~
~~$0.421875~~	~~June 30, 2016~~	~~June 17, 2016~~	~~June 30, 2016~~



Distribution Amount Per Share		For the Quarter Ended	Stockholder Record Date	Payment Date
$	0.421875	March 31, 2017	March 10, 2017	March 31, 2017
$	0.421875	June 30, 2017	June 15, 2017	June 30, 2017

The following ~~regular~~ quarterly distributions have been declared and paid to common stockholders and common OP Unit non-controlling ~~interest~~ holders for the six months ended June 30, ~~2016:~~2017.



~~Distribution Amount Per Share~~	~~For the Quarter Ending~~	~~Stockholder Record Date~~	~~Payment Date~~
~~$0.425~~	~~March 31, 2016~~	~~March 25, 2016~~	~~April 8, 2016~~
~~$0.425~~	~~June 30, 2016~~	~~June 24, 2016~~	~~July 8, 2016~~



Distribution Amount Per Share		For the Quarter Ended	Stockholder Record Date	Payment Date
$	0.4875	March 31, 2017	March 31, 2017	April 14, 2017
$	0.4875	June 30, 2017	June 30, 2017	July 14, 2017

Conversions

Subject to certain limitations, holders of Common Operating Partnership units ("OP units") can convert their units to Common Stock at any time. During the six months ended June 30, 2017, 1,334,747 OP units were converted to an equal number of shares of Common Stock.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

~~Note 3 – Common Stock and Other Equity Related Transactions (continued)~~

Note 5 – Real Estate Acquisitions

On May 4, 2015, we extended our at-the-market (“ATM”) offering program by entering into new separate equity distribution agreements with certain sales agents, pursuant to which we may sell, from time-to-time, shares of our Common Stock, par value $0.01 per share, having an aggregate offering price of up to $125.0 million. The following table presents the shares that were issued under the ATM equity offering program during the six months ended June 30, 2016 (amounts in thousands, except stock data):

Six Months Ended June 30, 2016
Shares of Common Stock sold 683,548
Weighted average price $ 73.15
Total gross proceeds $ 50,000
Commissions paid to sales agents $ 657

We did not sell any shares under the ATM offering program for the comparable six month period in 2015. As June 30, 2016, approximately $75.0 million of Common Stock remained available for issuance under this ATM equity offering program.

~~Note 4 – Investment in Real Estate~~

~~Acquisitions~~

All acquisitions have been accounted for utilizing the acquisition method of accounting in accordance with FASB ASC 805 and, accordingly, the results of operations of acquired assets are included in the Consolidated Statements of Income and Comprehensive Income from the dates of acquisition. Certain purchase price adjustments may be made within one year following the acquisition and applied prospectively in accordance with ASU 2015-16 Business Combinations (Topic 805): ~~Simplifying the Accounting for Measurement-Period Adjustments~~.

~~On June 15, 2016,~~10, 2017, we completed the acquisition of ~~Forest Lake Estates,~~Paradise Park Largo, a ~~1,168-Site property located in Zephryhills, Florida. This property consists of 894~~108-site manufactured home community ~~Sites and 274 RV resort Sites. The purchase price of $75.2 million was funded with proceeds from the ATM offering program and the assumption of mortgage debt of approximately $22.6 million.~~

~~On May 26, 2016, we closed on the acquisition of Portland Fairview, a 407-Site RV resort~~ located in ~~Fairview, Oregon.~~Largo, Florida. The purchase price of approximately ~~$17.6~~$8.0 million was funded with available ~~cash.~~

~~On January 27, 2016, we completed the acquisition~~cash and an assumed loan. The $5.9 million loan has an interest rate of ~~Rose Bay, a 303-Site RV resort, located~~4.6% that matures in ~~Port Orange, Florida. The total purchase price of approximately $7.4 million was funded with available cash.~~

During the year ended December 31, 2015, we acquired two RV resorts, Whispering Pines and Miami Everglades, collectively containing 581 Sites, and one manufactured home community, Bogue Pines, containing 150 Sites. The combined purchase price of approximately $23.9 million was funded with available cash.

~~Equity LifeStyle Properties, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~Note 4 – Investment in Real Estate (continued)~~

The following table summarizes the estimated fair value of the assets acquired and liabilities assumed in the acquisitions for the six months ended June 30, 2016 and the year ended December 31, 2015, which we determined using Level-2, for mortgage notes payable and other liabilities, and Level-3 inputs (amounts in thousands):

Six Months Ended Year Ended
June 30,
2016 December 31,
2015
Assets acquired
Land $ 40,975
$ 8,985
Buildings and other depreciable property 58,676
13,948
Manufactured homes 22
345
In-place leases 475
622
Net investment in real estate 100,148
23,900
Other assets 20
53
Total Assets acquired $ 100,168
$ 23,953

Liabilities assumed
Mortgage notes payable $ 22,010
$ —
Other liabilities 1,955
266
Total Liabilities assumed $ 23,965
$ 266
Net assets acquired $ 76,203
$ 23,687

~~Dispositions and real estate held for disposition~~

~~As of June 30, 2016, we did not have any Properties designated as held for disposition pursuant to FASB ASC 360-10-35.~~2040.

Note 56 – Investment in Unconsolidated Joint Ventures

~~We recorded approximately $1.6 million and $1.7 million (each net of approximately $0.6 million and $0.5 million of depreciation expense, for the six months ended~~On June ~~30, 2016 and 2015, respectively) of equity~~15, 2017, we entered into a joint venture agreement to purchase Crosswinds Mobile Home Park, a 376-site manufactured home community located in ~~income from unconsolidated joint ventures for each~~St. Petersburg, Florida. The purchase price of the ~~six months ended June 30, 2016 and 2015, respectively.~~Property was $18.4 million. We ~~received approximately $1.0~~contributed $2.2 million ~~and $1.2 million~~for a 49% equity interest in ~~distributions from these~~the joint ~~ventures~~venture. The joint venture is accounted for under the ~~six months ended June 30, 2016 and 2015, respectively.~~

~~On January 4, 2016,~~equity method of accounting. As part of the transaction, we ~~contributed approximately $5.0~~issued a short term loan of $13.8 million to the ~~ECHO Financing, LLC~~ joint ~~venture (the "ECHO JV") which brought our total investment~~venture. The loan bears interest at 5% per annum, can be repaid with no penalty prior to ~~approximately $15.4 million.~~maturity and matures on December 12, 2017.

The following table summarizes our investment in unconsolidated joint ventures ~~as of June 30, 2016 and December 31, 2015~~ (investment amounts in thousands with the number of Properties shown ~~parenthetically)~~parenthetically as of June 30, 2017 and December 31, 2016):


						Investment as of				JV Income (loss) for the Six Months Ended										Investment as of				Joint Venture Income/(Loss) for the Six Months Ended
Investment	Location	Number of Sites	Economic Interest ^(a)			June 30, 2016		December 31, 2015		June 30, 2016			June 30, 2015		Location	Number of Sites	Economic Interest ^(a)			June 30, 2017		December 31, 2016		June 30, 2017		June 30, 2016
Meadows	Various (2,2)	1,077	50	%		$	139	$	162	$	577		$	742	Various (2,2)	1,077	50	%		$	240	$	510	$	1,130	$	577
Lakeshore	Florida (2,2)	342	65	%		50		46		160			177		Florida (3,2)	720	(b)			2,321		56		147		160
Voyager	Arizona (1,1)	1,706	50	%	^(b)	7,676		7,166		917			740		Arizona (1,1)	1,801	50	%	^(c)	3,799		3,376		800		917
ECHO JV	Various	—	50	%		15,358		10,367		(8		)	65		Various	—	50	%		15,406		15,427		113		(8		)
		3,125				$	23,223	$	17,741	$	1,646		$	1,724		3,598				$	21,766	$	19,369	$	2,190	$	1,646

_____________________


(a)	The percentages shown approximate our economic interest as of June 30, ~~2016.~~2017. Our legal ownership interest may differ.


(b)	Includes two joint ventures in which we own a 65% interest and Crosswinds joint venture in which we own a 49% interest.


(c)	Voyager joint venture primarily consists of a 50% interest in Voyager RV Resort and 33% interest in the utility plant servicing the Property.

~~Note 6 - Notes Receivable~~

~~In certain cases, we purchase loans made by others to finance~~We received approximately $1.8 million and $1.0 million in distributions from these joint ventures for the ~~sales of homes to our customers (“Chattel Loans”). Our Chattel Loans receivable require monthly principal~~six months ended June 30, 2017 and ~~interest payments~~2016, respectively. Approximately $0.3 million and ~~are collateralized by homes at certain~~$0.5 million of the ~~Properties. As of~~distributions made to us exceeded our basis in joint ventures for the quarter and six months ended June 30, ~~2016~~2017, and ~~December 31, 2015, we had approximately $16.6 million~~as such were recorded as income from unconsolidated joint ventures. None of the distributions made to us exceeded our basis in joint ventures for the quarter and ~~$17.6 million, respectively, of these Chattel Loans included in notes receivable. As of~~six months ended June 30, ~~2016, the Chattel Loans receivable had a stated per annum average rate of~~

~~Equity LifeStyle Properties, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~Note 6 – Notes Receivable (continued)~~

approximately 7.8%, with a yield of 19.7%, and had an average term remaining of approximately 11 years. These Chattel Loans are recorded net of allowances of approximately $0.3 million as of June 30, 2016 and December 31, 2015, respectively.

We also provide financing for non-refundable upgrades to existing right-to-use contracts (“Contracts Receivable”). As of June 30, 2016 and December 31, 2015, we had approximately $17.2 million and $17.8 million, respectively, of Contracts Receivable, net of allowances of approximately $0.6 million. The Contracts Receivable have an average stated interest rate of 16.1% per annum, have a weighted average term remaining of approximately four years and require monthly payments of principal and interest.2016.

Note 7 – Borrowing Arrangements

With the adoption of ASU 2015-03 and ASU 2015-15, we reclassified deferred financing costs to mortgage notes payable in the amount of $18.9 million as of December 31, 2015. In addition, we reclassified deferred financing costs to term loan in the amount of $0.8 million as of December 31, 2015. Also, we reclassified deferred financing costs related to our unsecured line of credit to Escrow deposits, goodwill, and other assets, net in the amount of $3.7 million as of December 31, 2015.

Mortgage Notes Payable

As of June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, we had outstanding mortgage indebtedness of approximately ~~$1.9 billion, excluding~~$1,855.0 million and $1,891.9 million, respectively, net of deferred financing costs. In connection with the Paradise Park Largo acquisition during the quarter ended June 30, 2017, we assumed approximately $5.9 million of mortgage debt secured by the manufactured home community with an interest rate of 4.6% that matures in 2040. During the quarter ended March 31, 2017, we paid off one maturing mortgage loan of approximately $21.1 million, with a weighted average interest rate of 5.76% per annum, secured by one manufactured home Property.

The weighted average interest rate, including the impact of premium/discount amortization and loan cost amortization on ~~this~~ mortgage indebtedness, for the six months ended June 30, ~~2016~~2017 was approximately 4.9% per annum. The debt bears interest at stated rates ranging from 3.5% to 8.9% per annum and matures on various dates ranging from ~~2016~~2017 to ~~2040.~~2041. The debt encumbered a total of 126 ~~and 127~~ of our Properties as of both June 30, ~~2016~~2017 and December 31, ~~2015, respectively,~~2016, and the carrying value of such Properties was approximately ~~$2.3 billion~~$2,282.1 million and ~~$2.2 billion, respectively,~~$2,296.6 million, as of ~~such dates.~~

In connection with the Forest Lake Estates acquisition, we assumed approximately $22.6 million of mortgage debt secured by the manufactured home community, with a stated interest rate of 4.51% per annum, which is set to mature in 2038.

~~During the six months ended~~ June 30, ~~2016, we paid off two maturing mortgage loans of approximately $13.1 million, with a weighted average interest rate of 5.53% per annum, secured by two manufactured home Properties.~~

~~On July 1, 2016, we paid off two maturing mortgage loans of approximately $23.9 million in the aggregate, with weighted average interest rate of 5.99%, secured by one RV resort~~2017 and ~~one manufactured home Property.~~

~~During the year ended~~ December 31, 2015, we closed on loans with total gross proceeds of $395.3 million. The loans have a weighted average maturity of 21 years, carry a weighted average interest rate of 3.93% per annum and were secured by 26 manufactured home Properties and RV resorts. Proceeds from the financings were used to retire by defeasance and prepayment approximately $370.2 million of loans maturing at various times throughout 2015 and 2016, with a weighted average interest rate of 5.58% per annum, which were secured by 32 manufactured home Properties and RV resorts. We incurred approximately $17.0 million in early debt retirement expense related to these loans.

~~Term Loan~~respectively.

As of June 30, 2016 and December 31, 2015, our $200.0 million unsecured Term Loan (the “Term Loan”) matures on January 10, 2020 and has an interest rate of LIBOR plus 1.35% to 1.95% per annum and, subject to certain conditions, may be prepaid at any time without premium or penalty. The spread over LIBOR is variable quarterly based on leverage measured quarterly throughout the loan term. The Term Loan contains customary representations, warranties, and negative and affirmative covenants, and provides for acceleration of principal and payment of all other amounts payable thereunder upon the occurrence of certain events of default. In connection with the Term Loan, we also entered into a three year LIBOR Swap Agreement (the “2014 Swap”) allowing us to trade the variable interest rate for a fixed interest rate on the Term Loan (See Note 8 to the Consolidated Financial Statements for further information on the accounting for the 2014 Swap).

~~Unsecured Line of Credit~~

As of June 30, 2016 and December 31, 2015, our unsecured Line of Credit (“LOC”) had a borrowing capacity of $400.0 million, with the option to increase the borrowing capacity by $100.0 million, subject to certain conditions, with no amounts outstanding as of those dates. The LOC bears interest at a rate of LIBOR plus 1.20% to 1.65%, requires an annual facility fee of

~~Equity LifeStyle Properties, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~Note 7 – Borrowing Arrangements (continued)~~

0.20% to 0.35% and matures on July 17, 2018, with an option to extend for one additional year, subject to certain conditions. The spread over LIBOR is variable quarterly based on leverage throughout the loan term.

~~As of June 30, 2016,~~2017, we are in compliance in all material respects with the covenants in our borrowing arrangements.

~~Note 8 – Derivative Instruments and Hedging Activities~~

~~Cash Flow Hedges of Interest Rate Risk~~

In connection with our Term Loan, we entered into the 2014 Swap (see Note 7 to the Consolidated Financial Statements for information about the Term Loan related to the 2014 Swap) allowing us to trade the variable interest rate for a fixed interest rate on the Term Loan. The 2014 Swap fixes the underlying LIBOR rate on the Term Loan at 1.04% per annum for the first three years and matures on August 1, 2017. Based on the leverage as of June 30, 2016, our spread over LIBOR is 1.35% resulting in an estimated all-in interest rate of 2.39% per annum.

We have designated the 2014 Swap as a cash flow hedge. No gain or loss was recognized in the Consolidated Statements of Income and Comprehensive Income related to hedge ineffectiveness or to amounts excluded from effectiveness testing on our cash flow hedge during the quarters and six months ended June 30, 2016 and 2015.

Amounts reported in accumulated other comprehensive loss on the Consolidated Balance Sheets related to derivatives are reclassified to interest expense as interest payments are made on our variable-rate debt. During the next twelve months, we estimate that an additional $1.1 million will be reclassified as an increase to interest expense. This estimate may be subject to change as the underlying LIBOR rate changes.

~~Derivative Instruments and Hedging Activities~~

The table below presents the fair value of our derivative financial instrument as well as our classification on our Consolidated Balance Sheets as of June 30, 2016 and December 31, 2015 (amounts in thousands):

Derivatives in Cash Flow Hedging Relationship Balance Sheet Location June 30,
2016 December 31,
2015
Interest Rate Swap Accrued expenses and accounts payable $ 1,197
$ 553

~~Tabular Disclosure of the Effect of Derivative Instruments on the Income Statement~~

The tables below present the effect of our derivative financial instrument on the Consolidated Statements of Income and Comprehensive Income for the quarters ended June 30, 2016 and 2015 (amounts in thousands):

Derivatives in Cash Flow Hedging Relationship Amount of loss recognized
in OCI on derivative Location of loss
reclassified from
accumulated OCI into income Amount of loss
reclassified from
accumulated OCI into
income
June 30,
2016 June 30,
2015 June 30,
2016 June 30,
2015
Interest Rate Swap $ 338
$ 230
Interest Expense $ 302
$ 434

The tables below present the effect of our derivative financial instrument on the Consolidated Statements of Income and Comprehensive Income for the six months ended June 30, 2016 and 2015 (amounts in thousands):

~~We determined that no adjustment was necessary for non-performance risk on our derivative obligation. As of June 30, 2016, we have not posted any collateral related to this agreement.~~

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

~~Note 9 – Deferred Revenue-entry of right-to-use contracts and Deferred Commission Expense~~

~~As of June 30, 2016 and 2015, the components of the change in deferred revenue-entry of right-to-use contracts and deferred commission expense are as follows (amounts in thousands):~~

Six Months Ended June 30,
2016 2015
Deferred revenue–upfront payments from right-to-use contracts, as of January 1, $ 78,405
$ 74,174
Right-to-use contracts current period, gross 5,618
6,375
Revenue recognized from right-to-use contract upfront payments (4,518 ) (4,147 )
Right-to-use contract upfront payments, deferred, net 1,100
2,228
Deferred revenue–upfront payments from right-to-use contracts, as of June 30, $ 79,505
$ 76,402

Deferred commission expense, as of January 1, $ 30,865
$ 28,589
Deferred commission expense 2,238
3,067
Commission expense recognized (2,019 ) (1,696 )
Net increase in deferred commission expense 219
1,371
Deferred commission expense, as of June 30, $ 31,084
$ 29,960

Note 108 – Equity Incentive Awards

Stock-based compensation expense, reported in general and administrative on the Consolidated Statements of Income and Comprehensive Income, for both of the quarters ended June 30, ~~2016~~2017 and ~~2015~~2016 was approximately $2.5 million ~~and $2.2 million, respectively,~~ and for the six months ended June 30, ~~2016~~2017 and ~~2015~~2016 was approximately ~~$4.4~~$4.3 million and ~~$4.0~~$4.4 million respectively.

Our 2014 Equity Incentive Plan (the “2014 Plan”) was adopted by our Board of Directors on March 11, 2014 and approved by our stockholders on May 13, 2014. Pursuant to the 2014 Plan, our officers, directors, employees and consultants may be awarded (i) shares of common stock (“Restricted ~~Stock Grants”~~Stock”), (ii) options to acquire shares of common stock (“Options”), including non-qualified stock options and incentive stock options within the meaning of Section 422 of the Internal Revenue Code, and (iii) other forms of equity awards, subject to conditions and restrictions determined by the Compensation, Nominating, and Corporate Governance Committee of our Board of Directors (the “Compensation Committee”). The Compensation Committee will determine the vesting schedule, if any, of each Restricted Stock Grant or Option and the term of each Option, which term shall not exceed ten years from the date of grant. Shares that do not vest are forfeited. Dividends paid on restricted stock are not returnable, even if the underlying stock does not entirely vest. A maximum of 3,750,000 shares of common stock were originally available for grant under the 2014 Plan. As of June 30, ~~2016, 3,264,282~~2017, 3,126,885 shares remained available for grant. ~~For the six months ended June 30, 2016, Options for 220,000 shares of common stock were exercised for gross proceeds of approximately $5.2 million.~~

Grants under the 2014 Plan are approved by the Compensation Committee, which determines the individuals eligible to receive awards, the types of awards, and the terms, conditions and restrictions applicable to any award, except grants to directors which are approved by the Board of Directors.

~~Grants Issued~~

On May ~~10, 2016,~~2, 2017, we awarded ~~Restricted Stock Grants for 14,705~~to certain members of our Board of Directors, 55,238 shares of ~~common stock~~Restricted Stock at a fair market value of approximately ~~$1.1~~$4.5 million and ~~awarded~~ Options to purchase ~~7,550~~6,930 shares of common stock with an exercise price of ~~$74.53~~$81.15 per ~~share to certain members of our Board of Directors.The~~share. The shares of common stock covered by these awards are subject to multiple tranches that vest ~~as soon as~~between November ~~10, 2016~~2, 2017 and ~~as late as~~ May ~~10, 2019.~~2, 2020.

On February 1, ~~2016,~~2017, we awarded ~~Restricted Stock Grants for 73,000~~75,000 shares of ~~common stock~~Restricted Stock at a fair market value of approximately ~~$4.9~~$5.4 million to certain members of our senior management for their service in ~~2016.~~2017. These ~~Restricted Stock Grants~~restricted stock grants will vest on December 31, ~~2016.~~

On February 1, 2016, we awarded Restricted Stock Grants for 45,784 shares of common stock at a fair market value of approximately $3.1 million to certain members of our Board of Directors for their services as Chairman of the Board, Chairman of the Compensation Committee and Lead Director, Chairman of the Executive Committee and Chairman of the Audit Committee in 2016. One-third of the shares of restricted common stock covered by these awards will vest on each of December 31, 2016, December 31, 2017, and December 31, 2018.

~~Equity LifeStyle Properties, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~Note 10 – Equity Incentive Awards (continued)~~

2017.

The fair market value of our restricted stock grants was determined by using the closing share price of our common stock on the date the shares were issued and is recorded as compensation expense and paid in capital over the vesting period.

~~Note 11 – Long-Term Cash Incentive Plan~~

On February 12, 2016, our Compensation Committee approved a Long-Term Cash Incentive Plan Award (the "2016 LTIP") to provide a long-term cash bonus opportunity to certain members of our management. The 2016 LTIP was approved by the Compensation Committee pursuant to the authority set forth in the Long Term Cash Incentive Plan approved by our Board of Directors on May 15, 2007. The total cumulative payment for all participants (the "Eligible Payment") is based upon certain performance conditions being met over a three year period ending December 31, 2018.

The Compensation Committee has responsibility for administering the 2016 LTIP and may use its reasonable discretion to adjust the performance criteria or Eligible Payments to take into account the impact of any major or unforeseen transaction or event. Our named executive officers are not participants in the 2016 LTIP. The Eligible Payment will be paid, at the discretion of our Compensation Committee, in cash upon completion of our annual audit for the 2018 fiscal year and upon satisfaction of the vesting conditions as outlined in the 2016 LTIP and, including employer costs, is currently estimated to be approximately $5.6 million. As of June 30, 2016, we had accrued compensation expense of approximately $1.0 million for the 2016 LTIP.

The amount accrued for the 2016 LTIP reflects our evaluation of the 2016 LTIP based on forecasts and other available information and is subject to performance in line with forecasts and final evaluation and determination by the Compensation Committee. There can be no assurances that our estimates of the probable outcome will be representative of the actual outcome.

Note 129 – Commitments and Contingencies

California Rent Control Litigation

As part of our effort to realize the value of our Properties subject to rent control, we previously initiated lawsuits against certain localities in California with the goal of achieving a level of regulatory fairness in California's rent control jurisdictions, and in particular those jurisdictions that prohibit increasing rents to market upon turnover. Such regulations allow tenants to sell their homes for a price that includes a premium above the intrinsic value of the homes. The premium represents the value of the future discounted rent-controlled rents, which is fully capitalized into the prices of the homes sold. In our view, such regulations result in a transfer to the tenants of the value of our land, which would otherwise be reflected in market rents. We have discovered through the litigation process that certain municipalities considered condemning our Properties at values well below the value of the underlying land. In our view, a failure to articulate market rents for Sites governed by restrictive rent control would put us at risk for condemnation or eminent domain proceedings based on artificially reduced rents. Such a physical taking, should it occur, could represent substantial lost value to stockholders. We are cognizant of the need for affordable housing in the jurisdictions, but assert that restrictive rent regulation does not promote this purpose because tenants pay to their sellers as part of the purchase price of the home all the future rent savings that are expected to result from the rent control regulations, eliminating any supposed improvement in the affordability of housing. In a more well-balanced regulatory environment, we would receive market rents that would eliminate the price premium for homes, which would trade at or near their intrinsic value. Such efforts have included the following matters:

We sued the City of San Rafael on October 13, 2000 in the U.S. District Court for the Northern District of California, challenging its rent control ordinance on constitutional grounds. While the ~~trial court~~District Court found the rent control ordinance unconstitutional, the United States Court of Appeals for the Ninth Circuit reversed the ~~trial court~~District Court and ruled that the ordinance had not unconstitutionally taken our property. On September 3, 2013, we filed a petition for review by the U.S. Supreme Court, which was denied.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 9 – Commitments and Contingencies (continued)

On January 31, 2012, we sued the City of Santee in the United States District for the Southern District of California challenging its rent control ordinance on constitutional grounds. On September 26, 2013, we entered a settlement agreement with the City pursuant to which we are able to increase Site rents at the Meadowbrook community through January 1, 2034 as follows: (a) a one-time 2.5% rent increase on all Sites in January 2014; plus (b) annual rent increases of 100% of the consumer price index (CPI) beginning in 2014; and (c) a 10% increase in the rent on a site upon turnover of that site. Absent the settlement, the rent control ordinance limited us to annual rent increases of at most 70% of CPI with no increases on turnover of a site.

~~Equity LifeStyle Properties, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~Note 12 – Commitments and Contingencies (continued)~~

~~Colony Park~~Settlement of California Lawsuits

On ~~December 1, 2006, a group~~January 18, 2017, we entered into agreements pursuant to which we agreed to settle three California lawsuits related to our California Hawaiian property in San Jose, our Monte del Lago property in Castroville and our Santiago Estates property in Sylmar. Each of ~~tenants at our Colony Park Property in Ceres, California filed a complaint in~~ the ~~California Superior Court for Stanislaus County alleging~~three plaintiff groups was represented by the same law firm and alleged that ~~we had~~the Company failed to properly maintain the ~~Property~~respective properties. The settlement agreements provided for $9.9 million to be paid to settle the California Hawaiian matter, $1.5 million to be paid to settle the Monte del Lago matter and ~~had improperly reduced~~$1.9 million to be paid to settle the ~~services provided~~Santiago Estates matter. As a result, a litigation settlement payable was recorded in Accrued expenses and accounts payable as of December 31, 2016. In addition, an insurance receivable was recorded in escrow deposits, goodwill and other assets, net as of December 31, 2016, resulting in a net settlement of approximately $2.4 million reflected as a component of property rights initiatives and other, net on the consolidated statement of income for the year ended December 31, 2016. During the quarter ended March 31, 2017, the settlements were finalized, the settlement payments were made and the insurance payments were received. These settlements resolved all pending matters brought by plaintiffs’ counsel against us or any of our affiliates. Pursuant to the ~~tenants, among other allegations. We answered the complaint by denying~~settlement agreements, all ~~material allegations and filed a counterclaim for declaratory relief and damages. The case proceeded in Superior Court because our motion~~plaintiffs provided full releases to ~~compel arbitration was denied and the denial was upheld on appeal. Trial~~each of the case began on July 27, 2010. After just over three months of trial in which the plaintiffs asked the jury to award a total of approximately $6.8 million in damages, the jury rendered verdicts awarding a total of less than $44,000 to six out of the 72 plaintiffs,defendants and awarding nothing to the other 66 plaintiffs. The plaintiffs who were awarded nothing filed a motion for a new trial or alternatively for judgment notwithstanding the jury's verdict, which the Court denied on February 14, 2011. All but three of the 66 plaintiffs to whom the jury awarded nothing appealed. Oral argument in the appeal was held on September 19, 2013 and the matter was taken under submission by the California Court of Appeal.

By orders entered on December 14, 2011, the Superior Court awarded us approximately $2.0 million in attorneys' fees and other costs jointly and severally against the plaintiffs to whom the jury awarded nothing, and awarded no attorneys' fees or costs to either sidetheir affiliates including with respect to the ~~six plaintiffs to whom~~claims alleged in the ~~jury awarded less than $44,000. Plaintiffs filed~~lawsuits, and each of the lawsuits and related appeals were dismissed with prejudice. The settlements do not constitute an ~~appeal from the approximately $2.0 million award~~admission of liability by us or any of our ~~attorneys' fees~~affiliates and ~~other costs. Oral argument~~were made to avoid the costs, risks and uncertainties inherent in ~~that appeal was also held on September 19, 2013.~~ On December 3, 2013, the Court of Appeal issued a partially published opinion that rejected all of plaintiffs' claims on appeal except one, relating to whether the park's rules prohibited the renting of spaces to recreational vehicles. The Court of Appeal reversed the judgment on the recreational vehicle issue and remanded for further proceedings regarding that issue. Because the judgment was reversed, the award of attorney's fees and other costs was also reversed. Both sides filed rehearing petitions with the Court of Appeal. On December 31, 2013, the Court of Appeal granted the defendants' rehearing petition and ordered the parties to submit supplemental briefing, which the parties did. On March 10, 2014, the Court of Appeal issued a new partially published opinion in which it again rejected all of the plaintiffs' claims on appeal except the one relating to whether the park's rules prohibited the renting of spaces to recreational vehicles, reversing the judgment on that issue and remanding it for further proceedings, and accordingly vacating the award of attorney's fees and other costs.

As of result of a settlement we reached with the plaintiffs remaining in the litigation, pursuant to which among other provisions the parties agreed to mutually release all of their claims in the litigation without any payment by us, on September 28, 2015 the plaintiffs filed with the Superior Court a request for dismissal with prejudice of the entire action, to which we consented. ~~On July 14, 2016, the Superior Court entered a dismissal of the action with prejudice.~~

~~California Hawaiian~~

On April 30, 2009, a group of tenants at our California Hawaiian Property in San Jose, California filed a complaint in the California Superior Court for Santa Clara County, Case No. 109CV140751, alleging that we have failed to properly maintain the Property and have improperly reduced the services provided to the tenants, among other allegations. We moved to compel arbitration and stay the proceedings, to dismiss the case, and to strike portions of the complaint. By order dated October 8, 2009, the Court granted our motion to compel arbitration and stayed the court proceedings pending the outcome of the arbitration. The plaintiffs filed with the California Court of Appeal a petition for a writ seeking to overturn the trial court's arbitration and stay orders. On May 10, 2011, the Court of Appeal granted the petition and ordered the trial court to vacate its order compelling arbitration and to restore the matter to its litigation calendar for further proceedings. On May 24, 2011, we filed a petition for rehearing requesting the Court of Appeal to reconsider its May 10, 2011 decision. On June 8, 2011, the Court of Appeal denied the petition for rehearing. On June 16, 2011, we filed with the California Supreme Court a petition for review of the Court of Appeal's decision. On August 17, 2011, the California Supreme Court denied the petition for review.

The trial commenced on January 27, 2014. On April 14-15, 2014, the jury entered verdicts against our Operating Partnership of approximately $15.3 million in compensatory damages and approximately $95.8 million in punitive damages. On October 6, 2014, we filed a motion for a new trial and a motion for partial judgment notwithstanding the jury's verdict. On December 5, 2014, after briefing and a hearing on those motions, the trial court entered an order granting us a new trial on the issue of damages while upholding the jury's determination of liability. As grounds for the ruling, the court cited excessive damages and insufficiency of the evidence to support the verdict as to the amount of damages awarded by the jury. The Court's ruling overturned the April 2014 verdicts of $15.3 million in compensatory damages and $95.8 million in punitive damages. On January 28, 2015, we and the plaintiffs each served notices of appeal from the trial court's December 5, 2014 order. The Court of Appeal issued an order setting the briefing sequence and ordered commencement of the briefing. On December 15, 2015, the plaintiffs filed their opening appellants’ brief; on March 25, 2016, we filed our combined respondents’ and opening brief; and on July 8, 2016, the plaintiffs filed their combined reply and cross-respondents’ brief. We intend to continue to vigorously defend ourselves in this litigation.

~~Equity LifeStyle Properties, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~Note 12 – Commitments and Contingencies (continued)~~

At June 30, 2016, based on the information available to us, a material loss was neither probable nor estimable. We have taken into consideration the events that have occurred after the reporting period and before the financial statements were issued. We anticipate a lengthy time period to achieve resolution of this case.

~~Monte del Lago~~

On February 13, 2015, a group of tenants at our Monte del Lago Property in Castroville, California filed a complaint in the California Superior Court for Monterey County, Case No. M131016, alleging that we have failed to properly maintain the Property and have improperly reduced the services provided to the tenants, among other allegations. We believe the allegations are without merit and intend to vigorously defend ourselves in the lawsuit. On May 13, 2015, we filed a motion to compel arbitration with respect to certain plaintiffs and to stay the litigation pending the conclusion of the arbitration proceedings. Hearings on the motion were held on July 17, 2015 and September 18, 2015. On October 7, 2015, the court denied our motion. On December 3, 2015, we filed a notice of appeal from the denial of our motion.

~~Santiago Estates~~

On September 4, 2015, a group of tenants at our Santiago Estates Property in Sylmar, California filed a complaint in the California Superior Court for Los Angeles County, Case No. BC593831, alleging that we have failed to properly maintain the Property and have improperly reduced the services provided to the tenants, among other allegations. We believe the allegations are without merit and intend to vigorously defend ourselves in the lawsuit. On November 24, 2015, we filed a motion to compel arbitration with respect to certain plaintiffs and to stay the litigation pending the conclusion of the arbitration proceedings. The hearing date for that motion is August 19, 2016.

Civil Investigation by Certain California District Attorneys

In November 2014, we received a civil investigative subpoena from the office of the District Attorney for Monterey County, California ("MCDA"), seeking information relating to, among other items, statewide compliance with asbestos and hazardous waste regulations dating back to 2005 primarily in connection with demolition and renovation projects performed by third-party contractors at our California Properties. We responded by providing the information required by the subpoena.

On October 20, 2015, we attended a meeting with representatives of the MCDA and certain other District Attorneys' offices at which the MCDA reviewed the preliminary results of their investigation including, among other things, (i) alleged violations of asbestos and related regulations associated with approximately 200 historical demolition and renovation projects in California; (ii) potential exposure to civil penalties and unpaid fees; and (iii) next steps with respect to a negotiated resolution of the alleged violations. No legal proceedings have been instituted to date and we are involved in settlement discussions with the District Attorneys' offices. We continue to assess the allegations and the underlying facts, and at this time we are unable to predict the outcome of the investigation or reasonably estimate any possible loss.

~~Alpine Lake RV Resort OSHA Citations~~

On February 19, 2016, we received a Citation and Notice of Penalty from the Occupational Safety and Health Administration (“OSHA”) alleging two willful and seven serious safety violations relating to the design and maintenance of the electrical system at our Alpine Lake RV Resort in Corinth, New York, and assessing fines totaling $187,000. We have been working with a certified third-party electrician to address the items raised in the citations.

On March 9, 2016, we attended an informal conference in Albany, New York with the OSHA Area Director. The matter was not resolved at the meeting, and we filed the required notice of contest on March 10, 2016 after which the matter was transferred to the Occupational Safety & Health Review Commission, which is represented by a solicitor from the Department of Labor. The solicitor filed a complaint on May 20, 2016, and the parties participated in a formal settlement conference on June 22, 2016. The parties did not reach a settlement at the formal settlement conference. Absent the parties reaching a settlement, we anticipate that this matter will proceed to trial. We intend to continue to vigorously defend ourselves, and at this time we are unable to predict the outcome of this matter.

Other

In addition to legal matters discussed above, we are involved in various other legal and regulatory proceedings ("Other Proceedings") arising in the ordinary course of business. The Other Proceedings include, but are not limited to, notices, consent

~~Equity LifeStyle Properties, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~Note 12 – Commitments and Contingencies (continued)~~

decrees, information requests, and additional permit requirements and other similar enforcement actions by governmental agencies relating to our utility infrastructure, including water and wastewater treatment plants and other waste treatment facilities and electrical systems. Additionally, in the ordinary course of business, our operations are subject to audit by various taxing authorities. Management believes these Other Proceedings taken together do not represent a material liability. In addition, to the extent any such proceedings or audits relate to newly acquired Properties, we consider any potential indemnification obligations of sellers in our favor.

Note 1310 – Reportable Segments

Operating segments are defined as components of an entity for which separate financial information is available that is evaluated regularly by the chief operating decision maker. The chief operating decision maker evaluates and assesses performance on a monthly basis. Segment operating performance is measured on Net Operating Income (“NOI”). NOI is defined as total operating revenues less total operating expenses. Segments are assessed before interest income, depreciation and amortization of in-place leases.

We have identified two reportable segments which are: (i) Property Operations and (ii) Home Sales and Rentals Operations. The Property Operations segment owns and operates land lease Properties and the Home Sales and Rentals Operations segment purchases, sells and leases homes at the Properties. The distribution of the Properties throughout the United States reflects our belief that geographic diversification helps insulate the portfolio from regional economic influences.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 10 - Reportable Segments (Continued)

All revenues are from external customers and there is no customer who contributed 10% or more of our total revenues during the quarters and six months ended June 30, ~~2016~~2017 or ~~2015~~.2016.

The following tables summarize our segment financial information for the quarters and six months ended June 30, ~~2016~~2017 and ~~2015~~2016 (amounts in thousands):

Quarter Ended June 30, 2017



	Property Operations			Home Sales and Rentals Operations			Consolidated
Operations revenues	$	206,594		$	11,811		$	218,405
Operations expenses	(102,649		)	(10,481		)	(113,130		)
Income from segment operations	103,945			1,330			105,275
Interest income	754			1,041			1,795
Depreciation on real estate assets and rental homes	(27,609		)	(2,638		)	(30,247		)
Amortization of in-place leases	(958		)	—			(958		)
Income (loss) from operations	$	76,132		$	(267	)	$	75,865
Reconciliation to Consolidated net income:
Corporate interest income							3
Income from other investments, net							1,109
General and administrative							(8,461		)
Property rights initiatives and other							(271		)
Interest and related amortization							(24,822		)
Equity in income of unconsolidated joint ventures							1,040
Consolidated net income							$	44,463

Total assets	$	3,267,947		$	217,411		$	3,485,358

Quarter Ended June 30, 2016


	Property Operations			Home Sales and Rentals Operations			Consolidated			Property Operations			Home Sales and Rentals Operations			Consolidated
Operations revenues	$	193,184		$	13,002		$	206,186		$	193,184		$	13,002		$	206,186
Operations expenses	(94,375		)	(11,867		)	(106,242		)	(94,375		)	(11,867		)	(106,242		)
Income from segment operations	98,809			1,135			99,944			98,809			1,135			99,944
Interest income	736			867			1,603			736			867			1,603
Depreciation on real estate assets and rental homes	(26,317		)	(2,712		)	(29,029		)	(26,317		)	(2,712		)	(29,029		)
Amortization of in-place leases	(428		)	—			(428		)	(428		)	—			(428		)
Income (loss) from operations	$	72,800		$	(710	)	72,090			$	72,800		$	(710	)	$	72,090
Reconciliation to Consolidated net income:
Corporate interest income							22									22
Income from other investments, net							2,270									2,270
General and administrative							(8,255		)							(8,255		)
Property rights initiatives and other							(527		)							(527		)
Interest and related amortization							(25,561		)							(25,561		)
Equity in income of unconsolidated joint ventures							765									765
Consolidated net income							$	40,804								$	40,804

Total assets	$	3,249,375		$	236,200		$	3,485,575		$	3,249,375		$	236,200		$	3,485,575

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 1310 - ~~Segment Reporting (continued)~~Reportable Segments (Continued)

~~Quarter~~Six Months Ended June 30, ~~2015~~2017


	Property Operations			Home Sales and Rentals Operations			Consolidated			Property Operations			Home Sales and Rentals Operations			Consolidated
Operations revenues	$	184,125		$	13,441		$	197,566		$	425,582		$	22,685		$	448,267
Operations expenses	(90,677		)	(11,502		)	(102,179		)	(199,906		)	(20,076		)	(219,982		)
Income from segment operations	93,448			1,939			95,387			225,676			2,609			228,285
Interest income	713			1,001			1,714			1,484			2,079			3,563
Depreciation on real estate assets and rental homes	(25,586		)	(2,749		)	(28,335		)	(55,062		)	(5,295		)	(60,357		)
Amortization of in-place leases	(669		)	—			(669		)	(1,990		)	—			(1,990		)
Income from operations	$	67,906		$	191		68,097
Income (loss) from operations										$	170,108		$	(607	)	$	169,501
Reconciliation to Consolidated net income:
Corporate interest income							22									5
Income from other investments, net							2,178									1,866
General and administrative							(7,541		)							(15,834		)
Property rights initiatives and other							(694		)							(490		)
Early debt retirement							69
Interest and related amortization							(26,145		)							(49,701		)
Equity in income of unconsolidated joint ventures							840									2,190
Consolidated net income							$	36,826								$	107,537

Total assets	$	3,192,050		$	255,458		$	3,447,508		$	3,267,947		$	217,411		$	3,485,358
Capital improvements										$	31,731		$	21,733		$	53,464

Six Months Ended June 30, 2016



	Property Operations			Home Sales and Rentals Operations			Consolidated
Operations revenues	$	397,910		$	25,040		$	422,950
Operations expenses	(184,887		)	(22,507		)	(207,394		)
Income from segment operations	213,023			2,533			215,556
Interest income	1,453			1,785			3,238
Depreciation on real estate assets and rental homes	(52,281		)	(5,403		)	(57,684		)
Amortization of in-place leases	(763		)	—			(763		)
Income (loss) from operations	$	161,432		$	(1,085	)	$	160,347
Reconciliation to Consolidated net income:
Corporate interest income							47
Income from other investments, net							3,993
General and administrative							(15,663		)
Property rights initiatives and other							(1,181		)
Interest and related amortization							(51,195		)
Equity in income of unconsolidated joint ventures							1,646
Consolidated net income							$	97,994

Total assets	$	3,249,375		$	236,200		$	3,485,575

~~Six Months EndedJune 30, 2016~~

Property
Operations

Home Sales
and Rentals
Operations
Consolidated
Operations revenues $ 397,910
$ 25,040
$ 422,950
Operations expenses (184,887 ) (22,507 ) (207,394 )
Income from segment operations 213,023
2,533
215,556
Interest income 1,453
1,785
3,238
Depreciation on real estate assets and rental homes (52,281 ) (5,403 ) (57,684 )
Amortization of in-place leases (763 ) —
(763 )
Income (loss) from operations $ 161,432
$ (1,085 ) 160,347
Reconciliation to Consolidated net income:
Corporate interest income 47
Income from other investments, net 3,993
General and administrative (15,663 )
Property rights initiatives and other (1,181 )
Interest and related amortization (51,195 )
Equity in income of unconsolidated joint ventures 1,646
Consolidated net income $ 97,994

Total assets $ 3,249,375
$ 236,200
$ 3,485,575
Capital improvements $ 37,551
$ 30,984
$ 55,707

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 1310 - ~~Segment Reporting (continued)~~Reportable Segments (Continued)

~~Six Months Ended June 30, 2015~~

Property
Operations

Home Sales
and Rentals
Operations
Consolidated
Operations revenues $ 378,814
$ 24,227
$ 403,041
Operations expenses (177,957 ) (20,700 ) (198,657 )
Income from segment operations 200,857
3,527
204,384
Interest income 1,422
2,089
3,511
Depreciation on real estate assets and rental homes (50,965 ) (5,486 ) (56,451 )
Amortization of in-place leases (1,334 ) —
(1,334 )
Income from operations $ 149,980
$ 130
150,110
Reconciliation to Consolidated net income:
Corporate interest income 45
Income from other investments, net 3,297
General and administrative (14,947 )
Property rights initiatives and other (1,247 )
Early debt retirement (16,922 )
Interest and related amortization (53,421 )
Equity in income of unconsolidated joint ventures 1,724
Consolidated net income $ 68,639

Total assets $ 3,192,050
$ 255,458
$ 3,447,508
Capital improvements $ 22,557
$ 19,702
$ 42,259

The following table summarizes our financial information for the Property Operations segment for the quarters and six months ended June 30, ~~2016~~2017 and ~~2015~~2016 (amounts in thousands):

Quarters Ended Six Months Ended
June 30,
2016 June 30,
2015 June 30,
2016 June 30,
2015
Revenues:
Community base rental income $ 115,385
$ 110,073
$ 229,461
$ 219,343
Resort base rental income 44,732
41,427
100,166
93,072
Right-to-use annual payments 11,187
10,945
22,241
21,926
Right-to-use contracts current period, gross 3,086
3,578
5,618
6,375
Right-to-use contract upfront payments, deferred, net (798 ) (1,455 ) (1,100 ) (2,228 )
Utility and other income 19,523
18,901
40,316
37,983
Ancillary services revenues, net 69
656
1,208
2,343
Total property operations revenues 193,184
184,125
397,910
378,814
Expenses:
Property operating and maintenance 66,647
64,178
129,601
125,295
Real estate taxes 12,869
12,652
26,067
25,246
Sales and marketing, gross 2,931
3,512
5,424
6,034
Right-to-use contract commissions, deferred, net (116 ) (764 ) (12 ) (1,007 )
Property management 12,044
11,099
23,807
22,389
Total property operations expenses 94,375
90,677
184,887
177,957
Income from property operations segment $ 98,809
$ 93,448
$ 213,023
$ 200,857

~~Equity LifeStyle Properties, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~Note 13 - Segment Reporting (continued)~~



	Quarters Ended						Six Months Ended
	June 30, 2017			June 30, 2016			June 30, 2017			June 30, 2016
Revenues:
Community base rental income	$	121,964		$	115,385		$	242,656		$	229,461
Resort base rental income	50,055			44,732			111,123			100,166
Right-to-use annual payments	11,350			11,187			22,602			22,241
Right-to-use contracts current period, gross	3,798			3,086			7,004			5,618
Right-to-use contract upfront payments, deferred, net	(1,321		)	(798		)	(2,096		)	(1,100		)
Utility and other income	20,650			19,523			42,776			40,316
Ancillary services revenues, net	98			69			1,517			1,208
Total property operations revenues	206,594			193,184			425,582			397,910
Expenses:
Property operating and maintenance	72,901			66,647			140,955			129,601
Real estate taxes	13,943			12,869			27,980			26,067
Sales and marketing, gross	2,894			2,931			5,584			5,424
Right-to-use contract commissions, deferred, net	(112		)	(116		)	(196		)	(12		)
Property management	13,023			12,044			25,583			23,807
Total property operations expenses	102,649			94,375			199,906			184,887
Income from property operations segment	$	103,945		$	98,809		$	225,676		$	213,023

The following table summarizes our financial information for the Home Sales and Rentals Operations segment for the quarters and six months ended June 30, ~~2016~~2017 and ~~2015~~2016 (amounts in thousands):


	Quarters Ended				Six Months Ended				Quarters Ended				Six Months Ended
	June 30, 2016		June 30, 2015		June 30, 2016		June 30, 2015		June 30, 2017		June 30, 2016		June 30, 2017		June 30, 2016
Revenues:
Gross revenue from home sales	$	9,130	$	9,526	$	17,344	$	16,463	$	7,833	$	9,130	$	14,860	$	17,344
Brokered resale revenues, net	329		356		608		651		346		329		588		608
Rental home income ^(a)	3,543		3,559		7,088		7,113		3,632		3,543		7,237		7,088
Total revenues	13,002		13,441		25,040		24,227		11,811		13,002		22,685		25,040
Expenses:
Cost of home sales	9,481		9,093		17,762		15,817		7,895		9,481		15,014		17,762
Home selling expenses	805		720		1,639		1,525		929		805		1,854		1,639
Rental home operating and maintenance	1,581		1,689		3,106		3,358		1,657		1,581		3,208		3,106
Total expenses	11,867		11,502		22,507		20,700		10,481		11,867		20,076		22,507
Income from home sales and rentals operations segment	$	1,135	$	1,939	$	2,533	$	3,527	$	1,330	$	1,135	$	2,609	$	2,533

______________________


(a)	Segment information does not include Site rental income included in Community base rental income.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the Consolidated Financial Statements and related Notes included elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2016, and with the information under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2016.

Overview ~~and Outlook~~

We are a self-administered, self-managed, real estate investment trust (“REIT”) with headquarters in Chicago, Illinois. We are a fully integrated owner and operator of lifestyle-oriented properties (“Properties”) consisting primarily of manufactured home ("MH") communities and recreational vehicle ("RV") resorts and campgrounds. We lease individual developed areas (“Sites”) with access to utilities for placement of factory built homes, cottages, cabins or RVs. Customers may lease individual Sites or enter right-to-use contracts providing the customer access to specific Properties for limited stays. As of June 30, ~~2016,~~2017, we owned or had an ownership interest in a portfolio of ~~390~~393 Properties located throughout the United States and Canada containing ~~145,804~~147,107 Sites. These properties are located in 32 states and British ~~Columbia.~~

~~This Quarterly Report on Form 10-Q for the quarter ended June 30, 2016 includes certain “forward-looking statements”~~Columbia, with more than 80 Properties with lake, river or ocean frontage and more than 100 Properties within ~~the meaning~~10 miles 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, orcoastal United States.

We generate the negative thereof, unless the context requires otherwise, are intended to identify forward-looking statements and may include without limitation, information regarding our expectations, goals or intentions regarding the future, and the expected effectmajority of our ~~acquisitions. These forward-looking statements are subject to numerous assumptions, risks and uncertainties, including, but not limited to:~~

our ability to control costs, real estate market conditions, the actual rate of decline in customers, the actual use of Sites by customers and our success in acquiring new customers at our Properties (including those that we may acquire);

~~our ability to maintain historical or increase future rental rates and occupancy with respect to Properties currently owned or that we may acquire;~~

~~our ability to retain and attract customers renewing, upgrading and entering right-to-use contracts;~~

~~our assumptions about rental and home sales markets;~~

~~our ability to manage counterparty risk;~~

in the age-qualified Properties, home sales results could be impacted by the ability of potential home buyers to sell their existing residences as well as by financial, credit and capital markets volatility;

results from home sales and occupancy will continue to be impacted by local economic conditions, lack of affordable manufactured home financing and competition from alternative housing options including site-built single-family housing;

~~impact of government intervention to stabilize site-built single-family housing and not manufactured housing;~~

~~effective integration of recent acquisitions and our estimates regarding the future performance of recent acquisitions;~~

~~Management's Discussion (continued)~~

~~the completion of future transactions in their entirety, if any, and timing and effective integration with respect thereto;~~

~~unanticipated costs or unforeseen liabilities associated with recent acquisitions;~~

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

~~the effect of interest rates;~~

~~the dilutive effects of issuing additional securities;~~

~~the effect of accounting for the entry of contracts with customers representing a right-to-use the Properties under the Codification Topic~~ ~~"Revenue Recognition;"~~

the outcome of pending or future lawsuits filed against us, including those disclosed in our filings with the Securities and Exchange Commission, by tenant groups seeking to limit rent increases and/or seeking large damage awards for our alleged failure to properly maintain certain Properties or other tenant related matters, such as the case currently pending in the California Court of Appeal, Sixth Appellate District, Case No. H041913, involving our California Hawaiian manufactured home property, including any further proceedings on appeal or in the trial court; 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. We are under no obligation to, and expressly disclaim any obligation to, update or alter our forward-looking statements whether as a result of such changes, new information, subsequent events or otherwise.

~~The following chart lists the Properties acquired or invested in since January 1, 2015 through~~ ~~June 30, 2016~~.



~~Property~~	~~Transaction Date~~	~~Sites~~

~~Total Sites as of January 1, 2015~~		~~143,113~~
~~Property or Portfolio:~~
~~Acquisitions:~~
~~Bogue Pines~~	~~February 9, 2015~~	~~150~~
~~Whispering Pines~~	~~February 9, 2015~~	~~278~~
~~Miami Everglades~~	~~June 26, 2015~~	~~303~~
~~Rose Bay~~	~~January 27, 2016~~	~~303~~
~~Portland Fairview~~	~~May 26, 2016~~	~~407~~
~~Forest Lake Estates~~	~~June 15, 2016~~	~~1,168~~
~~Expansion Site Development and other:~~
~~Net Sites added (reconfigured) in 2015~~		94
~~Net Sites added (reconfigured) in 2016~~		~~(12~~	)
~~Total Sites as of June 30, 2016~~		~~145,804~~

Our gross investment in real estate has increased approximately $140.0 million to $4,618 million as of June 30, 2016 from $4,478 million as of December 31, 2015 primarily due to the acquisition of Rose Bay, Portland Fairview and Forest Lake Estates as well as increased capital expenditures.

We actively seek to acquire and are currently engaged in various stages of negotiations relating to the possible acquisition of additional properties, which may include contracts outstanding to acquire such properties that are subject to the satisfactory completion of our due diligence review.

~~Occupancy in our Properties, as well as our ability to increase rental rates, directly affects revenues. Our revenue streams are predominantly derived~~revenues from customers renting our Sites, ~~on a long-term basis. Some revenue streams are subject~~or entering into right-to-use contracts (also referred to ~~seasonal fluctuations and accordingly, quarterly interim results may not be indicative of full fiscal year results.~~

~~Management's Discussion (continued)~~

~~The following table shows the breakdown of~~as membership products) which provide our ~~Sites by type.~~customers access to specific Properties for limited stays. Our MH community Sites and annual RV resort Sites are leased on an annual basis. Seasonal Sites are leased to customers generally for one to six months. Transient Sites are leased to customers on a short-term basis. The revenue from seasonal and transient Sites is generally higher during the first and third quarters. We consider the transient revenue stream to be our most volatile as it is subject to weather conditions and other factors affecting the ~~marginal~~ RV customer's vacation and travel preferences. Sites designated as right-to-use Sites are primarily utilized to service the approximately ~~104,800~~106,500 customers who have entered into right-to-use ~~contracts.~~contracts (otherwise referred to as "memberships" or "membership dues"). We also have interests in joint venture Properties for which revenue is classified as Equity in income from unconsolidated joint ventures in the Consolidated Statements of Income and Comprehensive Income. The breakdown of our Sites by type are as follows (amounts are approximate):



	Total Sites as of June 30, ~~2016~~2017
Community Sites	~~71,000~~71,100
Resort Sites:
Annual	~~26,300~~26,600
Seasonal	~~10,800~~11,200
Transient	10,500
Right-to-use⁽¹⁾	24,100
Joint Ventures ⁽²⁾	~~3,100~~3,600
	~~145,800~~147,100

_________________________


⁽¹⁾	Includes approximately ~~5,500~~5,700 Sites rented on an annual basis.


⁽²⁾	Joint ventures have approximately ~~2,200~~2,700 annual Sites, approximately 400 seasonal Sites and approximately 500 transient ~~Sites.~~Sites and includes Crosswinds Mobile Home Park joint venture that we entered into during the quarter ended June 30, 2017.

~~For the periods presented,~~

In our ~~Core Portfolio (“Core Portfolio”) consists of~~Home Sales and Rental Operations business our revenue streams include home sales, home rentals, brokerage services and ancillary activities. We generate revenue through home sales and rental operations by selling or leasing Site Set homes that are located in Properties owned and operated during the entire period. This measure is useful to investors for annual comparison as it removes the fluctuations associated with acquisitions, dispositions and significant transactions or unique situations, which are included in income from property operations, excluding deferrals and property management. For the quarter ended June 30, 2016, property operating revenues in our Core Portfolio, excluding deferrals, were up 4.2% and property operating expenses in our Core Portfolio, excluding deferrals and property management, were up 1.7%, resulting in an increase in Core net operating income before deferrals and property management of 6.1%.

Approximately one third of our rental agreements on community Sites have rent increases that are directly or indirectly connected to published CPI statistics that are issued from June through September of the year prior to the increase effective date. Approximately one half of those rental agreements have a CPI floor of approximately 3.0%.

State and local rent control regulations affect 27 Properties, including 19 of our 49 California Properties, all of our seven Delaware Properties and one of our five Massachusetts Properties. The impact of the rent control regulations is to limit our ability to implement rent increases based on prevailing market conditions. The regulations generally permit us to increase ratesmanaged by a percentage of the increase in the CPI, which may be national, regional or local, depending on the rent control ordinance. The limit on rent increases may range from 60% to 100% of CPI with certain maximum limits depending on the jurisdiction.

In the years following the disruption in the site-built housing market, our home sales business was negatively affected by our customers' inability to sell their existing site-built homes and relocate to their retirement destination. As a result, we focused on home rentals rather than sales as our primary source of occupancy upon turnover. As we managed and expanded our portfolio of rental homes, we placed homes in communities where we believed we could successfully sell homes as the market improved. At these Properties, we have been successful at selling homes and driving occupancy gains through increased home ownership. We continue to allocate capital to home purchases based on our assessment of market conditions and emphasize home sales. We continue to see population growth in our key markets, increased access to distribution channels for our products and a renewed willingness by our customers to commit to us for longer periods of time. We have also seen a decrease in homes coming back to us, which generally means that our residents have the opportunity to resell their homes to new residents. While we continue to focus on selling homes, we continue to evaluate rental units, and based on market conditions, we expect to invest in additional new homes for customer rentals.

us. We continue to focus on ~~the quality~~our rental operations, as we believe renting our vacant new homes may represent an attractive source of occupancy ~~growth by increasing~~and the ~~number of homeowners in our Core portfolio. As of June 30, 2016, we increased occupancy in our Core Portfolio by 271 Sites, which included~~opportunity to convert to a ~~gain of 377 homeowners. This compares to the first six months of 2015, during which occupancy increased by 306 Sites resulting from a gain of 758 homeowners.~~

~~Since 2013, we have experienced an increase~~new homebuyer in the ~~sales volume of new~~future. We also sell and used homes in our communities. We attribute this increase to various factors including management's focus on increasing the number of homeowners within our communities, changes to incentive structures for our on-site personnel to emphasize home sales rather than rentals and willingness of an increasing number of customers to commit their capital to purchase a home in one of our communities. New home sales in the manufactured home communities in our Core Portfolio during the six months ended June 30, 2016 increased by 72 new homes over the same

~~Management's Discussion (continued)~~

period in the prior year. The recent new home sales have been primarily in our California, Colorado and Florida communities. (See the Home Sales Operations tables in the sections below for additional detail regarding our home sales activity.)

In the ordinary course of business, we acquire used homes from customers through purchase, foreclosure of a lien, or abandonment. In a vibrant home sales market in which residents are able to resell their homes, we generally acquire fewerrent homes through ~~foreclosure or abandonment. Used homes may require rehabilitation before renting them to new customers.~~

~~During 2013 we formed a~~our joint venture, ECHO Financing, LLC (the "ECHO JV")~~, with~~. We provide brokerage services to residents of our Properties who move from a ~~home manufacturer to buy~~Property but do not relocate their home. In addition, we operate ancillary activities at certain Properties, such as golf courses, pro shops, stores and sell homes, as well as to purchase loans made by an unaffiliated lender to purchasers of such homes at our Properties. The ECHO JV may also rent homes to customers in our communities. We also have a limited program under which we purchase loans made by an unaffiliated lender to purchasers of homes at our Properties.restaurants.

In the manufactured housing industry chattel financing options are limited. Financing options available today include community owner funded programs or third party lender programs that provide subsidized financing to customers and require the community owner to guarantee customer defaults. Third party lender programs have stringent underwriting criteria, sizable down payment requirements, short loan amortization and high interest rates. We have a limited program under which we purchase loans made by an unaffiliated lender to purchasers of homes at our Properties.

AsWe invest in Properties in sought-after locations near retirement and vacation destinations and urban areas across the United States with a focus on increasing operating cash flows. We seek growth in earnings, funds from operations ("FFO") and cash flows by enhancing the profitability and operation of our Properties and investments. We seek to accomplish this by attracting high quality customers to our Properties and retaining these customers who take pride in the Property and in their homes and efficiently

Management's Discussion (continued)

managing our Properties to increase operating margins by increasing occupancy, maintaining competitive market rents and controlling expenses.

In addition to Net income computed in accordance with GAAP, we assess and measure our overall financial and operating performance using certain Non-GAAP supplemental measures, which include: (i) FFO, (ii) Normalized funds from operations ("NFFO"), (iii) Income from property operations, (iv) Income from property operations, excluding deferrals and property management, (v) Core Portfolio income from property operations, excluding deferrals and property management, (operating results for properties owned and operated in both periods under comparison) and (vi) Income from rental operations, net of depreciation. We use these measures internally to evaluate the operating performance of our portfolio and provide a basis for comparison with other real estate companies. Definitions and reconciliations of these measures to the most comparable GAAP measures are included below in this discussion.

Results Overview

Net income available for Common Stockholders increased $4.0 million, to $39.5 million for the quarter ended June 30, ~~2016, we had 4,861 occupied rental homes in our MH communities. For~~2017, compared to $35.5 million for the ~~quarters~~quarter ended June 30, 2016. Net income available for Common Stockholders increased $10.3 million, to $96.4 million for the six months ended June 30, 2017, compared to $86.1 million for the six months ended June 30, 2016. Both FFO per diluted share and NFFO per diluted share for the quarter ended June 30, 2017 were $0.81 compared to $0.75 for the quarter ended June 30, 2016 driven by improved Core and ~~2015, home rental program net operating~~Non-Core income ~~was approximately $8.3 million~~from property operations. Both FFO per diluted share and $8.4 million, respectively, net of rental asset depreciation expense of approximately $2.7 million for both periods. Approximately $9.0 million and $9.2 million of home rental operations revenue was included in community base rental incomeNFFO per diluted share for the ~~quarters~~six months ended June 30, 2017 were $1.81 compared to $1.67 for the six months ended June 30, 2016.

For the quarter ended June 30, 2017 property operating revenues in our Core Portfolio, excluding deferrals, were up 5.5% and property operating expenses in our Core Portfolio, excluding deferrals and property management, were up 6.5% from the quarter ended June 30, 2016, resulting in an increase in our income from property operations before deferrals and ~~2015, respectively (see~~property management of 4.8%, from the ~~Rental Operations tables in the sections below for additional detail regarding our rental activity). We believe at this time we compete effectively with other types of rentals (i.e., apartments).~~

quarter ended June 30, 2016. For the six months ended June 30, ~~2016~~2017 property operating revenues in our Core Portfolio, excluding deferrals, were up 4.9% and ~~2015, home rental program net~~property operating ~~income was approximately $16.6 million~~expenses in our Core Portfolio, excluding deferrals and $17.0 million, respectively, net of rental asset depreciation expense of approximately $5.3 million and $5.4 million, respectively. Approximately $18.0 million and $18.6 million of home rental operations revenue was included in community base rental income forproperty management, were up 5.9% from the six months ended June 30, 2016, ~~and 2015, respectively (see the Rental Operations tables~~resulting in ~~the sections below for additional detail regarding our rental activity).~~

~~In our RV resorts, we are focused on engaging with our existing customers and providing them the lifestyle they seek as well as attracting additional customers interested~~an increase in our ~~Properties.~~ income from property operations before deferrals and property management of 4.3%, from the six months ended June 30, 2016.

We continue to focus on the quality of occupancy growth by increasing the number of manufactured homeowners in our Core Portfolio. Our Core Portfolio average occupancy consists of occupied home sites in our MH communities (both homeowners and renters) and was 94.2% for the quarter ended June 30, 2017, compared to 94.0% for the quarter ended March 31, 2017 and 93.3% for the quarter ended June 30, 2016. During the quarter ended June 30, 2017, we increased occupancy of manufactured homes within our Core Portfolio by 114 sites with an increase in homeowner occupancy of 204 sites compared to occupancy as of March 31, 2017. By comparison, as of June 30, 2016, our Core Portfolio occupancy increased 128 sites with an increase in homeowner occupancy of 229 sites compared to occupancy at March 31, 2016.

We continue to experience growth in revenues in our ~~annual revenues~~Core RV Portfolio as a result of our ability to increase rental rates and occupancy. ~~Our second quarter~~RV revenues in our Core Portfolio ~~annual revenues~~for the quarter ended June 30, 2017 were ~~5.0%~~8.1% higher than the ~~second~~ quarter ended June 30, 2016. Annual, seasonal and transient revenues for the quarter ended June 30, 2017 increased 6.0%, 13.7% and 12.3%, respectively, from the quarter ended June 30, 2016. RV revenues in our Core Portfolio for the six months ended June 30, 2017 were 5.3% higher than the six months ended June 30, 2016. Annual, seasonal and transient revenues for the six months ended June 30, 2017 increased 5.3%, 3.8% and 6.7%, respectively, from the six months ended June 30, 2016.

We continue to offer the Thousand Trails Camping Pass (“TTC”) and as a customer acquisition tool we have relationships with a network of ~~last year. We believe our customer base is loyal~~RV dealers to provide them with a free one-year TTC membership to give to their customers in connection with the purchase of an RV. During the quarter ended June 30, 2017 online TTC sales increased 45% from the quarter ended June 30, 2016. During the quarter ended June 30, 2017 we sold approximately 4,700 TTCs and ~~engaged in~~activated approximately 5,700 RV dealer TTCs. For the ~~lifestyle~~six months ended June 30, 2017 we ~~offer at our Properties. We have annual customers who have stayed with us for more than ten years~~sold approximately 7,300 TTCs and ~~our member base includes members who have camped with us for more than twenty years.~~ activated approximately 9,200 RV dealer TTCs.

Our social media presence ~~has increased~~continues to increase within ~~this member~~our RV customer base and we ~~have also been~~continue to be successful at providing a venue for our customers to promote our Properties by encouraging them to share their memories of their ~~adventures~~experiences at our resorts. We believe this is an important factor in a customer's decision to relocate. Our customers continue to increase the amount of time spent shopping online for their home and vacation decisions. We have also expanded our marketing efforts to reach approximately 40 million outdoor enthusiasts (according to the 2014 American Camper Report) to inform them about our product offerings.

For our membership based RV resorts, we offer low-cost membership products that focus on the installed base of approximately nine million RV owners. Such products include right-to-use contracts that entitle the customer to use certain Properties. We are offering a Thousand Trails Camping Pass (“TTC”) (formerly Zone Park Pass), which can be purchased for one to five geographic areas of the United States and requires an annual payment of $545. A single zone TTC requires no additional upfront payment while additional zones may be purchased for modest additional upfront payments. Since the introduction of low-cost membership products,Year-over-year we have ~~entered into approximately 91,700 TTCs. Our renewal rate for these memberships is approximately 45.1%~~seen an increase in social media fans of 30%.

~~We have arranged with RV dealers to feature~~ Through our ~~TTC as part of the dealers’ sales and~~summer marketing efforts. We provide the dealer with a TTC membership to give to their customers in connection with the purchase of an RV. No cash is received from the member during the first year of membership for memberships activated through the RV dealer program. Since inception,campaigns, we have ~~activated 37,548 TTCs through the RV dealer program. Our renewal rate for these RV dealer memberships is approximately 18.0%.~~

Management's Discussion (continued)

~~The table below provides additional details regarding~~increased the awareness of our ~~TTCs:~~

Years Ended December 31, Six Months Ended June 30,
2012 2013 2014 2015 2016
TTC Origination 10,198
15,607
18,187
25,544
14,723
TTC Sales 8,909
9,289
10,014
11,877
6,622
RV Dealer TTC Activations 1,289
6,318
8,173
13,667
8,101

~~Existing~~product offering and our customers are ~~eligible~~increasingly choosing the web as a vehicle to ~~upgrade their right-to-use contract from time-to-time. An upgrade is distinguishable from a~~transact with us.

We continue to see high demand for our homes and communities. We closed 120 new ~~right-to-use contract that a customer would enter by, depending on~~home sales in the ~~type of upgrade, offering (1) increased length of consecutive stay by 50% (i.e., up~~quarter ended June 30, 2017 compared to ~~21 days); (2) ability~~180 during the quarter ended June 30, 2016 and 240 new home sales in the six months ended June 30, 2017 compared to make earlier advance reservations; (3) discounts on rental units; (4) access to additional Properties, which may include use of Sites at non-membership RV resorts and (5) membership in discount travel programs. Each upgrade contract requires a nonrefundable upfront payment. For certain customers, we finance the nonrefundable upfront payment of these upgrades.

~~Critical Accounting Policies and Estimates~~

Refer to the 2015 Form 10-K for a discussion of our critical accounting policies, which includes impairment of real estate assets and investments, revenue recognition and business combinations. There have been no changes to these policies301 during the six months ended June 30, 2016. The new home sales during the quarter and six months ended June 30, 2017 were primarily in our Florida and Colorado communities.

~~Supplemental~~As of June 30, 2017, we had 4,674 occupied rental homes in our MH communities. For the quarters ended June 30, 2017 and 2016, home rental program net operating income was approximately $8.2 million and $8.3 million, respectively, net of rental asset depreciation expense of approximately $2.6 million for the quarter ended June 30, 2017 and $2.7 million for the quarter ended June 30, 2016. Approximately $8.8 million and $9.0 million of home rental operations revenue was included in community base rental income for the quarters ended June 30, 2017 and June 30, 2016, respectively. For the six months ended June 30, 2017 and 2016, home rental program net operating income was approximately $16.4 million and $16.8 million, respectively, net of rental asset depreciation expense of approximately $5.3 million for both the six months ended June 30, 2017 and six months ended June 30, 2016. Approximately $17.7 million and $18.1 million of home rental operations revenue was included in community base rental income for the six months ended June 30, 2017 and six months ended June 30, 2016, respectively.

On May 10, 2017, we completed the acquisition of Paradise Park Largo, a 108-site manufactured home community located in Largo, Florida for a purchase price of approximately $8.0 million. Our gross investment in real estate has increased approximately $46.3 million to $4,731.6 million as of June 30, 2017 from $4,685.3 million as of December 31, 2016 primarily due to the acquisition of Paradise Park Largo and increased capital expenditures.

The following chart lists both the Properties acquired or invested in from January 1, 2016 through June 30, 2017, which represents our Non-Core Portfolio; and Sites added through expansion opportunities at our existing Properties.



Property	Location	Type of Property	Transaction Date	Sites

Total Sites as of January 1, 2016				143,938
Acquisitions:
Rose Bay	Port Orange, Florida	RV	January 27, 2016	303
Portland Fairview	Fairview, Oregon	RV	May 26, 2016	407
Forest Lake Estates	Zephryhills, Florida	RV, MH	June 15, 2016	1,168
Riverside RV	Arcadia, Florida	RV	October 13, 2016	499
Paradise Park Largo	Largo, Florida	MH	May 10, 2017	108
Joint Venture:
Crosswinds	St. Petersburg, Florida	MH	June 15, 2017	376
Expansion Site Development and other:
Net Sites added (reconfigured) in 2016				295
Net Sites added (reconfigured) in 2017				13
Total Sites as of June 30, 2017				147,107

Non-GAAP Financial Measures

~~Management's discussion~~Income from Property Operations and analysis of financial condition and results of operations include certain non-GAAP financial measures that in management's view of the business we believe are meaningful as they allow the investor the ability to understand key operating details of our business both with and without regard to certain accounting conventions or items that may not always be indicative of recurring annual cash flow of the portfolio. These non-GAAP financial measures as determined and presented by us may not be comparable to similarly titled measures reported by other companies, and includeCore Portfolio

We use Income from property operations ~~Funds from Operations ("FFO") and Normalized Funds from Operations ("Normalized FFO"). We believe investors should review FFO, Normalized FFO~~ and Income from property operations, ~~along with GAAP net~~excluding deferrals and property management and Core Portfolio income from property operations, excluding deferrals and ~~cash flow from~~property management, as alternative measures to evaluate the operating ~~activities, investing activities~~results of our manufactured home and financing activities, when evaluating an equity REIT’s operating performance. A discussion of FFO, Normalized FFO and a reconciliation to net income is included in the presentation of FFO following our "Results of Operations."

RV communities. Income from property operations, represents rental income, utility income and right-to-use income less property operating and maintenance expenses, real estate ~~taxes,~~tax, sales and marketing expenses and property management expenses. ~~We believe that~~ Income from property operations, excluding deferrals and property management represents income from property operations excluding property management expenses and the impact of the GAAP deferral of right-to-use contract upfront payments and related commissions, net. Our Core Portfolio consists of our Properties owned and operated since December 31, 2015. Core Portfolio income from property operations, excluding deferrals and property management is useful to investors for annual comparison as it removes the fluctuations associated with acquisitions, dispositions and significant transactions or unique situations. Our Non-Core Portfolio (or Acquisitions) includes all Properties that were not owned and operated during 2016 and 2017.

Management's Discussion (continued)

Funds from Operations ("FFO") and Normalized Funds from Operations ("NFFO")

We define FFO as net income, computed in accordance with GAAP, excluding gains and actual or estimated losses from sales of properties, plus real estate related depreciation and amortization, impairments, if any, 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. We compute FFO in accordance with our interpretation of standards established by the National Association of Real Estate Investment Trusts (“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. We receive up-front non-refundable payments from the entry of right-to-use contracts. In accordance with GAAP, the upfront non-refundable payments and related commissions are deferred and amortized over the estimated customer life. Although the NAREIT definition of FFO does not address the treatment of non-refundable right-to-use payments, we believe that it is appropriate to adjust for the impact of the deferral activity in our calculation of FFO.

We define NFFO as FFO excluding the following non-operating income and expense items: a) the financial impact of contingent consideration; b) gains and losses from early debt extinguishment, including prepayment penalties and defeasance costs; c) property acquisition and other transaction costs related to mergers and acquisitions; and d) other miscellaneous non-comparable items. NFFO presented herein is not necessarily comparable to NFFO presented by other real estate companies due to the fact that not all real estate companies use the same methodology for computing this amount.

We believe that FFO and Normalized FFO are helpful to investors as supplemental measures of the performance of an equity REIT. We believe that by excluding the effect of depreciation, amortization, impairments, if any, and actual or estimated 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. We further believe that Normalized FFO provides useful information to investors, analysts and our management because it allows them to compare our operating performance to the operating performance of other real estate companies and between periods on a consistent basis without having to account for differences not related to our operations. For example, we believe that excluding the early extinguishment of debt, property acquisition and other transaction costs related to mergers and acquisitions from NFFO allows investors, analysts and our management to assess the sustainability of operating performance in future periods because these costs do not affect the future operations of the properties. In some cases, we provide information about identified non-cash components of FFO and NFFO because it allows investors, analysts and our management to assess the impact of those items.

Income from Rental Operations, Net of Depreciation

We use Income from rental operations, net of depreciation as aan alternative measure ofto evaluate the operating results of our ~~manufactured~~ home rental program. Income from rental operations, net of depreciation, represents income from rental operations less depreciation expense on rental homes. We believe this measure is meaningful for investors as it provides a complete picture of the home rental program operating results including the impact of depreciation which affects our home rental program investment decisions.

Our definitions and ~~RV communities.~~calculations of these non-GAAP financial and operating measures and other terms may differ from the definitions and methodologies used by other REITs and, accordingly, may not be comparable. These non-GAAP financial and operating measures 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.

Management's Discussion (continued)

The following table reconciles ~~Income before equity in~~Net income ~~of unconsolidated joint ventures~~available for Common Stockholders to ~~income~~Income from property operations for the quarters and six months ended June 30, ~~2016~~2017 and ~~2015~~June 30, 2016 (amounts in thousands):


	Total Portfolio												Quarters ended June 30,						Six Months Ended June 30,
	Quarters Ended						Six Months Ended						2017			2016			2017			2016
	June 30, 2016			June 30, 2015			June 30, 2016			June 30, 2015
Computation of Income from Property Operations:
Net income available for Common Stockholders													$	39,498		$	35,490		$	96,385		$	86,073
Series C Redeemable Perpetual Preferred Stock Dividends													2,316			2,316			4,613			4,613
Income allocated to non-controlling interests - Common OP Units													2,649			2,998			6,539			7,308
Equity in income of unconsolidated joint ventures													(1,040		)	(765		)	(2,190		)	(1,646		)
Income before equity in income of unconsolidated joint ventures													43,423			40,039			105,347			96,348
Total other expenses, net													61,852			59,905			122,938			119,208
Income from home sales operations and other													547			758			(97		)	241
Income from property operations	$	100,702		$	94,662		$	215,797		$	202,269		$	105,822		$	100,702		$	228,188		$	215,797
(Loss) income from home sales operations and other	(758		)	725			(241		)	2,115
Total other income and expenses, net	(59,905		)	(59,401		)	(119,208		)	(137,469		)
Income before equity in income of unconsolidated joint ventures	$	40,039		$	35,986		$	96,348		$	66,915

The following table presents a calculation of FFO available for Common Stock and OP Unit holders and Normalized FFO available for Common Stock and OP Unit holders for the quarters and six months ended June 30, 2017 and June 30, 2016 (amounts in thousands):



	Quarters ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Computation of FFO and Normalized FFO:
Net income available for Common Stockholders	$	39,498		$	35,490		$	96,385		$	86,073
Income allocated to common OP units	2,649			2,998			6,539			7,308
Right-to-use contract upfront payments, deferred, net	1,321			798			2,096			1,100
Right-to-use contract commissions, deferred, net	(112		)	(116		)	(196		)	(12		)
Depreciation on real estate assets	27,608			26,362			55,061			52,370
Depreciation on rental homes	2,639			2,667			5,296			5,314
Amortization of in-place leases	958			428			1,990			763
Depreciation on unconsolidated joint ventures	364			305			811			595
FFO available for Common Stock and OP Unit holders	74,925			68,932			167,982			153,511
Transaction costs	220			398			324			598
Normalized FFO available for Common Stock and OP Unit holders	$	75,145		$	69,330		$	168,306		$	154,109
Weighted average Common Shares outstanding – fully diluted	93,063			92,264			93,041			92,163

Management's Discussion (continued)

~~Management's Discussion (continued)~~

Results of Operations

Comparison of the Quarter Ended June 30, ~~2016~~2017 to the Quarter Ended June 30, ~~2015~~2016

Income from Property Operations

The following table summarizes certain financial and statistical data for the Core Portfolio and the total portfolio for the quarters ended June 30, ~~2016~~2017 and ~~2015~~2016 (amounts in thousands). The Core Portfolio ~~may change from time-to-time depending on acquisitions, dispositions and significant transactions or unique situations. The Core Portfolio~~ in this ~~Form 10-Q~~discussion includes all Properties acquired ~~prior to~~on or before December 31, ~~2014~~2015 and which we have owned and operated continuously since January 1, ~~2015~~2016. Core Portfolio growth percentages exclude the impact of GAAP deferrals of upfront payments from right-to-use contracts and related commissions.


	Core Portfolio									Total Portfolio									Core Portfolio									Total Portfolio
	2016		2015		Variance			% Change		2016		2015		Variance			% Change		2017		2016		Variance			% Change		2017		2016		Variance			% Change
Community base rental income	$	115,079	$	109,957	$	5,122		4.7	%	$	115,385	$	110,073	$	5,312		4.8	%	$	120,699	$	115,188	$	5,511		4.8	%	$	121,964	$	115,385	$	6,579		5.7	%
Rental home income	3,543		3,559		(16		)	(0.4	)%	3,543		3,559		(16		)	(0.4	)%	3,632		3,543		89			2.5	%	3,632		3,543		89			2.5	%
Resort base rental income	43,670		41,203		2,467			6.0	%	44,732		41,427		3,305			8.0	%	47,753		44,173		3,580			8.1	%	50,055		44,732		5,323			11.9	%
Right-to-use annual payments	11,187		10,945		242			2.2	%	11,187		10,945		242			2.2	%	11,350		11,187		163			1.5	%	11,350		11,187		163			1.5	%
Right-to-use contracts current period, gross	3,086		3,578		(492		)	(13.8	)%	3,086		3,578		(492		)	(13.8	)%	3,798		3,086		712			23.1	%	3,798		3,086		712			23.1	%
Utility and other income	19,381		18,876		505			2.7	%	19,523		18,901		622			3.3	%	20,319		19,468		851			4.4	%	20,650		19,523		1,127			5.8	%
Property operating revenues, excluding deferrals	195,946		188,118		7,828			4.2	%	197,456		188,483		8,973			4.8	%	207,551		196,645		10,906			5.5	%	211,449		197,456		13,993			7.1	%

Property operating and maintenance	65,978		64,005		1,973			3.1	%	66,647		64,178		2,469			3.8	%	71,096		66,363		4,733			7.1	%	72,901		66,647		6,254			9.4	%
Rental home operating and maintenance	1,581		1,689		(108		)	(6.4	)%	1,581		1,689		(108		)	(6.4	)%	1,657		1,581		76			4.8	%	1,657		1,581		76			4.8	%
Real estate taxes	12,746		12,640		106			0.8	%	12,869		12,652		217			1.7	%	13,462		12,781		681			5.3	%	13,943		12,869		1,074			8.3	%
Sales and marketing, gross	2,931		3,512		(581		)	(16.5	)%	2,931		3,512		(581		)	(16.5	)%	2,894		2,931		(37		)	(1.3	)%	2,894		2,931		(37		)	(1.3	)%
Property operating expenses, excluding deferrals and Property management	83,236		81,846		1,390			1.7	%	84,028		82,031		1,997			2.4	%	89,109		83,656		5,453			6.5	%	91,395		84,028		7,367			8.8	%
Income from property operations, excluding deferrals and Property management ⁽¹⁾	112,710		106,272		6,438			6.1	%	113,428		106,452		6,976			6.6	%	118,442		112,989		5,453			4.8	%	120,054		113,428		6,626			5.8	%
Property management	12,044		11,099		945			8.5	%	12,044		11,099		945			8.5	%	13,023		12,044		979			8.1	%	13,023		12,044		979			8.1	%
Income from property operations, excluding deferrals⁽¹⁾	100,666		95,173		5,493			5.8	%	101,384		95,353		6,031			6.3	%	105,419		100,945		4,474			4.4	%	107,031		101,384		5,647			5.6	%
Right-to-use contracts, deferred and sales and marketing, deferred, net	682		691		(9		)	(1.3	)%	682		691		(9		)	(1.3	)%	1,209		682		527			77.3	%	1,209		682		527			77.3	%
Income from property operations ⁽¹⁾	$	99,984	$	94,482	$	5,502		5.8	%	$	100,702	$	94,662	$	6,040		6.4	%	$	104,210	$	100,263	$	3,947		3.9	%	$	105,822	$	100,702	$	5,120		5.1	%

__________________________

⁽¹⁾ Non-GAAP measure.

~~The increase in total portfolio~~Total Portfolio income from property operations, which includes recently acquired properties, ~~is primarily due to increases~~for the quarter ended June 30, 2017 increased $5.1 million, or 5.1%, from the quarter ended June 30, 2016, driven by an increase of $3.9 million, or 3.9%, in our Core ~~community~~Portfolio income from property operations and a $1.2 million increase in our Non-Core income from property operations.

Property Operating Revenues

Community base rental income in our Core ~~resort base rental income,~~Portfolio for the quarter ended June 30, 2017 increased utility and other property income, partially offset by decreases in membership sales and marketing expenses. The increase is partially offset by an overall increase in expenses, with the most significant increases relating to property payroll, repairs and maintenance and utility expense.

~~The $5.1~~$5.5 million, or ~~4.7%, increase in Core Portfolio community base rental income primarily~~4.8% from the quarter ended June 30, 2016, which reflects ~~a 3.8%~~3.9% growth from rate increases and approximately 0.9% growth from occupancy gains. The average monthly base ~~rent~~rental income per Site increased to approximately $611 for the quarter ended June 30, 2017 from approximately $588 for the quarter ended June 30, ~~2016 from approximately $567 for the corresponding quarter in 2015.~~2016. The average occupancy for the Core Portfolio increased to ~~93.4%~~94.2% for the quarter ended June 30, ~~2016~~2017 from ~~92.5%~~93.3% for the ~~corresponding~~ quarter ~~in 2015.~~

The increase in property operating and maintenance expenses was primarily driven by increased property payroll, repair and maintenance and utility expense. The increase in property payroll resulted from additional employees and 2016 salary increases, while the increase in repair and maintenance was largely due to extraordinary expenses, mainly due to excess water hauling expense as a result of significant rainfall in the South region, increased landscaping expenses and other extraordinary expenses.ended June 30, 2016.

Management's Discussion (continued)

Resort base rental income in our Core Portfolio for the quarter ended June 30, 2017 increased $3.6 million, or 8.1%, from the quarter ended June 30, 2016 primarily due to increased rates. Resort base rental income is comprised of the following (amounts in thousands):


	Core Portfolio								Total Portfolio								Core Portfolio								Total Portfolio
	2016		2015		Variance		% Change		2016		2015		Variance		% Change		2017		2016		Variance		% Change		2017		2016		Variance		% Change
Annual	$	29,809	$	28,379	$	1,430	5.0	%	$	30,360	$	28,547	$	1,813	6.4	%	$	31,884	$	30,089	$	1,795	6.0	%	$	32,869	$	30,360	$	2,509	8.3	%
Seasonal	3,845		3,644		201		5.5	%	4,114		3,668		446		12.2	%	4,481		3,942		539		13.7	%	4,902		4,114		788		19.2	%
Transient	10,016		9,180		836		9.1	%	10,258		9,212		1,046		11.4	%	11,388		10,142		1,246		12.3	%	12,284		10,258		2,026		19.8	%
Resort base rental income	$	43,670	$	41,203	$	2,467	6.0	%	$	44,732	$	41,427	$	3,305	8.0	%	$	47,753	$	44,173	$	3,580	8.1	%	$	50,055	$	44,732	$	5,323	11.9	%

Right-to-use contracts current period, gross, net of sales and marketing, gross, ~~decreased~~increased by $0.7 million, primarily as a result of ~~lower~~an increase in the average price per upgrade sale and a higher number of upgrade sales ~~by our third party sales agent.~~during the quarter ended June 30, 2017 compared to the quarter ended June 30, 2016. During the quarter ended June 30, 2017 there were 635 upgrade sales with an average price per upgrade sale of $5,980. This compares to 626 upgrade sales with an average price per upgrade sale of ~~$4,930. This compares to 757 upgrade sales with an average price per sale of $4,730 for~~$4,930 during the quarter ended June 30, 2015. This decrease in sales from our third party sales agent was partially offset by an increase in upgrade sales by our in-park staff as we continue to experience increased demand for our upgraded product from our newest TTC members.2016.

The increase in utility and other income is primarily due to ~~proceeds of approximately $0.4~~insurance recovery revenue related to California storm events and increased electric, water, gas, and sewer income recovery.

Property Operating Expenses

Property operating expenses, excluding deferrals and property management, in our Core Portfolio for the quarter ended June 30, 2017 increased $5.5 million, or 6.5%, from the quarter ended June 30, 2016 primarily driven by an increase in utility expenses, property payroll and repairs and maintenance. The increase in utility expense was driven by increases in electric, sewer, and gas expenses, which is partially offset by an increase in utility income recovery. The increase in property payroll expense primarily resulted from 2017 salary increases. The increase in repairs and maintenance expense was primarily due to clean-up costs as a result of ~~the land easement at a certain Property in Pennsylvania.~~California storm events.

Home Sales and Rental Operations

Home Sales and Other

The following table summarizes certain financial and statistical data for ~~the~~ Home Sales ~~Operations~~ for the quarters endedJune 30, ~~2016~~2017 and ~~2015~~2016 (amounts in thousands, except home sales volumes).


	2016			2015		Variance			% Change		2017			2016			Variance			% Change
Gross revenues from new home sales⁽¹⁾	$	6,044		$	5,355	$	689		12.9	%	$	4,548		$	6,044		$	(1,496	)	(24.8	)%
Cost of new home sales ⁽¹⁾	6,246			4,925		1,321			26.8	%	(4,419		)	(6,246		)	1,827			29.3	%
Gross (loss) profit from new home sales	(202		)	430		(632		)	(147.0	)%
Gross profit (loss) from new home sales											129			(202		)	331			163.9	%

Gross revenues from used home sales	3,086			4,171		(1,085		)	(26.0	)%	3,285			3,086			199			6.4	%
Cost of used home sales	3,235			4,168		(933		)	(22.4	)%	(3,476		)	(3,235		)	(241		)	(7.4	)%
Gross (loss) profit from used home sales	(149		)	3		(152		)	(5,066.7	)%
Loss from used home sales											(191		)	(149		)	(42		)	(28.2	)%

Brokered resale revenues and ancillary services revenues, net	398			1,012		(614		)	(60.7	)%	444			398			46			11.6	%
Home selling expenses	805			720		85			11.8	%	(929		)	(805		)	(124		)	(15.4	)%
(Loss) income from home sales operations and other	$	(758	)	$	725	$	(1,483	)	(204.6	)%
Loss from home sales and other											$	(547	)	$	(758	)	$	211		27.8	%

Home sales volumes
Total new home sales⁽²⁾	180			143		37			25.9	%	120			180			(60		)	(33.3	)%
New Home Sales Volume - ECHO JV	63			49		14			28.6	%	41			63			(22		)	(34.9	)%
Used home sales	342			436		(94		)	(21.6	)%	338			342			(4		)	(1.2	)%
Brokered home resales	217			261		(44		)	(16.9	)%	252			217			35			16.1	%

_________________________

⁽¹⁾ New home sales gross revenues and costs of new home sales does not include the revenues and costs associated with our ECHO JV.

⁽²⁾ Total new home sales volume includes home sales from our ECHO ~~JV for the quarters ended~~ ~~June 30, 2016~~ ~~and 2015, respectively.~~JV.

The decrease in income from home sales operations and other is primarily due to lower revenue from ancillary services, which includes retail sales at various Properties, as well as lower gross profits from new home sales.

Management's Discussion (continued)

Loss from home sales and other was $0.5 million and $0.8 million for the quarters ended June 30, 2017 and 2016, respectively. The decrease in loss from home sales and other from the quarter ended June 30, 2016 was primarily due to an increase in the gross profit from new home sales, partially offset by an increase in home selling expenses.

Rental Operations

The following table summarizes certain financial and statistical data for manufactured home Rental Operations for the quarters endedJune 30, ~~2016~~2017 and ~~2015~~2016 (amounts in thousands, except rental unit volumes).


	2016		2015		Variance			% Change		2017			2016			Variance			% Change
Manufactured homes:
New Home	$	6,332	$	5,173	$	1,159		22.4	%	$	6,985		$	6,332		$	653		10.3	%
Used Home	6,198		7,613		(1,415		)	(18.6	)%	5,483			6,250			(767		)	(12.3	)%
Rental operations revenue ⁽¹⁾	12,530		12,786		(256		)	(2.0	)%	12,468			12,582			(114		)	(0.9	)%
Rental home operating and maintenance	1,581		1,689		(108		)	(6.4	)%	(1,657		)	(1,581		)	(76		)	(4.8	)%
Income from rental operations	10,949		11,097		(148		)	(1.3	)%	10,811			11,001			(190		)	(1.7	)%
Depreciation on rental homes ⁽²⁾	2,667		2,681		(14		)	(0.5	)%	(2,639		)	(2,667		)	28			1.0	%
Income from rental operations, net of depreciation	$	8,282	$	8,416	$	(134	)	(1.6	)%	$	8,172		$	8,334		$	(162	)	(1.9	)%

Gross investment in new manufactured home rental units ⁽³⁾	$	120,708	$	108,937	$	11,771		10.8	%	$	129,868		$	120,708		$	9,160		7.6	%
Gross investment in used manufactured home rental units	$	54,655	$	60,822	$	(6,167	)	(10.1	)%	$	48,182		$	54,675		$	(6,493	)	(11.9	)%

Net investment in new manufactured home rental units	$	96,167	$	89,097	$	7,070		7.9	%	$	104,710		$	99,428		$	5,282		5.3	%
Net investment in used manufactured home rental units	$	30,375	$	42,443	$	(12,068	)	(28.4	)%	$	28,182		$	36,690		$	(8,508	)	(23.2	)%

Number of occupied rentals – new, end of period ⁽⁴⁾	2,267		2,062		205			9.9	%	2,517			2,267			250			11.0	%
Number of occupied rentals – used, end of period	2,594		2,981		(387		)	(13.0	)%	2,157			2,595			(438		)	(16.9	)%

______________________

⁽¹⁾

Rental operations revenue consists of Site rental income and home rental income. Approximately ~~$9.0~~$8.8 million and ~~$9.2~~$9.0 million for the quarters ended June 30, ~~2016~~2017 and ~~2015,~~2016, respectively, of Site rental income are included in Community base rental income in the Income from Property Operations table. The remainder of home rental income is included in Rental home income in the Income from Property Operations table.


⁽²⁾	Included in depreciation on real estate and other costs in the Consolidated Statements of Income and Comprehensive Income.


⁽³⁾	New home cost basis does not include the costs associated with our ECHO JV. Our investment in the ECHO JV was $15.4 million ~~and $10.4 million~~ at both June 30, ~~2016~~2017 and ~~2015, respectively.~~December 31, 2016.


⁽⁴⁾	~~Includes~~Occupied rentals as of the end of the period in our Core Portfolio and includes 257 and 143 ~~and 65~~ homes rented through our ECHO JV during the quarters ended June 30, ~~2016~~2017 and ~~2015,~~2016, respectively.

The decrease in income from rental operations, isnet of depreciation, was primarily due to a decrease in the number of used occupied rental ~~units. The occupancy decrease is~~units, partially offset by the change in the mix of occupied rentals, driven by an ~~increased~~increase in the number of occupied new rental homes at a higher rental rate.

Other Income and Expenses

The following table summarizes other income and expenses, net for the quarters ended June 30, ~~2016~~2017 and ~~2015~~2016 (amounts in thousands, expenses shown as negative).


	2016			2015			Variance			% Change		2017			2016			Variance			% Change
Depreciation on real estate and rental homes	$	(29,029	)	$	(28,335	)	$	(694	)	(2.4	)%	$	(30,247	)	$	(29,029	)	$	(1,218	)	(4.2	)%
Amortization of in-place leases	(428		)	(669		)	241			36.0	%	(958		)	(428		)	(530		)	(123.8	)%
Interest income	1,625			1,736			(111		)	(6.4	)%	1,798			1,625			173			10.6	%
Income from other investments, net	2,270			2,178			92			4.2	%	1,109			2,270			(1,161		)	(51.1	)%
General and administrative (excluding transaction costs)	(7,857		)	(7,491		)	(366		)	(4.9	)%	(8,241		)	(7,857		)	(384		)	(4.9	)%
Transaction costs	(398		)	(50		)	(348		)	(696.0	)%	(220		)	(398		)	178			44.7	%
Property rights initiatives and other	(527		)	(694		)	167			24.1	%	(271		)	(527		)	256			48.6	%
Early debt retirement	—			69			(69		)	100.0	%
Interest and related amortization	(25,561		)	(26,145		)	584			2.2	%	(24,822		)	(25,561		)	739			2.9	%
Total other income and expenses, net	$	(59,905	)	$	(59,401	)	$	(504	)	(0.8	)%	$	(61,852	)	$	(59,905	)	$	(1,947	)	(3.3	)%

~~Depreciation~~

Other expenses, net increased $1.9 million for the quarter ended June 30, 2017, compared to the quarter ended June 30, 2016. The increase from the quarter ended June 30, 2016 was primarily due to an increase in depreciation on real estate and rental

Management's Discussion (continued)

homes ~~increased primarily~~and amortization of in-place leases due to ~~increased capital expenditures~~2016 acquisition activity and a decrease in income from other investments, net, due to the ~~acquisitions that occurred~~termination of the Tropical Palms RV ground lease in 2016.

This was partially offset by a decrease in interest and related amortization as a result of the refinancing activities completed during ~~the first half of~~ 2016 (see Note 47 to the Consolidated Financial Statements for additional detail regarding ~~our recent acquisition activity)~~borrowing arrangements).

~~A decrease in secured debt, resulting from the 2015 refinancing and prepayment activity, and lower weighted average interest rates contributed to the decrease in interest and related amortization.~~

~~Management's Discussion (continued)~~

Comparison of the Six Months Ended June 30, ~~2016~~2017 to the Six Months Ended June 30, ~~2015~~2016

Income from Property Operations

The following table summarizes certain financial and statistical data for the Core Portfolio and the total portfolio for the six months ended June 30, ~~2016~~2017 and ~~2015~~2016 (amounts in thousands). The Core Portfolio ~~may change from time-to-time depending on acquisitions, dispositions and significant transactions or unique situations. The Core Portfolio~~ in this ~~Form 10-Q~~discussion includes all Properties acquired ~~prior to~~on or before December 31, ~~2014~~2015 and which we have owned and operated continuously since January 1, ~~2015.~~2016. Core Portfolio growth percentages exclude the impact of GAAP deferrals of upfront payments from right-to-use contracts and related commissions.


	Core Portfolio									Total Portfolio									Core Portfolio								Total Portfolio
	2016		2015		Variance			% Change		2016		2015		Variance			% Change		2017		2016		Variance		% Change		2017		2016		��	Variance		% Change
Community base rental income	$	229,047	$	219,166	$	9,881		4.5	%	$	229,461	$	219,343	$	10,118		4.6	%	$	240,278	$	229,264	$	11,014	4.8	%	$	242,656	$	229,461		$	13,195	5.8	%
Rental home income	7,088		7,113		(25		)	(0.4	)%	7,088		7,113		(25		)	(0.4	)%	7,237		7,089		148		2.1	%	7,237		7,088			149		2.1	%
Resort base rental income	97,941		92,738		5,203			5.6	%	100,166		93,072		7,094			7.6	%	104,603		99,380		5,223		5.3	%	111,123		100,166			10,957		10.9	%
Right-to-use annual payments	22,241		21,926		315			1.4	%	22,241		21,926		315			1.4	%	22,602		22,241		361		1.6	%	22,602		22,241			361		1.6	%
Right-to-use contracts current period, gross	5,618		6,375		(757		)	(11.9	)%	5,618		6,375		(757		)	(11.9	)%	7,004		5,618		1,386		24.7	%	7,004		5,618			1,386		24.7	%
Utility and other income	40,064		37,947		2,117			5.6	%	40,316		37,983		2,333			6.1	%	42,003		40,249		1,754		4.4	%	42,776		40,316			2,460		6.1	%
Property operating revenues, excluding deferrals	401,999		385,265		16,734			4.3	%	404,890		385,812		19,078			4.9	%	423,727		403,841		19,886		4.9	%	433,398		404,890			28,508		7.0	%

Property operating and maintenance	128,405		125,024		3,381			2.7	%	129,601		125,295		4,306			3.4	%	137,429		129,186		8,243		6.4	%	140,955		129,601			11,354		8.8	%
Rental home operating and maintenance	3,106		3,358		(252		)	(7.5	)%	3,106		3,358		(252		)	(7.5	)%	3,208		3,105		103		3.3	%	3,208		3,106			102		3.3	%
Real estate taxes	25,886		25,225		661			2.6	%	26,067		25,246		821			3.3	%	27,032		25,957		1,075		4.1	%	27,980		26,067			1,913		7.3	%
Sales and marketing, gross	5,424		6,034		(610		)	(10.1	)%	5,424		6,034		(610		)	(10.1	)%	5,583		5,426		157		2.9	%	5,584		5,424			160		2.9	%
Property operating expenses, excluding deferrals and Property management	162,821		159,641		3,180			2.0	%	164,198		159,933		4,265			2.7	%	173,252		163,674		9,578		5.9	%	177,727		164,198			13,529		8.2	%
Income from property operations, excluding deferrals and Property management ⁽¹⁾	239,178		225,624		13,554			6.0	%	240,692		225,879		14,813			6.6	%	250,475		240,167		10,308		4.3	%	255,671		240,692			14,979		6.2	%
Property management	23,807		22,389		1,418			6.3	%	23,807		22,389		1,418			6.3	%	25,583		23,807		1,776		7.5	%	25,583		23,807			1,776		7.5	%
Income from property operations, excluding deferrals⁽¹⁾	215,371		203,235		12,136			6.0	%	216,885		203,490		13,395			6.6	%	224,892		216,360		8,532		3.9	%	230,088		216,885			13,203		6.1	%
Right-to-use contracts, deferred and sales and marketing, deferred, net	1,088		1,221		(133		)	(10.9	)%	1,088		1,221		(133		)	(10.9	)%	1,900		1,088		812		74.6	%	1,900		1,088			812		74.6	%
Income from property operations⁽¹⁾	$	214,283	$	202,014	$	12,269		6.1	%	$	215,797	$	202,269	$	13,528		6.7	%	$	222,992	$	215,272	$	7,720	3.6	%	$	228,188	$	215,797		$	12,391	5.7	%

__________________________

⁽¹⁾ Non-GAAP measure.

~~The increase in total portfolio~~Total Portfolio income from property operations, which includes recently acquired properties, ~~is primarily due to increases~~for the six months ended June 30, 2017 increased $12.4 million, or 5.7%, from the six months ended June 30, 2016, driven by an increase of $7.7 million, or 3.6%, in our Core ~~community~~Portfolio income from property operations and a $4.7 million increase in our Non-Core income from property operations.

Property Operating Revenues

Community base rental income in our Core ~~resort base rental income as well as~~Portfolio for the six months ended June 30, 2017 increased utility and other property income. The increase is partially offset by an overall increase in expenses, with the most significant increases relating to repairs and maintenance, payroll and property taxes.

~~The $9.9~~$11.0 million, or ~~4.5%, increase in Core Portfolio community base rental income primarily~~4.8% from the six months ended June 30, 2016, which reflects ~~a 3.7%~~3.9% growth from rate increases and ~~a 0.8%~~approximately 0.9% growth from occupancy gains. The average monthly base ~~rent~~rental income per Site increased to approximately ~~$586 in 2016~~$608 for the six months ended June 30, 2017 from approximately ~~$566~~$586 for the ~~corresponding quarter in 2015.~~six months ended June 30, 2016. The average occupancy for the Core Portfolio increased to 94.1% for the six months ended June 30, 2017 from 93.2% ~~in 2016 from 92.4% in 2015.~~

The increase in property operating and maintenance expenses was primarily driven by increased repair and maintenance, property payroll and utility expense. The increase in repair and maintenance was largely due to excess water hauling expense as a result of significant rainfall infor the South region, increased landscaping expenses, snow removal costs in the Northeast region and other extraordinary expenses, while the increase in property payroll resulted from additional employees and 2016 salary increases.six months ended June 30, 2016.

Management's Discussion (continued)

Resort base rental income in our Core Portfolio for the six months ended June 30, 2017 increased $5.2 million, or 5.3%, from the quarter ended June 30, 2016 primarily due to an increase in annual and transient revenues as a result of increased rates. Resort base rental income is comprised of the following (amounts in thousands):


	Core Portfolio								Total Portfolio								Core Portfolio								Total Portfolio
	2016		2015		Variance		% Change		2016		2015		Variance		% Change		2017		2016		Variance		% Change		2017		2016		Variance		% Change
Annual	$	59,397	$	56,208	$	3,189	5.7	%	$	60,370	$	56,475	$	3,895	6.9	%	$	63,123	$	59,953	$	3,170	5.3	%	$	64,965	$	60,370	$	4,595	7.6	%
Seasonal	19,676		18,620		1,056		5.7	%	20,329		18,651		1,678		9.0	%	20,864		20,100		764		3.8	%	23,401		20,329		3,072		15.1	%
Transient	18,868		17,910		958		5.3	%	19,467		17,946		1,521		8.5	%	20,616		19,327		1,289		6.7	%	22,757		19,467		3,290		16.9	%
Resort base rental income	$	97,941	$	92,738	$	5,203	5.6	%	$	100,166	$	93,072	$	7,094	7.6	%	$	104,603	$	99,380	$	5,223	5.3	%	$	111,123	$	100,166	$	10,957	10.9	%

Right-to-use contracts current period, gross, net of sales and marketing, gross, ~~decreased~~increased by $1.4 million, primarily as a result of ~~lower~~a higher average price per upgrade sale and higher upgrade sales ~~by our third party sales agent.~~during the six months ended June 30, 2017 compared to the six months ended June 30, 2016. During the six months ended June 30, ~~2016,~~2017 there were 1,260 upgrade sales with an average price per upgrade sale of $5,557. This compares to 1,152 upgrade sales with an average price per upgrade sale of ~~$4,877. This compares to 1,354 upgrade sales with an average price per sale of $4,710~~$4,877 for the six months ended ~~ended~~ June 30, 2015. This decrease in sales by our third party sales agent was partially offset by an increase in upgrade sales by our in-park staff as we continue to experience increased demand for our upgraded product from our newest TTC members.2016.

The increase in utility and other income is primarily due to insurance ~~proceeds of approximately $0.8 million~~recovery revenue related to ~~two prior~~California storm events ~~that impacted certain properties~~and increased electric, water, gas, and sewer income recovery.

Property Operating Expenses

Property operating expenses, excluding deferrals and property management, in ~~California~~our Core Portfolio for the six months ended June 30, 2017 increased $9.6 million, or 5.9%, from the six months ended June 30, 2016. The increase was primarily due to an increase in utility expenses, property payroll and ~~Florida~~repairs and ~~proceeds of approximately $0.4 million~~maintenance. The increase in utility expense was driven by increases in electric, sewer, trash and gas expenses, which was partially offset by increased utility income recovery. The increase in property payroll expense resulted from 2017 salary increases. The increase in repairs and maintenance expense was primarily due to clean-up costs as a result of California storm events and the ~~land easement at a certain Property~~hurricanes in ~~Pennsylvania.~~Florida in 2016, and an increase in landscaping costs.

Home Sales and Rental Operations

Home Sales and Other

The following table summarizes certain financial and statistical data for ~~the~~ Home Sales ~~Operations~~ for the six months ended June 30, ~~2016~~2017 and ~~2015~~June 30, 2016 (amounts in thousands, except home sales volumes).


	2016			2015		Variance			% Change		2017			2016			Variance			% Change
Gross revenues from new home sales⁽¹⁾	$	11,443		$	8,285	$	3,158		38.1	%	$	9,491		$	11,443		$	(1,952	)	(17.1	)%
Cost of new home sales ⁽¹⁾	11,698			7,670		4,028			52.5	%	(9,191		)	(11,698		)	2,507			21.4	%
Gross (loss) profit from new home sales	(255		)	615		(870		)	(141.5	)%
Gross profit (loss) from new home sales											300			(255		)	555			217.6	%

Gross revenues from used home sales	5,901			8,178		(2,277		)	(27.8	)%	5,369			5,901			(532		)	(9.0	)%
Cost of used home sales	6,064			8,147		(2,083		)	(25.6	)%	(5,823		)	(6,064		)	241			4.0	%
Gross (loss) profit from used home sales	(163		)	31		(194		)	(625.8	)%
Loss from used home sales											(454		)	(163		)	(291		)	(178.5	)%

Brokered resale revenues and ancillary services revenues, net	1,816			2,994		(1,178		)	(39.3	)%	2,105			1,816			289			15.9	%
Home selling expenses	1,639			1,525		114			7.5	%	(1,854		)	(1,639		)	(215		)	(13.1	)%
(Loss) income from home sales operations and other	$	(241	)	$	2,115	$	(2,356	)	(111.4	)%
Income (loss) from home sales and other											$	97		$	(241	)	$	338		140.2	%

Home sales volumes
Total new home sales⁽²⁾	301			229		72			31.4	%	240			301			(61		)	(20.3	)%
New Home Sales Volume - ECHO JV	97			88		9			10.2	%	78			97			(19		)	(19.6	)%
Used home sales	653			817		(164		)	(20.1	)%	623			653			(30		)	(4.6	)%
Brokered home resales	403			466		(63		)	(13.5	)%	420			403			17			4.2	%

_________________________

⁽¹⁾ New home sales gross revenues and costs of new home sales does not include the revenues and costs associated with our ECHO JV.

⁽²⁾ Total new home sales volume includes home sales from our ECHO JV for the six months ended June 30, ~~2016~~2017 and ~~2015,~~June 30, 2016, respectively.

Management's Discussion (continued)

The ~~decrease~~increase in income from home sales ~~operations~~ and other iswas primarily due to ~~lower revenue from ancillary services, which includes retail sales at various Properties, as well as lower~~an increase in the gross ~~profits~~profit from new home sales, partially offset by an increase in the loss from used home sales.

~~Management's Discussion (continued)~~

Rental Operations

The following table summarizes certain financial and statistical data for manufactured home Rental Operations for the six months ended June 30, ~~2016~~2017 and ~~2015~~June 30, 2016 (amounts in thousands, except rental unit volumes).


	2016		2015		Variance			% Change		2017			2016			Variance			% Change
Manufactured homes:
New Home	$	12,473	$	10,310	$	2,163		21.0	%	$	13,618		$	12,473		$	1,145		9.2	%
Used Home	12,588		15,427		(2,839		)	(18.4	)%	11,267			12,715			(1,448		)	(11.4	)%
Rental operations revenue ⁽¹⁾	25,061		25,737		(676		)	(2.6	)%	24,885			25,188			(303		)	(1.2	)%
Rental home operating and maintenance	3,106		3,358		(252		)	(7.5	)%	(3,208		)	(3,106		)	(102		)	(3.3	)%
Income from rental operations	21,955		22,379		(424		)	(1.9	)%	21,677			22,082			(405		)	(1.8	)%
Depreciation on rental homes ⁽²⁾	5,314		5,387		(73		)	(1.4	)%	(5,296		)	(5,314		)	18			0.3	%
Income from rental operations, net of depreciation	$	16,641	$	16,992	$	(351	)	(2.1	)%	$	16,381		$	16,768		$	(387	)	(2.3	)%

Gross investment in new manufactured home rental units ⁽³⁾	$	120,708	$	108,937	$	11,771		10.8	%	$	129,868		$	120,708		$	9,160		7.6	%
Gross investment in used manufactured home rental units	$	54,655	$	60,822	$	(6,167	)	(10.1	)%	$	48,182		$	54,675		$	(6,493	)	(11.9	)%

Net investment in new manufactured home rental units	$	96,167	$	89,097	$	7,070		7.9	%	$	104,710		$	99,428		$	5,282		5.3	%
Net investment in used manufactured home rental units	$	30,375	$	42,443	$	(12,068	)	(28.4	)%	$	28,182		$	36,690		$	(8,508	)	(23.2	)%

Number of occupied rentals – new, end of period ⁽⁴⁾	2,267		2,062		205			9.9	%	2,517			2,267			250			11.0	%
Number of occupied rentals – used, end of period	2,594		2,981		(387		)	(13.0	)%	2,157			2,595			(438		)	(16.9	)%

______________________

⁽¹⁾

Rental operations revenue consists of Site rental income and home rental income. Approximately ~~$18.0~~17.7 million and ~~18.6~~$18.1 million for the six months ended June 30, 2017 and June 30, 2016, ~~and 2015,~~ respectively, of Site rental income are included in Community base rental income in the Income from Property Operations table. The remainder of home rental income is included in Rental home income in the Income from Property Operations table.


⁽²⁾	Included in depreciation on real estate and other costs in the Consolidated Statements of Income and Comprehensive Income.


⁽³⁾	New home cost basis does not include the costs associated with our ECHO JV. Our investment in the ECHO JV was $15.4 million ~~and $10.4 million~~ at both June 30, ~~2016~~2017 and ~~2015, respectively.~~December 31, 2016.


⁽⁴⁾	~~Includes~~Occupied rentals as of the end of the period in our Core Portfolio and includes 257 and 143 ~~and 65~~ homes rented through our ECHO JV induring the six months ended June 30, 2017 and June 30, 2016, ~~and 2015,~~ respectively.

The decrease in income from rental operations, isnet of depreciation, was primarily due to a decrease in the number of occupied rental ~~units. The occupancy decrease is~~units, which was partially offset by the change in the mix of occupied rentals, driven by an increased number of occupied new homes at a higher rental rate.

Other Income and Expenses

The following table summarizes other income and expenses for the six months ended June 30, ~~2016~~2017 and ~~2015~~June 30, 2016 (amounts in thousands, expenses shown as negative).


	2016			2015			Variance			% Change		2017			2016			Variance			% Change
Depreciation on real estate and rental homes	$	(57,684	)	$	(56,451	)	$	(1,233	)	(2.2	)%	$	(60,357	)	$	(57,684	)	$	(2,673	)	(4.6	)%
Amortization of in-place leases	(763		)	(1,334		)	571			42.8	%	(1,990		)	(763		)	(1,227		)	(160.8	)%
Interest income	3,285			3,556			(271		)	(7.6	)%	3,568			3,285			283			8.6	%
Income from other investments, net	3,993			3,297			696			21.1	%	1,866			3,993			(2,127		)	(53.3	)%
General and administrative (excluding transaction costs)	(15,065		)	(14,465		)	(600		)	(4.1	)%	(15,510		)	(15,065		)	(445		)	(3.0	)%
Transaction costs	(598		)	(482		)	(116		)	(24.1	)%	(324		)	(598		)	274			45.8	%
Property rights initiatives and other	(1,181		)	(1,247		)	66			5.3	%	(490		)	(1,181		)	691			58.5	%
Early debt retirement	—			(16,922		)	16,922			100.0	%
Interest and related amortization	(51,195		)	(53,421		)	2,226			4.2	%	(49,701		)	(51,195		)	1,494			2.9	%
Total other income and expenses, net	$	(119,208	)	$	(137,469	)	$	18,261		13.3	%	$	(122,938	)	$	(119,208	)	$	(3,730	)	(3.1	)%

~~Depreciation~~

Other expenses, net increased $3.7 million for the six months ended June 30, 2017, compared to the six months ended June 30, 2016. The increase in other expenses, net from the six months ended June 30, 2016 was primarily due to an increase in depreciation on real estate and rental homes ~~increased primarily~~and amortization of in-place leases due to ~~increased capital expenditures~~2016 acquisition activity and a a decrease in income from other investments, net, due to the ~~acquisitions that occurred~~termination of the Tropical Palms RV ground lease in 2016.

Management's Discussion (continued)

~~Early debt retirement expense was higher in 2015 as a result of the defeasance and prepayment activity that occurred during the first quarter of 2015.~~

A decrease in secured debt, resulting from the aforementioned refinancing and prepayment activity, and lower weighted average interest rates contributed to the decrease in interest and related amortization.

~~Management's Discussion (continued)~~

Liquidity and Capital Resources

Liquidity

Our primary demands for liquidity include payment of operating expenses, debt service, including principal and interest, capital improvements on properties, purchasing both new and pre-owned homes, acquisitions of new Properties, and distributions. We expect similar ~~demands~~demand for liquidity will continue for the short-term and long-term. Our primary sources of cash include operating cash flows, proceeds from financings, borrowings under our unsecured Line of Credit ("LOC") and proceeds from issuance of equity and debt securities.

~~On May 4, 2015, we extended our~~We have entered into an at-the-market (“ATM”) offering program, ~~by entering into new separate equity distribution agreements with certain sales agents,~~ pursuant to which we may sell, from time-to-time, shares of our common stock, par value $0.01 per share, having an aggregate offering price of up to $125.0 million. For the six months ended June 30, 2016, we sold 683,548 shares of our common stock under the ATM offering Program for gross cash proceeds of approximately $50.0 million before expenses of approximately $0.7 million. As of June 30, ~~2016,~~2017, $75.0 million of common stock remained available for issuance under the ATM equity offering program. In addition, we have available liquidity in the form of authorized and unissued preferred stock of approximately 9.9 million shares and approximately ~~114.7~~113.0 million shares of authorized but unissued common stock registered for sale under the Securities Act of 1933, as amended, by a shelf registration statement which was automatically effective when filed with the SEC. Our charter allows us to issue up to 200.0 million shares of common stock, par value $0.01 per share, and up to 10.0 million shares of preferred stock, par value $0.01 per share.

One of our stated objectives is to maintain financial flexibility. Achieving this objective allows us to take advantage of strategic opportunities that may arise. We believe effective management of our balance sheet, including maintaining various access points to raise capital, manage future debt maturities and borrow at competitive rates enables us to meet this objective. We believe that as of June 30, ~~2016,~~2017, we have sufficient liquidity, in the form of ~~$69.6~~$62.5 million in available cash, net of restricted cash, and $400.0 million available on our LOC, to satisfy our near term obligations. Our LOC has a borrowing capacity of $400.0 million with the option to increase the borrowing capacity by $100.0 million, subject to certain ~~conditions (See Note 7~~conditions. The LOC bears interest at a rate of LIBOR plus 1.20% to ~~the Consolidated Financial Statements).~~1.65%, requires an annual facility fee of 0.20% to 0.35% and matures on July 17, 2018, with an option to extend for one additional year, subject to certain conditions.

We expect to meet our short-term liquidity requirements, including distributions for the ~~second quarter distribution of approximately $39.3 million paid on July 8, 2016, as well as all the remaining distributions,~~next twelve months, generally through available cash as well as net cash provided by operating activities and availability under our existing LOC. We consider these resources to be adequate to meet our operating requirements for capital improvements, amortizing debt and payment of dividends and distributions.

We expect to meet certain long-term liquidity requirements such as scheduled debt maturities, property acquisitions and capital improvements by use of our current cash balance, long-term collateralized and uncollateralized borrowings including borrowings under the existing LOC and the issuance of debt securities or additional equity securities, in addition to net cash provided by operating activities. As of June 30, ~~2016,~~2017, we have approximately ~~$66.9~~$6.9 million of scheduled debt maturities in ~~2016~~2017 (excluding scheduled principal payments on debt maturing in ~~2016~~2017 and beyond). We expect to satisfy our ~~2016~~2017 maturities with existing cash and anticipated operating cash flow.

During the six months ended June 30, 2017 we paid off one maturing mortgage loan and assumed debt in the purchase of Paradise Park Largo. The mortgage loan we paid off was approximately $21.1 million, with a weighted average interest rate of 5.76% per annum, secured by one manufactured home Property. In connection with the Paradise Park Largo acquisition ~~completed in~~during the quarter ended June ~~2016,~~30, 2017, we assumed approximately ~~$22.6~~$5.9 million of mortgage debt secured by the ~~Forest Lake Estates~~ manufactured home community with ~~a stated~~an interest rate of ~~4.51% per annum, which is set to mature~~4.6% that matures in ~~2038.~~

During the six months ended June 30, 2016, we paid off two maturing mortgages of approximately $13.1 million, with weighted average interest rate of 5.53% per annum, each secured by one manufactured home property.

On July 1, 2016, we paid off two maturing mortgage loans of approximately $23.9 million. The loans had a weighted average interest rate of 5.99% per annum respectively and were secured by one RV resort and one manufactured home property.

~~Management's Discussion (continued)~~

2040.

The table below summarizes cash flow activity for the six months ended June 30, ~~2016~~2017 and ~~2015~~2016 (amounts in thousands):


	Six Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2017			2016
Net cash provided by operating activities	$	186,807		$	209,946		$	214,102		$	186,807
Net cash used in investing activities	(136,090		)	(68,615		)	(71,426		)	(136,090		)
Net cash used in financing activities	(56,104		)	(130,100		)	(131,276		)	(56,104		)
Net (decrease)/increase in cash	$	(5,387	)	$	11,231
Net increase (decrease) in cash							$	11,400		$	(5,387	)

Management's Discussion (continued)

Operating Activities

Net cash provided by operating activities ~~decreased $23.1~~increased $27.3 million to $214.1 million for the six months ended June 30, 2017, from $186.8 million for the six months ended June 30, ~~2016, from $209.9 million for the six months ended June 30, 2015.~~2016. The ~~overall decrease~~increase in net cash provided by operating activities iswas primarily due to ~~a decrease~~higher income from property operations of ~~$16.0~~$12.4 million, receipt of insurance proceeds of $10.8 million related to the California failure to maintain lawsuits, long term incentive plan payments of $4.3 million during the first quarter of 2016, increase of $1.2 million in ~~Accrued expenses and accounts payable, a decrease in Escrow deposits, goodwill and other assets of $14.4 million, as well as an decrease of $1.6 million in Rents~~rents received in advance and ~~security deposits,~~an increase of $0.8 million in distributions from unconsolidated joint ventures. These increases were partially offset by ~~an increase in Income from property operations~~the litigation settlement payment of ~~$13.5 million.~~$13.3 million related to the California failure to maintain lawsuits.

Investing Activities

Net cash used in investing activities was $71.4 million for the six months ended June 30, 2017 compared to $136.1 million for the six months ended June 30, ~~2016 compared~~2016. The decrease in net cash used in investing activities was primarily due to ~~$68.6 million for~~the acquisitions of Forest Lake Estates, Portland Fairview and Rose Bay during the six months ended June 30, ~~2015. Significant components~~2016, partially offset by the short-term loan of ~~net cash used in investing activities include:~~

~~We paid approximately $76.2~~$13.8 million in 2016 to acquire the Rose Bay RV Resort, Forest Lakes Estates and Portland Fairview which resulted in an additional 984 RV Sites and 894 manufactured home Sites. We paid approximately $23.7 million in 2015 to acquire the Bogue Pines MH Property, Whispering Pines RV Resort and Miami Everglades RV Resort. These acquisitions contributed an additional 731 Sites.

~~We contributed $5.0 million to our ECHO JV in 2016 compared~~issued to the ~~$4.0 million we invested in 2015. (see Note 5 to the Consolidated Financial Statements for a description of our~~Crosswinds joint ~~ventures).~~

~~We paid approximately $55.7 million and $42.3 million for capital improvements~~venture during the ~~quarters ended June 30, 2016 and 2015, respectively (see Capital Improvements table below).~~second quarter of 2017.

Capital Improvements

The table below summarizes capital improvement activity for the six months ended June 30, ~~2016~~2017 and ~~2015~~2016 (amounts in thousands):



	Six Months Ended June 30, ⁽¹⁾
	2017		2016
Recurring Capital Expenditures ⁽²⁾	$	18,808	$	18,317
Property upgrades and site development	11,870		5,961
New home investments⁽³⁾⁽⁴⁾	19,542		27,774
Used home investments ⁽⁴⁾	2,191		3,210
Total Property	52,411		55,262
Corporate	1,053		445
Total Capital improvements	$	53,464	$	55,707

______________________

Six Months ended
June 30,⁽¹⁾
2016 2015
Recurring Capital Expenditures ⁽²⁾
$ 18,317
$ 18,265
Property upgrades and site development 5,961
3,749
New home investments⁽³⁾
27,774
15,905
Used home investments 3,210
3,797
Total Property 55,262
41,716
Corporate 445
543
Total Capital improvements $ 55,707
$ 42,259
⁽¹⁾ Excludes non-cash activity of approximately $0.2 million and $0.4 million of used homes acquired through foreclosure of Chattel Loans for the six months ended June 30, 2017 and 2016, respectively.

~~______________________~~⁽²⁾Recurring capital expenditures are primarily comprised of common area improvements, furniture, and mechanical improvements.


⁽¹⁾ ⁽³⁾ Excludes new home investment associated with our ECHO JV. ⁽⁴⁾Net proceeds from new and used home sale activities are reflected within Operating Activities.	~~Excludes non-cash activity of approximately $0.4 million of used homes acquired through foreclosure of Chattel Loans for the six months ended June 30, 2016 and 2015, respectively.~~


⁽²⁾	~~Recurring capital expenditures are primarily comprised of common area improvements, furniture, and mechanical improvements.~~


⁽³⁾	~~Excludes new home investment associated with our ECHO JV.~~

Financing Activities

Net cash used in financing activities was $131.3 million for the six months ended June 30, 2017 compared to net cash used in financing activities of $56.1 million for the six months ended June 30, ~~2016 compared to~~2016. The increase in net cash used in financing activities ~~of $130.1 million for~~was primarily due to the ~~six months ended June 30, 2015. Significant components of net cash used in financing activities include:~~

~~We paid approximately $19.4~~$50.0 million of amortizing principal debt and approximately $13.1 million to repay two maturing mortgage in 2016. This compares to 2015 where we had approximately $18.4 million of amortizing principal debt, approximately $48.7 million of maturing mortgage, defeased approximately $370.2 million of debt and paid a total of

~~Management's Discussion (continued)~~

approximately $23.5 million in debt issuance and defeasance costs as well as early debt retirement costs. (See Note 7 to the Consolidated Financial Statements for a description of our borrowing arrangements).

~~We sold 683,548 shares of our common stock under the ATM offering program for gross~~ cash proceeds ~~of approximately $50.0 million before expenses~~received during the six months ended June 30, 2016 ~~(see Note 3 to the Consolidated Financial Statements for~~as a ~~description~~result of ~~our equity transactions).~~

~~We received $395.3 million in financing proceeds in 2015. (see Note 7 to the Consolidated Financial Statements for a description of our borrowing arrangements).~~

We made distributions of approximately $77.9 million in the first six months of 2016 to Common Stockholders, Common OP unitholders and preferred stockholders which were partially offset by proceeds received of approximately $5.2 million from the exercise of stock options and the sale of ~~shares through~~stock under the ~~employee stock purchase plan (see Note 3 to the Consolidated Financial Statements for a description of our~~ATM equity ~~transactions).~~offering program.

We made distributions of approximately $68.5 million in the first quarter of 2015 to Common Stockholders, Common OP unitholders and preferred stockholders and paid approximately $0.3 million for offering costs, offset by proceeds received of approximately $4.3 million from the exercise of stock options and the sale of shares through the employee stock purchase plan (see Note 3 to the Consolidated Financial Statements for a description of our equity transactions).

Management's Discussion (continued)

Contractual Obligations

As of June 30, ~~2016~~2017, we were subject to certain contractual payment obligations as described in the table below (amounts in thousands):



	Total ⁽⁵⁾			2017			2018			2019			2020			2021			Thereafter
Long Term Borrowings ⁽¹⁾	$	2,068,016		$	28,900		$	239,608		$	234,920		$	352,089		$	211,650		$	1,000,849
Interest Expense ⁽²⁾	605,441			48,266			87,925			73,013			57,639			49,742			288,856
Operating Lease	9,444			1,090			2,221			2,062			2,011			1,711			349
LOC Maintenance Fee ⁽³⁾	849			409			440			—			—			—			—
Ground Lease ⁽⁴⁾	16,035			993			1,980			1,983			1,984			1,987			7,108
Total Contractual Obligations	$	2,699,785		$	79,658		$	332,174		$	311,978		$	413,723		$	265,090		$	1,297,162
Weighted average interest rates - Long Term Borrowings	4.41		%	4.69		%	4.61		%	4.40		%	4.49		%	4.39		%	4.25		%

Total ⁽⁵⁾
2016 2017 2018 2019 2020 Thereafter
Long Term Borrowings ⁽¹⁾
$ 2,126,878
$ 86,816
$ 98,153
$ 230,697
$ 232,073
$ 349,125
$ 1,130,014
Interest Expense ⁽²⁾
654,066
49,875
93,482
84,214
69,499
54,242
302,754
Operating Lease 11,588
1,063
2,171
2,221
2,062
2,011
2,060
LOC Maintenance Fee ⁽³⁾
1,660
409
811
440
—
—
—
Ground Lease ⁽⁴⁾
17,380
981
1,963
1,957
1,960
1,961
8,558
Total Contractual Obligations $ 2,811,572
$ 139,144
$ 196,580
$ 319,529
$ 305,594
$ 407,339
$ 1,443,386
Weighted average interest rates - Long Term Borrowings 4.54 % 4.81 % 4.75 % 4.66 % 4.45 % 4.56 % 4.36 %

~~______________________________~~


⁽¹⁾	Balance excludes note premiums of ~~$7.1~~$4.3 million and deferred financing costs of approximately ~~$18.9~~$17.8 million. Balances include debt maturing, ~~and~~ scheduled periodic principal ~~payments.~~payments, and Paradise Park Largo mortgage debt of $5.9 million.


⁽²⁾	Amounts include interest expected to be incurred on our secured debt and Term Loan based on obligations outstanding as of June 30, ~~2016.~~2017.


⁽³⁾	As of June 30, ~~2016,~~2017, assumes we will not exercise our one year extension option on July 17, 2018 and assumes we will maintain our current leverage ratios as defined by the LOC.


⁽⁴⁾	We also lease land under non-cancelable operating leases at certain of the Properties expiring in various years from 2017 to 2054. The majority of the lease terms require twelve equal payments per year plus additional rents calculated as a percentage of gross revenues.


⁽⁵⁾	We do not include insurance, property taxes and cancelable contracts in the contractual obligations table.

We believe that we will be able to refinance our maturing debt obligations on a secured or unsecured basis; however, to the extent we are unable to refinance our debt as it matures, we believe that we will be able to repay such maturing debt through available cash as well as operating cash flow, asset sales and/or the proceeds from equity issuances. With respect to any refinancing of maturing debt, our future cash flow requirements could be impacted by significant changes in interest rates or other debt terms, including required amortization payments.

Inflation

Substantially all of the leases at the Properties allow for monthly or annual rent increases which provide us with the opportunity to achieve increases, where justified by the market, as each lease matures. Such types of leases generally minimize our risks of inflation. In addition, our resort Properties are not generally subject to leases and rents are established for these Sites on an annual basis. Our right-to-use contracts generally provide for an annual dues increase, but dues may be frozen under the terms of certain contracts if the customer is over 61 years of age.

Off Balance Sheet Arrangements

As of June 30, ~~2016,~~2017, we have no off balance sheet arrangements.

Critical Accounting Policies and Estimates

Refer to the 2016 Form 10-K for a discussion of our critical accounting policies, which includes impairment of real estate assets and investments, revenue recognition and business combinations. There have been no changes to these policies during the quarter ended June 30, 2017.

Management's Discussion (continued)

~~Funds From Operations~~Forward Looking Statements

~~Funds from Operations ("FFO") is a non-GAAP financial measure. We define FFO~~This Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. When used, words such as ~~net income, computed in accordance with GAAP, excluding gains~~“anticipate,” “expect,” “believe,” “project,” “intend,” “may be” and ~~actual~~“will be” and similar words or ~~estimated losses from sales~~phrases, or the negative thereof, unless the context requires otherwise, are intended to identify forward-looking statements and may include without limitation, information regarding our expectations, goals or intentions regarding the future, and the expected effect of ~~properties, plus~~our acquisitions. These forward-looking statements are subject to numerous assumptions, risks and uncertainties, including, but not limited to:

our ability to control costs, real estate ~~related depreciation~~market conditions, the actual rate of decline in customers, the actual use of Sites by customers and ~~amortization, impairments,~~our success in acquiring new customers at our Properties (including those that we may acquire);

our ability to maintain historical or increase future rental rates and occupancy with respect to Properties currently owned or that we may acquire;

our ability to retain and attract customers renewing, upgrading and entering right-to-use contracts;

our assumptions about rental and home sales markets;

our ability to manage counterparty risk;

impact of government intervention to stabilize site-built single-family housing and not manufactured housing;

effective integration of recent acquisitions and our estimates regarding the future performance of recent acquisitions;

the completion of future transactions in their entirety, if any, and ~~after adjustments~~timing and effective integration with respect thereto;

unanticipated costs or unforeseen liabilities associated with recent acquisitions;

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

the effect of interest rates;

the dilutive effects of issuing additional securities;

the effect of accounting for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO on the same basis. We compute FFO in accordance with our interpretation of standards established by the National Association of Real Estate Investment Trusts (“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. We receive up-front non-refundable payments from the entry of contracts with customers representing a right-to-use ~~contracts. In accordance with GAAP,~~ the ~~upfront non-refundable payments and related commissions are deferred and amortized over~~Properties under the ~~estimated customer life. Although~~ Codification Topic "Revenue Recognition";

the ~~NAREIT definition~~outcome of ~~FFO does not address the treatment of non-refundable right-to-use payments, we believe that it is appropriate to adjust for the impact of the deferral activity~~pending or future lawsuits or actions brought against us, including those disclosed in our ~~calculation of FFO.~~filings with the Securities and Exchange Commission; and

~~We believe FFO, as defined by~~other risks indicated from time to time in our filings with the ~~Board of Governors of NAREIT, is generally a measure of performance for an equity REIT. While FFO is a relevant~~Securities 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.Exchange Commission.

Normalized Funds from Operations ("Normalized FFO") is a non-GAAP measure. We define Normalized FFO as FFO excluding the following non-operating income and expense items: a) the financial impact of contingent consideration; b) gains and losses from early debt extinguishment, including prepayment penalties and defeasance costs; c) property acquisition and other transaction costs related to mergers and acquisitions; and d) other miscellaneous non-comparable items. Normalized FFO presented herein is not necessarily comparable to Normalized FFO presented by other real estate companies due to the fact that not all real estate companies use the same methodology for computing this amount.

We believe that FFO and Normalized FFO are helpful to investors as supplemental measures of the performance of an equity REIT. We believe that by excluding the effect of depreciation, amortization, impairments, if any, and actual or estimated gains or losses from sales of real estate, all of whichThese forward-looking statements are based on ~~historical costs~~management's present expectations and ~~which may be of limited relevance~~beliefs about future events. As with any projection or forecast, these statements are inherently susceptible to uncertainty and changes in ~~evaluating current performance, FFO can facilitate comparisons of operating performance between periods~~circumstances. We are under no obligation to, and ~~among other equity REITs. We further believe that Normalized FFO provides useful information~~expressly disclaim any obligation to, ~~investors, analysts and~~update or alter our management because it allows them to compare our operating performance to the operating performance of other real estate companies and between periods on a consistent basis without having to account for differences not related to our operations. For example, we believe that excluding the early extinguishment of debt, property acquisition and other transaction costs related to mergers and acquisitions from Normalized FFO allows investors, analysts and our management to assess the sustainability of operating performance in future periods because these costs do not affect the future operations of the properties. In some cases, we provide information about identified non-cash components of FFO and Normalized FFO because it allows investors, analysts and our management to assess the impact of those items.

Our definitions and calculations of these non-GAAP financial and operating measures and other terms may differ from the definitions and methodologies used by other REITs and, accordingly, may not be comparable. These non-GAAP financial and operating measures 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,forward-looking statements whether as a ~~measure~~result of ~~our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make cash distributions.~~

~~Management's Discussion (continued)~~

The following table presents a calculation of FFO available for Common Stock and OP Unit holders and Normalized FFO available for Common Stock and OP Unit holders for the quarters ended June 30, 2016 and 2015 (amounts in thousands):

Quarters Ended
June 30, Six Months Ended June 30,
2016 2015 2016 2015
Computation of FFO and Normalized FFO:
Net income available for Common Stockholders $ 35,490
$ 31,786
$ 86,073
$ 58,972
Income allocated to common OP units 2,998
2,724
7,308
5,054
Right-to-use contract upfront payments, deferred, net 798
1,455
1,100
2,228
Right-to-use contract commissions, deferred, net (116 ) (764 ) (12 ) (1,007 )
Depreciation on real estate assets 26,362
25,654
52,370
51,064
Depreciation on rental homes 2,667
2,681
5,314
5,387
Amortization of in-place leases 428
669
763
1,334
Depreciation on unconsolidated joint ventures 305
282
595
525
FFO available for Common Stock and OP Unit holders 68,932
64,487
153,511
123,557
Transaction costs 398
50
598
482
Early debt retirement —
(69 ) —
16,922
Normalized FFO available for Common Stock and OP Unit holders $ 69,330
$ 64,468
$ 154,109
$ 140,961
Weighted average Common Shares outstanding – fully diluted 92,264
91,851
92,163
91,829
such changes, new information, subsequent events or otherwise.


Item 3.	Quantitative and Qualitative Disclosure of Market Risk

We disclosed a quantitative and qualitative analysis regarding market risk in Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk on Form 10-K for the year ended December 31, ~~2015.~~2016. There have been no material changes in the assumptions used or results obtained regarding market risk since December 31, ~~2015.~~2016.


Item 4.	Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial and accounting officer), has evaluated the effectiveness of our disclosure controls and procedures as of June 30, ~~2016~~2017. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective to give reasonable assurances to the timely collection, evaluation and disclosure of information relating to us that would potentially be subject to disclosure under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated thereunder as of June 30, ~~2016~~2017.

Notwithstanding the foregoing, a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that it will detect or uncover failures within us to disclose material information otherwise required to be set forth in our periodic reports.

Changes in Internal Control Over Financial Reporting

During the ~~second~~quarter of ~~2016~~,ended June 30, 2017, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II – Other Information


Item 1.	Legal Proceedings

See Note 129 of the Consolidated Financial Statements contained herein.


Item 1A.	Risk Factors

There have been no material changes to the risk factors discussed in “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2015 other than those disclosed~~2016 and in our Quarterly Report on Form 10-Q for the quarter ended March ~~2016.~~31, 2017.


Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds

None.


Item 3.	Defaults Upon Senior Securities

None.


Item 4.	Mine Safety Disclosure

None.


Item 5.	Other Information

None.


Item 6.	Exhibit Index



~~10.4~~	~~Amended and Restated Equity LifeStyle Properties, Inc. 1997 Non-Qualified Employee Stock Purchase Plan, effective May 10, 2016.~~
31.1	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.
32.2	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350.
101	The following materials from Equity LifeStyle Properties, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, ~~2016~~2017 formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income and Comprehensive Income, (iii) Consolidated Statements of Changes in Equity, (iv) Consolidated Statements of Cash Flow, and (v) Notes to Consolidated Financial Statements, filed herewith.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.



	EQUITY LIFESTYLE PROPERTIES, INC.

Date: July ~~27, 2016~~26, 2017	By:	/s/ Marguerite Nader
		Marguerite Nader
		President and Chief Executive Officer
		(Principal Executive Officer)

Date: July ~~27, 2016~~26, 2017	By:	/s/ Paul Seavey
		Paul Seavey
		Executive Vice President, Chief Financial Officer and Treasurer
		(Principal Financial ~~Officer)~~

~~Date: July 27, 2016~~	~~By:~~	~~/s/ Ann Wallin~~
		~~Ann Wallin~~
		~~Vice President~~ and ~~Chief Accounting Officer~~
		~~(Principal~~ Accounting Officer)

4336



	Six Months Ended June 30, 2016
Shares of Common Stock sold	683,548
Weighted average price	$	73.15
Total gross proceeds	$	50,000
Commissions paid to sales agents	$	657



	Six Months Ended		Year Ended
	June 30, 2016		December 31, 2015
Assets acquired
Land	$	40,975	$	8,985
Buildings and other depreciable property	58,676		13,948
Manufactured homes	22		345
In-place leases	475		622
Net investment in real estate	100,148		23,900
Other assets	20		53
Total Assets acquired	$	100,168	$	23,953

Liabilities assumed
Mortgage notes payable	$	22,010	$	—
Other liabilities	1,955		266
Total Liabilities assumed	$	23,965	$	266
Net assets acquired	$	76,203	$	23,687



Derivatives in Cash Flow Hedging Relationship	Balance Sheet Location	June 30, 2016		December 31, 2015
Interest Rate Swap	Accrued expenses and accounts payable	$	1,197	$	553



Derivatives in Cash Flow Hedging Relationship	Amount of loss recognized in OCI on derivative				Location of loss reclassified from accumulated OCI into income	Amount of loss reclassified from accumulated OCI into income
Derivatives in Cash Flow Hedging Relationship	June 30, 2016		June 30, 2015			June 30, 2016		June 30, 2015
Interest Rate Swap	$	338	$	230	Interest Expense	$	302	$	434



	Years Ended December 31,				Six Months Ended June 30,
	2012	2013	2014	2015	2016
TTC Origination	10,198	15,607	18,187	25,544	14,723
TTC Sales	8,909	9,289	10,014	11,877	6,622
RV Dealer TTC Activations	1,289	6,318	8,173	13,667	8,101



	Six Months ended June 30,⁽¹⁾
	2016		2015
Recurring Capital Expenditures ⁽²⁾	$	18,317	$	18,265
Property upgrades and site development	5,961		3,749
New home investments⁽³⁾	27,774		15,905
Used home investments	3,210		3,797
Total Property	55,262		41,716
Corporate	445		543
Total Capital improvements	$	55,707	$	42,259