UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________________________________

FORM 10-Q

_________________________________________________________


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

For the quarterly period ended March 31, ~~2022~~2023


☐			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)

(IRS Employer Identification Number)

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


Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 Par Value	ELS	New York Stock Exchange

_________________________________________________________

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

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	~~��~~☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

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 ☐

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: ~~186,011,525~~186,209,657 shares of Common Stock as of April ~~21, 2022.~~19, 2023.

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 March ~~31, 2022~~ 3 1 , 202 3 and December 31, 202122	3
	Consolidated Statements of Income and Comprehensive Income for the quarters ended March 31,~~2022~~ 2023 and ~~2021~~2022	4
	Consolidated Statements of Changes in Equity for the quarters ended Ma ~~rch~~March 31, ~~2022~~2023 and ~~2021~~2022	5
	Consolidated Statements of Cash Flows for the quarters ended March 31, ~~2022~~2023 and ~~2021~~2022	6
	Notes to Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3130
Item 4.	Controls and Procedures	3130
Part II - Other Information
Item 1.	Legal Proceedings	3231
Item 1A.	Risk Factors	3231
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3231
Item 3.	Defaults Upon Senior Securities	3231
Item 4.	Mine Safety Disclosures	3231
Item 5.	Other Information	3231
Item 6.	Exhibits	3231

Part I – Financial Information

Item 1. Financial Statements

Equity LifeStyle Properties, Inc.

Consolidated Balance Sheets

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


		March 31, 2022		December 31, 2021			March 31, 2023		December 31, 2022
		(unaudited)					(unaudited)
Assets	Assets					Assets
Investment in real estate:	Investment in real estate:					Investment in real estate:
Land	Land	$	2,025,609	$	2,019,787	Land	$	2,086,725	$	2,084,532
Land improvements	Land improvements	3,962,367		3,912,062		Land improvements	4,170,166		4,115,439
Buildings and other depreciable property	Buildings and other depreciable property	1,083,942		1,057,215		Buildings and other depreciable property	1,197,416		1,169,590
		7,071,918		6,989,064			7,454,307		7,369,561
Accumulated depreciation	Accumulated depreciation	(2,150,238)		(2,103,774)		Accumulated depreciation	(2,306,538)		(2,258,540)
Net investment in real estate	Net investment in real estate	4,921,680		4,885,290		Net investment in real estate	5,147,769		5,111,021
Cash and restricted cash	Cash and restricted cash	38,120		123,398		Cash and restricted cash	30,661		22,347
Notes receivable, net	Notes receivable, net	40,542		39,955		Notes receivable, net	46,655		45,356
Investment in unconsolidated joint ventures	Investment in unconsolidated joint ventures	79,688		70,312		Investment in unconsolidated joint ventures	81,135		81,404
Deferred commission expense	Deferred commission expense	47,859		47,349		Deferred commission expense	51,090		50,441
Other assets, net	Other assets, net	136,916		141,567		Other assets, net	162,003		181,950
Total Assets	Total Assets	$	5,264,805	$	5,307,871	Total Assets	$	5,519,313	$	5,492,519

Liabilities and Equity	Liabilities and Equity					Liabilities and Equity
Liabilities:	Liabilities:					Liabilities:
Mortgage notes payable, net	Mortgage notes payable, net	$	2,598,830	$	2,627,783	Mortgage notes payable, net	$	2,677,318	$	2,693,167
Term loan, net	Term loan, net	496,148		297,436		Term loan, net	497,039		496,817
Unsecured line of credit	Unsecured line of credit	69,000		349,000		Unsecured line of credit	212,000		198,000
Accounts payable and other liabilities	Accounts payable and other liabilities	166,435		172,285		Accounts payable and other liabilities	185,126		175,148
Deferred membership revenue	Deferred membership revenue	182,181		176,439		Deferred membership revenue	204,312		197,743
Accrued interest payable	Accrued interest payable	9,175		9,293		Accrued interest payable	12,090		11,739
Rents and other customer payments received in advance and security deposits	Rents and other customer payments received in advance and security deposits	132,412		118,696		Rents and other customer payments received in advance and security deposits	130,704		122,318
Distributions payable	Distributions payable	80,287		70,768		Distributions payable	87,338		80,102
Total Liabilities	Total Liabilities	3,734,468		3,821,700		Total Liabilities	4,005,927		3,975,034
Equity:	Equity:					Equity:
Stockholders' Equity:	Stockholders' Equity:					Stockholders' Equity:
Preferred stock, $0.01 par value, 10,000,000 shares authorized as of March 31, 2022 and December 31, 2021; none issued and outstanding.		—		—
Common stock, $0.01 par value, 600,000,000 shares authorized as of March 31, 2022 and December 31, 2021; 186,006,354 and 185,640,379 shares issued and outstanding as of March 31, 2022, and December 31, 2021, respectively.		1,916		1,913
Preferred stock, $0.01 par value, 10,000,000 shares authorized as of March 31, 2023 and December 31, 2022; none issued and outstanding.						Preferred stock, $0.01 par value, 10,000,000 shares authorized as of March 31, 2023 and December 31, 2022; none issued and outstanding.	—		—
Common stock, $0.01 par value, 600,000,000 shares authorized as of March 31, 2023 and December 31, 2022; 186,205,815 and 186,120,298 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively.						Common stock, $0.01 par value, 600,000,000 shares authorized as of March 31, 2023 and December 31, 2022; 186,205,815 and 186,120,298 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively.	1,916		1,916
Paid-in capital	Paid-in capital	1,619,164		1,593,362		Paid-in capital	1,629,866		1,628,618
Distributions in excess of accumulated earnings	Distributions in excess of accumulated earnings	(177,158)		(183,689)		Distributions in excess of accumulated earnings	(205,203)		(204,248)
Accumulated other comprehensive income	Accumulated other comprehensive income	13,448		3,524		Accumulated other comprehensive income	15,141		19,119
Total Stockholders’ Equity	Total Stockholders’ Equity	1,457,370		1,415,110		Total Stockholders’ Equity	1,441,720		1,445,405
Non-controlling interests – Common OP Units	Non-controlling interests – Common OP Units	72,967		71,061		Non-controlling interests – Common OP Units	71,666		72,080
Total Equity	Total Equity	1,530,337		1,486,171		Total Equity	1,513,386		1,517,485
Total Liabilities and Equity	Total Liabilities and Equity	$	5,264,805	$	5,307,871	Total Liabilities and Equity	$	5,519,313	$	5,492,519

The accompanying notes are an integral part of the consolidated financial statements.

Equity LifeStyle Properties, Inc.

Consolidated Statements of Income and Comprehensive Income

(amounts in thousands, except per share data)

(unaudited)

Quarters Ended March 31,
2022 2021
Revenues:
Rental income $ 285,065 $ 249,022
Annual membership subscriptions 15,157 13,654
Membership upgrade sales current period, gross 7,151 10,014
Membership upgrade sales upfront payments, deferred, net (4,084) (7,427)
Other income 13,542 10,521
Gross revenues from home sales, brokered resales and ancillary services 39,695 25,160
Interest income 1,759 1,767
Income from other investments, net 1,904 936
Total revenues 360,189 303,647
Expenses:
Property operating and maintenance 103,992 88,873
Real estate taxes 19,457 17,850
Sales and marketing, gross 4,914 6,176
Membership sales commissions, deferred, net (583) (1,499)
Property management 17,871 15,380
Depreciation and amortization 49,394 45,398
Cost of home sales, brokered resales and ancillary services 30,684 18,836
Home selling expenses and ancillary operating expenses 6,481 4,941
General and administrative 12,297 10,512
Other expenses 823 698
Early debt retirement 516 2,029
Interest and related amortization 27,464 26,275
Total expenses 273,310 235,469
Loss on sale of real estate, net — (59)
Income before equity in income of unconsolidated joint ventures 86,879 68,119
Equity in income of unconsolidated joint ventures 171 868
Consolidated net income 87,050 68,987
Income allocated to non-controlling interests – Common OP Units (4,144) (3,747)
Net income available for Common Stockholders $ 82,906 $ 65,240
Consolidated net income $ 87,050 $ 68,987
Other comprehensive income (loss):
Adjustment for fair market value of swap 9,924 129
Consolidated comprehensive income 96,974 69,116
Comprehensive income allocated to non-controlling interests – Common OP Units (4,616) (3,754)
Comprehensive income attributable to Common Stockholders $ 92,358 $ 65,362
Earnings per Common Share – Basic $ 0.45 $ 0.36
Earnings per Common Share – Fully Diluted $ 0.45 $ 0.36
Weighted average Common Shares outstanding – Basic 185,690 181,945
Weighted average Common Shares outstanding – Fully Diluted 195,246 192,685


	Quarters Ended March 31,
	2023		2022
Revenues:
Rental income	$	296,451	$	285,065
Annual membership subscriptions	15,970		15,157
Membership upgrade sales current period, gross	7,975		7,151
Membership upgrade sales upfront payments, deferred, net	(4,470)		(4,084)
Other income	17,714		13,542
Gross revenues from home sales, brokered resales and ancillary services	32,133		39,695
Interest income	2,088		1,759
Income from other investments, net	2,091		1,904
Total revenues	369,952		360,189
Expenses:
Property operating and maintenance	112,483		103,992
Real estate taxes	18,316		19,457
Sales and marketing, gross	5,517		4,914
Membership sales commissions, deferred, net	(679)		(583)
Property management	19,464		17,871
Depreciation and amortization	50,502		49,394
Cost of home sales, brokered resales and ancillary services	23,141		30,684
Home selling expenses and ancillary operating expenses	6,924		6,481
General and administrative	11,661		12,072
Casualty-related charges/(recoveries), net	—		—
Other expenses	1,468		1,048
Early debt retirement	—		516
Interest and related amortization	32,588		27,464
Total expenses	281,385		273,310
Loss on sale of real estate and impairment, net	(2,632)		—
Income before equity in income of unconsolidated joint ventures	85,935		86,879
Equity in income of unconsolidated joint ventures	524		171
Consolidated net income	86,459		87,050

Income allocated to non-controlling interests – Common OP Units	(4,088)		(4,144)

Net income available for Common Stockholders	$	82,371	$	82,906

Consolidated net income	$	86,459	$	87,050
Other comprehensive income (loss):
Adjustment for fair market value of swap	(3,978)		9,924
Consolidated comprehensive income	82,481		96,974
Comprehensive income allocated to non-controlling interests – Common OP Units	(3,899)		(4,616)

Comprehensive income attributable to Common Stockholders	$	78,582	$	92,358

Earnings per Common Share – Basic	$	0.44	$	0.45

Earnings per Common Share – Fully Diluted	$	0.44	$	0.45

Weighted average Common Shares outstanding – Basic	185,900		185,690
Weighted average Common Shares outstanding – Fully Diluted	195,369		195,246

The accompanying notes are an integral part of the consolidated financial statements.

Equity LifeStyle Properties, Inc.

Consolidated Statements of Changes in Equity

(amounts in thousands)

(unaudited)

Common Stock Paid-in Capital Distributions in Excess of Accumulated Earnings Accumulated Other Comprehensive Income (Loss) Non-controlling Interests – Common OP Units Total Equity
Balance as of December 31, 2021 $ 1,913 $ 1,593,362 $ (183,689) $ 3,524 $ 71,061 $ 1,486,171
Exchange of Common OP Units for Common Stock — 67 — — (67) —
Issuance of Common Stock through employee stock purchase plan — 513 — — — 513
Issuance of Common Stock 3 28,367 — — — 28,370
Compensation expenses related to restricted stock and stock options — 2,590 — — — 2,590
Repurchase of Common Stock or Common OP Units — (3,449) — — — (3,449)
Adjustment for Common OP Unitholders in the Operating Partnership — (1,641) — — 1,641 —
Adjustment for fair market value of swap — — — 9,924 — 9,924
Consolidated net income — — 82,906 — 4,144 87,050
Distributions — — (76,375) — (3,812) (80,187)
Other — (645) — — — (645)
Balance as of March 31, 2022 $ 1,916 $ 1,619,164 $ (177,158) $ 13,448 $ 72,967 $ 1,530,337


	Common Stock		Paid-in Capital		Distributions in Excess of Accumulated Earnings		Accumulated Other Comprehensive Income (Loss)		Non-controlling Interests – Common OP Units		Total Equity
Balance as of December 31, 2022	$	1,916	$	1,628,618	$	(204,248)	$	19,119	$	72,080	$	1,517,485
Exchange of Common OP Units for Common Stock	—		198		—		—		(198)		—

Issuance of Common Stock through employee stock purchase plan	—		363		—		—		—		363

Compensation expenses related to restricted stock and stock options	—		2,549		—		—		—		2,549
Repurchase of Common Stock or Common OP Units	—		(1,932)		—		—		—		(1,932)
Adjustment for Common OP Unitholders in the Operating Partnership	—		168		—		—		(168)		—
Adjustment for fair market value of swap	—		—		—		(3,978)		—		(3,978)
Consolidated net income	—		—		82,371		—		4,088		86,459
Distributions	—		—		(83,326)		—		(4,136)		(87,462)
Other	—		(98)		—		—		—		(98)
Balance as of March 31, 2023	$	1,916	$	1,629,866	$	(205,203)	$	15,141	$	71,666	$	1,513,386

Common Stock Paid-in Capital Distributions in Excess of Accumulated Earnings Accumulated Other Comprehensive Income (Loss) Non-controlling interests – Common OP Units Total Equity
Balance as of December 31, 2020 $ 1,813 $ 1,411,397 $ (179,523) $ — $ 71,068 $ 1,304,755
Exchange of Common OP Units for Common Stock — 58 — — (58) —
Issuance of Common Stock through employee stock purchase plan — 732 — — — 732
Compensation expenses related to restricted stock and stock options — 2,556 — — — 2,556
Repurchase of Common Stock or Common OP Units — (2,814) — — — (2,814)
Adjustment for fair market value of swap — — — 129 — 129
Consolidated net income — — 65,240 — 3,747 68,987
Distributions — — (66,087) — (3,796) (69,883)
Other — (116) — — — (116)
Balance as of March 31, 2021 $ 1,813 $ 1,411,813 $ (180,370) $ 129 $ 70,961 $ 1,304,346


	Common Stock		Paid-in Capital		Distributions in Excess of Accumulated Earnings		Accumulated Other Comprehensive Income (Loss)		Non-controlling interests – Common OP Units		Total Equity
Balance as of December 31, 2021	$	1,913	$	1,593,362	$	(183,689)	$	3,524	$	71,061	$	1,486,171
Exchange of Common OP Units for Common Stock	—		67		—		—		(67)		—

Issuance of Common Stock through employee stock purchase plan	—		513		—		—		—		513
Issuance of Common Stock	3		28,367		—		—		—		28,370
Compensation expenses related to restricted stock and stock options	—		2,590		—		—		—		2,590
Repurchase of Common Stock or Common OP Units	—		(3,449)		—		—		—		(3,449)
Adjustment for Common OP Unitholders in the Operating Partnership	—		(1,641)		—		—		1,641		—
Adjustment for fair market value of swap	—		—		—		9,924		—		9,924
Consolidated net income	—		—		82,906		—		4,144		87,050
Distributions	—		—		(76,375)		—		(3,812)		(80,187)
Other	—		(645)		—		—		—		(645)
Balance as of March 31, 2022	$	1,916	$	1,619,164	$	(177,158)	$	13,448	$	72,967	$	1,530,337

The accompanying notes are an integral part of the consolidated financial statements.

Equity LifeStyle Properties, Inc.

Consolidated Statements of Cash Flows

(amounts in thousands)

(unaudited)


		Quarters Ended March 31,					Quarters Ended March 31,
		2022		2021			2023		2022
Cash Flows From Operating Activities:	Cash Flows From Operating Activities:					Cash Flows From Operating Activities:
Consolidated net income	Consolidated net income	$	87,050	$	68,987	Consolidated net income	$	86,459	$	87,050
Adjustments to reconcile consolidated net income to net cash provided by operating activities:	Adjustments to reconcile consolidated net income to net cash provided by operating activities:					Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Loss on sale of real estate, net		—		59
Loss on sale of real estate and impairment, net						Loss on sale of real estate and impairment, net	2,632		—
Early debt retirement	Early debt retirement	516		2,029		Early debt retirement	—		516
Depreciation and amortization	Depreciation and amortization	50,237		46,119		Depreciation and amortization	51,860		50,237
Amortization of loan costs	Amortization of loan costs	1,213		1,111		Amortization of loan costs	1,208		1,213
Debt premium amortization	Debt premium amortization	(60)		(83)		Debt premium amortization	(32)		(60)
Equity in income of unconsolidated joint ventures	Equity in income of unconsolidated joint ventures	(171)		(868)		Equity in income of unconsolidated joint ventures	(524)		(171)

Distributions of income from unconsolidated joint ventures						Distributions of income from unconsolidated joint ventures	174		—
Proceeds from insurance claims, net	Proceeds from insurance claims, net	59		2,343		Proceeds from insurance claims, net	5,795		59
Compensation expense related to incentive plans	Compensation expense related to incentive plans	(1,529)		2,939		Compensation expense related to incentive plans	3,330		(1,529)
Revenue recognized from membership upgrade sales upfront payments	Revenue recognized from membership upgrade sales upfront payments	(3,067)		(2,587)		Revenue recognized from membership upgrade sales upfront payments	(3,505)		(3,067)
Commission expense recognized related to membership sales	Commission expense recognized related to membership sales	1,040		955		Commission expense recognized related to membership sales	1,095		1,040

Changes in assets and liabilities:	Changes in assets and liabilities:					Changes in assets and liabilities:
Notes receivable, net	Notes receivable, net	189		(1,366)		Notes receivable, net	(1,345)		189
Deferred commission expense	Deferred commission expense	(1,550)		(2,363)		Deferred commission expense	(1,744)		(1,550)
Other assets, net	Other assets, net	23,168		17,884		Other assets, net	21,763		23,168
Accounts payable and other liabilities	Accounts payable and other liabilities	(1,923)		11,781		Accounts payable and other liabilities	9,553		(1,923)
Deferred membership revenue	Deferred membership revenue	8,494		12,687		Deferred membership revenue	10,074		8,494
Rents and other customer payments received in advance and security deposits	Rents and other customer payments received in advance and security deposits	13,665		13,704		Rents and other customer payments received in advance and security deposits	7,668		13,665
Net cash provided by operating activities	Net cash provided by operating activities	177,331		173,331		Net cash provided by operating activities	194,461		177,331
Cash Flows From Investing Activities:	Cash Flows From Investing Activities:					Cash Flows From Investing Activities:
Real estate acquisitions, net	Real estate acquisitions, net	(15,402)		(295,599)		Real estate acquisitions, net	(8,803)		(15,402)
Proceeds from disposition of properties, net		—		(7)

Investment in unconsolidated joint ventures	Investment in unconsolidated joint ventures	(7,912)		—		Investment in unconsolidated joint ventures	(1,752)		(7,912)
Distributions of capital from unconsolidated joint ventures	Distributions of capital from unconsolidated joint ventures	374		731		Distributions of capital from unconsolidated joint ventures	1,012		374
Proceeds from insurance claims		1,405		—
Proceeds from insurance claims, net						Proceeds from insurance claims, net	4,070		1,405

Capital improvements	Capital improvements	(83,647)		(56,778)		Capital improvements	(96,455)		(83,647)
Net cash used in investing activities	Net cash used in investing activities	(105,182)		(351,653)		Net cash used in investing activities	(101,928)		(105,182)

The accompanying notes are an integral part of the consolidated financial statements.

Equity LifeStyle Properties, Inc.

Consolidated Statements of Cash Flows (continued)

(amounts in thousands)

(unaudited)


		Quarters Ended March 31,					Quarters Ended March 31,
		2022		2021			2023		2022
Cash Flows From Financing Activities:	Cash Flows From Financing Activities:					Cash Flows From Financing Activities:
Proceeds from stock options and employee stock purchase plan	Proceeds from stock options and employee stock purchase plan	513		732		Proceeds from stock options and employee stock purchase plan	363		513
Gross proceeds from the issuance of common stock	Gross proceeds from the issuance of common stock	28,370		—		Gross proceeds from the issuance of common stock	—		28,370
Distributions:	Distributions:					Distributions:
Common Stockholders	Common Stockholders	(67,295)		(62,414)		Common Stockholders	(76,309)		(67,295)
Common OP Unitholders	Common OP Unitholders	(3,373)		(3,589)		Common OP Unitholders	(3,799)		(3,373)

Share based award tax withholding payments	Share based award tax withholding payments	(3,449)		(2,814)		Share based award tax withholding payments	(1,932)		(3,449)
Principal payments and mortgage debt repayment	Principal payments and mortgage debt repayment	(29,592)		(80,351)		Principal payments and mortgage debt repayment	(16,443)		(29,592)
Mortgage notes payable financing proceeds		—		270,000

Term loan proceeds	Term loan proceeds	200,000		300,000		Term loan proceeds	—		200,000
Line of Credit repayment	Line of Credit repayment	(319,000)		(283,000)		Line of Credit repayment	(104,000)		(319,000)
Line of Credit proceeds	Line of Credit proceeds	39,000		111,000		Line of Credit proceeds	118,000		39,000
Debt issuance and defeasance costs	Debt issuance and defeasance costs	(1,957)		(3,658)		Debt issuance and defeasance costs	—		(1,957)
Other	Other	(644)		(116)		Other	(99)		(644)
Net cash (used in) provided by financing activities		(157,427)		245,790
Net (decrease) increase in cash and restricted cash		(85,278)		67,468
Cash and restricted cash, beginning of year		123,398		24,060
Net cash used in financing activities						Net cash used in financing activities	(84,219)		(157,427)
Net increase (decrease) in cash and restricted cash						Net increase (decrease) in cash and restricted cash	8,314		(85,278)
Cash and restricted cash, beginning of period						Cash and restricted cash, beginning of period	22,347		123,398
Cash and restricted cash, end of period	Cash and restricted cash, end of period	$	38,120	$	91,528	Cash and restricted cash, end of period	$	30,661	$	38,120


		Quarters Ended March 31,					Quarters Ended March 31,
		2022		2021			2023		2022
Supplemental Information:	Supplemental Information:					Supplemental Information:
Cash paid for interest		$	26,839	$	24,864
Cash paid for interest, net						Cash paid for interest, net	$	31,630	$	26,839
Net investment in real estate – reclassification of rental homes	Net investment in real estate – reclassification of rental homes	$	21,311	$	12,751	Net investment in real estate – reclassification of rental homes	$	15,907	$	21,311
Other assets, net – reclassification of rental homes	Other assets, net – reclassification of rental homes	$	(21,311)	$	(12,751)	Other assets, net – reclassification of rental homes	$	(15,907)	$	(21,311)

Real estate acquisitions:	Real estate acquisitions:					Real estate acquisitions:
Investment in real estate	Investment in real estate	$	(15,075)	$	(303,292)	Investment in real estate	$	(9,535)	$	(15,075)
Notes receivable, net	Notes receivable, net	(772)		—		Notes receivable, net	—		(772)

Other assets, net	Other assets, net	—		(2,781)		Other assets, net	14		—

Deferred revenue - sale of right-to-use contracts		315		—
Accrued expenses and accounts payable		—		1,251
Deferred membership revenue						Deferred membership revenue	—		315

Other liabilities	Other liabilities	79		—		Other liabilities	—		79
Rents and other customer payments received in advance and security deposits	Rents and other customer payments received in advance and security deposits	51		9,223		Rents and other customer payments received in advance and security deposits	718		51
Real estate acquisitions, net	Real estate acquisitions, net	$	(15,402)	$	(295,599)	Real estate acquisitions, net	$	(8,803)	$	(15,402)

Real estate dispositions:
Investment in real estate		$	—	$	52

Loss on sale of real estate, net		—		(59)
Real estate dispositions, net		$	—	$	(7)

The accompanying notes are an integral part of the consolidated financial statements.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 1 – Organization and Basis of Presentation

Equity LifeStyle Properties, Inc. (“ELS”), a Maryland corporation, together with MHC Operating Limited Partnership (the “Operating Partnership”) and its other consolidated subsidiaries (the “Subsidiaries”), are referred to herein as “we,” “us,” and “our”. We are a fully integrated owner of lifestyle-oriented properties (“Properties”) consisting of property operations and home sales and rental operations primarily within manufactured home (“MH”) and recreational vehicle (“RV”) communities and marinas. We ~~have a unique business model where we own~~provide our customers the ~~land which we lease~~opportunity to ~~customers who own~~place manufactured homes and cottages, RVs and/or boats on our Properties either on a long-term or short-term basis. Our customers may lease individual developed areas (“Sites”) or enter into right-to-use contracts, also known as membership subscriptions, which provide them access to specific Properties for limited stays.

Our Properties are owned primarily by the Operating Partnership and managed internally by affiliates of the Operating Partnership. ELS is the sole general partner of the Operating Partnership, has exclusive responsibility and discretion in management and control of the Operating Partnership and held a ~~95.2%~~95.3% interest as of March 31, ~~2022.~~2023. As the general partner with control, ELS is the primary beneficiary of, and therefore consolidates, the Operating Partnership.

Equity method of accounting is applied to entities in which ELS does not have a controlling interest or for variable interest entities in which ELS is not considered the primary beneficiary, but with respect to which it can exercise significant influence over operations and major decisions. 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.

The accompanying unaudited interim consolidated financial statements have been prepared pursuant to Securities and Exchange Commission (“SEC”) rules and regulations for Quarterly Reports on Form 10-Q. 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 consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Intercompany balances and transactions have been eliminated. All adjustments to the unaudited interim consolidated financial statements are of a normal, recurring nature and, in the opinion of management, are necessary for a fair presentation of results for these interim periods. Revenues and expenses are subject to seasonal fluctuations and accordingly, quarterly interim results may not be indicative of full year results. Certain prior period amounts have been reclassified on our unaudited interim consolidated financial statements to conform with current year presentation.

Note 2 – Summary of Significant Accounting Policies

(a) Revenue Recognition

Our revenue streams are predominantly derived from customers renting our Sites or entering into membership subscriptions. Leases with customers renting our Sites are accounted for as operating leases. The rental income associated with these leases is accounted for in accordance with the Accounting Standards Codification (“ASC”) 842, Leases, and is recognized over the term of the respective lease or the length of a customer’s stay. MH Sites are generally leased on an annual basis to residents who own or lease factory-built homes, including manufactured homes. RV and marina Sites are leased to those who generally have an RV, factory-built cottage, boat or other unit placed on the site, including those customers renting marina dry storage slips. Annual Sites are leased on an annual basis, including those Northern Properties that are open for the summer season. Seasonal Sites are leased to customers generally for one to six months. Transient Sites are leased to customers on a short-term basis. We do not separate expenses reimbursed by our customers (“utility recoveries”) from the associated rental income as we meet the practical expedient criteria of ASC 842, Leases to combine the lease and non-lease components. We assessed the criteria and concluded that the timing and pattern of transfer for rental income and the associated utility recoveries are the same and, as our leases qualify as operating leases, we account for and present rental income and utility recoveries as a single component under Rental income in our Consolidated Statements of Income and Comprehensive Income. In addition, customers may lease homes that are located in our communities. These leases are accounted for as operating leases. Rental income derived from customers leasing homes is also accounted for in accordance with ASC 842, Leases and is recognized over the term of the respective lease. The allowance for credit losses related to the collectability of lease receivables is presented as a reduction to Rental income. Lease receivables are presented within Other assets, net on the Consolidated Balance Sheets and are net of an allowance for credit losses. The estimate for credit losses is a result of our ongoing assessments and evaluations of collectability, including historical loss experience, current market conditions and future expectations in forecasting credit losses.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 2 – Summary of Significant Accounting Policies (continued)

Annual membership subscriptions and membership upgrade sales are accounted for in accordance with ASC 606, Revenue from Contracts with Customers. Membership subscriptions provide our customers access to specific Properties for limited stays at a specified group of Properties. Payments are deferred and recognized on a straight-line basis over the one-year period during which access to Sites at certain Properties is provided. Membership subscription receivables are presented within Other assets, net on the Consolidated Balance Sheets and are net of an allowance for credit losses. Membership upgrades grant certain additional access rights to the customer and require non-refundable upfront payments. The non-refundable upfront payments are recognized on a straight-line basis over 20 years. Financed upgrade sales (also known as contract receivables) are presented within Notes receivable, net on the Consolidated Balance Sheets and are net of an allowance for credit losses.

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. We have a limited program under which we purchase loans made by an unaffiliated lender to homebuyers at our Properties. Financed home sales (also known as chattel loans) are presented within Notes receivable, net on the Consolidated Balance Sheets and are net of an allowance for credit losses.

(b) Restricted Cash

As of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, restricted cash ~~consists~~consisted of ~~$29.3~~$19.8 million ~~for each period,~~and $19.7 million, respectively, primarily related to cash reserved for customer deposits and escrows for insurance and real estate taxes.

During the quarter ended March 31, 2023, we recognized expenses of approximately $8.5 million related to debris removal and cleanup related to Hurricane Ian and an offsetting insurance recovery revenue accrual of $8.5 million related to the expected insurance recovery as a result of Hurricane Ian.

Note 3 – Leases

Lessor

The leases entered into between the customer and us for rental of a Site are renewable upon the consent of both parties or, in some instances, as provided by statute. Long-term leases that are non-cancelable by the tenants are in effect at certain Properties. Rental rate increases at these Properties are primarily a function of increases in the Consumer Price Index, taking into consideration certain conditions. Additionally, periodic market rate adjustments are made as deemed appropriate. In addition, certain state statutes allow entry into long-term agreements that effectively modify lease terms related to rent amounts and increases over the term of the agreements. The following table presents future minimum rents expected to be received under long-term non-cancelable tenant leases, as well as those leases that are subject to long-term agreements governing rent payments and increases:


(amounts in thousands)	(amounts in thousands)	As of March 31, 2022		(amounts in thousands)	As of March 31, 2023
2022		$	119,123
2023	2023	161,093		2023	$	86,670
2024	2024	98,692		2024	115,394
2025	2025	40,813		2025	42,805
2026	2026	21,539		2026	23,963
2027				2027	22,544
Thereafter	Thereafter	66,894		Thereafter	57,200
Total	Total	$	508,154	Total	$	348,576

Lessee

We lease land under non-cancelable operating leases at 1410 Properties expiring at various dates between ~~2022~~2028 and 2054. The majority of the leases have terms requiring fixed payments plus additional rents based on a percentage of gross revenues at those Properties. We also have other operating leases, primarily office space, expiring at various dates through 2032. For the quarters ended March 31, ~~2022~~2023 and ~~2021,~~2022, total operating lease payments were $1.5 million and $2.6 million, ~~and $2.5 million,~~ respectively.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 3 – Leases (continued)

The following table summarizes our minimum future rental payments, excluding variable costs, which are discounted by our incremental borrowing rate to calculate the lease liability for our operating leases as of March 31, ~~2022:~~2023:


		As of March 31, 2022						As of March 31, 2023
(amounts in thousands)	(amounts in thousands)	Ground Leases		Office and Other Leases		Total			(amounts in thousands)	Ground Leases		Office and Other Leases		Total
2022		$	1,603	$	2,972	$	4,575
2023	2023	626		3,523		4,149			2023	$	544	$	3,081	$	3,625
2024	2024	632		3,097		3,729			2024	675		3,407		4,082
2025	2025	637		2,763		3,400			2025	680		3,108		3,788
2026	2026	615		2,543		3,158			2026	684		2,613		3,297
2027									2027	689		2,424		3,113
Thereafter	Thereafter	4,325		13,140		17,465			Thereafter	4,525		10,794		15,319
Total undiscounted rental payments	Total undiscounted rental payments	8,438		28,038		36,476			Total undiscounted rental payments	7,797		25,427		33,224
Less imputed interest	Less imputed interest	(2,281)		(4,506)		(6,787)			Less imputed interest	(2,013)		(3,741)		(5,754)
Total lease liabilities	Total lease liabilities	$	6,157	$	23,532	$	29,689		Total lease liabilities	$	5,784	$	21,686	$	27,470

Right-of-use (“ROU”) assets and lease liabilities from our operating leases, included within Other assets, net and Accounts payable and other liabilities on the Consolidated Balance Sheets, were ~~$27.8~~$25.3 million and ~~$29.7~~$27.5 million, respectively, as of March 31, ~~2022.~~2023. The weighted average remaining lease term for our operating leases was ~~ten~~nine years and the weighted average incremental borrowing rate was 3.8% at March 31, ~~2022.~~2023.

ROU assets and lease liabilities from our operating leases, included within Other assets, net and Accounts payable and other liabilities on the Consolidated Balance Sheets, were ~~$30.3~~$25.9 million and ~~$30.7~~$28.0 million, respectively, as of December 31, ~~2021.~~2022. The weighted average remaining lease term for our operating leases was ~~seven~~nine years and the weighted average incremental borrowing rate was 3.8% at December 31, ~~2021.~~2022.

Note 4 – Earnings Per Common Share

The following table sets forth the computation of basic and diluted earnings per share of common stock (Common Share) for the quarters ended March 31, ~~2022~~2023 and ~~2021:~~2022:

Quarters Ended March 31,
(amounts in thousands, except per share data) 2022 2021
Numerators:
Net income available for Common Stockholders – Basic $ 82,906 $ 65,240
Amounts allocated to non controlling interest (dilutive securities) 4,144 3,747
Net income available for Common Stockholders – Fully Diluted $ 87,050 $ 68,987
Denominators:
Weighted average Common Shares outstanding – Basic 185,690 181,945
Effect of dilutive securities:
Exchange of Common OP Units for Common Shares 9,301 10,473
Stock options and restricted stock 255 267
Weighted average Common Shares outstanding – Fully Diluted 195,246 192,685
Earnings per Common Share – Basic $ 0.45 $ 0.36
Earnings per Common Share – Fully Diluted $ 0.45 $ 0.36


	Quarters Ended March 31,
(amounts in thousands, except per share data)	2023		2022
Numerators:
Net income available for Common Stockholders – Basic	$	82,371	$	82,906
Amounts allocated to non controlling interest (dilutive securities)	4,088		4,144
Net income available for Common Stockholders – Fully Diluted	$	86,459	$	87,050
Denominators:
Weighted average Common Shares outstanding – Basic	185,900		185,690
Effect of dilutive securities:
Exchange of Common OP Units for Common Shares	9,262		9,301
Stock options and restricted stock	207		255
Weighted average Common Shares outstanding – Fully Diluted	195,369		195,246

Earnings per Common Share – Basic	$	0.44	$	0.45

Earnings per Common Share – Fully Diluted	$	0.44	$	0.45

Note 5 – Common Stock and Other Equity Related Transactions

Common Stockholder Distribution Activity

The following quarterly distributions have been declared and paid to Common Stockholders and the Operating Partnership unit (“OP Unit”) holders since January 1, ~~2021.~~2022.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 5 – Common Stock and Other Equity Related Transactions (continued)

Distribution Amount Per Share

For the Quarter Ended

Stockholder Record Date

Payment Date

$~~0.3625~~

~~March 31, 2021~~

~~March 26, 2021~~

~~April 9, 2021~~

~~$0.3625~~

~~June 30, 2021~~

~~June 25, 2021~~

~~July 9, 2021~~

~~$0.3625~~

~~September 30, 2021~~

~~September 24, 2021~~

~~October 8, 2021~~

~~$0.3625~~

~~December 31, 2021~~

~~January 14, 2022~~

$0.4100

March 31, 2022

March 25, 2022

April 8, 2022

$0.4100

June 30, 2022

June 24, 2022

July 8, 2022

$0.4100

September 30, 2022

October 14, 2022

$0.4100

December 31, 2022

December 30, 2022

January 13, 2023

$0.4475

March 31, 2023

April 14, 2023

Equity Offering Program

On February 24, 2022, we entered into our current at-the-market (“ATM”) equity offering program with certain sales agents, pursuant to which we may sell, from time-to-time, shares of our common stock, par value $0.01 per share, having an aggregate offering price of up to $500.0 million. ~~Prior to the new program, the aggregate offering price was up to $200.0 million.~~ As of March 31, ~~2022,~~2023, the full capacity ofremained available for issuance under our ~~current~~ ATM equity offering ~~program remained available for issuance.~~

The following table presents the shares that were issued under our prior ATM equity offering program during the quarter ended March 31, 2022. There was no ATM equity activity during the quarter ended March 31, 2021.


	~~Quarter Ended March 31,~~
~~(amounts in thousands, except share data)~~	~~2022~~
~~Shares of common stock sold~~	~~328,123~~
~~Weighted average price~~	$	~~86.46~~
~~Total gross proceeds~~	$	~~28,370~~
~~Commissions paid to sales agents~~	$	~~389~~

program.

Exchanges

Subject to certain limitations, OP Unit holders can request an exchange of any or all of their 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 quarters ended March 31, 2023 and 2022, 25,496 and ~~2021,~~ 8,640 ~~and 8,560~~ OP Units, respectively, were exchanged for an equal number of shares of Common Stock.

Note 6 – Investment in Real Estate

Acquisitions

~~2022~~2023

On ~~February 18, 2022,~~March 28, 2023, we completed the acquisition of ~~Blue Mesa Recreational Ranch,~~Red Oak Shores Campground, a ~~385-site membership~~223-site RV community located in ~~Gunnison, Colorado, and Pilot Knob RV Resort a 247-site RV community located in Winterhaven, California~~Ocean View, New Jersey for a ~~combined~~ purchase price of ~~$15.9~~$9.5 million. The acquisition was accounted for as an asset acquisition under ASC 805, Business Combinations and was funded ~~with available cash.~~from our unsecured line of credit.

Impairment

During the quarter ended March 31, 2023, we recorded an impairment charge of approximately $2.6 million related to flooding events at certain Properties in California.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 7 – Investments in Unconsolidated Joint Ventures

The following table summarizes our investment in unconsolidated joint ventures (investment amounts in thousands with the number of Properties shown parenthetically as of March 31, ~~2022~~2023 and December 31, ~~2021~~2022, respectively):


							Investment as of				Income/(Loss) for the quarters ended										Investment as of				Income/(Loss) for the Quarters Ended
Investment	Investment	Location	Number of Sites	Economic Interest (a)			March 31, 2022		December 31, 2021		March 31, 2022		March 31, 2021		Investment	Location	Number of Sites	Economic Interest (a)			March 31, 2023		December 31, 2022		March 31, 2023		March 31, 2022
Meadows	Meadows	Various (2,2)	1,077	50	%		$	60	$	—	$	260	$	550	Meadows	Various (2,2)	1,077	50	%		$	232	$	158	$	374	$	260
Lakeshore	Lakeshore	Florida (3,3)	721	(b)			2,599		2,638		135		152		Lakeshore	Florida (3,3)	721	(b)			2,866		2,625		172		135
Voyager	Voyager	Arizona (1,1)	—	33	%	(c)	160		141		20		30		Voyager	Arizona (1,1)	—	—	%	(c)	—		139		692		20
ECHO JV	ECHO JV	Various	—	50	%		18,313		18,136		177		136		ECHO JV	Various	—	50	%		2,773		2,963		(190)		177
RVC	RVC	Various	1,019	80	%		53,085		49,397		(421)		—		RVC	Various	1,282	80	%	(d)	60,036		60,323		(353)		(421)
Mulberry Farms	Mulberry Farms	Various	—	50	%	(d)	5,471		—		—		—		Mulberry Farms	Arizona	200	50	%		10,071		9,902		(31)		—
Hiawassee KOA JV															Hiawassee KOA JV	Georgia	283	50	%		$	5,157	$	5,294	$	(140)	$	—
			2,817				$	79,688	$	70,312	$	171	$	868			3,563				$	81,135	$	81,404	$	524	$	171

_____________________

(a)The percentages shown approximate our economic interest as of March 31, ~~2022.~~2023. Our legal ownership interest may differ.

(b)Includes 2two joint ventures in which we own a 65% interest in each and the Crosswinds joint venture in which we own a 49% interest.

(c)~~Consists of a~~During the quarter ended March 31, 2023 we sold our 33% interest in the utility plant servicing Voyager RV Resort. ~~On October 14, 2021, we completed the acquisition of the remaining 50% interest in Voyager RV Resort.~~

(d)~~On January 18, 2022, we acquired~~Includes three joint ventures of which one joint venture owns a ~~50% equity interest in~~portfolio of seven operating RV communities and two joint ventures each own an ~~entity developing an age-restricted community in Prescott Valley, Arizona.~~RV property under development.

We received approximately ~~$0.4~~$1.2 million and ~~$0.7~~$0.4 million in distributions from our unconsolidated joint ventures for the quarters ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively. Approximately $0.3 ~~million and $0.7~~ million of the distributions made to us exceeded our basis in our unconsolidated joint ventures for the quarters ended March 31, ~~2022~~2023 and ~~2021, respectively,~~2022, and as such, were recorded as income from unconsolidated joint ventures.

Note 8 – Borrowing Arrangements

Mortgage Notes Payable

Our mortgage notes payable isare classified as Level 2 in the fair value hierarchy. The following table presents the fair value of our mortgage notes payable:


		As of March 31, 2022				As of December 31, 2021					As of March 31, 2023				As of December 31, 2022
(amounts in thousands)	(amounts in thousands)	Fair Value		Carrying Value		Fair Value		Carrying Value		(amounts in thousands)	Fair Value		Carrying Value		Fair Value		Carrying Value
Mortgage notes payable, excluding deferred financing costs	Mortgage notes payable, excluding deferred financing costs	$	3,065,711	$	2,624,409	$	2,743,527	$	2,654,086	Mortgage notes payable, excluding deferred financing costs	$	2,100,665	$	2,701,638	$	2,043,412	$	2,718,114

The weighted average interest rate on our outstanding mortgage indebtedness, including the impact of premium/discount amortization and loan cost amortization on mortgage indebtedness, as of March 31, ~~2022,~~2023, was approximately ~~3.8%~~3.7% per annum. The debt bears interest at stated rates ranging from 2.4% to 8.9% per annum and matures on various dates ranging from ~~2022~~2023 to 2041. The debt encumbered a total of 114 ~~and 117~~ of our Properties as of March 31, ~~2022~~2023 and December 31, ~~2021, respectively,~~2022, and the gross carrying value of such Properties was approximately ~~$2,811.0~~$2,895.2 million and ~~$2,817.5~~$2,868.3 million, as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

~~During~~Unsecured Debt

We previously entered into a Third Amended and Restated Credit Agreement (“Credit Agreement”), pursuant to which we have access to a $500.0 million unsecured line of credit (the “LOC”) and a $300.0 million senior unsecured term loan (the “$300 million Term Loan”). On March 1, 2023, we amended the ~~quarter ended March 31, 2022, we repaid $14.2~~Credit Agreement to transition the LIBOR rate borrowings to Secured Overnight Financing Rate (“SOFR”) borrowings. The LOC bears interest at a rate of SOFR plus 1.25% to 1.65% and requires an annual facility fee of 0.20% to 0.35%. The $300 million ~~of principal on 2 mortgage loans that were due to mature in 2022, incurring $0.5 million of prepayment penalties. These mortgage loans had a weighted average~~Term Loan has an interest rate of ~~5.25%~~SOFR plus 1.40% to 1.95% per ~~annum~~annum. For both the LOC and ~~were secured by 3 RV communities.~~

~~In April 2022, we closed~~the $300 million Term Loan, the spread over SOFR is variable based on ~~a secured refinancing transaction generating gross proceeds~~leverage throughout the respective loan terms. As of ~~$200.0 million. The loan is secured by 1 MH community,~~March 31, 2023, the Company has ~~a fixed interest rate of 3.36% per annum and has a maturity date of May 1, 2034. See~~ ~~Note 13. Subsequent Events~~ ~~for further details~~.

no remaining LIBOR based borrowings.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 8 – Borrowing Arrangements (continued)

~~Unsecured Debt~~

~~During the quarter ended March 31, 2022 we entered into a $200.0 million senior unsecured term loan agreement.~~ The ~~maturity date is January 21, 2027, with an interest rate of Secured Overnight Financing Rate (“SOFR”) plus approximately 1.30% to 1.80%, depending on leverage levels.~~

~~The Line of Credit (“LOC”)~~LOC had a balance of ~~$69.0~~$212.0 million and ~~$349.0~~$198.0 million outstanding as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. As of March 31, ~~2022,~~2023, our LOC had a remaining borrowing capacity of ~~$431.0~~$288.0 million. ~~In conjunction with the closing of the secured refinancing transaction, we repaid the remaining balance on the LOC. As of April 26, 2022, there is no outstanding balance on the LOC.~~

As of March 31, ~~2022,~~2023, we were in compliance in all material respects with the covenants in all our borrowing arrangements.

During the year ended December 31, 2022, we entered into a $200.0 million senior unsecured term loan agreement (the “$200 million Term Loan”). The maturity date is January 21, 2027, with an interest rate of SOFR plus approximately 1.30% to 1.80%, depending on leverage levels.

Note 9 – Derivative Instruments and Hedging

Cash Flow Hedges of Interest Rate Risk

We record all derivatives at fair value. Our objective in utilizing interest rate derivatives is to add stability to our interest expense and to manage our exposure to interest rate movements. We do not enter into derivatives for speculative purposes.

~~We have~~In March 2021, we entered into a ~~three-year LIBOR~~ Swap Agreement (the ~~“Swap”~~“2021 Swap”) with a notional amount of $300.0 million allowing us to trade the variable interest rate associated with our ~~variable rate debt~~$300.0 million Term Loan for a fixed interest rate. In March 2023, we amended the 2021 Swap agreement to reflect the change in the $300.0 million Term Loan interest rate benchmark from LIBOR to SOFR (see Note 8.Borrowing arrangements). The 2021 Swap has ~~a notional amount of $300.0 million of outstanding principal with~~ a fixed interest rate of ~~0.39%~~0.41% per annum and matures on March 25, 2024. Based on the leverage as of March 31, ~~2022,~~2023, our spread over ~~LIBOR~~SOFR was 1.40% resulting in an estimated all-in interest rate of ~~1.79%~~1.81% per annum.

In April 2023, we entered into a Swap Agreement (the “2023 Swap”) with a notional amount of $200.0 million allowing us to trade the variable interest rate associated with our $200.0 million Term Loan for a fixed interest rate. The 2023 Swap has a fixed interest rate of 3.68% per annum and matures on January 21, 2027. Based on the leverage as of March 31, 2023, our spread over SOFR was 1.20% resulting in an estimated all-in interest rate of 4.88% per annum.

Our derivative financial instrument was classified as Level 2 in the fair value hierarchy. The following table presents the fair value of our derivative financial instrument:


			As of March 31,		As of December 31,				As of March 31,		As of December 31,
(amounts in thousands)	(amounts in thousands)	Balance Sheet Location	2022		2021		(amounts in thousands)	Balance Sheet Location	2023		2022
Interest Rate Swap	Interest Rate Swap	Other assets, net	$	13,448	$	3,524	Interest Rate Swap	Other assets, net	$	15,141	$	19,119

The following table presents the effect of our derivative financial instrument on the Consolidated Statements of Income and Comprehensive Income:


Derivatives in Cash Flow Hedging Relationship	Derivatives in Cash Flow Hedging Relationship	Amount of (gain)/loss recognized in OCI on derivative for the quarters ended March 31,				Location of (gain)/ loss reclassified from accumulated OCI into income	Amount of (gain)/loss reclassified from accumulated OCI into income for the quarters ended March 31,				Derivatives in Cash Flow Hedging Relationship	Amount of (gain)/loss recognized in OCI on derivative for the quarters ended March 31,				Location of (gain)/ loss reclassified from accumulated OCI into income	Amount of (gain)/loss reclassified from accumulated OCI into income for the quarters ended March 31,
(amounts in thousands)	(amounts in thousands)	2022		2021		(amounts in thousands)	2022		2021		(amounts in thousands)	2023		2022		(amounts in thousands)	2023		2022
Interest Rate Swap	Interest Rate Swap	$	(9,661)	$	(112)	Interest Expense	$	263	$	17	Interest Rate Swap	$	523	$	(9,661)	Interest Expense	$	(3,455)	$	263

During the next twelve months, we estimate that ~~$4.2~~$14.0 million will be reclassified as a decrease to interest expense. This estimate may be subject to change as the underlying ~~LIBOR~~SOFR changes. We determined that no adjustment was necessary for non-performance risk on our derivative obligation. As of March 31, ~~2022,~~2023, we had not posted any collateral related to the 2021 Swap.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 10 – Equity Incentive Awards

Our 2014 Equity Incentive Plan (the “2014 Plan”) was adopted by the Board of Directors on March 11, 2014 and approved by our stockholders on May 13, 2014.

During the quarter ended March 31, ~~2022, 79,078~~2023, 82,884 shares of restricted stock were awarded to certain members of our management team. Of these shares, 50% are time-based awards, vesting in equal installments over a three-year period on January ~~27, 2023, January 26,~~30, 2024, February 4, 2025 and ~~January 31, 2025,~~February 3, 2026, respectively, and have a grant date fair value of $3.0 million. The remaining 50% are performance-based awards vesting in equal installments on January ~~27, 2023, January 26,~~30, 2024, February 4, 2025 and ~~January 31, 2025,~~February 3, 2026, respectively, upon meeting performance conditions as established by the Compensation Committee in the year of the vesting period. They are valued using the closing price at the grant date when all the key terms and conditions are known to all parties. The ~~13,178~~13,812 shares of restricted stock subject to ~~2022~~2023 performance goals have a grant date fair value of $1.0 million.

Stock based compensation expense, reported in General and administrative expense on the Consolidated Statements of Income and Comprehensive Income, was $2.5 million and $2.6 million for ~~each of~~ the quarters ended March 31, 2023 and 2022, ~~and 2021.~~respectively.

Note 11 – Commitments and Contingencies

We are involved in various legal and regulatory proceedings (“Proceedings”) arising in the ordinary course of business. The Proceedings include, but are not limited to, legal claims made by employees, vendors and customers, and notices, consent decrees, information requests, 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 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.

The Operating Partnership operates and manages Westwinds, a 720 site mobilehome community, and Nicholson Plaza, an adjacent shopping center, both located in San Jose, California pursuant to ground leases that expire on August 31, 2022 and do not contain extension options. The master lessor of these ground leases, The Nicholson Family Partnership (the “Nicholsons”), has expressed a desire to redevelop Westwinds, and in a written communication, they claimed that we were obligated to deliver the property free and clear of any and all subtenancies upon the expiration of the ground leases on August 31, 2022. In connection with any redevelopment, the City of San Jose’s conversion ordinance requires, among other things, that the landowner provide relocation, rental and purchase assistance to the impacted residents.

We believe the Nicholsons’ demand is unlawful, and on December 30, 2019, the Operating Partnership, together with certain interested parties, filed a complaint in California Superior Court for Santa Clara County, seeking declaratory relief pursuant to which it requested that the Court determine, among other things, that the Operating Partnership has no obligation to deliver the property free and clear of the mobilehome residents upon the expiration of the ground leases. The Operating Partnership and the interested parties filed an amended complaint on January 29, 2020. The Nicholsons filed a demand for arbitration on January 28, 2020, which they subsequently amended, pursuant to which they request (i) a declaration that the Operating Partnership, as the “owner and manager” of Westwinds, is “required by the Ground Leases, and State and local law to deliver the Property free of any encumbrances or third-party claims at the expiration of the lease terms,” (ii) that the Operating Partnership anticipatorily breached the ground leases by publicly repudiating any such obligation and (iii) that the Operating Partnership is required to indemnify the Nicholsons with respect to the claims brought by the interested parties in the Superior Court proceeding.

On February 3, 2020, the Nicholsons filed a motion in California Superior Court to compel arbitration and to stay the Superior Court litigation, which motion was heard on June 25, 2020. On July 29, 2020, the Superior Court issued a final order denying the Nicholsons' motion to compel arbitration. The Nicholsons filed a notice of appeal on August 7, 2020. On February 4, 2022, the California Court of Appeal affirmed the Superior Court’s order denying the Nicholsons' motion to compel arbitration. On February 22, 2022, the Nicholsons filed a petition for rehearing, which the Court of Appeal denied on March 2, 2022. On March 16, 2022, the Nicholsons filed a petition for review with the California Supreme Court.

The arbitration is stayed pursuant to an agreement between MHC and the Nicholsons. We intend to continue to vigorously defend our interests in this matter. As of March 31, 2022, we have not made an accrual, as we are unable to predict the outcome of this matter or reasonably estimate any possible loss.

~~Equity LifeStyle Properties, Inc.~~

~~Notes to Consolidated Financial Statements~~

Note 12 –- Reportable Segments

We have identified 2two reportable segments: (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.

All revenues were from external customers and there is no customer who contributed 10% or more of our total revenues during the quarters ended March 31, ~~2022~~2023 or ~~2021.~~2022.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 12 – Reportable Segments (continued)

The following tables summarize our segment financial information for the quarters ended March 31, ~~2022~~2023 and ~~2021:~~2022:

Quarter Ended March 31, 2023


(amounts in thousands)	Property Operations		Home Sales and Rentals Operations		Consolidated
Operations revenues	$	341,737	$	24,036	$	365,773
Operations expenses	(165,023)		(20,143)		(185,166)
Income from segment operations	176,714		3,893		180,607
Interest income	1,566		514		2,080
Depreciation and amortization	(47,755)		(2,747)		(50,502)
Loss on sale of real estate and impairment, net	(2,632)		—		(2,632)
Income from operations	$	127,893	$	1,660	$	129,553
Reconciliation to consolidated net income:
Corporate interest income					8
Income from other investments, net					2,091
General and administrative					(11,661)
Other expenses					(1,468)
Interest and related amortization					(32,588)
Equity in income of unconsolidated joint ventures					524

Consolidated net income					$	86,459

Total assets	$	5,239,891	$	279,422	$	5,519,313
Capital improvements	$	51,412	$	45,043	$	96,455

Quarter Ended March 31, 2022


(amounts in thousands)	(amounts in thousands)	Property Operations		Home Sales and Rentals Operations		Consolidated		(amounts in thousands)	Property Operations		Home Sales and Rentals Operations		Consolidated
Operations revenues	Operations revenues	$	325,426	$	31,100	$	356,526	Operations revenues	$	325,426	$	31,100	$	356,526
Operations expenses	Operations expenses	(154,988)		(27,828)		(182,816)		Operations expenses	(154,988)		(27,828)		(182,816)
Income from segment operations	Income from segment operations	170,438		3,272		173,710		Income from segment operations	170,438		3,272		173,710
Interest income	Interest income	1,377		380		1,757		Interest income	1,377		380		1,757
Depreciation and amortization	Depreciation and amortization	(46,877)		(2,517)		(49,394)		Depreciation and amortization	(46,877)		(2,517)		(49,394)

Income (loss) from operations		$	124,938	$	1,135	$	126,073
Income from operations								Income from operations	$	124,938	$	1,135	$	126,073
Reconciliation to consolidated net income:	Reconciliation to consolidated net income:							Reconciliation to consolidated net income:
Corporate interest income	Corporate interest income					2		Corporate interest income					2
Income from other investments, net	Income from other investments, net					1,904		Income from other investments, net					1,904
General and administrative(1)	General and administrative(1)					(12,297)		General and administrative(1)					(12,072)
Other expenses(1)	Other expenses(1)					(823)		Other expenses(1)					(1,048)
Interest and related amortization	Interest and related amortization					(27,464)		Interest and related amortization					(27,464)
Equity in income of unconsolidated joint ventures	Equity in income of unconsolidated joint ventures					171		Equity in income of unconsolidated joint ventures					171
Early debt retirement	Early debt retirement					(516)		Early debt retirement					(516)
Consolidated net income	Consolidated net income					$	87,050	Consolidated net income					$	87,050

Total assets	Total assets	$	5,012,335	$	252,470	$	5,264,805	Total assets	$	5,012,335	$	252,470	$	5,264,805
Capital improvements	Capital improvements	$	54,990	$	28,657	$	83,647	Capital improvements	$	54,990	$	28,657	$	83,647

~~Quarter Ended March 31, 2021~~______________________

(amounts in thousands) Property
Operations Home Sales
and Rentals
Operations Consolidated
Operations revenues $ 280,998 $ 19,946 $ 300,944
Operations expenses (132,980) (17,577) (150,557)
Income from segment operations 148,018 2,369 150,387
Interest income 1,148 615 1,763
Depreciation and amortization (42,778) (2,620) (45,398)
Gain on sale of real estate, net (59) — (59)
Income (loss) from operations $ 106,329 $ 364 $ 106,693
Reconciliation to consolidated net income:
Corporate interest income 4
Income from other investments, net 936
General and administrative (10,512)
Other expenses (698)
Interest and related amortization (26,275)
Equity in income of unconsolidated joint ventures 868
Early debt retirement (2,029)
Consolidated net income $ 68,987
Total assets $ 4,524,713 $ 261,002 $ 4,785,715
Capital improvements $ 36,468 $ 20,310 $ 56,778
(1)Prior period amounts have been reclassified to conform to the current period presentation.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 12 – Reportable Segments (continued)

The following table summarizes our financial information for the Property Operations segment for the quarters ended March 31, ~~2022~~2023 and ~~2021:~~2022:


		Quarters Ended March 31,				Quarters Ended March 31,
(amounts in thousands)	(amounts in thousands)	2022		2021			(amounts in thousands)	2023		2022
Revenues:	Revenues:						Revenues:
Rental income	Rental income	$	281,104	$	244,729		Rental income	$	292,579	$	281,104
Annual membership subscriptions	Annual membership subscriptions	15,157		13,654			Annual membership subscriptions	15,970		15,157
Membership upgrade sales current period, gross	Membership upgrade sales current period, gross	7,151		10,014			Membership upgrade sales current period, gross	7,975		7,151
Membership upgrade sales upfront payments, deferred, net	Membership upgrade sales upfront payments, deferred, net	(4,084)		(7,427)			Membership upgrade sales upfront payments, deferred, net	(4,470)		(4,084)
Other income	Other income	13,542		10,521			Other income	17,714		13,542
Gross revenues from ancillary services	Gross revenues from ancillary services	12,556		9,507			Gross revenues from ancillary services	11,969		12,556
Total property operations revenues	Total property operations revenues	325,426		280,998			Total property operations revenues	341,737		325,426
Expenses:	Expenses:						Expenses:
Property operating and maintenance	Property operating and maintenance	102,590		87,630			Property operating and maintenance	111,524		102,590
Real estate taxes	Real estate taxes	19,457		17,850			Real estate taxes	18,316		19,457
Sales and marketing, gross	Sales and marketing, gross	4,914		6,176			Sales and marketing, gross	5,517		4,914
Membership sales commissions, deferred, net	Membership sales commissions, deferred, net	(583)		(1,499)			Membership sales commissions, deferred, net	(679)		(583)
Cost of ancillary services	Cost of ancillary services	5,721		3,808			Cost of ancillary services	5,297		5,721
Ancillary operating expenses	Ancillary operating expenses	5,018		3,635			Ancillary operating expenses	5,584		5,018
Property management	Property management	17,871		15,380			Property management	19,464		17,871
Total property operations expenses	Total property operations expenses	154,988		132,980			Total property operations expenses	165,023		154,988
Income from property operations segment	Income from property operations segment	$	170,438	$	148,018		Income from property operations segment	$	176,714	$	170,438

The following table summarizes our financial information for the Home Sales and Rentals Operations segment for the quarters ended March 31, ~~2022~~2023 and ~~2021:~~2022:


		Quarters Ended March 31,				Quarters Ended March 31,
(amounts in thousands)	(amounts in thousands)	2022		2021			(amounts in thousands)	2023		2022
Revenues:	Revenues:						Revenues:
Rental income (a)	Rental income (a)	$	3,961	$	4,293		Rental income (a)	$	3,872	$	3,961
Gross revenue from home sales and brokered resales	Gross revenue from home sales and brokered resales	27,139		15,653			Gross revenue from home sales and brokered resales	20,164		27,139

Total revenues	Total revenues	31,100		19,946			Total revenues	24,036		31,100
Expenses:	Expenses:						Expenses:
Rental home operating and maintenance	Rental home operating and maintenance	1,402		1,243			Rental home operating and maintenance	959		1,402
Cost of home sales and brokered resales	Cost of home sales and brokered resales	24,963		15,028			Cost of home sales and brokered resales	17,844		24,963
Home selling expenses	Home selling expenses	1,463		1,306			Home selling expenses	1,340		1,463
Total expenses	Total expenses	27,828		17,577			Total expenses	20,143		27,828
Income from home sales and rentals operations segment	Income from home sales and rentals operations segment	$	3,272	$	2,369		Income from home sales and rentals operations segment	$	3,893	$	3,272

______________________

(a)Rental income within Home Sales and Rentals Operations does not include base rent related to the rental home Sites. Base rent is included within property operations.

~~Note 13 – Subsequent Events~~

On April 18, 2022, we closed on a secured refinancing transaction generating gross proceeds of $200.0 million. The loan is secured by 1 MH community, has a fixed interest rate of 3.36% per annum and has a maturity date of May 1, 2034. The net proceeds from the transaction were used to repay all debt scheduled to mature in 2022 and to repay amounts outstanding on the LOC.

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 accompanying notes thereto included in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 (“~~2021~~2022 Form 10-K”), as well as information in Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our ~~2021~~2022 Form 10-K.

Overview and Outlook

We are a self-administered and self-managed real estate investment trust (“REIT”) with headquarters in Chicago, Illinois. We are a fully integrated owner of lifestyle-oriented properties (“Properties”) consisting of property operations and home sales and rental operations primarily within manufactured home (“MH”) and recreational vehicle (“RV”) communities and marinas. As of March 31, ~~2022,~~2023, we owned or had an ownership interest in a portfolio of ~~446~~450 Properties located throughout the United States and Canada containing ~~169,984~~171,477 individual developed areas (“Sites”). These Properties are located in 35 states and British Columbia, with more than 110 Properties with lake, river or ocean frontage and more than 120 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 delivering an exceptional experience to our residents and guests that results in delivery of value to stockholders. Our business model is intended to provide an opportunity for increased cash flows and appreciation in value. We seek growth in earnings, Funds from Operations (“FFO”), Normalized Funds from Operations (“Normalized FFO”) and cash flows by enhancing the profitability and operation of our Properties and investments. We accomplish this by attracting and retaining high quality customers to our Properties, who take pride in our Properties and in their homes, and efficiently managing our Properties by increasing occupancy, maintaining competitive market rents and controlling expenses. We also actively pursue opportunities that fit our acquisition criteria and are currently engaged in various stages of negotiations relating to the possible acquisition of additional properties.

We believe the demand from baby boomers for MH and RV communities will continue to be strong over the long term. It is estimated that approximately 10,000 baby boomers are turning 65 daily through 2030. In addition, the population age 55 and older is expected to grow 17% within the next 15 years. These individuals, seeking an active lifestyle, will continue to drive the market for second-home sales as vacation properties, investment opportunities or retirement retreats. We expect it is likely that over the next decade, we will continue to see high levels of second-home sales and that manufactured homes and cottages in our Properties will continue to provide a viable second-home alternative to site-built homes. We also believe the Millennial and Generation Z demographic will contribute to our future long-term customer pipeline. After conducting a comprehensive study of RV ownership, according to the Recreational Vehicle Industry Association (“RVIA”), data suggested that RV sales are expected to benefit from an increase in demand from those born in the United States from 1980 to 2003, or Millennials and Generation Z, over the coming years. We believe the demand from baby boomers and these younger generations will continue to outpace supply for MH and RV communities. The entitlement process to develop new MH and RV communities is extremely restrictive. As a result, there have been limited new communities developed in our target geographic markets.

We generate the majority of our revenues from customers renting our Sites or entering into right-to-use contracts, also known as membership subscriptions, which provide them access to specific Properties for limited stays. MH Sites are generally leased on an annual basis to residents who own or lease factory-built homes, including manufactured homes. Annual RV and marina Sites are leased on an annual basis to customers who generally have an RV, factory-built cottage, boat or other unit placed on the site, including those Northern properties that are open for the summer season. Seasonal RV and marina Sites are leased to customers generally for one to six months. Transient RV and marina 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. We also generate revenue from customers renting our marina dry storage. Additionally, we have interests in joint venture Properties for which revenue is classified as Equity in income from unconsolidated joint ventures on the Consolidated Statements of Income and Comprehensive Income.

Management's Discussion and Analysis (continued)

The following table shows the breakdown of our Sites by type (amounts are approximate):


						Total Sites as of March 31, ~~2022~~2023
MH Sites						~~73,400~~72,700
RV Sites:
Annual						~~34,000~~34,900
Seasonal						~~12,700~~12,500
Transient						~~14,700~~15,000
Marina Slips						6,900
Membership (1)						~~25,500~~25,800
Joint Ventures (2)						~~2,800~~3,600
Total						~~170,000~~171,400

_________________________

(1)Primarily utilized to service ~~the~~ approximately ~~128,100~~127,700 members. Includes approximately ~~6,200~~6,300 Sites rented on an annual basis.

(2)Includes approximately ~~1,800~~2,000 annual Sites and ~~1,000~~1,600 transient Sites.

In our Home Sales and Rentals Operations business, our revenue streams include home sales, home rentals and brokerage services and ancillary activities. We generate revenue through home sales and rental operations by selling or leasing manufactured homes and cottages that are located in Properties owned and managed by us. We believe renting our vacant homes represents an attractive source of occupancy and an opportunity to convert the renter to a homebuyer in the future. ~~We also sell and rent homes through our joint venture, ECHO Financing, LLC (the “ECHO JV”).~~ Additionally, home sale brokerage services are offered to our residents who may choose to sell their homes rather than relocate them when moving from a Property. At certain Properties, we operate ancillary facilities, such as golf courses, pro shops, stores and restaurants.

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

In addition to net income computed in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), we assess and measure our overall financial and operating performance using certain Non-GAAP supplemental measures, which include: (i) FFO, (ii) 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.

~~COVID-19 Pandemic Update~~

Since the COVID-19 pandemic began, we have taken actions to prioritize the safety and security of our employees, residents and customers, while maintaining our high-quality standards in service to our residents and customers. We have implemented and may continue to implement Centers for Disease Control and Prevention (“CDC”) and local public health department guidelines and protocols for social distancing and enhanced community and office cleaning procedures. Our Properties continue to be open subject to seasons of operations and state and local guidelines. Our property offices are open to residents and customers and we are complying with CDC recommended protocols.

We attribute the solid performance of our business to the fundamentals of our business model. The property locations and the lifestyle we offer have broad appeal to customers interested in enjoying an outdoor experience. We believe this is particularly relevant in a COVID-19 impacted environment. We intend to continue to monitor the evolving situation and we may take further actions that alter our business operations as may be required and that are in the best interests of our employees, residents, customers and shareholders. The extent of the impact that COVID-19 will have on our business going forward, including our financial condition, results of operations and cash flows, is dependent on multiple factors, many of which are unknown.

~~Management's Discussion and Analysis (continued)~~

Results Overview

For the quarter ended March 31, ~~2022,~~2023, net income available for Common Stockholders ~~increased $17.7~~decreased $0.5 million to $82.4 million, or ~~$0.09~~$0.44 per fully diluted Common Share, compared to $82.9 million, or $0.45 per fully diluted Common Share, ~~compared to $65.2 million, or $0.36 per fully diluted Common Share,~~ for the same period in ~~2021.~~2022. Net income available for Common Stockholders for the quarter ended March 31, 2023 includes an impairment charge of approximately $2.6 million related to flooding events at certain Properties in California.

For the quarter ended March 31, ~~2022,~~2023, FFO available for Common Stock and Operating Partnership unit (“OP Unit”) holders increased ~~$20.3~~$3.2 million, or ~~$0.09~~$0.02 per fully diluted Common Share, to $144.1 million, or $0.74 per fully diluted Common Share, compared to $140.9 million, or $0.72 per fully diluted Common Share, ~~compared to $120.6 million, or $0.63 per fully diluted Common Share,~~ for the same period in ~~2021.~~2022.

For the quarter ended March 31, ~~2022,~~2023, Normalized FFO available for Common Stock and OP Unit holders increased ~~$18.8~~$2.9 million, or ~~$0.08~~$0.02 per fully diluted Common Share, to $144.3 million, or $0.74 per fully diluted Common Share, compared to $141.4 million, or $0.72 per fully diluted Common Share, ~~compared to $122.6 million, or $0.64 per fully diluted Common Share,~~ for the same period in ~~2021.~~2022.

For the quarter ended March 31, ~~2022,~~2023, our Core Portfolio property operating revenues, excluding deferrals, increased ~~9.5%~~6.4% and property operating expenses, excluding deferrals and property management, increased ~~10.3%~~7.4%, from the same period in ~~2021,~~2022, resulting in an increase in income from property operations, excluding deferrals and property management, of ~~9.0%~~5.7%, compared to the same period in ~~2021.~~2022.

Management's Discussion and Analysis (continued)

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 includes both homeowners and renters in our MH communities and was 94.9%, 95.1% and 95.0% for ~~each of~~ the quarters ended March 31, 2023, December 31, 2022 and ~~December 31, 2021. Our Core Portfolio average occupancy was 95.2% for the quarter ended~~ March 31, ~~2021. The decrease in average occupancy from the prior year was due to expansion sites completed and added to our Core Portfolio during the quarter but not yet occupied as of March 31, 2022.~~2022, respectively. For the quarter ended March 31, ~~2022,~~2023, our Core Portfolio occupancy ~~increased~~decreased by 3879 sites, ~~with~~which included an increase in homeowner occupancy of ~~191~~30 sites ~~compared to occupancy as of December 31, 2021. By comparison, for the quarter ended March 31, 2021, our Core Portfolio occupancy increased 92 sites with an increase~~and a decrease in ~~homeowner~~rental occupancy of 109 ~~sites.~~compared to December 31, 2022. While we continue to focus on increasing the number of manufactured homeowners in our Core Portfolio, we also believe renting our vacant homes represents an attractive source of occupancy and an opportunity to potentially convert the renter to a new homebuyer in the future. We continue to expect there to be fluctuations in the sources of occupancy ~~gains~~ depending on local market conditions, availability of vacant sites and success with converting renters to homeowners. As of March 31, ~~2022,~~2023, we had ~~3,310~~2,702 occupied rental homes in our Core MH ~~communities, including 210 homes rented through our ECHO JV.~~communities.

RV and marina base rental income in our Core Portfolio increased 5.5% for the quarter ended March 31, ~~2022 was 21.4% higher than~~2023, compared to the same period in ~~2021~~2022 driven by ~~the rebound~~annual and seasonal rental income. Core RV and marina base rental income from annuals represents more than 60% of ~~seasonal demand in the South~~total Core RV and ~~West as we welcomed back our Canadian guests~~marina base rental income and ~~our domestic customers were able to travel without restrictions. Annual, seasonal and transient rental income~~increased 8.4% for the quarter ended March 31, 2023, compared to the same period in 2022 due to an 8.0% increase in rate and 0.4% increase in occupancy. Core seasonal RV and marina base rental income increased ~~8.6%, 64.8%~~11.9% for the quarter ended March 31, 2023, compared to the same period in 2022. Core transient RV and ~~21.2%, respectively.~~

~~Annual membership subscription revenue in our Core Portfolio increased $1.5~~marina base rental income decreased by $2.4 million, or ~~11%, from 2021, reflecting a 5.3% increase in~~14.9% for the ~~number of Thousand Trails Camping members and a rate increase of 5.7%. The increase in annual membership subscription revenue~~quarter ended March 31, 2023, compared to ~~2021 was offset by a Membership upgrade sales current~~the same period ~~gross decrease of $2.9 million, or 28.9%, from 2021,~~in 2022. Across the portfolio we have fewer sites available for transient stays and we experienced operating disruptions in California as a result of ~~the decrease in the number of upgrades sold primarily due to the introduction of the Adventure product~~flooding events during the ~~first~~ quarter ~~of 2021.~~ended March 31, 2023.

Demand for our homes and communities remains strong as evidenced by factors including our high occupancy levels. We closed 176 new home sales during the quarter ended March 31, 2023, compared to 261 new home sales during the quarter ended March 31, 2022, ~~compared to 192~~a decrease of 32.6%. The new home sales during the quarter ended March 31, ~~2021, an increase of 35.9%. The increase in new home sales was~~2023 were primarily ~~due to favorable housing trends~~ in the ~~broader real estate~~Florida market.

Our gross investment in real estate increased ~~$82.8~~$84.7 million to ~~$7,071.9~~$7,454.3 million as of March 31, ~~2022~~2023 from ~~$6,989.1~~$7,369.6 million as of December 31, ~~2021,~~2022, primarily due to ~~acquisitions~~capital improvements and ~~capital improvements~~an acquisition during the quarter ended March 31, ~~2022.~~

~~Management's Discussion and Analysis (continued)~~

2023.

The following chart lists the Properties acquired or sold from January 1, ~~2021~~2022 through March 31, ~~2022~~2023 and Sites added through expansion opportunities at our existing Properties:

Location

Type of Property

Transaction Date

Sites

Total Sites as of January 1, ~~2021~~2022 (1)

~~160,500~~169,300

Acquisition Properties:

~~Okeechobee KOA Resort~~

~~Okeechobee, Florida~~

~~January 21, 2021~~

~~740~~

~~Cortez Village Marina~~

~~Cortez, Florida~~

~~Marina~~

~~February 5, 2021~~

~~353~~

~~Fish Tale Marina~~

~~Fort Myers Beach, Florida~~

~~Marina~~

~~February 5, 2021~~

~~296~~

~~Hi-Lift Marina~~

~~Adventure, Florida~~

~~Marina~~

~~February 5, 2021~~

~~211~~

~~Hidden Harbour Marina~~

~~Pompano Beach, Florida~~

~~Marina~~

~~February 5, 2021~~

~~357~~

~~Inlet Harbor Marina~~

~~Ponce Inlet, Florida~~

~~Marina~~

~~February 5, 2021~~

~~295~~

~~Palm Harbour Marina~~

~~Cape Haze, Florida~~

~~Marina~~

~~February 5, 2021~~

~~260~~

~~Riverwatch Marina~~

~~Stuart, Florida~~

~~Marina~~

~~February 5, 2021~~

~~306~~

~~Boathouse Marina~~

~~Beaufort, North Carolina~~

~~Marina~~

~~February 5, 2021~~

~~547~~

~~Dale Hollow State Park Marina~~

~~Burkesville, Kentucky~~

~~Marina~~

~~February 5, 2021~~

~~198~~

~~Bay Point Marina~~

~~Marblehead, Ohio~~

~~Marina~~

~~February 5, 2021~~

~~841~~

~~Rivers Edge Marina~~

~~North Charleston, South Carolina~~

~~Marina~~

~~February 5, 2021~~

~~503~~

~~Pine Haven~~

~~Cape May, New Jersey~~

~~June 3, 2021~~

~~629~~

~~Myrtle Beach Property~~ ~~(2)~~

~~Myrtle Beach, South Carolina~~

~~August 26, 2021~~

~~813~~

~~Voyager RV Resort~~ ~~(3)~~

~~Tucson, Arizona~~

~~October 14, 2021~~

—

~~RVC Portfolio~~

~~Multiple~~

~~November 1, 2021~~

~~988~~

~~Hope Valley~~

~~Turner, Oregon~~

~~November 18, 2021~~

~~164~~

~~Lake Conroe~~

~~Montgomery, Texas~~

~~December 15, 2021~~

~~261~~

Blue Mesa Recreational Ranch

Gunnison, Colorado

Membership

February 18, 2022

385

Pilot Knob RV Resort

Winterhaven, California

February 18, 2022

247

Holiday Trav-L-Park Resort

Emerald Isle, North Carolina

June 15, 2022

299

Oceanside RV Resort

Oceanside, California

June 16, 2022

139

Hiawasee KOA JV

Hiawassee, Georgia

Unconsolidated JV

November 10, 2022

283

Whippoorwill Campground

Marmora, New Jersey

December 20, 2022

288

Red Oak Shores Campground

Ocean View, New Jersey

March 28, 2023

223

Expansion Site Development:

Sites added (reconfigured) in ~~2021~~

~~1,037~~

~~Sites added (reconfigured) in~~ 2022

561,034

Sites added (reconfigured) in 2023

Ground Lease Termination:

Westwinds

San Jose, California

August 31, 2022

(723)

Total Sites as of March 31, ~~2022~~2023 (1)

~~170,000~~171,400

______________________

(1) Sites are approximate. ~~Total does not foot due to rounding.~~

~~(2)~~ ~~RV community operated by a tenant pursuant to an existing ground lease.~~

~~(3)~~ On October 14, 2021, we completed the acquisition of the remaining interest in the Voyager RV Resort joint venture. The Voyager RV Resort joint venture sites are included in the Total Sites as of January 1, 2021.

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 investors the ability to understand key operating details of our business both with and without regard to certain accounting conventions or items that may not always be indicative of recurring annual cash flows of the portfolio. These Non-GAAP financial measures as determined and

Management's Discussion and Analysis (continued)

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 operations, 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, 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 Properties. Income from property operations represents rental income, membership subscriptions and upgrade sales, utility and other income less property and rental home operating and maintenance expenses, real estate taxes, sales and marketing expenses and property management expenses. Income from property operations,

~~Management's Discussion and Analysis (continued)~~

excluding deferrals and property management, represents income from property operations excluding property management expenses and the impact of the GAAP deferrals of membership upgrade sales upfront payments and membership sales commissions, net. WeFor comparative purposes, we present bad debt expense within Property operating ~~maintenance~~ and ~~real estate taxes~~maintenance in the current and prior periods.

Our Core Portfolio consists of our Properties owned and operated during all of ~~2021~~2022 and ~~2022.~~2023. 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 includes all Properties that were not owned and operated during all of ~~2021~~2022 and ~~2022.~~2023. This includes, but is not limited to, ~~six~~four RV communities and ~~eleven marinas acquired during 2021,~~ one membership RV community acquired during 2022 and one RV community acquired during ~~2022~~2023. The Non-Core Properties also include Fish Tale Marina, Fort Myers Beach, Gulf Air, Palm Harbour Marina, Pine Island and ~~our Westwinds MH community and Nicholson Plaza.~~Ramblers Rest.

~~Funds from Operations (~~“~~FFO”)~~FFO and Normalized ~~Funds from Operations (~~“~~Normalized FFO”)~~FFO

We define FFO as net income, computed in accordance with GAAP, excluding gains or losses from sales of properties, depreciation and amortization related to real estate, impairment charges and adjustments to reflect our share of FFO of unconsolidated joint ventures. Adjustments for unconsolidated 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 non-refundable upfront payments from membership upgrade contracts. In accordance with GAAP, the non-refundable upfront payments and related commissions are deferred and amortized over the estimated membership upgrade contract term. Although the NAREIT definition of FFO does not address the treatment of non-refundable upfront payments, we believe that it is appropriate to adjust for the impact of the deferral activity in our calculation of FFO.

We define Normalized FFO as FFO excluding non-operating income and expense items, such as gains and losses from early debt extinguishment, including prepayment penalties, defeasance costs and ~~defeasance~~transaction/pursuit costs, and other miscellaneous non-comparable items. Normalized FFO presented herein is not necessarily comparable to Normalized FFO presented by other real estate companies due to the fact that not all real estate companies use the same methodology for computing this amount.

We believe that FFO and Normalized FFO are helpful to investors as supplemental measures of the performance of an equity REIT. We believe that by excluding the effect of gains or losses from sales of properties, depreciation and amortization related to real estate and impairment charges, 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 normal operations. For example, we believe that excluding the early extinguishment of debt and other miscellaneous non-comparable items from FFO allows investors, analysts and our management to assess the sustainability of operating performance in future periods because these costs do not affect the future operations of the properties. In some cases, we provide information about identified non-cash components of FFO and Normalized FFO because it allows investors, analysts and our management to assess the impact of those items.

Management's Discussion and Analysis (continued)

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 expense on rental homes. We believe this measure is meaningful for investors as it provides a complete picture of the home rental program operating results including the impact of depreciation which affects our home rental program investment decisions.

Our definitions and calculations of these Non-GAAP financial and operating measures and other terms may differ from the definitions and methodologies used by other REITs and, accordingly, may not be comparable. These Non-GAAP financial and operating measures do not represent cash generated from operating activities in accordance with GAAP, nor do they represent cash available to pay distributions and should not be considered as an alternative to net income, determined in accordance with GAAP, as an indication of our financial performance, or to cash flows 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 and Analysis (continued)~~

The following table reconciles net income available for Common Stockholders to income from property operations for the quarters ended March 31, ~~2022~~2023 and ~~2021:~~2022:


		Quarters Ended March 31,				Quarters Ended March 31,
(amounts in thousands)	(amounts in thousands)	2022		2021			(amounts in thousands)	2023		2022
Computation of Income from Property Operations:	Computation of Income from Property Operations:						Computation of Income from Property Operations:
Net income available for Common Stockholders	Net income available for Common Stockholders	$	82,906	$	65,240		Net income available for Common Stockholders	$	82,371	$	82,906

Income allocated to non-controlling interests – Common OP Units	Income allocated to non-controlling interests – Common OP Units	4,144		3,747			Income allocated to non-controlling interests – Common OP Units	4,088		4,144
Equity in income of unconsolidated joint ventures	Equity in income of unconsolidated joint ventures	(171)		(868)			Equity in income of unconsolidated joint ventures	(524)		(171)
Income before equity in income of unconsolidated joint ventures	Income before equity in income of unconsolidated joint ventures	86,879		68,119			Income before equity in income of unconsolidated joint ventures	85,935		86,879
Loss on sale of real estate, net		—		59
Loss on sale of real estate and impairment, net(1)							Loss on sale of real estate and impairment, net(1)	2,632		—
Total other expenses, net	Total other expenses, net	86,831		82,209			Total other expenses, net	92,040		86,831
Gain from home sales operations and other	Gain from home sales operations and other	(2,530)		(1,383)			Gain from home sales operations and other	(2,068)		(2,530)
Income from property operations	Income from property operations	$	171,180	$	149,004		Income from property operations	$	178,539	$	171,180

_____________________

(1)During the quarter ended March 31, 2023, we recorded an impairment charge of approximately $2.6 million related to flooding events at certain Properties in California.

Management's Discussion and Analysis (continued)

The following table presents a calculation of FFO available for Common Stock and OP Unitholders and Normalized FFO available for Common Stock and OP Unitholders for the quarters ended March 31, ~~2022~~2023 and ~~2021:~~2022:


		Quarters Ended March 31,				Quarters Ended March 31,
(amounts in thousands)	(amounts in thousands)	2022		2021			(amounts in thousands)	2023		2022
Computation of FFO and Normalized FFO:	Computation of FFO and Normalized FFO:						Computation of FFO and Normalized FFO:
Net income available for Common Stockholders	Net income available for Common Stockholders	$	82,906	$	65,240		Net income available for Common Stockholders	$	82,371	$	82,906
Income allocated to non-controlling interests – Common OP Units	Income allocated to non-controlling interests – Common OP Units	4,144		3,747			Income allocated to non-controlling interests – Common OP Units	4,088		4,144
Membership upgrade sales upfront payments, deferred, net	Membership upgrade sales upfront payments, deferred, net	4,084		7,427			Membership upgrade sales upfront payments, deferred, net	4,470		4,084
Membership sales commissions, deferred, net	Membership sales commissions, deferred, net	(583)		(1,499)			Membership sales commissions, deferred, net	(679)		(583)
Depreciation and amortization	Depreciation and amortization	49,394		45,398			Depreciation and amortization	50,502		49,394
Depreciation on unconsolidated joint ventures	Depreciation on unconsolidated joint ventures	941		183			Depreciation on unconsolidated joint ventures	1,135		941
Loss on sale of real estate, net		—		59
Gain on unconsolidated joint ventures							Gain on unconsolidated joint ventures	(416)		—
Loss on sale of real estate and impairment, net							Loss on sale of real estate and impairment, net	2,632		—
FFO available for Common Stock and OP Unit holders	FFO available for Common Stock and OP Unit holders	140,886		120,555			FFO available for Common Stock and OP Unit holders	144,103		140,886
Early debt retirement	Early debt retirement	516		2,029			Early debt retirement	—		516

Transaction/pursuit costs (1)							Transaction/pursuit costs (1)	116		—
Lease termination expenses (2)							Lease termination expenses (2)	90		—
Normalized FFO available for Common Stock and OP Unit holders	Normalized FFO available for Common Stock and OP Unit holders	$	141,402	$	122,584		Normalized FFO available for Common Stock and OP Unit holders	$	144,309	$	141,402
Weighted average Common Shares outstanding – Fully Diluted	Weighted average Common Shares outstanding – Fully Diluted	195,246		192,685			Weighted average Common Shares outstanding – Fully Diluted	195,369		195,246

_____________________

(1)Represents transaction/pursuit costs related to unconsummated acquisitions included in Other expenses in the Consolidated Statements of Income.

(2) Represents non-operating expenses associated with the Westwinds ground leases that terminated on August 31, 2022 and is included in General and

Administrative expenses in the Consolidated Statement of Income.

Management's Discussion and Analysis (continued)

Results of Operations

This section discusses the comparison of our results of operations for the quarters ended March 31, 2023 and March 31, 2022 and our operating activities, investing activities and financing activities for the quarters ended March 31, 2023 and March 31, 2022. For the comparison of our results of operations for the quarters ended March 31, 2022 and March 31, 2021 and discussion of our operating activities, investing activities and financing activities for the quarters ended March 31, 2022 and March 31, ~~2021. For the comparison of our results of operations for the quarters ended March 31,~~ 2021, ~~and March 31, 2020 and discussion of our operating activities, investing activities and financing activities for the quarters ended March 31, 2021 and March 31, 2020,~~ refer to Part I,I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, ~~2021,~~2022, filed with the SEC on April 27, ~~2021.~~2022.

Comparison of the quarter ended March 31, ~~2022~~2023 to the quarter ended March 31, ~~2021~~2022

Income from Property Operations

The following table summarizes certain financial and statistical data for our Core Portfolio and total portfolio for the quarters ended March 31, ~~2022~~2023 and March 31, ~~2021:~~2022:


		Core Portfolio								Total Portfolio									Core Portfolio								Total Portfolio
		Quarters Ended March 31,								Quarters Ended March 31,									Quarters Ended March 31,								Quarters Ended March 31,
(amounts in thousands)	(amounts in thousands)	2022		2021		Variance		% Change		2022		2021		Variance		% Change		(amounts in thousands)	2023		2022		Variance		% Change		2023		2022		Variance		% Change
MH base rental income (1)	MH base rental income (1)	$	154,436	$	146,206	$	8,230	5.6	%	$	157,336	$	148,974	$	8,362	5.6	%	MH base rental income (1)	$	164,404	$	154,436	$	9,968	6.5	%	$	164,553	$	157,336	$	7,217	4.6	%
Rental home income (1)	Rental home income (1)	3,954		4,288		(334)		(7.8)	%	3,961		4,293		(332)		(7.7)	%	Rental home income (1)	3,861		3,954		(93)		(2.4)	%	3,872		3,961		(89)		(2.2)	%
RV and marina base rental income (1)	RV and marina base rental income (1)	96,402		79,405		16,997		21.4	%	108,764		83,588		25,176		30.1	%	RV and marina base rental income (1)	108,403		102,737		5,666		5.5	%	111,592		108,764		2,828		2.6	%
Annual membership subscriptions	Annual membership subscriptions	15,103		13,651		1,452		10.6	%	15,157		13,654		1,503		11.0	%	Annual membership subscriptions	15,780		15,075		705		4.7	%	15,970		15,157		813		5.4	%
Membership upgrades sales current period, gross	Membership upgrades sales current period, gross	7,115		10,014		(2,899)		(28.9)	%	7,151		10,014		(2,863)		(28.6)	%	Membership upgrades sales current period, gross	7,982		7,019		963		13.7	%	7,975		7,151		824		11.5	%
Utility and other income (1)	Utility and other income (1)	26,315		23,458		2,857		12.2	%	30,044		24,718		5,326		21.5	%	Utility and other income (1)	29,483		26,957		2,526		9.4	%	35,331		30,044		5,287		17.6	%
Property operating revenues, excluding deferrals	Property operating revenues, excluding deferrals	303,325		277,022		26,303		9.5	%	322,413		285,241		37,172		13.0	%	Property operating revenues, excluding deferrals	329,913		310,178		19,735		6.4	%	339,293		322,413		16,880		5.2	%

Property operating and maintenance (1)(2)	Property operating and maintenance (1)(2)	97,736		86,298		11,438		13.3	%	104,088		89,660		14,428		16.1	%	Property operating and maintenance (1)(2)	110,015		100,686		9,329		9.3	%	112,707		104,088		8,619		8.3	%
Real estate taxes	Real estate taxes	17,214		16,233		981		6.0	%	19,457		17,850		1,607		9.0	%	Real estate taxes	17,659		17,975		(316)		(1.8)	%	18,316		19,457		(1,141)		(5.9)	%
Rental home operating and maintenance	Rental home operating and maintenance	1,388		1,225		163		13.3	%	1,402		1,243		159		12.8	%	Rental home operating and maintenance	959		1,392		(433)		(31.1)	%	959		1,402		(443)		(31.6)	%
Sales and marketing, gross	Sales and marketing, gross	4,899		6,175		(1,276)		(20.7)	%	4,914		6,176		(1,262)		(20.4)	%	Sales and marketing, gross	5,521		4,872		649		13.3	%	5,517		4,914		603		12.3	%
Property operating expenses, excluding deferrals and property management	Property operating expenses, excluding deferrals and property management	121,237		109,931		11,306		10.3	%	129,861		114,929		14,932		13.0	%	Property operating expenses, excluding deferrals and property management	134,154		124,925		9,229		7.4	%	137,499		129,861		7,638		5.9	%
Income from property operations, excluding deferrals and property management (3)	Income from property operations, excluding deferrals and property management (3)	182,088		167,091		14,997		9.0	%	192,552		170,312		22,240		13.1	%	Income from property operations, excluding deferrals and property management (3)	195,759		185,253		10,506		5.7	%	201,794		192,552		9,242		4.8	%
Property management	Property management	17,871		15,380		2,491		16.2	%	17,871		15,380		2,491		16.2	%	Property management	19,464		17,871		1,593		8.9	%	19,464		17,871		1,593		8.9	%
Income from property operations, excluding deferrals (3)	Income from property operations, excluding deferrals (3)	164,217		151,711		12,506		8.2	%	174,681		154,932		19,749		12.7	%	Income from property operations, excluding deferrals (3)	176,295		167,382		8,913		5.3	%	182,330		174,681		7,649		4.4	%
Membership upgrade sales upfront payments and membership sales commission, deferred, net	Membership upgrade sales upfront payments and membership sales commission, deferred, net	3,501		5,928		(2,427)		(40.9)	%	3,501		5,928		(2,427)		(40.9)	%	Membership upgrade sales upfront payments and membership sales commission, deferred, net	3,791		3,501		290		8.3	%	3,791		3,501		290		8.3	%
Income from property operations (3)	Income from property operations (3)	$	160,716	$	145,783	$	14,933	10.2	%	$	171,180	$	149,004	$	22,176	14.9	%	Income from property operations (3)	$	172,504	$	163,881	$	8,623	5.3	%	$	178,539	$	171,180	$	7,359	4.3	%

_____________________

(1)Rental income consists of the following total portfolio income items in this table: 1) MH base rental income, 2) Rental home income, 3) RV and marina base rental income and 4) Utility income, which is calculated by subtracting Other income on the Consolidated Statements of Income and Comprehensive Income from Utility and other income in this table. The difference between the sum of the total portfolio income items and Rental income on the Consolidated Statements of Income and Comprehensive Income is bad debt expense, which is presented in Property operating and maintenance expense in this table.

(2)Includes bad debt expense for all periods presented.

(3)See Part I. Item 2. Management's Discussion and Analysis—Non-GAAP Financial Measures ~~section of the Management Discussion and Analysis~~ for definitions and reconciliations of these Non-GAAP measures to Net Income available for Common Shareholders.

Total portfolio income from property operations for the quarter ended March 31, ~~2022,~~2023, increased ~~$22.2~~$7.4 million, or ~~14.9%~~4.3%, from the quarter ended March 31, ~~2021,~~2022, driven by an increase of ~~$14.9~~$8.6 million, or ~~10.2%~~5.3%, from our Core Portfolio, ~~and an increase~~partially offset by a decrease of ~~$7.3~~$1.3 million from our Non-Core Portfolio. The increase in income from property operations from our Core Portfolio was primarily due to higher property operating revenues, excluding deferrals, primarily in ~~RV and marina~~MH base rental income and MHRV and marina base rental income, partially offset by an increase in property operating expenses, excluding deferrals and property management. The ~~increase~~decrease in income from property operations from our Non-Core Portfolio was primarily ~~attributed~~due to lower MH base rental income ~~from properties acquired in 2021~~ and RV and marina base rental income, partially offset by business interruption income related to Hurricane Ian of $3.6 million recognized during the ~~first~~ quarter ~~of 2022.~~

ended March 31, 2023.

Management's Discussion and Analysis (continued)

Property Operating Revenues

MH base rental income in our Core Portfolio for the quarter ended March 31, ~~2022~~2023 increased ~~$8.2~~$10.0 million, or ~~5.6%~~6.5%, from the quarter ended March 31, ~~2021,~~2022, which reflects ~~5.1%~~6.6% growth from rate increases and ~~0.5% growth from occupancy gains.~~a decline of 0.1% in occupancy. The average monthly base rental income per Site in our Core Portfolio increased to approximately $797 for the quarter ended March 31, 2023 from approximately $747 for the quarter ended March 31, ~~2022 from approximately $711 for the quarter ended March 31, 2021.~~2022. The average occupancy for our Core Portfolio was ~~95.1% and 95.2%~~94.9% for the ~~quarters~~quarter ended March 31, ~~2022~~2023 and 95.0% for the quarter ended March 31, ~~2021, respectively. The average occupancy rate decreased slightly due to the addition of expansion sites.~~2022.

RV and marina base rental income is comprised of the following:


		Core Portfolio								Total Portfolio									Core Portfolio								Total Portfolio
		Quarters Ended March 31,								Quarters Ended March 31,									Quarters Ended March 31,								Quarters Ended March 31,
(amounts in thousands)	(amounts in thousands)	2022		2021		Variance		% Change		2022		2021		Variance		% Change		(amounts in thousands)	2023		2022		Variance		% Change		2023		2022		Variance		% Change
Annual	Annual	$	55,408	$	51,022	$	4,386	8.6	%	$	64,333	$	54,519	$	9,814	18.0	%	Annual	$	67,058	$	61,848	$	5,210	8.4	%	$	69,401	$	64,333	$	5,068	7.9	%
Seasonal	Seasonal	24,928		15,125		9,803		64.8	%	26,625		15,362		11,263		73.3	%	Seasonal	27,400		24,496		2,904		11.9	%	27,960		26,625		1,335		5.0	%
Transient	Transient	16,066		13,258		2,808		21.2	%	17,806		13,707		4,099		29.9	%	Transient	13,945		16,393		(2,448)		(14.9)	%	14,231		17,806		(3,575)		(20.1)	%
RV and marina base rental income	RV and marina base rental income	$	96,402	$	79,405	$	16,997	21.4	%	$	108,764	$	83,588	$	25,176	30.1	%	RV and marina base rental income	$	108,403	$	102,737	$	5,666	5.5	%	$	111,592	$	108,764	$	2,828	2.6	%

RV and marina base rental income in our Core Portfolio for the quarter ended March 31, ~~2022~~2023 increased ~~$17.0~~$5.7 million, or ~~21.4%~~5.5%, from the quarter ended March 31, ~~2021,~~2022, driven by an increase in Annual and Seasonal RV and marina base rental income, partially offset by a decrease in Transient rental income. The increase in Annual RV and marina base rental ~~income.~~income of 8.4% was driven by an increase in rate. The increase in Seasonal RV and marina base rental income of ~~64.8%~~11.9% was driven by ~~increases in all regions, due to the rebound of seasonal demand~~an increase in the South and West ~~as we welcomed back our Canadian guests and our domestic customers were able to travel without restrictions.~~regions. The ~~increase~~decrease in ~~Annual~~Transient RV and marina base rental income of 14.9% was ~~8.6%, with 5.5% growth from rate increases and 3.1% from occupancy gains.~~

~~Annual membership subscription~~primarily due to a decrease in transient RV revenue ~~in our Core Portfolio for the quarter ended March 31, 2022 increased $1.5 million, or 11%, from the quarter ended March 31, 2021, reflecting~~as a ~~5.3% increase~~result of a reduction in the number of ~~Thousand Trails Camping members. The increase~~Transient sites available and flooding events at certain Properties in annual membership subscription revenue compared to 2021 was offset by a Membership upgrade sales current period, gross decrease of $2.9 million, or 28.9%, from 2021, as a result of the decrease in the number of upgrades sold primarily due to the introduction of the Adventure productCalifornia during the ~~first quarter of 2021.~~quarter.

Utility and other income in our Core Portfolio for the quarter ended March 31, ~~2022~~2023 increased ~~$2.9~~$2.5 million, or ~~12.2%~~9.4%, from the quarter ended March 31, ~~2021.~~2022. The increase was primarily due to ~~higher utility income of $2.0~~a $1.9 million ~~pass-through income of $0.5 million, and other property income of $0.4 million. The~~ increase in utility income, which was primarily due to an increase in electric income ~~across~~in all regions except the ~~West,~~Northeast, gas income in the South and ~~Northeast. The utility recovery rate (utility~~trash income ~~divided by utility expenses) for both~~in all regions and an increase of $0.4 million in other property income primarily due to business interruption income related to Hurricane Ian recognized during the ~~quarters~~quarter ended March 31, ~~2022 and 2021 was approximately 46%.~~2023.

Property Operating Expenses

Property operating expenses, excluding deferrals and property management, in our Core Portfolio for the quarter ended March 31, ~~2022~~2023 increased ~~$11.3~~$9.2 million, or ~~10.3%~~7.4%, from the quarter ended March 31, ~~2021,~~2022, driven by increases in property operating and maintenance expenses of ~~$11.4 million and real estate taxes of $1.0 million, partially offset by a decrease in gross sales and marketing expenses of $1.3~~$9.3 million. Core property operating and maintenance expenses were higher in ~~2022~~2023 primarily due to increases in utility expenses of ~~$4.6~~$4.1 million, repair and maintenance of ~~$2.9~~$2.5 million and property payroll of ~~$1.7 million and administrative expenses of $1.6~~$2.4 million.

Management's Discussion and Analysis (continued)

Home Sales and Rental Operations

Home Sales and Other

The following table summarizes certain financial and statistical data for our Home Sales and Other Operations:


		Quarters Ended March 31,									Quarters Ended March 31,
(amounts in thousands, except home sales volumes)	(amounts in thousands, except home sales volumes)	2022		2021		Variance		% Change		(amounts in thousands, except home sales volumes)	2023		2022		Variance		% Change
Gross revenues from new home sales ~~(1)~~	Gross revenues from new home sales ~~(1)~~	$	25,530	$	14,338	$	11,192	78.1	%	Gross revenues from new home sales ~~(1)~~	$	18,314	$	25,530	$	(7,216)	(28.3)	%
Cost of new home sales ~~(1)~~	Cost of new home sales ~~(1)~~	23,326		13,715		9,611		70.1	%	Cost of new home sales ~~(1)~~	16,662		23,326		(6,664)		(28.6)	%
Gross profit from new home sales	Gross profit from new home sales	2,204		623		1,581		253.8	%	Gross profit from new home sales	1,652		2,204		(552)		(25.0)	%

Gross revenues from used home sales	Gross revenues from used home sales	998		882		116		13.2	%	Gross revenues from used home sales	1,175		998		177		17.7	%
Cost of used home sales	Cost of used home sales	1,410		1,153		257		22.3	%	Cost of used home sales	945		1,410		(465)		(33.0)	%
Loss from used home sales		(412)		(271)		(141)		(52.0)	%
Gross profit/(loss) from used home sales										Gross profit/(loss) from used home sales	230		(412)		642		155.8	%

Gross revenue from brokered resales and ancillary services	Gross revenue from brokered resales and ancillary services	13,167		9,940		3,227		32.5	%	Gross revenue from brokered resales and ancillary services	12,644		13,167		(523)		(4.0)	%
Cost of brokered resales and ancillary services	Cost of brokered resales and ancillary services	5,948		3,968		1,980		49.9	%	Cost of brokered resales and ancillary services	5,534		5,948		(414)		(7.0)	%
Gross profit from brokered resales and ancillary services	Gross profit from brokered resales and ancillary services	7,219		5,972		1,247		20.9	%	Gross profit from brokered resales and ancillary services	7,110		7,219		(109)		(1.5)	%

Home selling and ancillary operating expenses	Home selling and ancillary operating expenses	6,481		4,941		1,540		31.2	%	Home selling and ancillary operating expenses	6,924		6,481		443		6.8	%

Income from home sales and other	Income from home sales and other	$	2,530	$	1,383	$	1,147	82.9	%	Income from home sales and other	$	2,068	$	2,530	$	(462)	(18.3)	%

Home sales volumes	Home sales volumes									Home sales volumes
Total new home sales ~~(2)~~(1)	Total new home sales ~~(2)~~(1)	261		192		69		35.9	%	Total new home sales ~~(2)~~(1)	176		261		(85)		(32.6)	%
New Home Sales Volume - ECHO JV		22		8		14		175.0	%
Used home sales	Used home sales	72		102		(30)		(29.4)	%	Used home sales	102		72		30		41.7	%
Brokered home resales	Brokered home resales	188		160		28		17.5	%	Brokered home resales	134		188		(54)		(28.7)	%

_________________________

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

~~(2)~~ Total new home sales volume for the quarter ended March 31, 2022 includes 22 home sales from our ECHO JV.

Income from home sales and other operations was $2.1 million for the quarter ended March 31, 2023, a decrease of $0.5 million, compared to $2.5 million for the ~~first~~ quarter ~~of 2022, an increase of $1.1 million, compared to $1.4 million in the first quarter of 2021.~~ended March 31, 2022. The ~~increase~~decrease in income from home sales and other operations was primarily due to ~~an increase~~a decrease in gross profit from new home sales ~~resulting from~~and higher home selling and ancillary operating expenses, partially offset by an increase ~~of 69 new~~in gross profit from used home sales during the ~~first~~ quarter ~~of 2022~~ended March 31, 2023 compared to the ~~first~~ quarter ~~of 2021, primarily driven by favorable housing trends in the broader real estate market.~~ended March 31, 2022.

Management's Discussion and Analysis (continued)

Rental Operations

The following table summarizes certain financial and statistical data for our MH Rental Operations:


		Quarters Ended March 31,									Quarters Ended March 31,
(amounts in thousands, except rental unit volumes)	(amounts in thousands, except rental unit volumes)	2022		2021		Variance		% Change		(amounts in thousands, except rental unit volumes)	2023		2022		Variance		% Change
Rental operations revenue (1)	Rental operations revenue (1)	$	11,343	$	12,389	$	(1,046)	(8.4)	%	Rental operations revenue (1)	$	10,258	$	11,347	$	(1,089)	(9.6)	%
Rental home operating and maintenance expenses	Rental home operating and maintenance expenses	1,388		1,225		163		13.3	%	Rental home operating and maintenance expenses	959		1,392		(433)		(31.1)	%
Income from rental operations	Income from rental operations	9,955		11,164		(1,209)		(10.8)	%	Income from rental operations	9,299		9,955		(656)		(6.6)	%
Depreciation on rental homes (2)	Depreciation on rental homes (2)	2,517		2,620		(103)		(3.9)	%	Depreciation on rental homes (2)	2,747		2,517		230		9.1	%
Income from rental operations, net of depreciation	Income from rental operations, net of depreciation	$	7,438	$	8,544	$	(1,106)	(12.9)	%	Income from rental operations, net of depreciation	$	6,552	$	7,438	$	(886)	(11.9)	%

Gross investment in new manufactured home rental units ~~(3)~~	Gross investment in new manufactured home rental units ~~(3)~~	$	228,755	$	237,635	$	(8,880)	(3.7)	%	Gross investment in new manufactured home rental units ~~(3)~~	$	252,204	$	226,890	$	25,314	11.2	%
Gross investment in used manufactured home rental units	Gross investment in used manufactured home rental units	$	15,009	$	15,264	$	(255)	(1.7)	%	Gross investment in used manufactured home rental units	$	14,056	$	15,004	$	(948)	(6.3)	%

Net investment in new manufactured home rental units	Net investment in new manufactured home rental units	$	185,896	$	203,244	$	(17,348)	(8.5)	%	Net investment in new manufactured home rental units	$	209,697	$	192,819	$	16,878	8.8	%
Net investment in used manufactured home rental units	Net investment in used manufactured home rental units	$	7,873	$	9,001	$	(1,128)	(12.5)	%	Net investment in used manufactured home rental units	$	8,071	$	9,776	$	(1,705)	(17.4)	%

Number of occupied rentals – new, end of period ~~(4)~~	Number of occupied rentals – new, end of period ~~(4)~~	2,908		3,383		(475)		(14.0)	%	Number of occupied rentals – new, end of period ~~(4)~~	2,389		2,908		(519)		(17.8)	%
Number of occupied rentals – used, end of period	Number of occupied rentals – used, end of period	402		524		(122)		(23.3)	%	Number of occupied rentals – used, end of period	313		402		(89)		(22.1)	%

______________________

(1)Consists of Site rental income and home rental income. Approximately ~~$7.4~~$6.4 million and ~~$8.1~~$7.4 million for the quarters ended March 31, ~~2022~~2023 and March 31, ~~2021,~~2022, respectively, of Site rental income is included in MH base rental income in the Core Portfolio Income from Property Operations table. The remainder of home rental income is included in rental home income in our Core Portfolio Income from Property Operations table.

(2)Presented in Depreciation and amortization 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 $18.3 million and $17.5 million as of March 31, 2022 and March 31, 2021, respectively.~~

~~(4)Includes 210 and 295 homes rented through our ECHO JV as of March 31, 2022 and 2021, respectively.~~

Income from rental operations, net of depreciation, decreased ~~$1.1~~$0.9 million during the ~~first~~ quarter ~~of 2022,~~ended March 31, 2023, compared to the ~~first~~ quarter ~~of 2021~~ended March 31, 2022, primarily due to ~~a decrease in rental operations revenues as a result of~~ a decrease in the number of new occupied rentals.

Other Income and Expenses

The following table summarizes other income and expenses, net:


		Quarters Ended March 31,									Quarters Ended March 31,
(amounts in thousands, expenses shown as negative)	(amounts in thousands, expenses shown as negative)	2022		2021		Variance		% Change		(amounts in thousands, expenses shown as negative)	2023		2022		Variance		% Change
Depreciation and amortization	Depreciation and amortization	$	(49,394)	$	(45,398)	$	(3,996)	(8.8)	%	Depreciation and amortization	$	(50,502)	$	(49,394)	$	(1,108)	(2.2)	%
Interest income	Interest income	1,759		1,767		(8)		(0.5)	%	Interest income	2,088		1,759		329		18.7	%
Income from other investments, net	Income from other investments, net	1,904		936		968		103.4	%	Income from other investments, net	2,091		1,904		187		9.8	%
General and administrative	General and administrative	(12,297)		(10,512)		(1,785)		(17.0)	%	General and administrative	(11,661)		(12,072)		411		3.4	%
Other expenses	Other expenses	(823)		(698)		(125)		(17.9)	%	Other expenses	(1,468)		(1,048)		(420)		(40.1)	%
Early debt retirement	Early debt retirement	(516)		(2,029)		1,513		74.6	%	Early debt retirement	—		(516)		516		100.0	%
Interest and related amortization	Interest and related amortization	(27,464)		(26,275)		(1,189)		(4.5)	%	Interest and related amortization	(32,588)		(27,464)		(5,124)		(18.7)	%
Total other income and expenses, net	Total other income and expenses, net	$	(86,831)	$	(82,209)	$	(4,622)	(5.6)	%	Total other income and expenses, net	$	(92,040)	$	(86,831)	$	(5,209)	(6.0)	%

Total other income and expenses, net increased ~~$4.6~~$5.2 million for the quarter ended March 31, ~~2022~~2023 compared to the quarter ended March 31, ~~2021,~~2022, primarily due to higher interest and related amortization expense as a result of an increase in interest rates and depreciation and amortization and an increase in general and administrative costs, partially offset by a decrease in early debt retirement costs. The increase in depreciation and amortization is due to depreciation on Non-core properties acquired in 2021 and the first quarter of 2022. The decrease in early debt retirement costs was due to lower debt repayment costs forexpense.

Casualty related charges/(recoveries), net

During the quarter ended March 31, ~~2022 compared~~2023, we recorded $8.5 million of expenses for debris removal and cleanup costs and an offsetting insurance recovery revenue of $8.5 million related to Hurricane Ian.

Loss on sale of real estate and impairment, net

During the quarter ended March 31, ~~2021.~~

2023, we recorded an impairment charge of approximately $2.6 million related to flooding events at certain California properties.

Management's Discussion and Analysis (continued)

Liquidity and Capital Resources

Liquidity

Our primary demands for liquidity include payment of operating expenses, dividend distributions, debt service, including principal and interest, capital improvements on Properties, home purchases and property acquisitions. 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~~line of ~~Credit (“LOC”~~credit (the “LOC”) and proceeds from issuance of equity and debt securities.

One of our stated objectives is to maintain financial flexibility. Achieving this objective allows us to take advantage of strategic opportunities that may arise. When investing capital, we consider all potential uses, including returning capital to our stockholders or the conditions under which we may repurchase our stock. These conditions include, but are not limited to, market price, balance sheet flexibility, alternative opportunistic capital uses and capital requirements. We believe effective management of our balance sheet, including maintaining various access points to raise capital, managing future debt maturities and borrowing at competitive rates, enables us to meet this objective. Accessing long-term low-cost secured debt continues to be our focus.

~~On February 24, 2022, we entered into our current~~Our at-the-market (“ATM”) equity offering program ~~with certain sales agents, pursuant~~allows us, from time-to-time, to ~~which we may~~ sell ~~from time-to-time,~~ shares of our common stock, par value $0.01 per share, having an aggregate offering price of up to $500.0 ~~million. Prior to the new program, the aggregate offering price was up to $200.0~~ million. As of March 31, ~~2022,~~2023, the full capacity of our ~~current~~ ATM equity offering program remained available for issuance.

During the quarter ended March 31, 2022, we sold 328,123 shares of our common stock under our prior ATM equity program for gross cash proceeds of approximately $28.0 million at a weighted average share price of $86.46.

As of March 31, ~~2022,~~2023, we had available liquidity in the form of approximately ~~414.0~~413.8 million shares of authorized and unissued common stock, par value $0.01 per share, and 10.0 million shares of authorized and unissued preferred stock registered for sale under the Securities Act of 1933, as amended.

During the quarter ended March 31, 2022, we closed on a $200.0 million senior unsecured term loan. The maturity date is January 21, 2027. The term loan bears interest at a rate of Secured Overnight Financing Rate (“SOFR”), plus approximately 1.30% to 1.80%, depending on leverage levels. See ~~Item 1. Financial Statements—Note 8. Borrowing Arrangements~~ ~~for further details.~~

We also utilize interest rate swaps to add stability to our interest expense and to manage our exposure to interest rate movements. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The changes in the fair value of the designated derivative are recorded in accumulated other comprehensive income (loss) on the Consolidated Balance Sheets and subsequently reclassified into earnings on the Consolidated Statements of Income and Comprehensive Income in the period that the hedged forecasted transaction affects earnings. For additional information regarding our interest rate swap, see Part I. Item 1. Financial Statements—Note 9. Derivative Instruments and Hedging.

We previously entered into a Third Amended and Restated Credit Agreement (“Credit Agreement”), pursuant to which we have access to a $500.0 million unsecured LOC and a $300.0 million senior unsecured term loan (the “$300 million Term Loan”). On March 1, 2023, we amended the Credit Agreement to transition the LIBOR rate borrowings to Secured Overnight Financing Rate (“SOFR”) borrowings. See Part I. Item 1. Financial Statements—Note 8. Borrowing Arrangements for further details. As of March, 31, 2023, the Company has no remaining LIBOR based borrowings.

In connection with our $300 million Term Loan, we entered into a Swap Agreement (the “2021 Swap”) allowing us to trade the variable interest rate for a fixed interest rate. During the quarter ended March 31, 2023, in connection with the amendment to the Credit Agreement, we replaced the LIBOR benchmarked swap with a SOFR benchmarked swap. See Part I. Item 1. Financial Statements—Note 9. Derivative Instruments and Hedging for further details.

We previously entered into a $200.0 million senior unsecured term loan agreement. In connection with our $200 million Term Loan, in April 2023, we entered into a Swap Agreement (the “2023 Swap”) allowing us to trade the variable interest rate for a fixed interest rate. See Part I. Item 1. Financial Statements—Note 9. Derivative Instruments and Hedging for further details.

We expect to meet our short-term liquidity requirements, including principal payments, capital improvements and dividend distributions for the next twelve months, generally through available cash, net cash provided by operating activities and our LOC. As of March 31, ~~2022,~~2023, our LOC had a borrowing capacity of ~~$431.0~~$288.0 million. ~~As of March 31, 2022, the LOC bears interest at a rate of LIBOR plus 1.25% to 1.65%, carries an annual facility fee of 0.20% to 0.35% and matures on April 18, 2025.~~

On April 18, 2022, we closed on a secured refinancing transaction generating gross proceeds of $200.0 million. The loan is secured by one MH community, has a fixed interest rate of 3.36% per annum and has a maturity date of May 1, 2034. The net proceeds from the transaction were used to repay all debt scheduled to mature in 2022 and to repay amounts outstanding on the LOC. See ~~Item 1. Financial Statements—Note 13. Subsequent Events~~ ~~for further details.~~

We expect to meet certain long-term liquidity requirements, such as scheduled debt maturities, property acquisitions and capital improvements, using long-term collateralized and uncollateralized borrowings including the existing LOC and the issuance of debt securities or the issuance of equity including under our ATM equity offering program.

We continue to monitor the development and adoption of an alternative index to LIBOR to manage the transition. Given the majority of our current debt is secured and not subject to LIBOR, we do not believe the discontinuation of LIBOR will have a significant impact on our consolidated financial statements.

Management's Discussion and Analysis (continued)

The impact the COVID-19 pandemic will continue to have on our financial condition and cashflows is uncertain and is dependent upon various factors including the manner in which operations will continue at our Properties, customer payment patterns and operational decisions we have made and may make in the future in response to guidance from public authorities and/or for the health and safety of our employees, residents and guests.

~~The~~ following table summarizes our cash flows activity:


		For the quarters ended March 31,					For the quarters ended March 31,
(amounts in thousands)	(amounts in thousands)	2022		2021		(amounts in thousands)	2023		2022
Net cash provided by operating activities	Net cash provided by operating activities	$	177,331	$	173,331	Net cash provided by operating activities	$	194,461	$	177,331
Net cash used in investing activities	Net cash used in investing activities	(105,182)		(351,653)		Net cash used in investing activities	(101,928)		(105,182)
Net cash (used in) provided by financing activities		(157,427)		245,790
Net (decrease) increase in cash and restricted cash		$	(85,278)	$	67,468
Net cash used in financing activities						Net cash used in financing activities	(84,219)		(157,427)
Net increase (decrease) in cash and restricted cash						Net increase (decrease) in cash and restricted cash	$	8,314	$	(85,278)

Operating Activities

Net cash provided by operating activities increased ~~$4.0~~$17.1 million to $194.5 million for the quarter ended March 31, 2023 from $177.3 million for the quarter ended March 31, ~~2022 from $173.3 million for the quarter ended March 31, 2021.~~2022. The increase in net cash provided by operating activities was primarily due to higher income from property operations of ~~$22.2~~$7.4 million ~~partially offset by long term incentive compensation of approximately $4.4 million paid during~~and the ~~first quarter of 2022~~net change in other assets, net and ~~a decrease in deferred membership revenue of $4.2 million.~~accounts payable and other liabilities.

Investing Activities

Net cash used in investing activities decreased ~~$246.5~~$3.3 million to $101.9 million for the quarter ended March 31, 2023 from $105.2 million for the quarter ended March 31, ~~2022 from $351.7 million for the quarter ended March 31, 2021.~~2022. The decrease was due to a decrease in spending on acquisitions of ~~$280.2~~$6.6 million, a decrease in investments in unconsolidated joint ventures of $6.2 million and an increase in insurance proceeds of $2.7 million, partially offset by an increase in capital improvement spending of ~~$26.9~~$12.8 million.

Capital Improvements

The following table summarizes capital improvements:


		For the quarters ended March 31,					For the quarters ended March 31,
(amounts in thousands)	(amounts in thousands)	2022		2021		(amounts in thousands)	2023		2022
Asset preservation (1)	Asset preservation (1)	$	9,906	$	7,644	Asset preservation (1)	$	11,154	$	9,906
Improvements and renovations(2)	Improvements and renovations(2)	6,431		3,940		Improvements and renovations(2)	6,958		6,431
Property upgrades and development	Property upgrades and development	30,302		23,566		Property upgrades and development	33,204		30,302
New and used home investments (3) (4)		28,657		20,310
New and used home investments (3)						New and used home investments (3)	45,043		28,657

Total property improvements	Total property improvements	75,296		55,460		Total property improvements	96,359		75,296
Corporate	Corporate	8,351		1,318		Corporate	96		8,351
Total capital improvements	Total capital improvements	$	83,647	$	56,778	Total capital improvements	$	96,455	$	83,647

______________________

(1)Includes upkeep of property infrastructure including utilities and streets and replacement of community equipment and vehicles.

(2)Includes enhancements to amenities such as buildings, common areas, swimming pools and replacement of furniture and site amenities.

(3)~~Excludes new home investments 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~~decreased $73.2 million to $84.2 million for the quarter ended March 31, 2023 from $157.4 million for the quarter ended March 31, 2022. ~~Net cash provided by financing activities was $245.8 million for the quarter ended March 31, 2021.~~ The decrease ~~in net cash provided by financing activities~~ was primarily due to a decrease in net debt ~~proceeds~~repayments of approximately ~~$425.0~~$107.1 million ~~partially offset by~~during the quarter ended March 31, 2023, compared to the same period in the prior year and proceeds from the sale of common stock under our prior ATM program of approximately ~~$28.0 million.~~$28.4 million recognized during the quarter ended March 31, 2022.

Contractual Obligations

Significant ongoing contractual obligations consist primarily of long-term borrowings, interest expense, operating leases, LOC maintenance fees and ground leases. For a summary and complete presentation and description of our ongoing commitments and contractual obligations, see Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations-Contractual~~Operations—Contractual Obligations in our ~~2021~~2022 Form 10-K.

Off-Balance Sheet Arrangements

As of March 31, 2023, we have no off-balance sheet arrangements.

Management's Discussion and Analysis (continued)

~~Westwinds~~

The master lessor of these ground leases, The Nicholson Family Partnership (together with its predecessor in interest, the “Nicholsons”), has expressed a desire to redevelop Westwinds, and in a written communication, they claimed that we were obligated to deliver the property free and clear of any and all subtenancies upon the expiration of the ground leases on August 31, 2022. In connection with any redevelopment, the City of San Jose’s conversion ordinance requires, among other things, that the landowner provide relocation, rental and purchase assistance to the impacted residents. We believe the Nicholsons are unlawfully attempting to impose those obligations upon the Operating Partnership.

Westwinds opened in the 1970s and was developed by the original ground lessee with assistance from the Nicholsons. In 1997, the Operating Partnership acquired the leasehold interest in the ground leases. In addition to rent based on the operations of Westwinds, the Nicholsons receive a percentage of gross revenues from the sale of new or used mobile homes in Westwinds.

The Operating Partnership has entered into subtenancy agreements with the mobilehome residents of Westwinds. Because the ground leases with the Nicholsons have an expiration date of August 31, 2022, and no further right of extension, the Operating Partnership has not entered into any subtenancy agreements that extend beyond August 31, 2022. However, the mobilehome residents’ occupancy rights continue by operation of California state and San Jose municipal law beyond the expiration date of the ground leases. Notwithstanding this, the Nicholsons have made what we believe to be an unlawful demand that the Operating Partnership deliver the property free and clear of any subtenancies upon the expiration of the ground leases by August 31, 2022. We believe the Nicholsons’ demand (i) violates California state and San Jose municipal law because the Nicholsons are demanding that the Operating Partnership remove all residents without just cause and (ii) conflicts with the terms and conditions of the ground leases, which contain no express or implied requirement that the Operating Partnership deliver the property free and clear of all subtenancies at the mobile home park and require, instead, that the Operating Partnership continuously operate the mobilehome park during the lease term.

On December 30, 2019, the Operating Partnership, together with certain interested parties, filed a complaint in California Superior Court for Santa Clara County, seeking declaratory relief pursuant to which it requested that the Court determine, among other things, that the Operating Partnership has no obligation to deliver the property free and clear of the mobilehome residents upon the expiration of the ground leases. The Operating Partnership and the interested parties filed an amended complaint on January 29, 2020.

The Nicholsons filed a demand for arbitration on January 28, 2020, which they subsequently amended, pursuant to which they request (i) a declaration that the Operating Partnership, as the “owner and manager” of Westwinds, is “required by the Ground Leases, and State and local law to deliver the Property free of any encumbrances or third-party claims at the expiration of the lease terms,” (ii) that the Operating Partnership anticipatorily breached the ground leases by publicly repudiating any such obligation and (iii) that the Operating Partnership is required to indemnify the Nicholsons with respect to the claims brought by the interested parties in the Superior Court proceeding.

On February 3, 2020, the Nicholsons filed a motion in California Superior Court to compel arbitration and to stay the Superior Court litigation, which motion was heard on June 25, 2020. On July 29, 2020, the Superior Court issued a final order denying the Nicholsons' motion to compel arbitration. The Nicholsons filed a notice of appeal on August 7, 2020, which appeal was heard on February 1, 2022. On February 4, 2022, the California Court of Appeal affirmed the Superior Court’s order denying the Nicholsons' motion to compel arbitration. On February 22, 2022, the Nicholsons filed a petition for rehearing, which the Court of Appeal denied on March 2, 2022. On March 16, 2022, the Nicholsons filed a petition for review with the California Supreme Court. The arbitration is stayed pursuant to an agreement between MHC and the Nicholsons.

Following the filing of our lawsuit, the City of San Jose took steps to accelerate the passage of a general plan amendment previously under review by the City to change the designation for Westwinds from its current general plan designation of Urban Residential (which would allow for higher density redevelopment), to a newly created designation of Mobile Home Park. The Nicholsons expressed opposition to this change in designation. However, on March 10, 2020, following significant pressure from residents and advocacy groups, the City Council approved this new designation for all 58 mobilehome communities in the City of San Jose, including Westwinds. In addition to requirements imposed by California state and San Jose municipal law, the change in designation requires, among other things, a further amendment to the general plan to a different land use designation by the City Council prior to any change in use.

~~Management's Discussion and Analysis (continued)~~

~~Off-Balance Sheet Arrangements~~

~~As of March 31, 2022, we have no off-balance sheet arrangements.~~

Critical Accounting Policies and Estimates

Refer to Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our ~~2021~~2022 Form 10-K for a discussion of our critical accounting policies. There have been no significant changes to our critical accounting policies and estimates during the quarter ended March 31, ~~2022.~~2023.

Forward-Looking Statements

This Quarterly Report on Form 10-Q 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, 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 currently owned or that we may acquire;

•our ability to attract and retain customers entering, renewing and upgrading membership subscriptions;

•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;

•home sales results could be impacted by the ability of potential homebuyers 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, including an adequate supply of homes at reasonable costs, 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;

•impact of the COVID-19 pandemic or other highly infectious or contagious diseases on our business operations, our residents, our customers, our employees and the economy generally;

•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;

•the effect of Hurricane Ian on our business including, but not limited to the following: (i) the timing and cost of recovery, (ii) the condition of properties and the impact on occupancy demand and related rent revenue and (iii) the timing and amount of insurance proceeds;

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

•the effect of inflation and interest rates;

•the effect from any breach of our, or any of our vendors’, data management systems;

•the dilutive effects of issuing additional securities;

•the outcome of pending or future lawsuits or actions brought by or 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.

In addition, these forward-looking statements are subject to risks related to the COVID-19 pandemic, many of which are unknown, including the duration of the pandemic, the extent of the adverse health impact on the general population and on our residents, customers, and employees in particular, its impact on the employment rate and the economy, the extent and impact of governmental responses, and the impact of operational changes we have implemented and may implement in response to the pandemic.

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.

3029

Item 3.Quantitative and Qualitative 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 in our ~~2021~~2022 Form 10-K. There have been no material changes in the assumptions used or results obtained regarding market risk since December 31, ~~2021.~~2022.

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 officer), has evaluated the effectiveness of our disclosure controls and procedures as of March 31, ~~2022.~~2023. 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 March 31, ~~2022.~~2023. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Changes in Internal Control Over Financial Reporting

During the quarter ended March 31, ~~2022,~~2023, 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.

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Part II – Other Information

Item 1.Legal Proceedings

See Part I. Item 1. Financial Statements—Note 11. Commitments and Contingencies accompanying the Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

Item 1A.Risk Factors

A description of the risk factors associated with our business are discussed in ~~Part I.~~Part1. Item 1A. Risk Factorsin our ~~2021~~2022 Form 10-K. On April 1, 2023, we renewed our property and casualty insurance policies. We have updated our risk factors disclosed in Part1. Item 1A. Risk Factors in our 2022 Form 10-K with the risk factor described below.

Some Potential Losses Are Not Covered by Insurance

We carry comprehensive insurance coverage for losses resulting from property damage and environmental liability and business interruption claims on all of our Properties. In addition, we carry liability coverage for other activities not specifically related to property operations. These coverages include, but are not limited to, Directors & Officers liability, Employment Practices liability, Fiduciary liability and Cyber liability. We believe that the policy specifications and coverage limits of these policies should be adequate and appropriate given the relative risk of loss, the cost of insurance and industry practice. There are, however, certain types of losses, such as punitive damages, lease and other contract claims that generally are not insured. Should an uninsured loss or a loss in excess of coverage limits occur, we could lose all or a portion of the capital we have invested in a Property or the anticipated future revenue from a Property. In such an event, we might nevertheless remain obligated for any mortgage debt or other financial obligations related to the Property.

Our current property and casualty insurance policies with respect to our MH and RV Properties renewed on April 1, 2023. We have a $125 million per occurrence limit with respect to our MH and RV all-risk property insurance program, which includes approximately $50 million of coverage per occurrence for named windstorms, which include, for example, hurricanes. The loss limit is subject to additional sub-limits as set forth in the policy form, including, among others, a $25 million aggregate loss limit for earthquake(s) in California. The deductibles for this policy primarily range from $500,000 minimum to 5% per unit of insurance for most catastrophic events. For most catastrophic events, there is an additional one-time aggregate deductible of $10 million, which is capped at $5 million per occurrence. We have separate insurance policies with respect to our marina Properties. Those casualty policies expire on November 1, 2023, and the property insurance program renewed on April 1, 2023. The marina property insurance program has a $25 million per occurrence limit, subject to self-insurance and a minimum deductible of $100,000 plus, for named windstorms, 5% per unit of insurance subject to a $500,000 minimum. A deductible indicates our maximum exposure, subject to policy limits and sub-limits, in the event of a loss.

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

None.

Item 3.Defaults Upon Senior Securities

None.

Item 4.Mine Safety Disclosures

None.

Item 5.Other Information

None.

Item 6.Exhibits


~~10.1~~10.1*			~~Consulting~~Amendment, dated March 1, 2023, to the Third Amended and Restated Credit Agreement, dated as of April 19, 2021, by and ~~between Roger Maynard and~~among MHC ~~Property Management~~Operating Limited Partnership, ~~dated February 10, 2022.~~
~~14.1~~			as Borrower, Equity LifeStyle Properties, Inc. ~~Business Ethics~~, as Parent, Wells Fargo Bank, National Association, as Administrative Agent, and ~~Conduct Policy,~~each of the Lenders set forth therein.
10.2(a)			Third Amended and Restated Credit Agreement, dated ~~October 27, 2020.~~as of April 19, 2021, by and among MHC Operating Limited Partnership, as Borrower, Equity LifeStyle Properties, Inc., as Parent, Wells Fargo Bank, National Association, as Administrative Agent, and each of the Lenders set forth therein .
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.INS			XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH			Inline XBRL Taxonomy Extension Schema Document
101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB			Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE			Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF			Inline XBRL Taxonomy Extension Definition Linkbase Document
104			Cover Page Interactive Data File included as Exhibit 101 (embedded within the Inline XBRL document)

The following documents are incorporated by reference.

(a)Included as an exhibit to our Report on Form 8-K dated April 19, 2021

* 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: April ~~26, 2022~~25, 2023	By:	/s/ Marguerite Nader
		Marguerite Nader
		President and Chief Executive Officer
		(Principal Executive Officer)

Date: April ~~26, 2022~~25, 2023	By:	/s/ Paul Seavey
		Paul Seavey
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)

Date: April ~~26, 2022~~25, 2023	By:	/s/ Valerie Henry
		Valerie Henry
		Senior Vice President and Chief Accounting Officer
		(Principal Accounting Officer)