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, ~~2017~~2018



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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting 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:

~~87,005,128~~89,098,574 shares of Common Stock as of July ~~24, 2017.~~20, 2018.

Equity LifeStyle Properties, Inc.

Table of Contents



		Page
Part I - Financial Information
Item 1.	Financial Statements (unaudited)
Index To Financial Statements
Consolidated Balance Sheets as of June 30, ~~2017 (unaudited)~~2018 and December 31, ~~2016~~2017		3
Consolidated Statements of Income and Comprehensive Income for the quarters and six months ended June 30, ~~2017~~2018 and ~~2016 (unaudited)~~2017		4
Consolidated Statement of Changes in Equity for the six months ended June 30, ~~2017 (unaudited)~~2018		6
Consolidated Statements of Cash Flows for the six months ended June 30, ~~2017~~2018 and ~~2016 (unaudited)~~2017		7
Notes to Consolidated Financial Statements		9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1822
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3337
Item 4.	Controls and Procedures	3337
Part II - Other Information
Item 1.	Legal Proceedings	3438
Item 1A.	Risk Factors	3438
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3438
Item 3.	Defaults Upon Senior Securities	3438
Item 4.	Mine Safety ~~Disclosure~~Disclosures	3438
Item 5.	Other Information	3438
Item 6.	Exhibits	3539

Part I – Financial Information

Item 1. Financial Statements

Equity LifeStyle Properties, Inc.

Consolidated Balance Sheets

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

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


							As of			As of
	June 30, 2017			December 31, 2016			June 30, 2018			December 31, 2017
	(unaudited)						(unaudited)
Assets
Investment in real estate:
Land	$	1,167,510		$	1,163,987		$	1,284,851		$	1,221,375
Land improvements	2,922,201			2,893,759			3,072,474			3,045,221
Buildings and other depreciable property	641,931			627,590			692,495			649,217
	4,731,642			4,685,336			5,049,820			4,915,813
Accumulated depreciation	(1,459,931		)	(1,399,531		)	(1,580,013		)	(1,516,694		)
Net investment in real estate	3,271,711			3,285,805			3,469,807			3,399,119
Cash	67,740			56,340
Cash and restricted cash							46,025			31,085
Notes receivable, net	48,253			34,520			34,672			49,477
Investment in unconsolidated joint ventures	21,766			19,369			57,699			53,080
Deferred commission expense	31,453			31,375			39,843			31,443
Escrow deposits, goodwill, and other assets, net	44,435			51,578			52,143			45,828
Total Assets	$	3,485,358		$	3,478,987		$	3,700,189		$	3,610,032
Liabilities and Equity
Liabilities:
Mortgage notes payable, net	$	1,855,028		$	1,891,900		$	2,028,535		$	1,971,715
Term loan	199,483			199,379			198,464			198,302
Unsecured lines of credit	—			—
Unsecured line of credit							—			30,000
Accrued expenses and accounts payable	93,451			89,864			90,929			80,744
Deferred revenue – upfront payments from right-to-use contracts	83,580			81,484			112,288			85,596
Deferred revenue – right-to-use annual payments	12,559			9,817			12,806			9,932
Accrued interest payable	8,044			8,379			8,425			8,387
Rents and other customer payments received in advance and security deposits	88,543			76,906			94,868			79,267
Distributions payable	45,259			39,411			52,043			46,047
Total Liabilities	2,385,947			2,397,140			2,598,358			2,509,990
Equity:
Stockholders’ Equity:
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
Preferred stock, $0.01 par value, 10,000,000 shares authorized as of December 31, 2017 and June 30, 2018; none issued and outstanding.							—			—
Common stock, $0.01 par value, 200,000,000 shares authorized as of June 30, 2018 and December 31, 2017; 88,802,758 and 88,585,160 shares issued and outstanding as of June 30, 2018 and December 31, 2017, respectively							884			883
Paid-in capital	1,121,307			1,103,048			1,248,047			1,242,109
Distributions in excess of accumulated earnings	(219,641		)	(231,276		)	(218,453		)	(211,980		)
Accumulated other comprehensive loss/(income)	30			(227		)
Accumulated other comprehensive income							3,579			942
Total Stockholders’ Equity	1,038,708			1,008,543			1,034,057			1,031,954
Non-controlling interests – Common OP Units	60,703			73,304			67,774			68,088
Total Equity	1,099,411			1,081,847			1,101,831			1,100,042
Total Liabilities and Equity	$	3,485,358		$	3,478,987		$	3,700,189		$	3,610,032

The accompanying notes are an integral part of these Consolidated Financial Statements.

Equity LifeStyle Properties, Inc.

Consolidated Statements of Income and Comprehensive Income

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

(amounts in thousands, except per share data)

(unaudited)


	Quarters Ended						Six Months Ended						Quarters Ended June 30,						Six Months Ended June 30,
	June 30, 2017			June 30, 2016			June 30, 2017			June 30, 2016			2018			2017			2018			2017
Revenues:
Community base rental income	$	121,964		$	115,385		$	242,656		$	229,461		$	128,579		$	121,964		$	255,318		$	242,656
Rental home income	3,632			3,543			7,237			7,088			3,561			3,632			7,076			7,237
Resort base rental income	50,055			44,732			111,123			100,166			55,231			50,055			119,485			111,123
Right-to-use annual payments	11,350			11,187			22,602			22,241			11,891			11,350			23,410			22,602
Right-to-use contracts current period, gross	3,798			3,086			7,004			5,618			3,944			3,798			7,106			7,004
Right-to-use contract upfront payments, deferred, net	(1,321		)	(798		)	(2,096		)	(1,100		)	(2,021		)	(1,321		)	(3,306		)	(2,096		)
Utility and other income	20,650			19,523			42,776			40,316			24,320			20,650			49,841			42,776
Gross revenues from home sales	7,833			9,130			14,860			17,344			9,105			7,833			17,414			14,860
Brokered resale revenues and ancillary services revenues, net	444			398			2,105			1,816			617			444			2,018			2,105
Interest income	1,798			1,625			3,568			3,285			1,862			1,798			3,812			3,568
Income from other investments, net	1,109			2,270			1,866			3,993			3,413			1,109			4,353			1,866
Total revenues	221,312			210,081			453,701			430,228			240,502			221,312			486,527			453,701
Expenses:
Property operating and maintenance	72,901			66,647			140,955			129,601			80,091			72,901			154,999			140,955
Rental home operating and maintenance	1,657			1,581			3,208			3,106			1,629			1,657			3,053			3,208
Real estate taxes	13,943			12,869			27,980			26,067			13,440			13,943			27,575			27,980
Sales and marketing, gross	2,894			2,931			5,584			5,424			3,305			2,894			6,117			5,584
Right-to-use contract commissions, deferred, net	(112		)	(116		)	(196		)	(12		)	(262		)	(112		)	(286		)	(196		)
Property management	13,023			12,044			25,583			23,807			13,472			13,023			27,153			25,583
Depreciation on real estate assets and rental homes	30,247			29,029			60,357			57,684			32,452			30,247			63,774			60,357
Amortization of in-place leases	958			428			1,990			763			1,893			958			2,945			1,990
Cost of home sales	7,895			9,481			15,014			17,762			9,632			7,895			18,206			15,014
Home selling expenses	929			805			1,854			1,639			973			929			2,048			1,854
General and administrative	8,461			8,255			15,834			15,663			9,669			8,461			17,707			15,834
Property rights initiatives and other, net	271			527			490			1,181
Other expenses													367			271			710			490
Interest and related amortization	24,822			25,561			49,701			51,195			26,285			24,822			51,988			49,701
Total expenses	177,889			170,042			348,354			333,880			192,946			177,889			375,989			348,354
Income before equity in income of unconsolidated joint ventures	43,423			40,039			105,347			96,348			47,556			43,423			110,538			105,347
Equity in income of unconsolidated joint ventures	1,040			765			2,190			1,646			1,613			1,040			2,808			2,190
Consolidated net income	44,463			40,804			107,537			97,994			49,169			44,463			113,346			107,537

Income allocated to non-controlling interests – Common OP Units	(2,649		)	(2,998		)	(6,539		)	(7,308		)	(3,024		)	(2,649		)	(6,979		)	(6,539		)
Series C Redeemable Perpetual Preferred Stock Dividends	(2,316		)	(2,316		)	(4,613		)	(4,613		)
Redeemable perpetual preferred stock dividends													(8		)	(2,316		)	(8		)	(4,613		)
Net income available for Common Stockholders	$	39,498		$	35,490		$	96,385		$	86,073		$	46,137		$	39,498		$	106,359		$	96,385

Consolidated net income	$	44,463		$	40,804		$	107,537		$	97,994		$	49,169		$	44,463		$	113,346		$	107,537
Other comprehensive income (loss) (“OCI”):
Other comprehensive income:
Adjustment for fair market value of swap	30			(36		)	257			(644		)	764			30			2,637			257
Consolidated comprehensive income	44,493			40,768			107,794			97,350			49,933			44,493			115,983			107,794
Comprehensive income allocated to non-controlling interests – Common OP Units	(2,651		)	(2,995		)	(6,555		)	(7,257		)	(3,071		)	(2,651		)	(7,141		)	(6,555		)
Series C Redeemable Perpetual Preferred Stock Dividends	(2,316		)	(2,316		)	(4,613		)	(4,613		)
Redeemable perpetual preferred stock dividends													(8		)	(2,316		)	(8		)	(4,613		)
Comprehensive income attributable to Common Stockholders	$	39,526		$	35,457		$	96,626		$	85,480		$	46,854		$	39,526		$	108,834		$	96,626

The accompanying notes are an integral part of these Consolidated Financial Statements.

Equity LifeStyle Properties, Inc.

Consolidated Statements of Income and Comprehensive Income (Continued)

~~For the Quarters EndedJune 30, 2017~~ ~~and~~ ~~2016~~

(amounts in thousands, except per share data)

(unaudited)


	Quarters Ended				Six Months Ended				Quarters Ended June 30,				Six Months Ended June 30,
	June 30, 2017		June 30, 2016		June 30, 2017		June 30, 2016		2018		2017		2018		2017
Earnings per Common Share – Basic:
Net income available for Common Stockholders	$	0.46	$	0.42	$	1.12	$	1.02	$	0.52	$	0.46	$	1.20	$	1.12
Earnings per Common Share – Fully Diluted:
Net income available for Common Stockholders	$	0.45	$	0.42	$	1.11	$	1.01	$	0.52	$	0.45	$	1.20	$	1.11

Distributions declared per Common Share outstanding	$	0.488	$	0.425	$	0.975	$	0.850	$	0.550	$	0.488	$	1.100	$	0.975
Weighted average Common Shares outstanding – basic	86,763		84,516		86,408		84,419		88,549		86,763		88,537		86,408
Weighted average Common Shares outstanding – fully diluted	93,063		92,264		93,041		92,163		94,623		93,063		94,600		93,041

The accompanying notes are an integral part of these Consolidated Financial Statements.

Equity LifeStyle Properties, Inc.

Consolidated Statement of Changes in Equity

~~For the Six Months Ended~~ ~~June 30, 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/(Income)			Total Equity			Common Stock		Paid-in Capital			Redeemable Perpetual Preferred Stock			Distributions in Excess of Accumulated Earnings			Accumulated Other Comprehensive Loss/(Income)		Non- controlling interests – Common OP Units			Total Equity
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	14		16,423			—			—			(16,437		)	—			—
Balance, December 31, 2017																					$	883	$	1,242,109		$	—		$	(211,980	)	$	942	$	68,088		$	1,100,042
Cumulative effect of change in accounting principle (as described in Note 2)																					—		—			—			(15,186		)	—		—			(15,186		)
Balance, January 1, 2018																					$	883	$	1,242,109		$	—		$	(227,166	)	$	942	$	68,088		$	1,084,856
Exchange of Common OP Units for Common Stock																					1		161			—			—			—		(162		)	—
Issuance of Common Stock through employee stock purchase plan	—		764			—			—			—			—			764			—		846			—			—			—		—			846
Compensation expenses related to restricted stock	—		4,257			—			—			—			—			4,257
Compensation expenses related to restricted stock and stock options																					—		4,541			—			—			—		—			4,541
Adjustment for Common OP Unitholders in the Operating Partnership	—		(3,037		)	—			—			3,037			—			—			—		725			—			—			—		(725		)	—
Adjustment for fair market value of swap	—		—			—			—			—			257			257			—		—			—			—			2,637		—			2,637
Net income	—		—			4,613			96,385			6,539			—			107,537
Consolidated net income																					—		—			8			106,359			—		6,979			113,346
Distributions	—		—			(4,613		)	(84,750		)	(5,740		)	—			(95,103		)	—		—			(8		)	(97,646		)	—		(6,406		)	(104,060		)
Other	—		(148		)	—			—			—			—			(148		)	—		(335		)	—			—			—		—			(335		)
Balance, June 30, 2017	$	868	$	1,121,307		$	136,144		$	(219,641	)	$	60,703		$	30		$	1,099,411
Balance, June 30, 2018																					$	884	$	1,248,047		$	—		$	(218,453	)	$	3,579	$	67,774		$	1,101,831

The accompanying notes are an integral part of these Consolidated Financial Statements.

Equity LifeStyle Properties, Inc.

Consolidated Statements of Cash Flows

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

(amounts in thousands)

(unaudited)

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



	Six Months Ended June 30,
	2018			2017
Cash Flows From Operating Activities:
Consolidated net income	$	113,346		$	107,537
Adjustments to reconcile Consolidated net income to Net cash provided by operating activities:
Depreciation	64,486			60,960
Amortization of in-place leases	2,945			1,990
Amortization of loan costs	1,772			1,788
Debt premium amortization	(711		)	(1,166		)
Equity in income of unconsolidated joint ventures	(2,808		)	(2,190		)
Distributions of income from unconsolidated joint ventures	1,732			1,270
Proceeds from insurance claims, net	1,809			4,482
Compensation expenses related to restricted stock and stock options	4,541			4,257
Revenue recognized from right-to-use contract upfront payments	(3,800		)	(4,908		)
Commission expense recognized related to right-to-use contracts	1,810			2,202
Long-term incentive plan compensation	461			674
Recovery for uncollectible rents receivable	134			214
Changes in assets and liabilities:
Notes receivable activity, net	347			(282		)
Deferred commission expense	(2,010		)	(2,280		)
Escrow deposits, goodwill and other assets	11,111			10,992
Accrued expenses and accounts payable	5,280			6,066
Deferred revenue – upfront payments from right-to-use contracts	7,106			7,004
Deferred revenue – right-to-use annual payments	2,874			2,742
Rents received in advance and security deposits	15,601			11,630
Net cash provided by operating activities	226,026			212,982
Cash Flows From Investing Activities:
Real estate acquisitions, net	(53,289		)	(2,053		)
Investment in unconsolidated joint ventures	(3,791		)	(2,267		)
Distributions of capital from unconsolidated joint ventures	110			530
Proceeds from insurance claims	2,335			590
Repayments of notes receivable	19,037			5,054
Issuance of notes receivable	(4,919		)	(18,696		)
Capital improvements	(81,377		)	(53,464		)
Net cash used in investing activities	(121,894		)	(70,306		)
Cash Flows From Financing Activities:
Proceeds from stock options and employee stock purchase plan	846			764
Distributions:
Common Stockholders	(92,008		)	(78,699		)
Common OP Unitholders	(6,049		)	(5,942		)
Perpetual Preferred Stockholders	(8		)	(4,613		)
Principal payments and mortgage debt payoff	(23,964		)	(42,637		)
New mortgage notes payable financing proceeds	64,014			—
Line of Credit payoff	(97,000		)	—
Line of Credit proceeds	67,000			—
Debt issuance and defeasance costs	(1,688		)	—
Other	(335		)	(149		)
Net cash used in financing activities	(89,192		)	(131,276		)
Net increase in Cash and restricted cash	14,940			11,400
Cash and restricted cash, beginning of period	31,085			56,340
Cash and restricted cash, end of period	$	46,025		$	67,740

The accompanying notes are an integral part of these Consolidated Financial Statements.

Equity LifeStyle Properties, Inc.

Consolidated Statements of Cash Flows (continued)

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

(amounts in thousands)

(unaudited)


							Six Months Ended June 30,
	June 30, 2017			June 30, 2016			2018			2017
Supplemental Information:
Cash paid during the period for interest	$	51,135		$	53,121		$	52,658		$	51,135
Capital improvements – used homes acquired by repossessions	192			445
Net repayments of notes receivable – used homes acquired by repossessions	(192		)	(445		)
Building and other depreciable property – reclassification of rental homes	15,322			15,986			19,390			15,322
Escrow deposits and other assets – reclassification of rental homes	(15,322		)	(15,986		)	(19,390		)	(15,322		)

Real estate acquisitions:
Investment in real estate, fair value	$	(7,985	)	$	(100,148	)	$	(71,756	)	$	(7,985	)
Escrow deposits and other assets	—			(20		)	(9		)	—
Debt assumed	5,900			22,010			9,200			5,900
Debt financed							8,786			—
Accrued expenses and accounts payable	32			1,955			490			32
Real estate acquisitions, net	$	(2,053	)	$	(76,203	)	$	(53,289	)	$	(2,053	)

The accompanying notes are an integral part of these Consolidated Financial Statements.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 1 – Basis of 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.” 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 provide our customers the opportunity to place factory built homes, cottages, cabins or RVs on our properties either on a long-term or short-term basis. Our customers may lease individual developed areas ("Sites") or enter right-to-use contracts, which provide them access to specific Properties for limited stays.

Capitalized terms used but not defined herein are as defined in our Annual Report on Form 10-K ~~(“2016 Form 10-K”)~~ for the year ended December 31, ~~2016.~~2017 (“2017 Form 10-K”). These unaudited interim 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~~2017 Form 10-K.

The following notes to the unaudited interim Consolidated Financial Statements highlight significant changes to the notes included in the ~~2016~~2017 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 2 – Summary of Significant Accounting Policies


(a)	Consolidation

We consolidate our majority-owned Subsidiaries in which we have the ability to control the operations and all variable interest entities ("VIEs") with respect to which we are the primary beneficiary. We have determined the Operating Partnership, which is our sole significant asset, meets the definition of a VIE. Therefore, we consolidate the Operating Partnership. We also consolidate entities in which we have a direct or indirect controlling 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. 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 Operating Partnership now meets the criteria as a VIE. We concluded that the Operating Partnership is a VIE because we are the general partner and controlling owner of approximately 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.

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 its operations and major decisions. We apply the cost method of accounting when our investment is (i) minimal (typically less than 5.0%) and (ii) passive. Our exposure to losses associated with unconsolidated joint ventures is primarily limited to the carrying value of these investments. Accordingly, distributions from a joint venture in excess of our carrying value are recognized in earnings.


(b)	Identified Intangibles and Goodwill

As of both June 30, ~~2017~~2018 and December 31, ~~2016,~~2017, the gross carrying amount of identified intangible assets and goodwill, a component of ~~escrow~~Escrow deposits, goodwill and other assets, net on our consolidated balance sheets, was approximately $12.1 million. As of both June 30, ~~2017~~2018 and December 31, ~~2016,~~2017, 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 ~~$2.9~~$3.0 million and ~~$2.8~~$2.9 million as of June 30, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively.

As of ~~both~~ June 30, ~~2017~~2018 and December 31, ~~2016,~~2017, the gross carrying amount of in-place lease intangible assets, a component of ~~buildings~~Buildings and other depreciable property on our consolidated balance sheets, was approximately $84.4 million and $76.7 ~~million.~~million, respectively. Accumulated amortization of in-place lease intangible assets was approximately ~~$75.9~~$77.6 million and ~~$74.0~~$76.5 million as of June 30, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively.


(c)	Restricted Cash

~~Cash as~~As of both June 30, ~~2017~~2018 and December 31, ~~2016~~2017, Cash and restricted cash included approximately $5.3 million of restricted cash for the payment of capital improvements, insurance or real estate ~~taxes.~~taxes pursuant to certain loan agreements.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 2 –- Summary of Significant Accounting Policies (continued)


(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 ~~$17.8~~$24.1 million and ~~$18.9~~$23.7 million as of June 30, 2018 and December 31, 2017, respectively, had an aggregate carrying value of approximately ~~$2,072.3~~$2,251.1 million and ~~$2,110.2~~$2,193.7 million as of June 30, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively, and a fair value of approximately ~~$2,106.4~~$2,230.7 million and ~~$2,081.2~~$2,184.0 million as of June 30, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively. The fair value was measured using quoted prices and observable inputs from similar liabilities (Level 2). At June 30, ~~2017~~2018 and December 31, ~~2016,~~2017, our cash flow hedge of interest rate risk included in ~~accrued expenses~~Escrow deposits, goodwill and ~~accounts payable~~other assets, net 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.


(e)	~~New~~Revenue Recognition

Our revenue streams are predominantly derived from customers renting our Sites and are accounted for in accordance with ("ASC 840"), Leases, which include the following classifications on our Consolidated Statements of Income and Comprehensive Income: Community base rental income; Rental home income; Resort base rental income; and Utility and other income. Customers lease the Site in which their home is located, and either own or lease their home. Lease revenues for Sites and homes are accounted for as operating leases and recognized over the term of the respective lease or the length of a customer’s stay. A typical lease for the rental of a Site between us and the owner or renter of a home is month-to-month or for a one-year term, renewable upon the consent of both parties, or in some instances, as provided by statute.

All other classifications on our Consolidated Statements of Income and Comprehensive Income are accounted for under other applicable accounting standards.

We enter into right-to-use contracts that give the customer the right to a set schedule of usage at a specified group of Properties. Payments are deferred and recognized ratably over the one year period in which access to Sites at certain Properties are provided. Right-to-use upgrade contracts grant certain additional access rights to the customer and require upfront non-refundable payments. The right-to-use upfront non-refundable payments are recognized on a straight-line basis over 20 years. On January 1, 2018, we adopted (“ASU 2014-09”), Revenue from Contracts with Customers. See Recently Adopted Accounting Pronouncements within Note 2 for further discussion.

Income from home sales is recognized when the earnings process is complete. The earnings process is complete when the home has been delivered, the purchaser has accepted the home and title has transferred.


(f)	Recently Adopted Accounting Pronouncements

InOn January ~~2017,~~1, 2018, the ~~FASB issued~~Company adopted on a prospective basis ("ASU 2017-01") Business Combinations ~~(Topic 805)~~: Clarifying the Definition of a Business (Topic 805). ~~ASU 2017-01~~This guidance clarifies the definition of a business ~~with the objective~~and provides a screen to determine when an integrated set of ~~adding guidance to assist entities with evaluating whether transactions should be~~assets and activities is not considered a business and, thus, is accounted for as an asset acquisition rather than a business combination. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not considered a business. Under this new guidance, transaction costs associated with asset acquisitions ~~(or disposals)~~are capitalized, while transaction costs associated with business combinations are expensed as incurred. All of ~~assets or businesses.~~ the acquisitions completed subsequent to January 1, 2018 met the screen and, therefore, were accounted for as asset acquisitions and, as such, the related transaction costs of $1.3 million were capitalized for the six months ended June 30, 2018.

On January 1, 2018, the Company adopted (“ASU ~~2017-01 will be effective for annual reporting beginning after December 15, 2017. We are currently in~~2016-18”) Statement of Cash Flows: Restricted Cash (Topic 230). ASU 2016-18 requires companies to include restricted cash with cash and cash equivalents when reconciling the ~~process~~beginning-of-period and end-of-period total amounts shown on the statement of ~~evaluating the potential impact that the~~cash flows. The adoption of this ~~standard may~~guidance did not have any effect on ~~our consolidated financial statements and related disclosures.~~the Company's Consolidated Financial Statements.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 2 - Summary of Significant Accounting Policies (continued)

~~In August 2016,~~On January 1, 2018, the ~~FASB issued~~Company adopted (“ASU 2016-15”) Statement of Cash ~~Flows~~Flows: Classification of Certain Cash Receipts and Cash Payments (Topic 230). on a retrospective basis. ASU 2016-15 ~~provides~~adds or clarifies guidance on ~~how~~the classification of certain cash receipts and ~~cash~~ payments ~~are to be presented and classified~~ in the statement of cash flows. The adoption of ASU 2016-15 ~~will~~impacted our classification of proceeds from the settlement of insurance claims and distributions received from equity method investments. The retrospective adoption of this guidance resulted in the reclassification of $0.6 million of insurance proceeds from Operating Activities to Investing Activities and $0.5 million of distributions from equity method investments from Operating Activities to Investing Activities in our Statement of Cash Flows for the six months ended June 30, 2017.

On January 1, 2018, we adopted ASU 2014-09, which is a comprehensive new revenue recognition model that requires revenue to be ~~effective~~recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for ~~annual~~those goods or services. We applied the modified retrospective method to our right-to-use upgrade contracts and related commissions that were not fully amortized as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASU 2014-09, while prior period amounts are not adjusted and continue to be reported under the previous accounting standards. As a result of the cumulative impact of adopting this guidance, we recorded a net reduction to retained earnings of approximately $15.2 million as of January 1, 2018 in Distributions in excess of accumulated earnings in the Consolidated Statement of Changes in Equity. There have not been significant changes to our business processes, systems, or internal controls as a result of implementing the standard. In addition to the information included within Note 2 regarding the impact of ASU 2014-09, also see Note 10, Reportable Segments, for further disaggregation of our various revenue streams by major source.

The cumulative effect adjustments resulting from the adoption of ASU 2014-09 as of January 1, 2018 were as follows:



(amounts in thousands)	Balance at December 31, 2017			Adjustment due to ASU 2014-09 Adoption			Balance at January 1, 2018
Assets
Deferred commission expense	$	31,443		$	8,200		$	39,643
Liabilities
Deferred revenue-upfront payment from right-to-use contracts	$	85,596		$	23,386		$	108,982
Equity
Distribution in excess of accumulated earnings	$	(211,980	)	$	(15,186	)	$	(227,166	)

The impact of ASU 2014-09 on the Company’s Consolidated Statements of Income and Comprehensive Income for the quarter ended June 30, 2018 was as follows:



(amounts in thousands, except per share data)	As Reported			Balances Without Adoption of ASU 2014-09 (a)			Effect of Change Higher/(Lower)
Revenues
Right-to-use contract upfront payments, deferred, net	$	(2,021	)	$	(1,286	)	$	735
Total revenues	$	240,502		$	241,237		$	(735	)

Expenses
Right-to-use contract commissions, deferred, net	$	(262	)	$	(43	)	$	219
Total expenses	$	192,946		$	193,165		$	(219	)

Consolidated net income	$	49,169		$	49,685		$	(516	)
Net income available for Common Stockholders	$	46,137		$	46,629		$	(492	)
Earnings per Common Share - Basic	$	0.52		$	0.53		$	(0.01	)
Earnings per Common Share - Fully Diluted	$	0.52		$	0.53		$	(0.01	)

_____________________

(a) Represents the amounts that would have been reported under GAAP that existed prior to the January 1, 2018 adoption of ASU 2014-09.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 2 - Summary of Significant Accounting Policies (continued)

The impact of ASU 2014-09 on the Company’s Consolidated Statements of Income and Comprehensive Income for the six months ended June 30, 2018 was as follows:



(amounts in thousands, except per share data)	As Reported			Balances Without Adoption of ASU 2014-09 (a)			Effect of Change Higher/(Lower)
Revenues
Right-to-use contract upfront payments, deferred, net	$	(3,306	)	$	(1,837	)	$	1,469
Total revenues	$	486,527		$	487,996		$	(1,469	)

Expenses
Right-to-use contract commissions, deferred, net	$	(286	)	$	164		$	450
Total expenses	$	375,989		$	376,439		$	(450	)

Consolidated net income	$	113,346		$	114,365		$	(1,019	)
Net income available for Common Stockholders	$	106,359		$	107,323		$	(964	)
Earnings per Common Share - Basic	$	1.20		$	1.21		$	(0.01	)
Earnings per Common Share - Fully Diluted	$	1.20		$	1.21		$	(0.01	)

_____________________

(a) Represents the amounts that would have been reported under GAAP that existed prior to the January 1, 2018 adoption of ASU 2014-09.


(g)	New Accounting Pronouncements

In August 2017, the FASB issued ("ASU 2017-12") Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities (Topic 815). ASU 2017-12 provides guidance about income statement classification and eliminates the requirement to separately measure and report hedge ineffectiveness. The entire change in fair value for qualifying hedge instruments including ineffectiveness will be recorded in Other comprehensive income ("OCI") and amounts deferred in OCI will be reclassified to earnings in the same income statement line item in which the earnings effect of the hedged item is reported. The new guidance also amends the presentation and disclosure requirements. The intention is to align hedge accounting with companies' risk management strategies more closely, thereby simplifying the application of hedge accounting and increasing transparency as to the scope and results of hedging programs. ASU 2017-12 is effective in fiscal years beginning after December 15, ~~2017.~~2018, including interim periods within those years. Early adoption is permitted. We are currently in the process of evaluating the potential impact, if any, that the adoption of this standard may have on our ~~consolidated financial statements~~Consolidated Financial Statements and related disclosures.

In June 2016, the FASB issued (“ASU 2016-13”) Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (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~~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.~~As the lessor, we generate rental income and other income when customers rent the Sites at our Properties. We are the lessee in other arrangements, primarily for office space, ground leases and certain equipment. We are currently in the process of evaluating the potential impact, as both a lessor and a lessee, this standard may have on our ~~consolidated financial statements~~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 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. The new standard will be effective for the Company beginning on January 1, 2018. The standard permits the use of either the full retrospective or modified retrospective transition method.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

~~Note 2 – Summary of Significant Accounting Policies (continued)~~

We expect to adopt ASU 2014-09 on January 1, 2018, using the modified retrospective transition method. We are 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 quantifying the impact, if any, the adoption of ASU 2014-09 will have on our non-lease revenue streams, including right-to-use annual payments, right-to-use contracts, and utility and other income.

Note 3 – Earnings Per Common Share

The following table sets forth the computation of basic and diluted earnings per ~~Common Share~~common share for the quarters and six months ended June 30, ~~2017~~2018 and ~~2016 (amounts in thousands, except per share data):~~2017:


	Quarters Ended				Six Months Ended				Quarters Ended				Six Months Ended
	June 30,				June 30,				June 30,				June 30,
	2017		2016		2017		2016
(amounts in thousands, except per share data)									2018		2017		2018		2017
Numerator:
Net Income Available for Common Stockholders:
Net income available for Common Stockholders – basic	$	39,498	$	35,490	$	96,385	$	86,073	$	46,137	$	39,498	$	106,359	$	96,385
Amounts allocated to dilutive securities	2,649		2,998		6,539		7,308		3,024		2,649		6,979		6,539
Net income available for Common Stockholders – fully diluted	$	42,147	$	38,488	$	102,924	$	93,381	$	49,161	$	42,147	$	113,338	$	102,924
Denominator:
Weighted average Common Shares outstanding – basic	86,763		84,516		86,408		84,419		88,549		86,763		88,537		86,408
Effect of dilutive securities:
Conversion of Common OP Units to Common Shares	5,886		7,205		6,235		7,206
Exchange of Common OP Units for Common Shares									5,826		5,886		5,827		6,235
Stock options and restricted shares	414		543		398		538		248		414		236		398
Weighted average Common Shares outstanding – fully diluted	93,063		92,264		93,041		92,163		94,623		93,063		94,600		93,041

Earnings per Common Share – Basic:
Net income available for Common Stockholders	$	0.46	$	0.42	$	1.12	$	1.02	$	0.52	$	0.46	$	1.20	$	1.12

Earnings per Common Share – Fully Diluted:
Net income available for Common Stockholders	$	0.45	$	0.42	$	1.11	$	1.01	$	0.52	$	0.45	$	1.20	$	1.11

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 4 – Common Stock and Other Equity Related Transactions

~~Dividends~~

~~The following 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 stockholders for the~~ ~~six months endedJune 30, 2017~~.

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
Common Stockholder Distribution Activity

The following quarterly distributions have been declared and paid to common stockholders and non-controlling common operating partnership unit ("OP ~~Unit non-controlling~~Unit") holders for the six months ended June 30, ~~2017.~~2018.

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



Distribution Amount Per Share	For the Quarter Ended	Stockholder Record Date	Payment Date
$0.5500	March 31, 2018	March 30, 2018	April 13, 2018
$0.5500	June 30, 2018	June 29, 2018	July 13, 2018

~~Conversions~~As of June 30, 2018, approximately $150.0 million of Common Stock remained available for issuance under the at-the-market (“ATM”) equity offering program.

Exchanges

Subject to certain limitations, holders of ~~Common Operating Partnership units ("~~OP ~~units")~~Units can ~~convert~~request an exchange of any or all of their ~~units to~~OP Units for shares of Common Stock at any time. Upon receipt of such a request, we may, in lieu of issuing shares of Common Stock, cause the Operating Partnership to pay cash. During the six months ended June 30, ~~2017, 1,334,747~~2018, 13,838 OP ~~units~~Units were ~~converted to~~exchanged for an equal number of shares of Common Stock.

~~Equity LifeStyle Properties, Inc.~~

~~Notes to Consolidated Financial Statements~~

Note 5 – Real Estate Acquisitions

On ~~May 10, 2017,~~April 20, 2018, we completed the acquisition of ~~Paradise~~Holiday Travel Park, ~~Largo,~~ a ~~108-site manufactured home community located~~613-site RV Resort in ~~Largo,~~Holiday, Florida. The purchase price was $22.5 million, including $0.3 million of ~~approximately $8.0 million~~transaction costs, and was funded with available cash and ~~an assumed loan.~~proceeds from our line of credit.

On March 15, 2018, we completed the acquisition of Serendipity, a 425-site manufactured home community located in Clearwater, Florida. The ~~$5.9~~purchase price was $30.7 million, including $0.6 million of transaction costs, and was funded with available cash, a loan ~~has an interest rate~~assumption of ~~4.6% that matures~~$9.2 million and new loan proceeds of $8.8 million.

On March 8, 2018, we completed the acquisition of Kingswood, a 229-site manufactured home community located in ~~2040.~~Riverview, Florida. The purchase price was $17.5 million, including $0.4 million of transaction costs, and was funded with available cash.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 6 – Investment in Unconsolidated Joint Ventures

On June 15, 2017, we entered into a joint venture agreement to purchase Crosswinds Mobile Home Park, a 376-site manufactured home community located in St. Petersburg, Florida. The purchase price of the Property was $18.4 million. We contributed $2.2 million for a 49% equity interest in the joint venture. The joint venture is accounted for under the equity method of accounting. As part of the transaction, we issued a short term loan of $13.8 million to the joint venture. The loan bears interest at 5% per annum, can be repaid with no penalty prior to maturity and matures on December 12, 2017.

The following table summarizes our ~~investment~~Investment in unconsolidated joint ventures (investment amounts in thousands with the number of Properties shown parenthetically as of June 30, ~~2017~~2018 and December 31, ~~2016)~~2017):


						Investment as of				Joint Venture 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, 2017		December 31, 2016		June 30, 2017		June 30, 2016			Location	Number of Sites ^(a)	Economic Interest ^(b)			June 30, 2018		December 31, 2017		June 30, 2018		June 30, 2017
Meadows	Various (2,2)	1,077	50	%		$	240	$	510	$	1,130	$	577		Various (2,2)	1,077	50	%		$	526	$	307	$	819	$	1,130
Lakeshore	Florida (3,2)	720	(b)			2,321		56		147		160			Florida (3,3)	720	(c)			2,435		2,530		123		147
Voyager	Arizona (1,1)	1,801	50	%	^(c)	3,799		3,376		800		917			Arizona (1,1)	1,801	50	%	^(d)	3,614		3,205		883		800
Loggerhead															Florida	2,343	49	%		35,205		31,414		689		—
ECHO JV	Various	—	50	%		15,406		15,427		113		(8		)	Various	—	50	%		15,919		15,624		294		113
		3,598				$	21,766	$	19,369	$	2,190	$	1,646			5,941				$	57,699	$	53,080	$	2,808	$	2,190

_____________________


(a)	Loggerhead sites represent marina slip count.


(b)	The percentages shown approximate our economic interest as of June 30, ~~2017.~~2018. Our legal ownership interest may differ.


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


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

On March 29, 2018, the Crosswinds joint venture repaid a short-term loan to us in the amount of $13.8 million. We provided the loan to Crosswinds in conjunction with the formation of the joint venture in June 2017.

We received approximately $1.8 ~~million and $1.0~~ million in distributions from these joint ventures for both the six months ended June 30, ~~2017~~2018 and ~~2016, respectively.~~2017. Approximately $0.3 ~~million and $0.5~~ million of the distributions made to us exceeded our basis in joint ventures for the ~~quarter and~~ six months ended June 30, 2017, and as such were recorded as income from unconsolidated joint ventures. None of the distributions made to us ~~exceeded~~exceed our basis in joint ventures for the ~~quarter and~~ six months ended June 30, ~~2016.~~2018.

Note 7 – Borrowing Arrangements

Mortgage Notes Payable

~~As of~~During the six months ended June 30, ~~2017 and December 31, 2016,~~2018, we ~~had outstanding mortgage indebtedness~~closed on one loan, secured by two RV resorts, for gross proceeds of approximately ~~$1,855.0 million~~$64.0 million. The loan carries an interest rate of 4.83% per annum and ~~$1,891.9 million, respectively, net of deferred financing costs.~~matures in 2038.

In connection with the ~~Paradise Park Largo~~Serendipity acquisition during the first quarter ~~ended June 30, 2017,~~of 2018, we assumed a loan of approximately ~~$5.9~~$9.2 million and obtained additional financing of $8.8 million for a total mortgage debt, secured by the manufactured home community, of $18.0 million with an interest rate of ~~4.6%~~4.75% that matures in ~~2040. During the quarter ended March~~2039.

As of June 30, 2018 and December 31, 2017, we ~~paid off one maturing~~had outstanding mortgage ~~loan~~indebtedness of approximately ~~$21.1~~$2,028.5 million ~~with a weighted average interest rate~~and $1,971.7 million, respectively, net of ~~5.76% per annum, secured by one manufactured home Property.~~deferred financing costs.

The weighted average interest rate on our outstanding mortgage indebtedness, including the impact of premium/discount amortization and loan cost amortization on mortgage indebtedness, for the six months ended June 30, ~~2017~~2018 was approximately ~~4.9%~~4.7% per annum. The debt bears interest at stated rates ranging from ~~3.5%~~3.1% to 8.9% per annum and matures on various dates ranging from ~~2017~~2018 to 2041. The debt encumbered a total of ~~126~~124 and 120 of our Properties as of ~~both~~ June 30, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively, and the carrying value of such Properties was approximately ~~$2,282.1~~$2,499.0 million and ~~$2,296.6~~$2,323.1 million, as of June 30, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively.

Unsecured Line of Credit

During the six months ended June 30, 2018, we paid off our unsecured line of credit balance, including approximately $30.0 million outstanding as of December 31, 2017.

As of June 30, ~~2017,~~2018, we are in compliance in all material respects with the covenants in our borrowing arrangements.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 8 – Equity Incentive Awards

~~Stock-based compensation~~Compensation expense related to restricted stock and stock options, reported in ~~general~~General and administrative on the Consolidated Statements of Income and Comprehensive Income, for ~~both of~~ the quarters ended June 30, ~~2017~~2018 and ~~2016~~2017 was approximately $2.7 million and $2.5 million and for the six months ended June 30, ~~2017~~2018 and ~~2016~~2017 was approximately ~~$4.3~~$4.5 million and ~~$4.4~~$4.3 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”), (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, 2017, 3,126,885 shares remained available for grant.

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. The Compensation Committee determines the vesting schedule, if any, of each restricted stock grant or stock option grant and the term of each stock 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, 2018, 2,934,810 shares remained available for grant.

On May ~~2, 2017,~~1, 2018, we awarded to certain members of our Board of Directors, ~~55,238~~51,388 shares of Restricted Stock at a fair market value of approximately ~~$4.5~~$4.6 million and Options to purchase ~~6,930~~6,270 shares of common stock with an exercise price of ~~$81.15~~$89.65 per share. The shares of common stock covered by these awards are subject to multiple tranches that vest between November ~~2, 2017~~1, 2018 and May ~~2, 2020.~~1, 2021.

On February 1, ~~2017,~~2018, we awarded ~~75,000~~70,250 shares of ~~Restricted Stock~~restricted stock (the “2018 Awards”) at a fair market value of approximately ~~$5.4~~$5.9 million to certain members of our senior management for their service in ~~2017.~~2018. These restricted stock grants vest over a three-year vesting period, with one-third vesting on December 28, 2018 and the remaining two-thirds vesting on each of December 28, 2019 and December 28, 2020, respectively (the “Extended Vesting Portion”). One-half of the Extended Vesting Portion of the 2018 Awards provide solely for time-based vesting and will vest in equal installments on December 28, 2019 and December 28, 2020. The remaining one-half of the Extended Vesting Portion of the 2018 Awards provide for performance-based vesting and will vest, subject to the satisfaction of the performance conditions to be established by the Compensation Committee in the year of the vesting period, in equal installments on December 28, 2019 and December 28, 2020.

Additionally, on February 1, 2018, we awarded a one-time transition award of time-based restricted stock (the "Transition Awards") as a transition from our prior practice of granting annual restricted stock awards which vest in full on December 31 of the relevant grant year. On February 1, 2018, we awarded Transition Awards for 70,250 shares of common stock at a fair market value of approximately $5.9 million to certain members of our senior management. These Transition Awards are intended to mitigate the impact of a reduction in the realized pay for certain members of our senior management in 2018 and 2019 resulting from the three-year vesting period for the 2018 Awards. Two-thirds of each Transition Award will vest on December ~~31, 2017.~~28, 2018, and the remaining one-third will vest on December 28, 2019. The Transition Awards are not subject to performance goals. The Compensation Committee does not intend to replicate these Transition Awards in future years.

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~~issued. Time-based restricted stock awards are recorded as stock-based compensation expense and paid in capital over the vesting period. Stock-based compensation for restricted stock awards with performance conditions will be recognized using the closing price of our common stock at the grant date when the key terms and conditions are known to all parties.

Note 9 – 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 District Court found the rent control ordinance unconstitutional, the United States Court of Appeals for the Ninth Circuit reversed the 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.

~~Settlement of California Lawsuits~~

On 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 the three plaintiff groups was represented by the same law firm and alleged that the Company failed to properly maintain the 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 $1.9 million to be paid to settle the 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 settlement agreements, all plaintiffs provided full releases to each of the defendants and their affiliates including with respect to the claims alleged in the lawsuits, and each of the lawsuits and related appeals were dismissed with prejudice. The settlements do not constitute an admission of liability by us or any of our affiliates and were made to avoid the costs, risks and uncertainties inherent in litigation.

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

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 9 – Commitments and Contingencies (continued)

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.

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 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.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 10 – Reportable Segments

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, ~~2017~~2018 or ~~2016.~~2017.

The following tables summarize our segment financial information for the quarters and six months ended June 30, ~~2017~~2018 and ~~2016~~2017 ~~(amounts in thousands)~~:

Quarter EndedJune 30, ~~2017~~2018


	Property Operations			Home Sales and Rentals Operations			Consolidated
(amounts in thousands)										Property Operations			Home Sales and Rentals Operations			Consolidated
Operations revenues	$	206,594		$	11,811		$	218,405		$	222,167		$	13,060		$	235,227
Operations expenses	(102,649		)	(10,481		)	(113,130		)	(110,046		)	(12,234		)	(122,280		)
Income from segment operations	103,945			1,330			105,275			112,121			826			112,947
Interest income	754			1,041			1,795			823			1,033			1,856
Depreciation on real estate assets and rental homes	(27,609		)	(2,638		)	(30,247		)	(30,061		)	(2,391		)	(32,452		)
Amortization of in-place leases	(958		)	—			(958		)	(1,893		)	—			(1,893		)
Income (loss) from operations	$	76,132		$	(267	)	$	75,865		$	80,990		$	(532	)	$	80,458
Reconciliation to Consolidated net income:
Reconciliation to consolidated net income:
Corporate interest income							3									6
Income from other investments, net							1,109									3,413
General and administrative							(8,461		)							(9,669		)
Property rights initiatives and other							(271		)
Other expenses																(367		)
Interest and related amortization							(24,822		)							(26,285		)
Equity in income of unconsolidated joint ventures							1,040									1,613
Consolidated net income							$	44,463								$	49,169

Total assets	$	3,267,947		$	217,411		$	3,485,358		$	3,477,455		$	222,734		$	3,700,189
Capital improvements										$	26,602		$	23,459		$	50,061

~~Quarter Ended June 30, 2016~~

Property
Operations

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

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

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 10 -– Reportable Segments ~~(Continued)~~(continued)

Quarter EndedJune 30, 2017



(amounts in thousands)	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		)
Other expenses							(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
Capital improvements	$	18,534		$	10,576		$	29,110

Six Months EndedJune 30, ~~2017~~

2018

Property
Operations

Home Sales
and Rentals
Operations
Consolidated
Operations revenues $ 425,582
$ 22,685
$ 448,267
Operations expenses (199,906 ) (20,076 ) (219,982 )
Income from segment operations 225,676
2,609
228,285
Interest income 1,484
2,079
3,563
Depreciation on real estate assets and rental homes (55,062 ) (5,295 ) (60,357 )
Amortization of in-place leases (1,990 ) —
(1,990 )
Income (loss) from operations $ 170,108
$ (607 ) $ 169,501
Reconciliation to Consolidated net income:
Corporate interest income 5
Income from other investments, net 1,866
General and administrative (15,834 )
Property rights initiatives and other (490 )
Interest and related amortization (49,701 )
Equity in income of unconsolidated joint ventures 2,190
Consolidated net income $ 107,537

Total assets $ 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
(amounts in thousands)										Property Operations			Home Sales and Rentals Operations			Consolidated
Operations revenues	$	397,910		$	25,040		$	422,950		$	453,183		$	25,179		$	478,362
Operations expenses	(184,887		)	(22,507		)	(207,394		)	(215,558		)	(23,307		)	(238,865		)
Income from segment operations	213,023			2,533			215,556			237,625			1,872			239,497
Interest income	1,453			1,785			3,238			1,631			1,940			3,571
Depreciation on real estate assets and rental homes	(52,281		)	(5,403		)	(57,684		)	(53,084		)	(10,690		)	(63,774		)
Amortization of in-place leases	(763		)	—			(763		)	(2,945		)	—			(2,945		)
Income (loss) from operations	$	161,432		$	(1,085	)	$	160,347		$	183,227		$	(6,878	)	$	176,349
Reconciliation to Consolidated net income:
Reconciliation to consolidated net income:
Corporate interest income							47									241
Income from other investments, net							3,993									4,353
General and administrative							(15,663		)							(17,707		)
Property rights initiatives and other							(1,181		)
Other expenses																(710		)
Interest and related amortization							(51,195		)							(51,988		)
Equity in income of unconsolidated joint ventures							1,646									2,808
Consolidated net income							$	97,994								$	113,346

Total assets	$	3,249,375		$	236,200		$	3,485,575		$	3,477,455		$	222,734		$	3,700,189
Capital improvements										$	47,870		$	33,507		$	81,377

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 10 -– Reportable Segments ~~(Continued)~~(continued)

Six Months EndedJune 30, 2017



(amounts in thousands)	Property Operations			Home Sales and Rentals Operations			Consolidated
Operations revenues	$	425,582		$	22,685		$	448,267
Operations expenses	(199,906		)	(20,076		)	(219,982		)
Income from segment operations	225,676			2,609			228,285
Interest income	1,484			2,079			3,563
Depreciation on real estate assets and rental homes	(55,062		)	(5,295		)	(60,357		)
Amortization of in-place leases	(1,990		)	—			(1,990		)
Income (loss) from operations	$	170,108		$	(607	)	$	169,501
Reconciliation to Consolidated net income:
Corporate interest income							5
Income from other investments, net							1,866
General and administrative							(15,834		)
Other expenses							(490		)
Interest and related amortization							(49,701		)
Equity in income of unconsolidated joint ventures							2,190
Consolidated net income							$	107,537

Total assets	$	3,267,947		$	217,411		$	3,485,358
Capital improvements	$	31,731		$	21,733		$	53,464

The following table summarizes our financial information for the Property Operations segment for the quarters and six months ended June 30, ~~2017~~2018 and ~~2016~~2017 ~~(amounts in thousands)~~:


	Quarters Ended						Six Months Ended						Quarters Ended						Six Months Ended
	June 30, 2017			June 30, 2016			June 30, 2017			June 30, 2016
(amounts in thousands)													June 30, 2018			June 30, 2017			June 30, 2018			June 30, 2017
Revenues:
Community base rental income	$	121,964		$	115,385		$	242,656		$	229,461		$	128,579		$	121,964		$	255,318		$	242,656
Resort base rental income	50,055			44,732			111,123			100,166			55,231			50,055			119,485			111,123
Right-to-use annual payments	11,350			11,187			22,602			22,241			11,891			11,350			23,410			22,602
Right-to-use contracts current period, gross	3,798			3,086			7,004			5,618			3,944			3,798			7,106			7,004
Right-to-use contract upfront payments, deferred, net	(1,321		)	(798		)	(2,096		)	(1,100		)	(2,021		)	(1,321		)	(3,306		)	(2,096		)
Utility and other income	20,650			19,523			42,776			40,316			24,320			20,650			49,841			42,776
Ancillary services revenues, net	98			69			1,517			1,208			223			98			1,329			1,517
Total property operations revenues	206,594			193,184			425,582			397,910			222,167			206,594			453,183			425,582
Expenses:
Property operating and maintenance	72,901			66,647			140,955			129,601			80,091			72,901			154,999			140,955
Real estate taxes	13,943			12,869			27,980			26,067			13,440			13,943			27,575			27,980
Sales and marketing, gross	2,894			2,931			5,584			5,424			3,305			2,894			6,117			5,584
Right-to-use contract commissions, deferred, net	(112		)	(116		)	(196		)	(12		)	(262		)	(112		)	(286		)	(196		)
Property management	13,023			12,044			25,583			23,807			13,472			13,023			27,153			25,583
Total property operations expenses	102,649			94,375			199,906			184,887			110,046			102,649			215,558			199,906
Income from property operations segment	$	103,945		$	98,809		$	225,676		$	213,023		$	112,121		$	103,945		$	237,625		$	225,676

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 10 – Reportable Segments (continued)

The following table summarizes our financial information for the Home Sales and Rentals Operations segment for the quarters and six months ended June 30, ~~2017~~2018 and ~~2016 (amounts in thousands):~~2017:


	Quarters Ended				Six Months Ended				Quarters Ended				Six Months Ended
	June 30, 2017		June 30, 2016		June 30, 2017		June 30, 2016
(amounts in thousands)									June 30, 2018		June 30, 2017		June 30, 2018		June 30, 2017
Revenues:
Gross revenue from home sales	$	7,833	$	9,130	$	14,860	$	17,344	$	9,105	$	7,833	$	17,414	$	14,860
Brokered resale revenues, net	346		329		588		608		369		346		651		588
Rental home income ^(a)	3,632		3,543		7,237		7,088		3,561		3,632		7,076		7,237
Ancillary services revenues, net									25		—		38		—
Total revenues	11,811		13,002		22,685		25,040		13,060		11,811		25,179		22,685
Expenses:
Cost of home sales	7,895		9,481		15,014		17,762		9,632		7,895		18,206		15,014
Home selling expenses	929		805		1,854		1,639		973		929		2,048		1,854
Rental home operating and maintenance	1,657		1,581		3,208		3,106		1,629		1,657		3,053		3,208
Total expenses	10,481		11,867		20,076		22,507		12,234		10,481		23,307		20,076
Income from home sales and rentals operations segment	$	1,330	$	1,135	$	2,609	$	2,533	$	826	$	1,330	$	1,872	$	2,609

______________________


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

Note 11 - Subsequent Events

On July 20, 2018, we completed the acquisition of Everglades Lakes, a 612-site MH community in Fort Lauderdale, Florida. The purchase price was $72.0 million and was funded with net proceeds from sales of common stock under our ATM equity offering program and proceeds from our line of credit.

During July 2018, we sold 252,864 shares of common stock as part of our ATM equity offering program at a weighted average price per share of $91.85, resulting in net cash proceeds of approximately $22.9 million. As of July 26, 2018, $126.8 million of common stock remains available for issuance under the ATM equity offering program.

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,~~2017, 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.~~2017.

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. As of June 30, ~~2017,~~2018, we owned or had an ownership interest in a portfolio of ~~393~~409 Properties located throughout the United States and Canada containing ~~147,107~~152,937 Sites. These properties are located in 32 states and British Columbia, with more than 8090 Properties with lake, river or ocean frontage and more than 100 Properties within 10 miles of the coastal United States.

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

We believe that demand from baby boomers for manufactured housing and RV resorts will continue to outpace supply for several years. We believe these individuals will continue to drive the market for second home sales as vacation properties, investment opportunities, or retirement retreats. We believe it is likely that over the next decade we will continue to see high levels of second home sales and that resort homes and cottages in our Properties will continue to provide a viable second-home alternative to site-built homes.

We also believe that our Properties and our business model provide an opportunity for increased cash flows and appreciation in value. These may be achieved through increases in rental and occupancy rates, as well as expense controls, expansion of existing Properties and opportunistic acquisitions. 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.

We generate the majority of our revenues from customers renting our Sites, or entering into right-to-use contracts (also referred to as membership products) which provide our 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 106,500 customers who have entered into right-to-use 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~~is as follows (amounts are approximate):



	Total Sites as of June 30, ~~2017~~2018
Community Sites	~~71,100~~71,800
Resort Sites:
Annual	~~26,600~~28,400
Seasonal	11,200
Transient	~~10,500~~11,400
Right-to-use⁽¹⁾	~~24,100~~24,200
Joint Ventures ⁽²⁾	~~3,600~~5,900
	~~147,100~~152,900

_________________________


⁽¹⁾	Primarily utilized to service the approximately 110,400 membership customers who have entered into a Thousand Trails Camping Pass. Includes approximately ~~5,700~~5,800 Sites rented on an annual basis.


⁽²⁾	Joint ventures have approximately 2,700 annual Sites, ~~approximately~~ 400 seasonal Sites, and ~~approximately~~ 500 transient Sites and includes ~~Crosswinds Mobile Home Park joint venture that we entered into during the quarter ended June 30, 2017.~~approximately 2,300 marina slips.

Management's Discussion (continued)

In our 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 managed by us. We continue to focus on our rental operations, as we believe renting our vacant new homes ~~may represent~~represents an attractive source of occupancy and the opportunity to convert the renter to a ~~new~~ homebuyer in the future. We also sell and rent homes through our joint venture, ECHO Financing, LLC (the "ECHO JV"). We provide brokerage services to residents of our Properties who move from a Property but do not relocate their home. In addition, we operate ancillary activities at certain Properties, such as golf courses, pro shops, stores and restaurants.

In the manufactured housing industry, options for home financing, also known as chattel financing, ~~options~~ are limited. ~~Financing~~Chattel financing options available today include community ~~owner funded~~owner-funded programs or ~~third party~~third-party lender programs that provide subsidized financing to customers and often require the community owner to guarantee customer defaults. ~~Third party~~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.

We 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.~~

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.

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"~~Normalized FFO"), (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~~$6.6 million or $0.07 per Common Share, to ~~$39.5~~$46.1 million, or $0.52 per Common Share for the quarter ended June 30, ~~2017,~~2018, compared to ~~$35.5~~$39.5 million, or $0.45 per Common Share for the quarter ended June 30, ~~2016.~~2017. Net income available for Common Stockholders increased ~~$10.3~~$10.0 million, or $0.09 per Common Share, to ~~$96.4~~$106.4 million, or $1.20 per Common Share for the six months ended June 30, ~~2017,~~2018, compared to ~~$86.1~~$96.4 million, or $1.11 per Common Share 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 Non-Core income from property operations. Both FFO per diluted share and NFFO per diluted share for the six months ended June 30, 2017 were $1.81 compared to $1.67 for the six months ended June 30, 2016.

2017.

For the quarter ended June 30, ~~2017~~2018, FFO available for Common Stock and OP Unit holders increased $10.7 million, or $0.09 per Common Share, to $85.6 million or $0.90 per Common Share, compared to $74.9 million, or $0.81 per Common Share, for the same period in 2017. For the six months ended June 30, 2018, FFO available for Common Stock and OP Unit holders increased $15.8 million, or $0.13 per Common Share, to $183.8 million or $1.94 per Common Share, compared to $168.0 million, or $1.81 per Common Share, for the same period in 2017.

For the quarter ended June 30, 2018, Normalized FFO available for Common Stock and OP Unit holders increased $8.7 million, or $0.08 per Common Share, to $83.8 million, or $0.89 per Common Share, compared to $75.1 million, or $0.81 per Common Share, for the same period in 2017. For the six months ended June 30, 2018, Normalized FFO available for Common Stock and OP Unit holders increased $13.4 million, or $0.11 per Common Share, to $181.7 million, or $1.92 per Common Share, compared to $168.3 million, or $1.81 per Common Share, for the same period in 2017.

For the quarter ended June 30, 2018, property operating revenues in our Core Portfolio, excluding deferrals, were up ~~5.5%~~$11.6 million, or 5.6% and property operating expenses in our Core Portfolio, excluding deferrals and property management, were up ~~6.5%~~$5.4 million, or 6.0% from the quarter ended June 30, ~~2016,~~2017, resulting in an increase in our ~~income~~Income from property operations ~~before~~excluding deferrals and property management of ~~4.8%~~$6.2 million, or 5.2%, from the quarter ended June 30, ~~2016.~~2017. For the six months ended June 30, ~~2017~~2018, property operating revenues in our Core Portfolio, excluding deferrals, were up ~~4.9%~~$23.9 million, or 5.6% and property operating expenses in our Core Portfolio, excluding deferrals and property management, were up ~~5.9%~~$11.9 million or 6.8% for the six months ended June 30, 2018, resulting in an increase in our Income from property operations excluding deferrals and property management of $12.0 million or 4.8% from the six months ended June 30, ~~2016, resulting in an increase in our income from property operations before deferrals and property management of 4.3%, from the six months ended June 30, 2016.~~2017.

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~~Sites in our MH communities (both homeowners and renters) and was 94.7% for the quarter ended June 30, 2018, compared to 94.6% for the quarter ended March 31, 2018 and 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.~~2017. During the quarter ended June 30, ~~2017,~~2018, we increased occupancy of manufactured homes within our Core Portfolio by 63 Sites with an increase in homeowner occupancy of 150 Sites compared to occupancy as of March 31, 2018. By comparison, as of June 30, 2017, our Core Portfolio occupancy increased 114 ~~sites~~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.Sites.

Management's Discussion (continued)

We ~~continue to experience~~have experienced growth in revenues in our Core RV Portfolio as a result of our ability to increase rental rates and occupancy. RV revenues in our Core Portfolio for the quarter ended June 30, ~~2017~~2018 were ~~8.1%~~7.7% higher than the quarter ended June 30, ~~2016.~~2017. Annual, seasonal and transient revenues for the quarter ended June 30, ~~2017~~2018 increased ~~6.0%~~7.0%, ~~13.7%~~11.8% and ~~12.3%~~8.3%, respectively, from the quarter ended June 30, ~~2016.~~2017. RV revenues in our Core Portfolio for the six months ended June 30, ~~2017~~2018 were ~~5.3%~~7.6% higher than the six months ended June 30, ~~2016.~~2017. Annual, seasonal and transient revenues for the six months ended June 30, ~~2017~~2018 increased ~~5.3%~~6.9%, ~~3.8%~~9.6% and ~~6.7%~~7.7%, respectively, from the six months ended June 30, ~~2016.~~2017.

We continue to ~~offer the Thousand Trails Camping Pass (“TTC”)~~build on our successful multi-channel marketing campaigns, incorporating social media and as a customer acquisition tool we have relationships with a network of 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.advanced marketing analytics. During the quarter ended June 30, ~~2017~~2018, our RV revenue through digital channels increased 15% and our sales of online ~~TTC sales~~camping passes increased ~~45% from~~42% compared to the quarter ended June 30, ~~2016. During~~2017. Our summer marketing campaigns are aimed at strengthening the ~~quarter ended June 30, 2017 we sold approximately 4,700 TTCs~~commitment with our customer. We have increased the awareness of our product offerings and ~~activated approximately 5,700 RV dealer TTCs. For the six months ended June 30, 2017 we sold approximately 7,300 TTCs and activated approximately 9,200 RV dealer TTCs.~~

Our social media presence continues to increase within our RV customer base and we continue to be successful at providing a venue for our customers to promote our Properties by encouraging them to share their memories of their experiences at our resorts. Year-over-yearyear over year we have seen an increase in social media fans of ~~30%~~20%. ~~Through our summer marketing campaigns, we have~~

~~Management's Discussion (continued)~~

~~increased the awareness of our product offering and our customers are increasingly choosing the web as a vehicle to transact with us.~~

We ~~continue to~~ see high demand for our homes and communities. We closed ~~120~~146 new home sales in the quarter ended June 30, ~~2017~~2018 compared to ~~180~~120 during the quarter ended June 30, ~~2016~~2017 and ~~240~~276 new home sales in the six months ended June 30, ~~2017~~2018 compared to ~~301~~240 during the six months ended June 30, ~~2016.~~2017. The new home sales during the quarter and six months ended June 30, ~~2017~~2018 were primarily in our Arizona, Florida, Colorado and ~~Colorado~~California communities.

As of June 30, ~~2017,~~2018, we had ~~4,674~~4,282 occupied rental homes in our MH ~~communities. For the quarters ended June 30, 2017 and 2016, home~~communities, including 264 homes rented through our ECHO joint venture. Home rental program net operating income was approximately $7.8 million, net of rental asset depreciation expense of approximately $2.4 million for the quarter ended June 30, 2018, and 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.~~2017. Approximately ~~$8.8~~$8.2 million and ~~$9.0~~$8.8 million of home rental operations revenue was included in ~~community~~Community base rental income for the quarters ended June 30, ~~2017~~2018 and ~~June 30, 2016,~~2017, respectively. For the six months ended June 30, ~~2017~~2018 and ~~2016,~~2017, home rental program net operating income was approximately ~~$16.4~~$15.6 million and ~~$16.8~~$16.4 million, respectively, net of rental asset depreciation expense of approximately ~~$5.3~~$4.9 million for ~~both~~ the six months ended June 30, ~~2017~~2018 and $5.3 million for the six months ended June 30, ~~2016.~~2017. Approximately ~~$17.7~~$16.5 million and ~~$18.1~~$17.6 million of home rental operations revenue was included in ~~community~~Community base rental income for the six months ended June 30, ~~2017~~2018 and six months ended June 30, ~~2016,~~2017, 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~~$134.0 million to ~~$4,731.6~~$5,049.8 million as of June 30, ~~2017~~2018 from ~~$4,685.3~~$4,915.8 million as of December 31, ~~2016~~2017, primarily due to the ~~acquisition~~acquisitions of ~~Paradise~~Kingswood, Serendipity and Holiday Travel Park, ~~Largo and increased~~as well as capital ~~expenditures.~~expenditures during the six months ended June 30, 2018.

The following chart lists both the Properties acquired or invested in from January 1, ~~2016~~2017 through June 30, ~~2017,~~2018, which represents ~~our~~ Non-Core ~~Portfolio;~~Properties; and Sites added through expansion opportunities at our existing Properties.



Property	Location	Type of Property	Transaction Date	Sites^(a)

Total Sites as of January 1, ~~2016~~2017				~~143,938~~146,610
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
Bethpage Camp Resort	Urbanna, Virginia	RV	November 15, 2017	1,034
Grey's Point Camp	Topping, Virginia	RV	November 15, 2017	728
Kingswood	Riverview, Florida	MH	March 8, 2018	229
Serendipity	Clearwater, Florida	MH	March 15, 2018	425
Holiday Travel Park	Holiday, Florida	RV	April 20, 2018	613
Joint Venture:
Crosswinds	St. Petersburg, Florida	MH	June 15, 2017	376
Loggerhead	Multiple, Florida	Marina	August 8, 2017	2,343
Expansion Site Development and other:
Net Sites added (reconfigured) in ~~2016~~				~~295~~
~~Net Sites added (reconfigured) in~~ 2017				13124
~~Total~~Net Sites ~~as of June 30, 2017~~added (reconfigured) in 2018				~~147,107~~347
Total Sites as of June 30, 2018				152,937


(a)	Loggerhead sites represent marina slip count.

Non-GAAP Financial Measures

Management's discussion and analysis of financial condition and results of operations include certain Non-GAAP financial measures that in management's view of the business 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

Management's Discussion (continued)

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 include Income from Property Operations and Core Portfolio, FFO, Normalized FFO and Income from Rental Operation, net of depreciation.

We believe investors should review Income from Property Operations and Core Portfolio, FFO, Normalized FFO and Income from Rental Operations, net of depreciation, along with GAAP net income and cash flow from operating activities, investing activities and financing activities, when evaluating an equity REIT's operating performance. A discussion of Income from property operations and Core Portfolio, FFO, Normalized FFO and Income from rental operations, net of depreciation, and a reconciliation to net income, are included below.

Income from Property Operations and Core Portfolio

We use Income from property operations and Income from property operations, excluding deferrals and property management, and Core Portfolio income from property operations, excluding deferrals and property management, as alternative measures to evaluate the operating results of our manufactured home and RV communities. Income from property operations represents rental income, utility and other income and right-to-use income less property and rental home operating and maintenance expenses, real estate tax, sales and marketing expenses and property management expenses. 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.~~2016. 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~~all of 2017 and ~~2017.~~

~~Management's Discussion (continued)~~

2018. This includes, but is not limited to, three properties acquired during 2018, three properties acquired during 2017 and Fiesta Key and Sunshine Key RV Resorts.

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

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~~upfront 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~~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~~b) acquisition and other transaction costs related to ~~mergers~~business combinations; and ~~acquisitions; and d)~~c) other miscellaneous non-comparable items. ~~NFFO~~Normalized FFO presented herein is not necessarily comparable to ~~NFFO~~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 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~~business combinations from ~~NFFO~~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 ~~NFFO~~Normalized FFO 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 an alternative measure to evaluate the operating results of our home rental program. Income from rental operations, net of depreciation, represents income from rental operations less depreciation

Management's Discussion (continued)

expense on rental homes. We believe this measure is meaningful for investors as it provides a more 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 calculations of these ~~non-GAAP~~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~~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 Net income available for Common Stockholders to Income from property operations for the quarters and six months ended June 30, ~~2017~~2018 and June 30, ~~2016 (amounts~~2017 (amounts in thousands):


	Quarters ended June 30,						Six Months Ended June 30,						Quarters ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016			2018			2017			2018			2017
Computation of Income from Property Operations:
Net income available for Common Stockholders	$	39,498		$	35,490		$	96,385		$	86,073		$	46,137		$	39,498		$	106,359		$	96,385
Series C Redeemable Perpetual Preferred Stock Dividends	2,316			2,316			4,613			4,613
Redeemable perpetual preferred stock dividends													8			2,316			8			4,613
Income allocated to non-controlling interests - Common OP Units	2,649			2,998			6,539			7,308			3,024			2,649			6,979			6,539
Equity in income of unconsolidated joint ventures	(1,040		)	(765		)	(2,190		)	(1,646		)	(1,613		)	(1,040		)	(2,808		)	(2,190		)
Income before equity in income of unconsolidated joint ventures	43,423			40,039			105,347			96,348			47,556			43,423			110,538			105,347
Total other expenses, net	61,852			59,905			122,938			119,208			65,391			61,852			128,959			122,938
Income from home sales operations and other	547			758			(97		)	241			883			547			822			(97		)
Income from property operations	$	105,822		$	100,702		$	228,188		$	215,797		$	113,830		$	105,822		$	240,319		$	228,188

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 and six months ended June 30, ~~2017~~2018 and June 30, ~~2016 (amounts~~2017 (amounts in thousands):


	Quarters ended June 30,						Six Months Ended June 30,						Quarters ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016			2018			2017			2018			2017
Computation of FFO and Normalized FFO:
Net income available for Common Stockholders	$	39,498		$	35,490		$	96,385		$	86,073		$	46,137		$	39,498		$	106,359		$	96,385
Income allocated to common OP units	2,649			2,998			6,539			7,308
Income allocated to non-controlling interests - Common OP units													3,024			2,649			6,979			6,539
Right-to-use contract upfront payments, deferred, net(1)	1,321			798			2,096			1,100			2,021			1,321			3,306			2,096
Right-to-use contract commissions, deferred, net	(112		)	(116		)	(196		)	(12		)	(262		)	(112		)	(286		)	(196		)
Depreciation on real estate assets	27,608			26,362			55,061			52,370			30,062			27,608			58,883			55,061
Depreciation on rental homes	2,639			2,667			5,296			5,314			2,390			2,639			4,891			5,296
Amortization of in-place leases	958			428			1,990			763			1,893			958			2,945			1,990
Depreciation on unconsolidated joint ventures	364			305			811			595			367			364			739			811
FFO available for Common Stock and OP Unit holders	74,925			68,932			167,982			153,511			85,632			74,925			183,816			167,982
Transaction costs(2)	220			398			324			598			—			220			—			324
Insurance proceeds due to catastrophic weather event ⁽³⁾													(1,806		)	—			(2,092		)	—
Normalized FFO available for Common Stock and OP Unit holders	$	75,145		$	69,330		$	168,306		$	154,109		$	83,826		$	75,145		$	181,724		$	168,306
Weighted average Common Shares outstanding – fully diluted	93,063			92,264			93,041			92,163			94,623			93,063			94,600			93,041

______________________

⁽¹⁾The Company adopted ASU 2014-09, Revenue from Contracts with Customers, and all related amendments, effective January 1, 2018. Upon adoption, right-to-use upfront nonrefundable payments will be recognized on a straight-line basis over 20 years to reflect our current estimated customer life for the majority of our upgrade contracts. Results for reporting periods beginning after January 1, 2018 are presented under ASU 2014-09, while prior period amounts are not adjusted and continue to be reported under the previous accounting standards.

⁽²⁾The Company adopted ASU 2017-01, Business Combinations, effective January 1, 2018. Upon adoption, transaction costs related to asset acquisitions are capitalized. All acquisitions completed subsequent to January 1, 2018 were determined by the Company to be asset acquisitions and, as such, the related transaction costs were capitalized. Transaction costs related to 2017 acquisitions, occurring prior to the adoption of this guidance, are included in General and administrative on the Consolidated Income Statement.

⁽³⁾ Represents insurance recovery revenue from reimbursement for capital expenditures related to Hurricane Irma.

Management's Discussion (continued)

Results of Operations

Comparison of the Quarter Ended June 30, ~~2017~~2018 to the Quarter Ended June 30, ~~2016~~2017

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, ~~2017~~2018 and ~~2016~~2017 ~~(amounts~~(amounts in thousands). The Core Portfolio in this discussion includes all Properties acquired on or before December 31, ~~2015~~2016 and which we have owned and operated continuously since January 1, ~~2016~~.2017. 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
	2017		2016		Variance			% Change		2017		2016		Variance			% Change		2018		2017		Variance			% Change		2018		2017		Variance			% Change
Community base rental income	$	120,699	$	115,188	$	5,511		4.8	%	$	121,964	$	115,385	$	6,579		5.7	%	$	127,409	$	121,848	$	5,561		4.6	%	$	128,579	$	121,964	$	6,615		5.4	%
Rental home income	3,632		3,543		89			2.5	%	3,632		3,543		89			2.5	%	3,561		3,632		(71		)	(2.0	)%	3,561		3,632		(71		)	(2.0	)%
Resort base rental income	47,753		44,173		3,580			8.1	%	50,055		44,732		5,323			11.9	%	51,881		48,161		3,720			7.7	%	55,231		50,055		5,176			10.3	%
Right-to-use annual payments	11,350		11,187		163			1.5	%	11,350		11,187		163			1.5	%	11,891		11,350		541			4.8	%	11,891		11,350		541			4.8	%
Right-to-use contracts current period, gross	3,798		3,086		712			23.1	%	3,798		3,086		712			23.1	%	3,944		3,798		146			3.8	%	3,944		3,798		146			3.8	%
Utility and other income	20,319		19,468		851			4.4	%	20,650		19,523		1,127			5.8	%	22,248		20,507		1,741			8.5	%	24,320		20,650		3,670			17.8	%
Property operating revenues, excluding deferrals	207,551		196,645		10,906			5.5	%	211,449		197,456		13,993			7.1	%	220,934		209,296		11,638			5.6	%	227,526		211,449		16,077			7.6	%

Property operating and maintenance	71,096		66,363		4,733			7.1	%	72,901		66,647		6,254			9.4	%	77,483		71,652		5,831			8.1	%	80,091		72,901		7,190			9.9	%
Rental home operating and maintenance	1,657		1,581		76			4.8	%	1,657		1,581		76			4.8	%	1,629		1,657		(28		)	(1.7	)%	1,629		1,657		(28		)	(1.7	)%
Real estate taxes	13,462		12,781		681			5.3	%	13,943		12,869		1,074			8.3	%	13,073		13,861		(788		)	(5.7	)%	13,440		13,943		(503		)	(3.6	)%
Sales and marketing, gross	2,894		2,931		(37		)	(1.3	)%	2,894		2,931		(37		)	(1.3	)%	3,305		2,894		411			14.2	%	3,305		2,894		411			14.2	%
Property operating expenses, excluding deferrals and Property management	89,109		83,656		5,453			6.5	%	91,395		84,028		7,367			8.8	%	95,490		90,064		5,426			6.0	%	98,465		91,395		7,070			7.7	%
Income from property operations, excluding deferrals and Property management ⁽¹⁾	118,442		112,989		5,453			4.8	%	120,054		113,428		6,626			5.8	%	125,444		119,232		6,212			5.2	%	129,061		120,054		9,007			7.5	%
Property management	13,023		12,044		979			8.1	%	13,023		12,044		979			8.1	%	13,472		13,023		449			3.4	%	13,472		13,023		449			3.4	%
Income from property operations, excluding deferrals⁽¹⁾	105,419		100,945		4,474			4.4	%	107,031		101,384		5,647			5.6	%	111,972		106,209		5,763			5.4	%	115,589		107,031		8,558			8.0	%
Right-to-use contracts, deferred and sales and marketing, deferred, net	1,209		682		527			77.3	%	1,209		682		527			77.3	%	1,759		1,209		550			45.5	%	1,759		1,209		550			45.5	%
Income from property operations ⁽¹⁾	$	104,210	$	100,263	$	3,947		3.9	%	$	105,822	$	100,702	$	5,120		5.1	%	$	110,213	$	105,000	$	5,213		5.0	%	$	113,830	$	105,822	$	8,008		7.6	%

__________________________

⁽¹⁾ Non-GAAP ~~measure.~~measure, see the Results Overview section of the Management Discussion and Analysis for Non-GAAP Financial Measure Definitions and reconciliations of these Non-GAAP measures to Net Income available to Common Shareholders.

Total Portfolio income from property operations, which includes ~~recently acquired properties,~~Core and Non-Core portfolios, for the quarter ended June 30, ~~2017~~2018 increased ~~$5.1~~$8.0 million, or ~~5.1%~~7.6%, from the quarter ended June 30, ~~2016,~~2017, driven by an increase of ~~$3.9~~$5.2 million, or ~~3.9%~~5.0%, in our Core Portfolio income from property ~~operations and a $1.2 million increase in our~~operations. Non-Core Portfolio income from property ~~operations.~~operations for the quarter ended June 30, 2018 was $3.6 million, which increased $2.8 million from the quarter ended June 30, 2017, and includes $1.5 million of insurance proceeds which we have identified as business interruption recovery at our RV properties in the Florida Keys.

Property Operating Revenues

Community base rental income in our Core Portfolio for the quarter ended June 30, ~~2017~~2018 increased ~~$5.5~~$5.6 million, or ~~4.8%~~4.6% from the quarter ended June 30, ~~2016,~~2017, which reflects ~~3.9%~~4.0% growth from rate increases and approximately ~~0.9%~~0.6% growth from occupancy gains. The average monthly base rental income per Site increased to approximately ~~$611~~$633 for the quarter ended June 30, ~~2017~~2018 from approximately ~~$588~~$608 for the quarter ended June 30, ~~2016.~~2017. The average occupancy for the Core Portfolio increased to 94.7% for the quarter ended June 30, 2018 from 94.2% for the quarter ended June 30, ~~2017 from 93.3% for the quarter ended June 30, 2016.~~

~~Management's Discussion (continued)~~

2017.

Resort base rental income in our Core Portfolio for the quarter ended June 30, ~~2017~~2018 increased ~~$3.6~~$3.7 million, or ~~8.1%~~7.7%, from the quarter ended June 30, ~~2016~~2017 driven by increases in annual, seasonal and transient revenues. Annual revenues increased due to increased rates and occupancy gains across the portfolio. Seasonal revenues increased due to an increase in rate and an increase

Management's Discussion (continued)

in the number of night stays. Transient revenues increased primarily due to ~~increased rates.~~ an increase in rent, particularly at our properties in Texas, New York and California.

Resort base rental income is comprised of the following ~~(amounts~~(amounts in thousands):


	Core Portfolio								Total Portfolio								Core Portfolio								Total Portfolio
	2017		2016		Variance		% Change		2017		2016		Variance		% Change		2018		2017		Variance		% Change		2018		2017		Variance		% Change
Annual	$	31,884	$	30,089	$	1,795	6.0	%	$	32,869	$	30,360	$	2,509	8.3	%	$	34,793	$	32,523	$	2,270	7.0	%	$	36,595	$	32,869	$	3,726	11.3	%
Seasonal	4,481		3,942		539		13.7	%	4,902		4,114		788		19.2	%	4,938		4,416		522		11.8	%	5,206		4,902		304		6.2	%
Transient	11,388		10,142		1,246		12.3	%	12,284		10,258		2,026		19.8	%	12,150		11,222		928		8.3	%	13,430		12,284		1,146		9.3	%
Resort base rental income	$	47,753	$	44,173	$	3,580	8.1	%	$	50,055	$	44,732	$	5,323	11.9	%	$	51,881	$	48,161	$	3,720	7.7	%	$	55,231	$	50,055	$	5,176	10.3	%

~~Right-to-use contracts current period, gross, net of sales~~Utility and ~~marketing, gross,~~other income in our Core Portfolio increased by ~~$0.7~~$1.7 million primarily ~~as a result of~~driven by an increase in ~~the average price per upgrade sale~~utility income due to usage and a higher number of upgrade sales 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 during the quarter ended June 30, 2016.

~~The increase in utility~~rate increases and ~~other income is primarily due to~~ insurance recovery revenue related to a flood event in California, ~~storm events~~which were partially offset by utility expenses and ~~increased electric, water, gas,~~repairs and ~~sewer income recovery.~~maintenance costs related to debris removal and cleanup following a flood event in California (see Property Operating Expenses below).

Property Operating Expenses

Property operating expenses, excluding deferrals and property management, in our Core Portfolio for the quarter ended June 30, ~~2017~~2018 increased ~~$5.5~~$5.4 million, or ~~6.5%~~6.0%, from the quarter ended June 30, ~~2016~~2017, primarily driven by an increase in ~~utility~~property operating and maintenance 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.of $5.8 million. The increase in property operating and maintenance expenses was primarily due to an increase in repairs and maintenance expenses, including costs related to debris removal and clean up following a flood event in California, and an increase in property payroll, ~~expense~~ primarily ~~resulted from 2017~~as a result of 2018 salary increases. The increase in ~~repairs~~property operating and maintenance expenses was also due to an increase in utility expense, ~~was~~ primarily due to ~~clean-up costs as a result of California storm events.~~increases in gas usage in the West and South and an increase in administrative expenses primarily due to legal costs.

Home Sales and Rental Operations

Home Sales and Other

The following table summarizes certain financial and statistical data for Home Sales for the quarters ended June 30, 2018 and 2017 ~~and 2016 (amounts~~(amounts in thousands, except home sales volumes).


	2017			2016			Variance			% Change		2018			2017			Variance			% Change
Gross revenues from new home sales ⁽¹⁾	$	4,548		$	6,044		$	(1,496	)	(24.8	)%	$	6,859		$	4,548		$	2,311		50.8	%
Cost of new home sales ⁽¹⁾	(4,419		)	(6,246		)	1,827			29.3	%	(6,800		)	(4,419		)	(2,381		)	(53.9	)%
Gross profit (loss) from new home sales	129			(202		)	331			163.9	%
Gross profit from new home sales												59			129			(70		)	(54.3	)%

Gross revenues from used home sales	3,285			3,086			199			6.4	%	2,246			3,285			(1,039		)	(31.6	)%
Cost of used home sales	(3,476		)	(3,235		)	(241		)	(7.4	)%	(2,832		)	(3,476		)	644			18.5	%
Loss from used home sales	(191		)	(149		)	(42		)	(28.2	)%	(586		)	(191		)	(395		)	(206.8	)%

Brokered resale revenues and ancillary services revenues, net	444			398			46			11.6	%	617			444			173			39.0	%
Home selling expenses	(929		)	(805		)	(124		)	(15.4	)%	(973		)	(929		)	(44		)	(4.7	)%
Loss from home sales and other	$	(547	)	$	(758	)	$	211		27.8	%	$	(883	)	$	(547	)	$	(336	)	(61.4	)%

Home sales volumes
Total new home sales ⁽²⁾	120			180			(60		)	(33.3	)%	146			120			26			21.7	%
New Home Sales Volume - ECHO JV	41			63			(22		)	(34.9	)%	25			41			(16		)	(39.0	)%
Used home sales	338			342			(4		)	(1.2	)%	297			338			(41		)	(12.1	)%
Brokered home resales	252			217			35			16.1	%	253			252			1			0.4	%

_________________________

⁽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.

~~Management's Discussion (continued)~~

Loss from home sales and other was ~~$0.5 million and $0.8~~$0.9 million for the ~~quarters~~quarter ended June 30, ~~2017 and 2016, respectively.~~2018 compared with $0.5 million for the quarter ended June 30, 2017. The ~~decrease~~increase in ~~loss~~Loss from home sales and other ~~from the quarter ended June 30, 2016~~ was primarily due to an increase of $0.4 million in the ~~gross profit~~loss from ~~new~~used home ~~sales, partially offset by an increase in home selling expenses.~~sales.

Management's Discussion (continued)

Rental Operations

The following table summarizes certain financial and statistical data for ~~manufactured~~manufactured home Rental Operations for the quarters ended June 30, 2018 and 2017 ~~and 2016 (amounts~~(amounts in thousands, except rental unit volumes).


	2017			2016			Variance			% Change		2018			2017			Variance			% Change
Manufactured homes:
New Home	$	6,985		$	6,332		$	653		10.3	%	$	7,388		$	6,985		$	403		5.8	%
Used Home	5,483			6,250			(767		)	(12.3	)%	4,384			5,483			(1,099		)	(20.0	)%
Rental operations revenue ⁽¹⁾	12,468			12,582			(114		)	(0.9	)%	11,772			12,468			(696		)	(5.6	)%
Rental home operating and maintenance	(1,657		)	(1,581		)	(76		)	(4.8	)%	(1,629		)	(1,657		)	28			1.7	%
Income from rental operations	10,811			11,001			(190		)	(1.7	)%	10,143			10,811			(668		)	(6.2	)%
Depreciation on rental homes ⁽²⁾	(2,639		)	(2,667		)	28			1.0	%	(2,390		)	(2,639		)	249			9.4	%
Income from rental operations, net of depreciation	$	8,172		$	8,334		$	(162	)	(1.9	)%	$	7,753		$	8,172		$	(419	)	(5.1	)%

Gross investment in new manufactured home rental units ⁽³⁾	$	129,868		$	120,708		$	9,160		7.6	%	$	138,934		$	129,868		$	9,066		7.0	%
Gross investment in used manufactured home rental units	$	48,182		$	54,675		$	(6,493	)	(11.9	)%	$	39,189		$	48,182		$	(8,993	)	(18.7	)%

Net investment in new manufactured home rental units	$	104,710		$	99,428		$	5,282		5.3	%	$	110,739		$	104,710		$	6,029		5.8	%
Net investment in used manufactured home rental units	$	28,182		$	36,690		$	(8,508	)	(23.2	)%	$	19,962		$	28,182		$	(8,220	)	(29.2	)%

Number of occupied rentals – new, end of period ⁽⁴⁾	2,517			2,267			250			11.0	%	2,614			2,517			97			3.9	%
Number of occupied rentals – used, end of period	2,157			2,595			(438		)	(16.9	)%	1,668			2,157			(489		)	(22.7	)%

______________________

⁽¹⁾

Rental operations revenue consists of Site rental income and home rental income. Approximately ~~$8.8~~$8.2 million and ~~$9.0~~$8.8 million for the quarters ended June 30, ~~2017~~2018 and ~~2016,~~2017, 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~~Depreciation on real estate and ~~other costs~~rental homes 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 $15.9 million and $15.4 million ~~at both~~as of June 30, 2018 and 2017, ~~and December 31, 2016.~~respectively.


⁽⁴⁾	Occupied rentals as of the end of the period in our Core Portfolio and includes ~~257~~264 and ~~143~~257 homes rented through our ECHO JV during the quarters ended June 30, ~~2017~~2018 and ~~2016,~~2017, respectively.

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

Other Income and Expenses

The following table summarizes other income and expenses, net for the quarters ended June 30, ~~2017~~2018 and ~~2016~~2017 ~~(amounts~~(amounts in thousands, expenses shown as negative).


	2017			2016			Variance			% Change		2018			2017			Variance			% Change
Depreciation on real estate and rental homes	$	(30,247	)	$	(29,029	)	$	(1,218	)	(4.2	)%	$	(32,452	)	$	(30,247	)	$	(2,205	)	(7.3	)%
Amortization of in-place leases	(958		)	(428		)	(530		)	(123.8	)%	(1,893		)	(958		)	(935		)	(97.6	)%
Interest income	1,798			1,625			173			10.6	%	1,862			1,798			64			3.6	%
Income from other investments, net	1,109			2,270			(1,161		)	(51.1	)%	3,413			1,109			2,304			207.8	%
General and administrative (excluding transaction costs)	(8,241		)	(7,857		)	(384		)	(4.9	)%
General and administrative												(9,669		)	(8,241		)	(1,428		)	(17.3	)%
Transaction costs	(220		)	(398		)	178			44.7	%	—			(220		)	220			100.0	%
Property rights initiatives and other	(271		)	(527		)	256			48.6	%
Other expenses												(367		)	(271		)	(96		)	(35.4	)%
Interest and related amortization	(24,822		)	(25,561		)	739			2.9	%	(26,285		)	(24,822		)	(1,463		)	(5.9	)%
Total other income and expenses, net	$	(61,852	)	$	(59,905	)	$	(1,947	)	(3.3	)%	$	(65,391	)	$	(61,852	)	$	(3,539	)	(5.7	)%

Other expenses, net increased ~~$1.9~~$3.5 million for the quarter ended June 30, ~~2017,~~2018, compared to the quarter ended June 30, ~~2016.~~2017. The increase from the quarter ended June 30, ~~2016~~2017 was primarily due to ~~an increase~~increases in depreciation on real estate and rental homes, interest and related amortization and general and administrative costs. These increases were partially offset by $1.8 million insurancerecovery revenue from reimbursement for capital expenditures related to Hurricane Irma during the quarter ended June 30, 2018.

Management's Discussion (continued)

~~homes and amortization of in-place leases due to 2016 acquisition activity and a decrease in income from other investments, net, due to the 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 2016 (see Note 7 to the Consolidated Financial Statements for additional detail regarding borrowing arrangements).

Comparison of the Six Months Ended June 30, ~~2017~~2018 to the Six Months Ended June 30, ~~2016~~2017

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, 2018 and 2017 ~~and 2016 (amounts~~(amounts in thousands). The Core Portfolio in this discussion includes all Properties acquired on or before December 31, ~~2015~~2016 and which we have owned and operated continuously since January 1, ~~2016.~~2017. 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
	2017		2016		Variance		% Change		2017		2016		��	Variance		% Change		2018			2017		Variance			% Change		2018		2017		Variance			% Change
Community base rental income	$	240,278	$	229,264	$	11,014	4.8	%	$	242,656	$	229,461		$	13,195	5.8	%	$	253,732		$	242,540	$	11,192		4.6	%	$	255,318	$	242,656	$	12,662		5.2	%
Rental home income	7,237		7,089		148		2.1	%	7,237		7,088			149		2.1	%	7,076			7,237		(161		)	(2.2	)%	7,076		7,237		(161		)	(2.2	)%
Resort base rental income	104,603		99,380		5,223		5.3	%	111,123		100,166			10,957		10.9	%	113,870			105,847		8,023			7.6	%	119,485		111,123		8,362			7.5	%
Right-to-use annual payments	22,602		22,241		361		1.6	%	22,602		22,241			361		1.6	%	23,407		34,130	22,602		805			3.6	%	23,410		22,602		808			3.6	%
Right-to-use contracts current period, gross	7,004		5,618		1,386		24.7	%	7,004		5,618			1,386		24.7	%	7,106			7,004		102			1.5	%	7,106		7,004		102			1.5	%
Utility and other income	42,003		40,249		1,754		4.4	%	42,776		40,316			2,460		6.1	%	46,384			42,440		3,944			9.3	%	49,841		42,776		7,065			16.5	%
Property operating revenues, excluding deferrals	423,727		403,841		19,886		4.9	%	433,398		404,890			28,508		7.0	%	451,575			427,670		23,905			5.6	%	462,236		433,398		28,838			6.7	%

Property operating and maintenance	137,429		129,186		8,243		6.4	%	140,955		129,601			11,354		8.8	%	150,615			138,346		12,269			8.9	%	154,999		140,955		14,044			10.0	%
Rental home operating and maintenance	3,208		3,105		103		3.3	%	3,208		3,106			102		3.3	%	3,054			3,208		(154		)	(4.8	)%	3,053		3,208		(155		)	(4.8	)%
Real estate taxes	27,032		25,957		1,075		4.1	%	27,980		26,067			1,913		7.3	%	27,066			27,830		(764		)	(2.7	)%	27,575		27,980		(405		)	(1.4	)%
Sales and marketing, gross	5,583		5,426		157		2.9	%	5,584		5,424			160		2.9	%	6,117			5,584		533			9.5	%	6,117		5,584		533			9.5	%
Property operating expenses, excluding deferrals and Property management	173,252		163,674		9,578		5.9	%	177,727		164,198			13,529		8.2	%	186,852			174,968		11,884			6.8	%	191,744		177,727		14,017			7.9	%
Income from property operations, excluding deferrals and Property management ⁽¹⁾	250,475		240,167		10,308		4.3	%	255,671		240,692			14,979		6.2	%	264,723			252,702		12,021			4.8	%	270,492		255,671		14,821			5.8	%
Property management	25,583		23,807		1,776		7.5	%	25,583		23,807			1,776		7.5	%	27,153			25,583		1,570			6.1	%	27,153		25,583		1,570			6.1	%
Income from property operations, excluding deferrals⁽¹⁾	224,892		216,360		8,532		3.9	%	230,088		216,885			13,203		6.1	%	237,570			227,119		10,451			4.6	%	243,339		230,088		13,251			5.8	%
Right-to-use contracts, deferred and sales and marketing, deferred, net	1,900		1,088		812		74.6	%	1,900		1,088			812		74.6	%	3,020			1,900		1,120			58.9	%	3,020		1,900		1,120			58.9	%
Income from property operations ⁽¹⁾	$	222,992	$	215,272	$	7,720	3.6	%	$	228,188	$	215,797		$	12,391	5.7	%	$	234,550		$	225,219	$	9,331		4.1	%	$	240,319	$	228,188	$	12,131		5.3	%

__________________________

Total Portfolio income from property operations, which includes ~~recently acquired properties,~~Core and Non-Core portfolios, for the six months ended June 30, ~~2017~~2018 increased ~~$12.4~~$12.1 million, or ~~5.7%~~5.3%, from the six months ended June 30, ~~2016,~~2017, driven by an increase of ~~$7.7~~$9.3 million, or ~~3.6%~~4.1%, in our Core Portfolio income from property ~~operations and a $4.7 million increase in our~~operations. Non-Core Portfolio income from property ~~operations.~~operations increased $2.8 million from the six months ended June 30, 2017 primarily driven by $2.5 million of insurance proceeds which we have identified as business interruption recovery at our RV properties in the Florida Keys.

Property Operating Revenues

Community base rental income in our Core Portfolio for the six months ended June 30, ~~2017~~2018 increased ~~$11.0~~$11.2 million, or ~~4.8%~~4.6% from the ~~six months~~quarter ended June 30, ~~2016,~~2017, which reflects ~~3.9%~~4.0% growth from rate increases and approximately ~~0.9%~~0.6% growth from occupancy gains. The average monthly base rental income per Site increased to approximately ~~$608~~$630 for the six months ended June 30, ~~2017~~2018 from approximately ~~$586~~$606 for the six months ended June 30, ~~2016.~~2017. The average occupancy for the Core Portfolio increased to 94.6% for the six months ended June 30, 2018 from 94.1% for the six months ended June 30, ~~2017 from 93.2% for the six months ended June 30, 2016.~~

~~Management's Discussion (continued)~~

2017.

Resort base rental income in our Core Portfolio for the six months ended June 30, ~~2017~~2018 increased ~~$5.2~~$8.0 million, or ~~5.3%~~7.6%, from the ~~quarter~~six months ended June 30, ~~2016 primarily~~2017 driven by increases in annual, seasonal and transient revenues. Annual revenues increased due to increased rates and occupancy gains across the portfolio. Seasonal revenues increased due to an increase in ~~annual~~rate and an increase in the number of night stays. All regions had an increase in transient revenues ~~as a result of increased rates.~~ during the six months ended June 30, 2018 compared to the six months ended June 30, 2017.

Management's Discussion (continued)

Resort base rental income is comprised of the following ~~(amounts~~(amounts in thousands):


	Core Portfolio								Total Portfolio								Core Portfolio								Total Portfolio
	2017		2016		Variance		% Change		2017		2016		Variance		% Change		2018		2017		Variance		% Change		2018		2017		Variance		% Change
Annual	$	63,123	$	59,953	$	3,170	5.3	%	$	64,965	$	60,370	$	4,595	7.6	%	$	68,713	$	64,297	$	4,416	6.9	%	$	71,751	$	64,965	$	6,786	10.4	%
Seasonal	20,864		20,100		764		3.8	%	23,401		20,329		3,072		15.1	%	23,598		21,540		2,058		9.6	%	24,229		23,401		828		3.5	%
Transient	20,616		19,327		1,289		6.7	%	22,757		19,467		3,290		16.9	%	21,559		20,010		1,549		7.7	%	23,505		22,757		748		3.3	%
Resort base rental income	$	104,603	$	99,380	$	5,223	5.3	%	$	111,123	$	100,166	$	10,957	10.9	%	$	113,870	$	105,847	$	8,023	7.6	%	$	119,485	$	111,123	$	8,362	7.5	%

~~Right-to-use contracts current period, gross, net of sales~~Utility and ~~marketing, gross,~~other income in our Core Portfolio increased by ~~$1.4~~$3.9 million primarily driven by insurance proceeds related to Hurricane Irma, which were offset by debris removal and cleanup costs (see Property Operating Expenses below). Additionally, utility income increased as a result of a higher average price per upgrade sale and higher upgrade sales during the six months ended June 30, 2017 compared to the six months ended June 30, 2016. During the six months ended June 30, 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 for the six months ended June 30, 2016.~~

~~The~~ increase in ~~utility and other income is primarily due to 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 six months ended June 30, ~~2017~~2018 increased ~~$9.6~~$11.9 million, or ~~5.9%~~6.8%, from the six months ended June 30, ~~2016.~~2017, primarily driven by an increase in property operating and maintenance expenses of $12.3 million. The increase in property operating and maintenance expenses was primarily due to an increase in ~~utility~~repairs and maintenance expenses, primarily related to cleanup costs from Hurricane Irma, an increase in property payroll, primarily as a result of 2018 salary increases and ~~repairs and maintenance. The~~an increase in utility expense, ~~was driven by~~primarily due to increases in electric ~~sewer, trash~~ and ~~gas~~water expenses, which was partially offset by ~~increased~~an increase in 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 hurricanes in 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 Home Sales for the six months ended June 30, 2018 and 2017 ~~and June 30, 2016 (amounts~~(amounts in thousands, except home sales volumes).


	2017			2016			Variance			% Change		2018			2017			Variance			% Change
Gross revenues from new home sales ⁽¹⁾	$	9,491		$	11,443		$	(1,952	)	(17.1	)%	$	13,595		$	9,491		$	4,104		43.2	%
Cost of new home sales ⁽¹⁾	(9,191		)	(11,698		)	2,507			21.4	%	(13,310		)	(9,191		)	(4,119		)	(44.8	)%
Gross profit (loss) from new home sales	300			(255		)	555			217.6	%
Gross profit from new home sales												285			300			(15		)	(5.0	)%

Gross revenues from used home sales	5,369			5,901			(532		)	(9.0	)%	3,819			5,369			(1,550		)	(28.9	)%
Cost of used home sales	(5,823		)	(6,064		)	241			4.0	%	(4,896		)	(5,823		)	927			15.9	%
Loss from used home sales	(454		)	(163		)	(291		)	(178.5	)%	(1,077		)	(454		)	(623		)	(137.2	)%

Brokered resale revenues and ancillary services revenues, net	2,105			1,816			289			15.9	%	2,018			2,105			(87		)	(4.1	)%
Home selling expenses	(1,854		)	(1,639		)	(215		)	(13.1	)%	(2,048		)	(1,854		)	(194		)	(10.5	)%
Income (loss) from home sales and other	$	97		$	(241	)	$	338		140.2	%	$	(822	)	$	97		$	(919	)	(947.4	)%

Home sales volumes
Total new home sales ⁽²⁾	240			301			(61		)	(20.3	)%	276			240			36			15.0	%
New Home Sales Volume - ECHO JV	78			97			(19		)	(19.6	)%	43			78			(35		)	(44.9	)%
Used home sales	623			653			(30		)	(4.6	)%	538			623			(85		)	(13.6	)%
Brokered home resales	420			403			17			4.2	%	446			420			26			6.2	%

_________________________

⁽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 JVJV.

Loss from home sales and other was $0.8 million for the six months ended June 30, ~~2017~~2018 compared with Income from homes sales and other of $0.1 million for the six months ended June 30, ~~2016, respectively.~~

~~Management's Discussion (continued)~~

2017. The ~~increase in income~~Loss from home sales and other was primarily due to an increase in the ~~gross profit from new home sales, partially offset by an increase in the~~ loss from used home ~~sales.~~sales and an increase in home selling expenses.

Management's Discussion (continued)

Rental Operations

The following table summarizes certain financial and statistical data for ~~manufactured~~manufactured home Rental Operations for the six months ended June 30, 2018 and 2017 ~~and June 30, 2016 (amounts~~(amounts in thousands, except rental unit volumes).


	2017			2016			Variance			% Change		2018			2017			Variance			% Change
Manufactured homes:
New Home	$	13,618		$	12,473		$	1,145		9.2	%	$	14,931		$	13,618		$	1,313		9.6	%
Used Home	11,267			12,715			(1,448		)	(11.4	)%	8,638			11,267			(2,629		)	(23.3	)%
Rental operations revenue ⁽¹⁾	24,885			25,188			(303		)	(1.2	)%	23,569			24,885			(1,316		)	(5.3	)%
Rental home operating and maintenance	(3,208		)	(3,106		)	(102		)	(3.3	)%	(3,053		)	(3,208		)	155			4.8	%
Income from rental operations	21,677			22,082			(405		)	(1.8	)%	20,516			21,677			(1,161		)	(5.4	)%
Depreciation on rental homes ⁽²⁾	(5,296		)	(5,314		)	18			0.3	%	(4,891		)	(5,296		)	405			7.6	%
Income from rental operations, net of depreciation	$	16,381		$	16,768		$	(387	)	(2.3	)%	$	15,625		$	16,381		$	(756	)	(4.6	)%

Gross investment in new manufactured home rental units ⁽³⁾	$	129,868		$	120,708		$	9,160		7.6	%	$	138,934		$	129,868		$	9,066		7.0	%
Gross investment in used manufactured home rental units	$	48,182		$	54,675		$	(6,493	)	(11.9	)%	$	39,189		$	48,182		$	(8,993	)	(18.7	)%

Net investment in new manufactured home rental units	$	104,710		$	99,428		$	5,282		5.3	%	$	110,739		$	104,710		$	6,029		5.8	%
Net investment in used manufactured home rental units	$	28,182		$	36,690		$	(8,508	)	(23.2	)%	$	19,962		$	28,182		$	(8,220	)	(29.2	)%

Number of occupied rentals – new, end of period ⁽⁴⁾	2,517			2,267			250			11.0	%	2,614			2,517			97			3.9	%
Number of occupied rentals – used, end of period	2,157			2,595			(438		)	(16.9	)%	1,668			2,157			(489		)	(22.7	)%

______________________

⁽¹⁾

Rental operations revenue consists of Site rental income and home rental income. Approximately ~~17.7~~$16.5 million and ~~$18.1~~$17.6 million for the six months ended June 30, ~~2017~~2018 and ~~June 30, 2016,~~2017, 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~~Depreciation on real estate and ~~other costs~~rental homes 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 $15.9 million and $15.4 million ~~at both~~as of June 30, 2018 and 2017, ~~and December 31, 2016.~~respectively.


⁽⁴⁾	Occupied rentals as of the end of the period in our Core Portfolio and includes ~~257~~264 and ~~143~~257 homes rented through our ECHO JV during the six months ended June 30, ~~2017~~2018 and ~~June 30, 2016,~~2017, respectively.

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

Other Income and Expenses

The following table summarizes other income and expenses, net for the six months ended June 30, 2018 and 2017 ~~and June 30, 2016 (amounts~~(amounts in thousands, expenses shown as negative).


	2017			2016			Variance			% Change		2018			2017			Variance			% Change
Depreciation on real estate and rental homes	$	(60,357	)	$	(57,684	)	$	(2,673	)	(4.6	)%	$	(63,774	)	$	(60,357	)	$	(3,417	)	(5.7	)%
Amortization of in-place leases	(1,990		)	(763		)	(1,227		)	(160.8	)%	(2,945		)	(1,990		)	(955		)	(48.0	)%
Interest income	3,568			3,285			283			8.6	%	3,812			3,568			244			6.8	%
Income from other investments, net	1,866			3,993			(2,127		)	(53.3	)%	4,353			1,866			2,487			133.3	%
General and administrative (excluding transaction costs)	(15,510		)	(15,065		)	(445		)	(3.0	)%
General and administrative												(17,707		)	(15,510		)	(2,197		)	(14.2	)%
Transaction costs	(324		)	(598		)	274			45.8	%	—			(324		)	324			100.0	%
Property rights initiatives and other	(490		)	(1,181		)	691			58.5	%
Other expenses												(710		)	(490		)	(220		)	(44.9	)%
Interest and related amortization	(49,701		)	(51,195		)	1,494			2.9	%	(51,988		)	(49,701		)	(2,287		)	(4.6	)%
Total other income and expenses, net	$	(122,938	)	$	(119,208	)	$	(3,730	)	(3.1	)%	$	(128,959	)	$	(122,938	)	$	(6,021	)	(4.9	)%

Other expenses, net increased ~~$3.7~~$6.0 million for the six months ended June 30, ~~2017,~~2018, compared to the six months ended June 30, ~~2016.~~2017. The increase ~~in other expenses, net~~ from the six months ended June 30, ~~2016~~2017 was primarily due to ~~an increase~~increases in depreciation on real estate and rental homes, interest and related amortization ~~of in-place leases due~~and general and administrative expenses. These increase were partially offset by $2.1 million insurancerecovery revenue from reimbursement for capital expenditures related to ~~2016 acquisition activity and a a decrease in income from other investments, net, due to~~Hurricane Irma during the ~~termination of the Tropical Palms RV ground lease in 2016.~~six months ended June 30, 2018.

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 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.

We have entered into an at-the-market (“ATM”) offering program, pursuant to which we may sell, from time-to-time, shares of our ~~common stock,~~Common Stock, par value $0.01 per share, having an aggregate offering price of up to ~~$125.0~~$200.0 million. As of June 30, ~~2017, $75.0~~2018, $150.0 million of common stock remained available for issuance under the ATM equity offering program. During July 2018, we sold 252,864 shares of common stock as part of our ATM equity offering program at a weighted average price per share of $91.85, resulting in gross cash proceeds of approximately $23.2 million. As of July 26, 2018, $126.8 million of common stock remain 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 113.0~~111.2 million shares of authorized but unissued common stock and approximately 10.0 million shares of authorized unissued preferred 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,~~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~~managing future debt maturities and ~~borrow~~borrowing at competitive rates enables us to meet this objective. We believe that as of June 30, ~~2017,~~2018, we have sufficient liquidity, in the form of ~~$62.5~~$40.8 million in ~~available cash, net of restricted~~unrestricted 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~~$200.0 million, subject to certain conditions. The LOC bears interest at a rate of LIBOR plus ~~1.20%~~1.10% to ~~1.65%~~1.55%, requires an annual facility fee of ~~0.20%~~0.15% to 0.35% and matures on ~~July 17, 2018, with an option to extend for one additional year, subject to certain conditions.~~October 27, 2021.

We expect to meet our short-term liquidity requirements, including distributions for the 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, ~~2017,~~2018, we have approximately ~~$6.9~~$3.0 million of scheduled debt maturities in ~~2017~~2018 (excluding scheduled principal payments on debt maturing in ~~2017~~2018 and beyond). We expect to satisfy our ~~2017~~2018 maturities with existing cash and anticipated operating cash flow.

During the six months ended June 30, ~~2017~~2018, we ~~paid off~~closed on one ~~maturing mortgage~~ loan, ~~and assumed debt in the purchase~~secured by two RV resorts, for gross proceeds of ~~Paradise Park Largo.~~approximately $64.0 million. The ~~mortgage~~ loan ~~we paid off was approximately $21.1 million, with a weighted average~~carries an interest rate of ~~5.76%~~4.83% per annum ~~secured by one manufactured home Property.~~and matures in 2038. In connection with the ~~Paradise Park Largo~~Serendipity acquisition, ~~during the quarter ended June 30, 2017,~~ we assumed a loan of approximately ~~$5.9~~$9.2 million and obtained additional financing of $8.8 million for total mortgage debt, secured by the manufactured home community, of $18.0 million with an interest rate of ~~4.6%~~4.75% that matures in ~~2040.~~2039.

During the six months ended June 30, 2018, we paid off our unsecured LOC, including the balance at December 31, 2017 of approximately $30.0 million.

Management's Discussion (continued)

The table below summarizes cash flow activity for the six months ended June 30, ~~2017~~2018 and ~~2016~~2017 (amounts in thousands):

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

~~Management's Discussion (continued)~~



	Six Months Ended June 30,
	2018			2017
Net cash provided by operating activities	$	226,026		$	212,982
Net cash used in investing activities	(121,894		)	(70,306		)
Net cash used in financing activities	(89,192		)	(131,276		)
Net increase in cash and restricted cash	$	14,940		$	11,400

Operating Activities

Net cash provided by operating activities increased ~~$27.3~~$13.0 million to ~~$214.1~~$226.0 million for the six months ended June 30, ~~2017,~~2018, from ~~$186.8~~$213.0 million for the six months ended June 30, ~~2016.~~2017. The increase in net cash provided by operating activities was primarily due to higher income from property operations of ~~$12.4~~$12.1 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,~~and an increase ~~of $1.2 million~~ in rents received in advance and ~~an increase of $0.8 million in distributions from unconsolidated joint ventures. These increases were~~security deposits, partially offset by ~~the litigation settlement payment of $13.3 million related to the California failure to maintain lawsuits.~~a decrease in insurance proceeds.

Investing Activities

Net cash used in investing activities was ~~$71.4~~$121.9 million for the six months ended June 30, ~~2017~~2018 compared to ~~$136.1~~$70.3 million for the six months ended June 30, ~~2016.~~2017. The ~~decrease~~increase in net cash used in investing activities was primarily due to ~~the~~an increase in real estate acquisitions and an increase in capital improvements. These increases were partially offset by receipt of ~~Forest Lake Estates, Portland Fairview and Rose Bay~~$13.8 million during ~~the~~ six months ended June 30, ~~2016, partially offset by~~2018 as a result of the repayment of the short-term loan ~~of $13.8 million~~we issued to the Crosswinds joint venture ~~during~~at the ~~second quarter~~time of ~~2017.~~closing.

Capital Improvements

The table below summarizes capital improvement activity for the six months ended June 30, 2018 and 2017 ~~and 2016 (amounts~~(amounts in thousands):


	Six Months Ended June 30, ⁽¹⁾				Six Months Ended June 30,
	2017		2016		2018		2017
Recurring Capital Expenditures ⁽²⁾	$	18,808	$	18,317
Recurring capital expenditures ⁽¹⁾					$	21,175	$	18,808
Property upgrades and site development(2)	11,870		5,961		25,580		11,870
New home investments⁽³⁾⁽⁴⁾	19,542		27,774		31,701		19,542
Used home investments ⁽⁴⁾	2,191		3,210		1,807		2,191
Total Property	52,411		55,262
Total property					80,263		52,411
Corporate	1,053		445		1,114		1,053
Total Capital improvements	$	53,464	$	55,707
Total capital improvements					$	81,377	$	53,464

______________________

⁽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.

⁽²⁾Includes $9.5 million of restoration and improvement capital expenditures related to Hurricane Irma for the six months ended June 30, 2018.

⁽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.

Financing Activities

Net cash used in financing activities was $89.2 million for the six months ended June 30, 2018 compared to net cash used in financing activities of $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.~~2017. The ~~increase~~decrease in net cash used in financing activities was primarily due to an increase in new mortgage debt proceeds, net and a decrease in mortgage debt payoffs, compared to the ~~$50.0~~six months ended June 30, 2017, partially offset by an increase in distributions and the line of credit payoff of $30.0 million ~~of cash proceeds received~~ during the six months ended June 30, ~~2016 as~~2018.

Contractual Obligations

Significant ongoing contractual obligations consist primarily of long term borrowings, interest expense, operating leases, LOC maintenance fees and ground leases. For a ~~result~~summary and complete presentation and description of our ongoing commitments and contractual obligations, see the ~~sale~~Contractual Obligations section of ~~stock under~~Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the ~~ATM equity offering program.~~year ended December 31, 2017 filed with the SEC on February 28, 2018.

Management's Discussion (continued)

~~Contractual Obligations~~

~~As of~~ ~~June 30, 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 %


⁽¹⁾	Balance excludes note premiums of $4.3 million and deferred financing costs of approximately $17.8 million. Balances include debt maturing, scheduled periodic principal 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, 2017.~~


⁽³⁾	~~As of June 30, 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~~increases. In addition, we have the opportunity to achieve rate increases, where justified by the market, as each lease matures. Such types of leases generally minimize our risks of inflation. In addition, our RV 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.~~old.

~~Off Balance~~Off-Balance Sheet Arrangements

As of June 30, ~~2017,~~2018, we have no ~~off balance~~off-balance sheet arrangements.

Critical Accounting Policies and Estimates

Refer to ~~the 2016~~Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2017 for a discussion of our critical accounting policies, which ~~includes~~include impairment, ~~of real estate assets and investments,~~ revenue recognition and business combinations. There have been no significant changes to ~~these~~our critical accounting policies and estimates during the quarter ended June 30, ~~2017.~~2018 compared with those contained in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2017, except that we updated our revenue recognition policy related to right-to-use contracts pursuant to the adoption of ASU 2014-09 (see "Recently Adopted Accounting Pronouncements" within Note 2).

~~Management's Discussion (continued)~~

~~Forward Looking~~Forward-Looking Statements

This Quarterly Report on Form 10-Q for the quarter ended June 30, ~~2017~~2018 includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. When used, words such as “anticipate,” “expect,” “believe,” “project,” “intend,” “may be” and “will be” and similar words or phrases, or the negative thereof, unless the context requires otherwise, are intended to identify forward-looking statements and may include without limitation, information regarding our expectations, goals or intentions regarding the future, and the expected effect 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 and real estate market conditions, ~~the actual rate of decline in~~our ability to retain 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~~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;

our ability to renew our insurance policies at existing rates and on consistent terms;

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;

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 changes in accounting for ~~the entry of contracts with customers representing a right-to-use the Properties~~Leases set forth under the Codification Topic "~~Revenue Recognition"~~Leases";

the outcome of pending or future lawsuits or actions brought against us, including those disclosed in our filings with the Securities and Exchange Commission; 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.


Item 3.	Quantitative and Qualitative ~~Disclosure of~~Disclosures About 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, ~~2016.~~2017. There have been no material changes in the assumptions used or results obtained regarding market risk since December 31, ~~2016.~~2017.


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, ~~2017~~.2018. 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, ~~2017~~.

~~Notwithstanding the foregoing, a control system,~~2018. Any controls and procedures, 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.~~of achieving the desired control objectives.

Changes in Internal Control Over Financial Reporting

During the quarter ended June 30, ~~2017,~~2018, 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 9 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, ~~2016~~2017 and in our Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2017.~~2018.


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

None.


Item 3.	Defaults Upon Senior Securities

None.


Item 4.	Mine Safety ~~Disclosure~~Disclosures

None.


Item 5.	Other Information

~~None.~~

None.


Item 6.	~~Exhibit Index~~Exhibits



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, ~~2017~~2018 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 26, ~~2017~~2018	By:	/s/ Marguerite Nader
		Marguerite Nader
		President and Chief Executive Officer
		(Principal Executive Officer)

Date: July 26, ~~2017~~2018	By:	/s/ Paul Seavey
		Paul Seavey
		Executive Vice President, Chief Financial Officer and Treasurer
		(Principal Financial and Accounting Officer)

3640



	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		%