UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________________________________

FORM 10-Q/A

(Amendment No. 1)

~~_________________________________________________________~~


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

For the quarterly period ended ~~September 30,~~March 31, 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: ~~186,392,726~~186,209,657 shares of Common Stock as of ~~October 17,~~April 19, 2023.

Explanatory Note

This Amendment No. 1 on Form 10-Q/A (the “Amended Report”) amends and restates certain items noted below in the Quarterly Report on Form 10-Q of Equity Lifestyle Properties (the “Company”) for the quarter ended ~~September 30,~~March 31, 2023, originally filed with the Securities and Exchange Commission (“SEC”) on ~~October 24,~~April 25, 2023 (the “Original Report”).

Background and Effect of Restatement

The Company received from the SEC a comment letter (“Comment Letter”) issued in the ordinary course of the SEC’s review of our disclosures. As a result of our research and consideration of a question raised in the Comment Letter, we previously disclosed in our Quarterly Reports on Form 10-Q for the quarters ended June 30, 2023 and September 30, 2023 the correction of an error, described below, related to the classification of cash outflows associated with the purchase of manufactured homes in the Consolidated Statements of Cash Flows. Based on an analysis of quantitative and qualitative factors in accordance with SEC Staff Accounting Bulletins 99, Materiality and 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, the Company and the Audit Committee of the Board of Directors (the “Audit Committee”), previously concluded that this error was immaterial. Followingreceipt of a further Comment Letter in which the Staff of the SEC informed the Company it disagreed with the materiality conclusion, the Company and the Audit Committee, on January 19, 2024, determined that the error was material to its previously issued financial statements, as included in the Annual Report on Form 10-K for the year ended December 31, 2022 and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 (the “Prior Period Financial Statements”). During the period of time following receipt of the initial Comment Letter, the Company along with the Audit Committee has discussed with Ernst & Young LLP (“EY”), our independent registered public accounting firm, the matters described herein.

As a result of the foregoing, the Company and the Audit Committee determined that the Prior Period Financial Statements, as well as, any reports, related earnings releases, investor presentations or similar communications of the Company’s Prior Period Financial Statements should no longer be relied upon.

The Company previously classified cash outflows associated with the purchase of manufactured homes within investing activities in the Consolidated Statements of Cash Flows. Based on the predominance principle in ASC 230-10-45-22, the Company determined that all of the cash flows associated with the purchase and sale of manufactured homes should be classified within operating activities in the Consolidated Statements of Cash Flows.

There was no impact to Cash and restricted cash, the Consolidated Statements of Income and Comprehensive Income, Consolidated Balance Sheets, Consolidated Statements of Changes in Equity for any periods presented in the Prior Period Financial Statements, or our ability to maintain compliance with covenants contained in our debt facilities or other contractual requirements.

The Company along with the Audit Committee has discussed with EY the matters disclosed in this Amended Report.

Items Amended in this Filing

For the convenience of the reader, this Amended Report presents the Original Report in its entirety, subject to the changes described below.

The Company is filing this Amended Report in order to amend the following items (the “Amended Items”) of the Original Report:

•Part I, Item 1. Financial Statements, including the Consolidated Statements of Cash Flows, Notes to Consolidated Financial Statements—Note ~~2. Summary~~3. Restatement of ~~Significant Accounting Policies~~ ~~(e) Prior period correction~~Previously Issued Consolidated Financial Statements, Note 11. Deferred Revenue from Membership Upgrade Sales and Deferred Commission Expense and Note 14. Reportable Segments

•Part I, Item 2. Management’s Discussion & Analysis, including our Non-GAAP financial measures definitions, calculations and reconciliations (for further information see Items 2.02 and 9.01 on the Company’s Form 8-K filed on January 22, 2024)

•Part I, Item 4. Controls and Procedures

•Part II, Item 1A. Risk Factors

•Part II, Item 6. Exhibits

This Amended Report also includes revisions and updates to certain other information including, but not limited to, cross-references, an updated signature page and other conforming changes. Pursuant to the rules of the SEC, the exhibit list included

in Part II, Item 6. Exhibits of the Original Report has been amended and restated to include updates to applicable exhibits, consisting of currently-dated certifications.

Except for the Amended Items, this Amended Report is presented as of the date of the Original Report and has not been updated to reflect events, results or developments that occurred or facts that became known to us subsequent to the filing of the Original Report other than the Amended Items and those associated with the restatement of our consolidated financial statements.

Control Considerations

~~As previously disclosed in our Amended Quarterly Reports on Form 10-Q/A for the quarters ended~~Management has concluded as of March 31, 2023 ~~and June 30, 2023, management concluded~~ that the Company’s disclosure controls and procedures as well as its internal control over financial reporting were not effective due to a material ~~weakness related to the~~weakness. Specifically, there was a lack of an effectively designed control activity related to the evaluation of the classification of cash flows pursuant to the predominance principle in ASC 230 associated with the purchase and sale of manufactured homes within the Company’s Consolidated Statements of Cash Flows. During the quarter ended June 30, 2023, the Company enhanced its control activities related to the evaluation of the classification of cash flows pursuant to the predominance principle in ASC 230 associated with the purchase and sale of manufactured homes. We tested the enhanced control activities as of June 30, 2023 and September 30, 2023 and management has concluded, through its testing, that the control is operating effectively and the material weakness was remediated as of September 30, 2023. See Part I, Item 4. Controls and Procedures.

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 ~~September 30,~~March 31, 2023 and December 31, ~~2022~~ 2022	3
	Consolidated Statements of Income and Comprehensive Income for the quarters ~~and nine months~~ ended ~~September 30,~~March 31, 2023 and 2022	4
	Consolidated Statements of Changes in Equity for the quarters ~~and nine months~~ ended ~~September 30,~~March 31, 2023 and 2022	5
	Consolidated Statements of Cash Flows ~~(As Restated~~ (As Rest ) ated)for the ~~nine months~~quarters ended ~~September 30,~~March 31, 2023 and 2022	76
	Notes to Consolidated Financial Statements	98
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2117
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3831
Item 4.	Controls and Procedures	3831
Part II - Other Information
Item 1.	Legal Proceedings	3932
Item 1A.	Risk Factors	3932
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3932
Item 3.	Defaults Upon Senior Securities	3932
Item 4.	Mine Safety Disclosures	3932
Item 5.	Other Information	3932
Item 6.	Exhibits	4032

Part I – Financial Information

Item 1. Financial Statements

Equity LifeStyle Properties, Inc.

Consolidated Balance Sheets

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


		September 30, 2023		December 31, 2022			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	$	2,088,657	$	2,084,532	Land	$	2,086,725	$	2,084,532
Land improvements	Land improvements	4,307,943		4,115,439		Land improvements	4,170,166		4,115,439
Buildings and other depreciable property	Buildings and other depreciable property	1,228,897		1,169,590		Buildings and other depreciable property	1,197,416		1,169,590
		7,625,497		7,369,561			7,454,307		7,369,561
Accumulated depreciation	Accumulated depreciation	(2,401,384)		(2,258,540)		Accumulated depreciation	(2,306,538)		(2,258,540)
Net investment in real estate	Net investment in real estate	5,224,113		5,111,021		Net investment in real estate	5,147,769		5,111,021
Cash and restricted cash	Cash and restricted cash	59,680		22,347		Cash and restricted cash	30,661		22,347
Notes receivable, net	Notes receivable, net	49,684		45,356		Notes receivable, net	46,655		45,356
Investment in unconsolidated joint ventures	Investment in unconsolidated joint ventures	84,328		81,404		Investment in unconsolidated joint ventures	81,135		81,404
Deferred commission expense	Deferred commission expense	53,180		50,441		Deferred commission expense	51,090		50,441
Other assets, net	Other assets, net	155,306		181,950		Other assets, net	162,003		181,950
Total Assets	Total Assets	$	5,626,291	$	5,492,519	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	$	3,005,034	$	2,693,167	Mortgage notes payable, net	$	2,677,318	$	2,693,167
Term loan, net	Term loan, net	497,422		496,817		Term loan, net	497,039		496,817
Unsecured line of credit	Unsecured line of credit	—		198,000		Unsecured line of credit	212,000		198,000
Accounts payable and other liabilities	Accounts payable and other liabilities	189,090		175,148		Accounts payable and other liabilities	185,126		175,148
Deferred membership revenue	Deferred membership revenue	216,021		197,743		Deferred membership revenue	204,312		197,743
Accrued interest payable	Accrued interest payable	12,296		11,739		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	121,930		122,318		Rents and other customer payments received in advance and security deposits	130,704		122,318
Distributions payable	Distributions payable	87,491		80,102		Distributions payable	87,338		80,102
Total Liabilities	Total Liabilities	4,129,284		3,975,034		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 September 30, 2023 and December 31, 2022; none issued and outstanding.		—		—
Common stock, $0.01 par value, 600,000,000 shares authorized as of September 30, 2023 and December 31, 2022; 186,390,612 and 186,120,298 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively.		1,917		1,916
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	1,641,553		1,628,618		Paid-in capital	1,629,866		1,628,618
Distributions in excess of accumulated earnings	Distributions in excess of accumulated earnings	(232,081)		(204,248)		Distributions in excess of accumulated earnings	(205,203)		(204,248)
Accumulated other comprehensive income	Accumulated other comprehensive income	15,564		19,119		Accumulated other comprehensive income	15,141		19,119
Total Stockholders’ Equity	Total Stockholders’ Equity	1,426,953		1,445,405		Total Stockholders’ Equity	1,441,720		1,445,405
Non-controlling interests – Common OP Units	Non-controlling interests – Common OP Units	70,054		72,080		Non-controlling interests – Common OP Units	71,666		72,080
Total Equity	Total Equity	1,497,007		1,517,485		Total Equity	1,513,386		1,517,485
Total Liabilities and Equity	Total Liabilities and Equity	$	5,626,291	$	5,492,519	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 September 30,				Nine Months Ended September 30,					Quarters Ended March 31,
		2023		2022		2023		2022			2023		2022
Revenues:	Revenues:									Revenues:
Rental income	Rental income	$	303,334	$	289,016	$	888,440	$	849,411	Rental income	$	296,451	$	285,065
Annual membership subscriptions	Annual membership subscriptions	16,673		16,254		48,832		47,003		Annual membership subscriptions	15,970		15,157
Membership upgrade sales	Membership upgrade sales	3,744		3,308		10,863		9,543		Membership upgrade sales	3,505		3,067

Other income	Other income	15,658		15,580		51,283		43,316		Other income	17,714		13,542
Gross revenues from home sales, brokered resales and ancillary services	Gross revenues from home sales, brokered resales and ancillary services	44,795		52,547		115,841		144,937		Gross revenues from home sales, brokered resales and ancillary services	32,133		39,695
Interest income	Interest income	2,276		1,865		6,623		5,346		Interest income	2,088		1,759
Income from other investments, net	Income from other investments, net	2,333		2,399		6,897		6,920		Income from other investments, net	2,091		1,904
Total revenues	Total revenues	388,813		380,969		1,128,779		1,106,476		Total revenues	369,952		360,189
Expenses:	Expenses:									Expenses:
Property operating and maintenance	Property operating and maintenance	126,846		123,181		361,543		341,480		Property operating and maintenance	112,483		103,992
Real estate taxes	Real estate taxes	19,017		17,734		56,165		56,373		Real estate taxes	18,316		19,457
Membership sales and marketing	Membership sales and marketing	5,696		5,937		16,055		15,720		Membership sales and marketing	4,838		4,331

Property management	Property management	19,887		19,003		58,710		55,973		Property management	19,464		17,871
Depreciation and amortization	Depreciation and amortization	50,968		52,547		152,934		152,737		Depreciation and amortization	50,502		49,394
Cost of home sales, brokered resales and ancillary services	Cost of home sales, brokered resales and ancillary services	33,471		40,224		85,880		111,894		Cost of home sales, brokered resales and ancillary services	23,141		30,684
Home selling expenses and ancillary operating expenses	Home selling expenses and ancillary operating expenses	7,164		7,080		21,258		21,146		Home selling expenses and ancillary operating expenses	6,924		6,481
General and administrative	General and administrative	9,895		11,086		38,163		34,834		General and administrative	11,661		12,072
Casualty-related charges/(recoveries), net	Casualty-related charges/(recoveries), net	—		—		—		—		Casualty-related charges/(recoveries), net	—		—
Other expenses	Other expenses	1,338		1,627		4,187		6,880		Other expenses	1,468		1,048
Early debt retirement	Early debt retirement	68		—		68		1,156		Early debt retirement	—		516
Interest and related amortization	Interest and related amortization	33,434		29,759		99,144		85,276		Interest and related amortization	32,588		27,464
Total expenses	Total expenses	307,784		308,178		894,107		883,469		Total expenses	281,385		273,310
Loss on sale of real estate and impairment, net	Loss on sale of real estate and impairment, net	(949)		(3,747)		(3,581)		(3,747)		Loss on sale of real estate and impairment, net	(2,632)		—
Income before equity in income of unconsolidated joint ventures	Income before equity in income of unconsolidated joint ventures	80,080		69,044		231,091		219,260		Income before equity in income of unconsolidated joint ventures	85,935		86,879
Equity in income of unconsolidated joint ventures	Equity in income of unconsolidated joint ventures	661		1,465		2,158		2,889		Equity in income of unconsolidated joint ventures	524		171
Consolidated net income	Consolidated net income	80,741		70,509		233,249		222,149		Consolidated net income	86,459		87,050

Income allocated to non-controlling interests – Common OP Units	Income allocated to non-controlling interests – Common OP Units	(3,772)		(3,346)		(10,981)		(10,563)		Income allocated to non-controlling interests – Common OP Units	(4,088)		(4,144)
Redeemable perpetual preferred stock dividends		—		—		(8)		(8)

Net income available for Common Stockholders	Net income available for Common Stockholders	$	76,969	$	67,163	$	222,260	$	211,578	Net income available for Common Stockholders	$	82,371	$	82,906

Consolidated net income	Consolidated net income	$	80,741	$	70,509	$	233,249	$	222,149	Consolidated net income	$	86,459	$	87,050
Other comprehensive income (loss):	Other comprehensive income (loss):									Other comprehensive income (loss):
Adjustment for fair market value of swaps		(1,763)		4,235		(3,555)		16,952
Adjustment for fair market value of swap										Adjustment for fair market value of swap	(3,978)		9,924
Consolidated comprehensive income	Consolidated comprehensive income	78,978		74,744		229,694		239,101		Consolidated comprehensive income	82,481		96,974
Comprehensive income allocated to non-controlling interests – Common OP Units	Comprehensive income allocated to non-controlling interests – Common OP Units	(3,690)		(3,547)		(10,814)		(11,370)		Comprehensive income allocated to non-controlling interests – Common OP Units	(3,899)		(4,616)
Redeemable perpetual preferred stock dividends		—		—		(8)		(8)

Comprehensive income attributable to Common Stockholders	Comprehensive income attributable to Common Stockholders	$	75,288	$	71,197	$	218,872	$	227,723	Comprehensive income attributable to Common Stockholders	$	78,582	$	92,358

Earnings per Common Share – Basic	Earnings per Common Share – Basic	$	0.41	$	0.36	$	1.19	$	1.14	Earnings per Common Share – Basic	$	0.44	$	0.45

Earnings per Common Share – Fully Diluted	Earnings per Common Share – Fully Diluted	$	0.41	$	0.36	$	1.19	$	1.14	Earnings per Common Share – Fully Diluted	$	0.44	$	0.45

Weighted average Common Shares outstanding – Basic	Weighted average Common Shares outstanding – Basic	186,100		185,814		186,008		185,758		Weighted average Common Shares outstanding – Basic	185,900		185,690
Weighted average Common Shares outstanding – Fully Diluted	Weighted average Common Shares outstanding – Fully Diluted	195,440		195,269		195,414		195,248		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		Redeemable Perpetual Preferred Stock		Distributions in Excess of Accumulated Earnings		Accumulated Other Comprehensive Income (Loss)		Non-controlling Interests – Common OP Units		Total Equity			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	Balance as of December 31, 2022	$	1,916	$	1,628,618	$	—	$	(204,248)	$	19,119	$	72,080	$	1,517,485	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	Exchange of Common OP Units for Common Stock	—		198		—		—		—		(198)		—		Exchange of Common OP Units for Common Stock	—		198		—		—		(198)		—

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

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

Issuance of Common Stock through employee stock purchase plan		—		504		—		—		—		—		504

Compensation expenses related to restricted stock and stock options		—		8,584		—		—		—		—		8,584

Adjustment for Common OP Unitholders in the Operating Partnership		—		(503)		—		—		—		503		—
Adjustment for fair market value of swap		—		—		—		—		2,186		—		2,186
Consolidated net income		—		—		8		62,920		—		3,121		66,049
Distributions		—		—		(8)		(83,357)		—		(4,135)		(87,500)
Other		—		(97)		—		—		—		—		(97)
Balance as of June 30, 2023		$	1,916	$	1,638,354	$	—	$	(225,640)	$	17,327	$	71,155	$	1,503,112
Exchange of Common OP Units for Common Stock		1		812		—		—		—		(813)		—

Issuance of Common Stock through employee stock purchase plan		—		736		—		—		—		—		736

Compensation expenses related to restricted stock and stock options		—		1,799		—		—		—		—		1,799

Adjustment for Common OP Unitholders in the Operating Partnership		—		(27)		—		—		—		27		—
Adjustment for fair market value of swaps		—		—		—		—		(1,763)		—		(1,763)
Consolidated net income		—		—		—		76,969		—		3,772		80,741
Distributions		—		—		—		(83,410)		—		(4,087)		(87,497)
Other		—		(121)		—		—		—		—		(121)
Balance as of September 30, 2023		$	1,917	$	1,641,553	$	—	$	(232,081)	$	15,564	$	70,054	$	1,497,007

Common Stock Paid-in Capital Redeemable Perpetual Preferred Stock 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
Issuance of Common Stock through employee stock purchase plan — 1,388 — — — — 1,388
Compensation expenses related to restricted stock and stock options — 2,681 — — — — 2,681
Adjustment for Common OP Unitholders in the Operating Partnership — (303) — — — 303 —
Adjustment for fair market value of swap — — — — 2,793 — 2,793
Consolidated net income — — 8 61,509 — 3,073 64,590
Distributions — — (8) (76,179) — (3,812) (79,999)
Other — (54) — — — — (54)
Balance as of June 30, 2022 $ 1,916 $ 1,622,876 $ — $ (191,828) $ 16,241 $ 72,531 $ 1,521,736
Exchange of Common OP Units for Common Stock — 203 — — — (203) —
Issuance of Common Stock through employee stock purchase plan — 458 — — — — 458
Compensation expenses related to restricted stock and stock options — 2,654 — — — — 2,654
Adjustment for Common OP Unitholders in the Operating Partnership — (342) — — — 342 —
Adjustment for fair market value of swap — — — — 4,235 — 4,235
Consolidated net income — — — 67,164 — 3,346 70,510
Distributions — — — (76,305) — (3,801) (80,106)
Other — (98) — — — — (98)
Balance as of September 30, 2022 $ 1,916 $ 1,625,751 $ — $ (200,969) $ 20,476 $ 72,215 $ 1,519,389
.


	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)


		Nine Months Ended September 30,					Quarters Ended March 31,
		2023		2022			2023		2022
				As Restated			As Restated		As Restated
Cash Flows From Operating Activities:	Cash Flows From Operating Activities:					Cash Flows From Operating Activities:
Consolidated net income	Consolidated net income	$	233,249	$	222,149	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 and impairment, net	Loss on sale of real estate and impairment, net	3,581		3,747		Loss on sale of real estate and impairment, net	2,632		—
Early debt retirement	Early debt retirement	68		1,156		Early debt retirement	—		516
Depreciation and amortization	Depreciation and amortization	156,967		156,074		Depreciation and amortization	51,860		50,237
Amortization of loan costs	Amortization of loan costs	3,637		3,631		Amortization of loan costs	1,208		1,213
Debt premium amortization	Debt premium amortization	(62)		(145)		Debt premium amortization	(32)		(60)
Equity in income of unconsolidated joint ventures	Equity in income of unconsolidated joint ventures	(2,158)		(2,889)		Equity in income of unconsolidated joint ventures	(524)		(171)
Distributions of income from unconsolidated joint ventures	Distributions of income from unconsolidated joint ventures	1,155		340		Distributions of income from unconsolidated joint ventures	174		—
Proceeds from insurance claims, net	Proceeds from insurance claims, net	21,770		(457)		Proceeds from insurance claims, net	5,795		59
Compensation expense related to incentive plans	Compensation expense related to incentive plans	15,275		5,367		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	(10,863)		(9,543)		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	3,122		2,850		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:
Manufactured homes, net	Manufactured homes, net	(31,980)		(6,972)		Manufactured homes, net	(19,574)		(1,378)

Notes receivable, net	Notes receivable, net	(4,365)		(3,954)		Notes receivable, net	(1,345)		189
Deferred commission expense	Deferred commission expense	(5,861)		(5,531)		Deferred commission expense	(1,744)		(1,550)
Other assets, net	Other assets, net	(5,076)		(298)		Other assets, net	5,856		1,857
Accounts payable and other liabilities	Accounts payable and other liabilities	12,165		15,475		Accounts payable and other liabilities	9,553		(1,923)
Deferred membership revenue	Deferred membership revenue	29,140		28,080		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	(1,106)		(3,957)		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	418,658		405,123		Net cash provided by operating activities	158,980		154,642
Cash Flows From Investing Activities:	Cash Flows From Investing Activities:					Cash Flows From Investing Activities:
Real estate acquisitions, net	Real estate acquisitions, net	(9,326)		(119,255)		Real estate acquisitions, net	(8,803)		(15,402)

Investment in unconsolidated joint ventures	Investment in unconsolidated joint ventures	(6,060)		(16,022)		Investment in unconsolidated joint ventures	(1,752)		(7,912)
Distributions of capital from unconsolidated joint ventures	Distributions of capital from unconsolidated joint ventures	3,730		3,602		Distributions of capital from unconsolidated joint ventures	1,012		374
Proceeds from insurance claims, net	Proceeds from insurance claims, net	5,309		1,405		Proceeds from insurance claims, net	4,070		1,405

Capital improvements	Capital improvements	(231,172)		(185,916)		Capital improvements	(60,974)		(60,958)
Net cash used in investing activities	Net cash used in investing activities	(237,519)		(316,186)		Net cash used in investing activities	(66,447)		(82,493)

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)


		Nine Months Ended September 30,					Quarters Ended March 31,
		2023		2022			2023		2022
				As Restated			As Restated		As Restated
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	1,604		2,359		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	(242,994)		(219,854)		Common Stockholders	(76,309)		(67,295)
Common OP Unitholders	Common OP Unitholders	(12,069)		(10,997)		Common OP Unitholders	(3,799)		(3,373)
Preferred Stockholders		(8)		(8)

Share based award tax withholding payments	Share based award tax withholding payments	(1,932)		(3,449)		Share based award tax withholding payments	(1,932)		(3,449)
Principal payments and mortgage debt repayment	Principal payments and mortgage debt repayment	(148,811)		(119,608)		Principal payments and mortgage debt repayment	(16,443)		(29,592)
Mortgage notes payable financing proceeds		463,753		200,000

Term loan proceeds	Term loan proceeds	—		200,000		Term loan proceeds	—		200,000
Line of credit repayment		(605,000)		(495,016)
Line of credit proceeds		407,000		241,000
Line of Credit repayment						Line of Credit repayment	(104,000)		(319,000)
Line of Credit proceeds						Line of Credit proceeds	118,000		39,000
Debt issuance and defeasance costs	Debt issuance and defeasance costs	(5,033)		(3,826)		Debt issuance and defeasance costs	—		(1,957)
Other	Other	(316)		(796)		Other	(99)		(644)
Net cash used in financing activities	Net cash used in financing activities	(143,806)		(181,825)		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	37,333		(92,888)		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, beginning of period	22,347		123,398
Cash and restricted cash, end of period	Cash and restricted cash, end of period	$	59,680	$	30,510	Cash and restricted cash, end of period	$	30,661	$	38,120


		Nine Months Ended September 30,					Quarters Ended March 31,
		2023		2022			2023		2022
				As Restated			As Restated		As Restated
Supplemental Information:	Supplemental Information:					Supplemental Information:
Cash paid for interest, net	Cash paid for interest, net	$	97,297	$	82,368	Cash paid for interest, net	$	31,630	$	26,839

Cash paid for the purchase of manufactured homes	Cash paid for the purchase of manufactured homes	$	90,477	$	82,698	Cash paid for the purchase of manufactured homes	$	35,481	$	22,689

Real estate acquisitions:	Real estate acquisitions:					Real estate acquisitions:
Investment in real estate	Investment in real estate	$	(10,057)	$	(119,796)	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	13		—		Other assets, net	14		—

Deferred membership revenue	Deferred membership revenue	—		315		Deferred membership revenue	—		315

Other liabilities	Other liabilities	—		702		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	718		296		Rents and other customer payments received in advance and security deposits	718		51
Real estate acquisitions, net	Real estate acquisitions, net	$	(9,326)	$	(119,255)	Real estate acquisitions, net	$	(8,803)	$	(15,402)

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 provide our customers the opportunity to 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 95.3% interest as of ~~September 30,~~March 31, 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, 2022, as amended on January 22, 2024.

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.

~~Revenue~~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 ~~September 30,~~March 31, 2023 and December 31, 2022, restricted cash consisted of ~~$21.2~~$19.8 million and $19.7 million, respectively, primarily related to cash reserved for customer deposits and escrows for insurance and real estate taxes.

~~Certain prior period amounts have been reclassified to conform to the current year presentation.~~

~~(d)~~ Insurance Recoveries

We carry comprehensive insurance coverage for losses resulting from property damage and environmental liability and business interruption claims on all of our properties. We record the estimated amount of expected insurance proceeds for property damage, clean-up costs and other losses incurred as an asset (typically a receivable from our insurance carriers) and income up to the amount of the losses incurred when receipt of insurance proceeds is deemed probable. Any amount of insurance recovery in excess of the losses incurred and any amount of insurance recovery related to business interruption are considered a gain contingency and will be recognized in the period in which the insurance proceeds are received.

During the ~~nine months~~quarter ended ~~September 30,~~March 31, 2023, we recognized expenses of approximately ~~$12.1~~$8.5 million related to debris removal and cleanup related to Hurricane Ian and an offsetting insurance recovery revenue accrual of ~~$12.1~~$8.5 million related to the expected insurance recovery as a result of Hurricane ~~Ian which is included in Casualty-related charges/(recoveries), net in the~~Ian.

Note 3—Restatement of Previously Issued Consolidated Financial Statements of Income and Comprehensive Income. During the nine months ended September 30, 2023, we received insurance proceeds of approximately $48.8 million, of which $9.6 million represented business interruption recovery revenue.

~~(e) Prior period correction~~

~~We previously disclosed in our Quarterly Report on Form 10-Q for~~

During the quarter ended ~~September~~June 30, 2023, the ~~correction of~~Company identified and corrected an error related to the classification of cash outflows associated with the purchase of manufactured homes in the Consolidated Statements of Cash Flows. ~~Based on an analysis of quantitative and qualitative factors in accordance with SEC Staff Accounting Bulletins 99,~~ ~~Materiality~~ ~~and 108,~~ ~~Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements~~,Previously, the Company previously concluded that this error was immaterial. Following receipt of a further comment letter from the SEC, the Company and the Audit Committee, on January 19, 2024, determined that the error was material to its previously issued financial statements, as included in the Annual Report on Form 10-K for the year ended December 31, 2022 and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2023.

~~The Company previously~~ classified these cash outflows ~~associated with the purchase of manufactured homes~~ within investing activities in the Consolidated Statements of Cash Flows. Based on the predominance principle in ASC 230-10-45-22, the Company determined that all of the cash flows associated with the purchase and sale of manufactured homes should be classified within operating activities in the Consolidated Statements of Cash Flows. There was no impact to ~~Cash and restricted cash,~~ the Consolidated Statements of Income and Comprehensive Income, Consolidated Balance Sheets, or Consolidated Statements of Changes in Equity for any periods ~~presented herein.~~presented. The Company is correcting this misclassification by restating its Consolidated Statements of Cash Flows through this Amended Report.

109

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note ~~2 – Summary~~3—Restatement of ~~Significant Accounting Policies~~Previously Issued Consolidated Financial Statements (continued)

The impact ~~of the restatements~~ on the line items within the previously reported Consolidated Statements of Cash Flows for the ~~nine months~~quarters ended ~~September 30,~~March 31, 2023 and 2022 previously filed in the Original Report isare as follows (in thousands):


	Three Month Ended March 31, 2023					Three Month Ended March 31, 2022
Operating Activities	As Reported		Adjustment	As Restated		As Reported		Adjustment		As Restated
Manufactured homes, net	$	—	(19,574)	$	(19,574)	$	—	$	(1,378)	$	(1,378)
Other assets, net	$	21,763	(15,907)	$	5,856	$	23,168	$	(21,311)	$	1,857
Net cash provided by operating activities	$	194,461	(35,481)	$	158,980	$	177,331	(22,689)		$	154,642

Investing Activities
Capital improvements	$	(96,455)	35,481	$	(60,974)	$	(83,647)	$	22,689	$	(60,958)
Net cash used in investing activities	$	(101,928)	35,481	$	(66,447)	$	(105,182)	$	22,689	$	(82,493)

Cash and restricted cash, end of period	$	30,661	—	$	30,661	$	38,120	—		$	38,120

Nine Months Ended September 30, 2022
Operating Activities As Reported Adjustment As Restated
Manufactured homes, net $ — (6,972) $ (6,972)
Other assets, net $ 75,428 (75,726) $ (298)
Net cash provided by operating activities $ 487,821 (82,698) $ 405,123
Investing Activities
Capital improvements $ (268,614) 82,698 $ (185,916)
Net cash used in investing activities $ (398,884) 82,698 $ (316,186)
Cash and restricted cash, end of period $ 30,510 — $ 30,510

In addition, capital improvements in our Home Sales and Rental Operations segment shown in Note 14. Reportable Segments has been updated to reflect the restatement to our Consolidated Statements of Cash Flows.

Note 34 – Leases

Lessor

The leases entered into between athe 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) As of September 30, 2023
2023 $ 31,687
2024 129,794
2025 55,073
2026 24,570
2027 23,096
Thereafter 58,914
Total $ 323,134

~~Equity LifeStyle Properties, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~Note 3 – Leases (continued)~~


(amounts in thousands)	As of March 31, 2023
2023	$	86,670
2024	115,394
2025	42,805
2026	23,963
2027	22,544
Thereafter	57,200
Total	$	348,576

Lessee

We lease land under non-cancelable operating leases at ~~ten~~10 Properties expiring onat various dates between 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 ~~September 30,~~March 31, 2023 and 2022, total operating lease payments were ~~$1.6~~$1.5 million and ~~$2.7~~$2.6 million, respectively. ~~For the nine months ended September 30, 2023 and 2022, total operating lease payments were $4.9 million and $8.2 million, respectively.~~

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 4 – 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 ~~September 30,~~March 31, 2023:


		As of September 30, 2023						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
2023	2023	$	152	$	1,698	$	1,850		2023	$	544	$	3,081	$	3,625
2024	2024	675		3,407		4,082			2024	675		3,407		4,082
2025	2025	680		3,108		3,788			2025	680		3,108		3,788
2026	2026	684		2,613		3,297			2026	684		2,613		3,297
2027	2027	689		2,424		3,113			2027	689		2,424		3,113
Thereafter	Thereafter	4,525		10,794		15,319			Thereafter	4,525		10,794		15,319
Total undiscounted rental payments	Total undiscounted rental payments	7,405		24,044		31,449			Total undiscounted rental payments	7,797		25,427		33,224
Less imputed interest	Less imputed interest	(1,890)		(3,397)		(5,287)			Less imputed interest	(2,013)		(3,741)		(5,754)
Total lease liabilities	Total lease liabilities	$	5,515	$	20,647	$	26,162		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 ~~$24.0~~$25.3 million and ~~$26.2~~$27.5 million, respectively, as of ~~September 30,~~March 31, 2023. The weighted average remaining lease term for our operating leases was nine years and the weighted average incremental borrowing rate was 3.8% at ~~September 30,~~March 31, 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 $25.9 million and $28.0 million, respectively, as of December 31, 2022. The weighted average remaining lease term for our operating leases was nine years and the weighted average incremental borrowing rate was 3.8% at December 31, 2022.

~~Equity LifeStyle Properties, Inc.~~

~~Notes to Consolidated Financial Statements~~

Note 45 – Earnings Per ~~Common Share~~

~~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”)~~(Common Share) for the quarters ~~and nine months~~ ended ~~September 30,~~March 31, 2023 and 2022:


		Quarters Ended September 30,				Nine Months Ended September 30,					Quarters Ended March 31,
(amounts in thousands, except per share data)	(amounts in thousands, except per share data)	2023		2022		2023		2022		(amounts in thousands, except per share data)	2023		2022
Numerators:	Numerators:									Numerators:
Net income available for Common Stockholders – Basic	Net income available for Common Stockholders – Basic	$	76,969	$	67,163	$	222,260	$	211,578	Net income available for Common Stockholders – Basic	$	82,371	$	82,906
Amounts allocated to non controlling interest (dilutive securities)	Amounts allocated to non controlling interest (dilutive securities)	3,772		3,346		10,981		10,563		Amounts allocated to non controlling interest (dilutive securities)	4,088		4,144
Net income available for Common Stockholders – Fully Diluted	Net income available for Common Stockholders – Fully Diluted	$	80,741	$	70,509	$	233,241	$	222,141	Net income available for Common Stockholders – Fully Diluted	$	86,459	$	87,050
Denominators:	Denominators:									Denominators:
Weighted average Common Shares outstanding – Basic	Weighted average Common Shares outstanding – Basic	186,100		185,814		186,008		185,758		Weighted average Common Shares outstanding – Basic	185,900		185,690
Effect of dilutive securities:	Effect of dilutive securities:									Effect of dilutive securities:
Exchange of Common OP Units for Common Shares	Exchange of Common OP Units for Common Shares	9,235		9,288		9,246		9,295		Exchange of Common OP Units for Common Shares	9,262		9,301
Stock options and restricted stock	Stock options and restricted stock	105		167		160		195		Stock options and restricted stock	207		255
Weighted average Common Shares outstanding – Fully Diluted	Weighted average Common Shares outstanding – Fully Diluted	195,440		195,269		195,414		195,248		Weighted average Common Shares outstanding – Fully Diluted	195,369		195,246

Earnings per Common Share – Basic	Earnings per Common Share – Basic	$	0.41	$	0.36	$	1.19	$	1.14	Earnings per Common Share – Basic	$	0.44	$	0.45

Earnings per Common Share – Fully Diluted	Earnings per Common Share – Fully Diluted	$	0.41	$	0.36	$	1.19	$	1.14	Earnings per Common Share – Fully Diluted	$	0.44	$	0.45

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, ~~2022:~~2022.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 6 – Common Stock and Other Equity Related Transactions (continued)

Distribution Amount Per Share

For the Quarter Ended

Stockholder Record Date

Payment Date

$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

~~$0.4475~~

~~June 30, 2023~~

~~July 14, 2023~~

~~$0.4475~~

~~September 30, 2023~~

~~September 29, 2023~~

~~October 13, 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. As of March 31, 2023, the full capacity remained available for issuance under our ATM equity offering 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 ~~nine months~~quarters ended ~~September 30,~~March 31, 2023 and 2022, ~~131,192~~25,496 and ~~34,680~~8,640 OP Units, respectively, were exchanged for an equal number of shares of Common Stock.

Note 67 – Investment in Real Estate

Acquisitions

2023

On March 28, 2023, we completed the acquisition of Red Oak Shores Campground, a 223-site RV community located in Ocean View, New Jersey for a purchase price of $9.5 million. The acquisition was accounted for as an asset acquisition under ASC 805, Business Combinations and was funded from our unsecured line of credit.

Impairment

During the ~~nine months~~quarter ended ~~September 30,~~March 31, 2023, we recorded an impairment ~~charges~~charge of approximately ~~$3.6~~$2.6 million ~~primarily~~ related to flooding events at certain Properties in California.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 78 – Investments in Unconsolidated Joint Ventures

The following table summarizes our ~~investments~~investment in unconsolidated joint ventures (investment ~~and income/(loss)~~ amounts in thousands with the number of Properties shown parenthetically as of ~~September 30,~~March 31, 2023 and December 31, 2022, respectively):


							Investment as of				Income/(Loss) for the Nine Months Ended										Investment as of				Income/(Loss) for the Quarters Ended
Investment	Investment	Location	Number of Sites	Economic Interest (a)			September 30, 2023		December 31, 2022		September 30, 2023		September 30, 2022		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	%		$	407	$	158	$	1,649	$	1,850	Meadows	Various (2,2)	1,077	50	%		$	232	$	158	$	374	$	260
Lakeshore	Lakeshore	Florida (3,3)	721	(b)			3,048		2,625		487		480		Lakeshore	Florida (3,3)	721	(b)			2,866		2,625		172		135
Voyager	Voyager	Arizona (1,1)	—	—	%	(c)	—		139		694		39		Voyager	Arizona (1,1)	—	—	%	(c)	—		139		692		20
ECHO JV	ECHO JV	Various	—	50	%		2,764		2,963		(199)		843		ECHO JV	Various	—	50	%		2,773		2,963		(190)		177
RVC	RVC	Various	1,283	80	%	(d)	61,805		60,323		(297)		(323)		RVC	Various	1,282	80	%	(d)	60,036		60,323		(353)		(421)
Mulberry Farms	Mulberry Farms	Arizona	200	50	%		10,560		9,902		96		—		Mulberry Farms	Arizona	200	50	%		10,071		9,902		(31)		—
Hiawassee KOA JV	Hiawassee KOA JV	Georgia	283	50	%		5,744		5,294		(272)		—		Hiawassee KOA JV	Georgia	283	50	%		$	5,157	$	5,294	$	(140)	$	—
			3,564				$	84,328	$	81,404	$	2,158	$	2,889			3,563				$	81,135	$	81,404	$	524	$	171

_____________________

(a)The percentages shown approximate our economic interest as of ~~September 30,~~March 31, 2023. Our legal ownership interest may differ.

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

(c)InDuring the quarter ended March of31, 2023 we sold our 33% interest in the utility plant servicing Voyager RV Resort.

(d)Includes three joint ventures of which one joint venture owns a portfolio of seven operating RV communities and two joint ventures each own an RV property under development.

We received approximately ~~$4.9~~$1.2 million and ~~$3.9~~$0.4 million in distributions from our unconsolidated joint ventures for the ~~nine months~~quarters ended ~~September 30,~~March 31, 2023 and 2022, respectively. Approximately ~~$1.4 million and $1.7~~$0.3 million of the distributions made to us exceeded our basis in our unconsolidated joint ventures for the ~~nine months~~quarters ended ~~September 30,~~March 31, 2023 and 2022, ~~respectively,~~ and as such, were recorded as income from unconsolidated joint ventures.

Note 89 – Borrowing Arrangements

Mortgage Notes Payable

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


		As of September 30, 2023				As of December 31, 2022					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	$	2,116,027	$	3,032,920	$	2,043,412	$	2,718,114	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 ~~September 30,~~March 31, 2023, was approximately 3.7% per annum. The debt bears interest at stated rates ranging from 2.4% to ~~5.1%~~8.9% per annum and matures on various dates ranging from ~~2025~~2023 to 2041. The debt encumbered a total of ~~120 and~~ 114 of our Properties as of ~~September 30,~~March 31, 2023 and December 31, 2022, ~~respectively,~~ and the gross carrying value of such Properties was approximately ~~$3,167.2~~$2,895.2 million and $2,868.3 million, as of ~~September 30,~~March 31, 2023 and December 31, 2022, respectively.

During the quarter ended June 30, 2023, we closed on a secured financing transaction generating gross proceeds of $89.0 million. The loan represents an incremental borrowing from an existing secured facility, has a fixed interest rate of 5.04% per annum and matures in ten years.

During the quarter ended September 30, 2023, we closed on three secured financing transactions generating gross proceeds of $375.0 million. The loans are secured by 20 MH and RV properties, have a weighted average fixed interest rate of 5.05% per annum and a weighted average maturity of approximately eight years.

~~Equity LifeStyle Properties, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~Note 8 – Borrowing Arrangements (continued)~~

During the quarter ended September 30, 2023, proceeds from the four secured financing transactions were used to repay $100.4 million of principal on three mortgage loans that were due to mature in 2023 and 2024 and the remaining outstanding balance on our unsecured line of credit (the “LOC”). The repaid mortgage loans had a weighted average fixed interest rate of 4.94% per annum and were secured by 14 MH and RV properties.

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 ~~LOC~~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 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 Term Loan has an interest rate of SOFR plus 1.40% to 1.95% per annum. For both the LOC and the $300 million Term Loan, the spread over SOFR is variable based on leverage throughout the respective loan terms. As of ~~September 30,~~March 31, 2023, the Company has no remaining LIBOR based borrowings.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 9 - Borrowing Arrangements (continued)

The LOC had ~~no outstanding~~a balance of $212.0 million and $198.0 million outstanding as of ~~September 30,~~March 31, 2023 and December 31, 2022, respectively. As of ~~September 30,~~March 31, 2023, our LOC had a remaining borrowing capacity of ~~$500.0~~$288.0 million.

As of ~~September 30,~~March 31, 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 910 – Derivative Instruments and Hedging Activities

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.

In March 2021, we entered into a Swap Agreement (the “2021 Swap”) with a notional amount of $300.0 million allowing us to trade the variable interest rate associated with our $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~~(see Note ~~8. Borrowing Arrangements~~9.Borrowing arrangements). The 2021 Swap has a fixed interest rate of 0.41% per annum and matures on March 25, 2024. Based on the leverage as of ~~September 30,~~March 31, 2023, our spread over SOFR was 1.40% resulting in an estimated all-in interest rate of 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 ~~September 30,~~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 September 30,		As of December 31,				As of March 31,		As of December 31,
(amounts in thousands)	(amounts in thousands)	Balance Sheet Location	2023		2022		(amounts in thousands)	Balance Sheet Location	2023		2022
Interest Rate Swaps		Other assets, net	$	15,564	$	19,119
Interest Rate Swap							Interest Rate Swap	Other assets, net	$	15,141	$	19,119

~~Equity LifeStyle Properties, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~Note 9 – Derivative Instruments and Hedging (continued)~~

The following table presents the effect of our derivative financial ~~instruments~~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 nine months ended September 30,				Location of (gain)/ loss reclassified from accumulated OCI into income	Amount of (gain)/loss reclassified from accumulated OCI into income for the nine months ended September 30,				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)	2023		2022		(amounts in thousands)	2023		2022		(amounts in thousands)	2023		2022		(amounts in thousands)	2023		2022
Interest Rate Swaps		$	(9,364)	$	(18,479)	Interest Expense	$	(12,919)	$	(1,527)
Interest Rate Swap											Interest Rate Swap	$	523	$	(9,661)	Interest Expense	$	(3,455)	$	263

During the next twelve months, we estimate that ~~$10.7~~$14.0 million will be reclassified ~~from accumulated other comprehensive income (loss)~~ as a decrease to interest expense. This estimate may be subject to change as the underlying SOFR changes. We determined that no adjustment was necessary for non-performance risk on our derivative obligation. As of ~~September 30,~~March 31, 2023, we had not posted any collateral related to the 2021 ~~Swap or 2023~~ Swap.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note ~~10 -~~11 – Deferred Revenue from Membership Upgrade Sales and Deferred Commission Expense

The components of the change in deferred revenue from membership upgrades and deferred commission expense were as follows:


(amounts in thousands)	(amounts in thousands)	Nine Months Ended September 30, 2023		Nine Months Ended September 30, 2022		(amounts in thousands)	Three Month Ended March 31, 2023		Three Month Ended March 31, 2022
Deferred revenue - upfront payments from membership upgrade sales, beginning	Deferred revenue - upfront payments from membership upgrade sales, beginning	$	185,660	$	163,957	Deferred revenue - upfront payments from membership upgrade sales, beginning	$	185,660	$	163,957
Membership upgrade sales(1)	Membership upgrade sales(1)	28,041		27,771		Membership upgrade sales(1)	7,975		7,151
Revenue recognized from membership upgrade sales upfront payments	Revenue recognized from membership upgrade sales upfront payments	(10,863)		(9,543)		Revenue recognized from membership upgrade sales upfront payments	(3,505)		(3,067)
Net increase in deferred revenue - upfront payments from membership grade sales(1)	Net increase in deferred revenue - upfront payments from membership grade sales(1)	17,178		18,228		Net increase in deferred revenue - upfront payments from membership grade sales(1)	4,470		4,084
Deferred revenue - upfront payments from membership upgrade sales, ending(2)	Deferred revenue - upfront payments from membership upgrade sales, ending(2)	$	202,838	$	182,185	Deferred revenue - upfront payments from membership upgrade sales, ending (2)	$	190,130	$	168,041

Deferred commission expense, beginning	Deferred commission expense, beginning	$	50,441	$	47,349	Deferred commission expense, beginning	$	50,441	47,349
Deferred commission expense	Deferred commission expense	5,861		5,531		Deferred commission expense	1,744		1,550
Commission expense recognized	Commission expense recognized	(3,122)		(2,850)		Commission expense recognized	(1,095)		(1,040)
Net increase in deferred commission expense(1)	Net increase in deferred commission expense(1)	2,739		2,681		Net increase in deferred commission expense(1)	649		510
Deferred commission expense, ending	Deferred commission expense, ending	$	53,180	$	50,030	Deferred commission expense, ending	51,090		47,859

_____________________

(1)We present membership upgrade sales and related commissions on a net basis in the Consolidated Statements of Income and Comprehensive Income.

(2)Included in Deferred membership revenue on the Consolidated Balance Sheets.

~~Equity LifeStyle Properties, Inc.~~

~~Notes to Consolidated Financial Statements~~

Note 1112 – 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, 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 30, 2024, February 4, 2025 and 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 30, 2024, February 4, 2025 and 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 13,812 shares of restricted stock subject to 2023 performance goals have a grant date fair value of $1.0 million.

During the quarter ended June 30, 2023, we awarded to certain members of our Board of Directors 60,391 shares of restricted stock at a fair value of approximately $4.1 million and options to purchase 8,450 shares of common stock with an exercise price of $68.01. These are time-based awards subject to various vesting dates between October 25, 2023 and April 24, 2026.

~~Stock-based~~Stock based compensation expense, reported in General and administrative expense on the Consolidated Statements of Income and Comprehensive Income, was ~~$1.8~~$2.5 million and $2.6 million for the quarters ended ~~September 30,~~March 31, 2023 and 2022, ~~respectively, and $12.9 million and $7.9 million for the nine months ended September 30, 2023 and 2022,~~ respectively. Stock-based compensation expense of $12.9 million for the nine months ended September 30, 2023 includes accelerated vesting of stock-based compensation expense of $6.3 million recognized during the quarter ended June 30, 2023, as a result of the passing of a member of our Board of Directors.

Note 1213 – 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.

Beginning on August 31, 2023 through October 12, 2023, certain private party plaintiffs filed several putative class actions against Datacomp Appraisal Systems, Inc. (“Datacomp”) and several owner/operators of manufactured housing communities, including ELS (the “Datacomp Litigation”), alleging that the community owner/operators used JLT Market Reports produced by Datacomp to conspire to raise manufactured home lot rents in violation of Section 1 of the Sherman Act. ELS purchased Datacomp in connection with the MHVillage/Datacomp acquisition during the year ended December 31, 2021.

We believe that the Datacomp Litigation is without merit, and we intend to vigorously defend our interests in this matter. As of September 30, 2023, we have not made an accrual, as we are unable to predict the outcome of this matter or reasonably estimate any possible loss.

Note ~~13 -~~14 – Reportable Segments

We have identified two 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

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 14 – Reportable Segments (continued)

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 ~~and nine months~~ ended ~~September 30,~~March 31, 2023 or 2022.

The following tables summarize our segment financial information for the quarters ended March 31, 2023 and 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 (1)	$	51,412	$	9,562	$	60,974

___________________

(1)Amounts are restated. See Part I. Item 1. Financial Statements—Note 3. Restatementof Previously Issued Consolidated Financial Statements for more information.

Quarter Ended March 31, 2022


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

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

Total assets	$	5,012,335	$	252,470	$	5,264,805
Capital improvements (2)	$	54,990	$	5,968	$	60,958

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 1314 – Reportable Segments (continued)

~~The following tables summarize our segment financial information for the quarters and nine months ended September 30, 2023 and 2022:~~

~~Quarter Ended September 30, 2023~~

(amounts in thousands) Property
Operations Home Sales
and Rentals
Operations Consolidated
Operations revenues $ 351,243 $ 32,961 $ 384,204
Operations expenses (183,579) (28,502) (212,081)
Income from segment operations 167,664 4,459 172,123
Interest income 1,637 631 2,268
Depreciation and amortization (48,242) (2,726) (50,968)
Loss on sale of real estate and impairment, net (949) — (949)
Income from operations $ 120,110 $ 2,364 $ 122,474
Reconciliation to consolidated net income:
Corporate interest income 8
Income from other investments, net 2,333
General and administrative (9,895)
Other expenses (1,338)
Interest and related amortization (33,434)
Equity in income of unconsolidated joint ventures 661
Early debt retirement (68)
Consolidated net income $ 80,741
Total assets $ 5,351,993 $ 274,298 $ 5,626,291
Capital improvements (1)
$ 79,750 $ 2,420 $ 82,170

~~___________________~~

~~(1)Amounts are restated. See~~ ~~Part I. Item 1. Financial Statements - Note 2. Summary of Significant Accounting Policies: (e) Prior Period Correction~~ ~~for more information.~~

~~Quarter Ended September 30, 2022~~

(amounts in thousands) Property
Operations Home Sales
and Rentals
Operations Consolidated
Operations revenues $ 338,208 $ 38,497 $ 376,705
Operations expenses (179,775) (33,384) (213,159)
Income from segment operations 158,433 5,113 163,546
Interest income 1,441 422 1,863
Depreciation and amortization (50,026) (2,521) (52,547)
Loss on sale of real estate and impairment, net (2,289) (1,458) (3,747)
Income from operations $ 107,559 $ 1,556 $ 109,115
Reconciliation to consolidated net income:
Corporate interest income 2
Income from other investments, net 2,399
General and administrative (1)
(11,086)
Other expenses (1)
(1,627)
Interest and related amortization (29,759)
Equity in income of unconsolidated joint ventures 1,465
Consolidated net income $ 70,509
Total assets $ 5,160,230 $ 245,216 $ 5,405,446
Capital improvements (2)
$ 49,553 $ 6,026 $ 55,579

______________________

(1)Prior period amounts have been reclassified to conform to the current period presentation.

(2)Amounts are restated. See Part I. Item 1. Financial ~~Statements -~~ Statements—Note ~~2. Summary~~3. Restatement of ~~Significant Accounting Policies: (e) Prior Period Correction~~Previously Issued Consolidated Financial Statements for more information.

~~Equity LifeStyle Properties, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~Note 13 – Reportable Segments (continued)~~

~~Nine Months Ended September 30, 2023~~

(amounts in thousands) Property
Operations Home Sales
and Rentals
Operations Consolidated
Operations revenues $ 1,029,609 $ 85,650 $ 1,115,259
Operations expenses (526,052) (73,559) (599,611)
Income from segment operations 503,557 12,091 515,648
Interest income 4,819 1,782 6,601
Depreciation and amortization (144,659) (8,275) (152,934)
Loss on sale of real estate and impairment, net (3,581) — (3,581)
Income from operations $ 360,136 $ 5,598 $ 365,734
Reconciliation to consolidated net income:
Corporate interest income 22
Income from other investments, net 6,897
General and administrative (38,163)
Other expenses (4,187)
Interest and related amortization (99,144)
Equity in income of unconsolidated joint ventures 2,158
Early debt retirement (68)
Consolidated net income $ 233,249
Total assets $ 5,351,993 $ 274,298 $ 5,626,291
Capital improvements (1)
$ 208,576 $ 22,596 $ 231,172

~~___________________~~

~~(1)Amounts are restated. See~~ ~~Part I. Item 1. Financial Statements - Note 2. Summary of Significant Accounting Policies: (e) Prior Period Correction~~ ~~for more information.~~

~~Nine Months Ended September 30, 2022~~

(amounts in thousands) Property
Operations Home Sales
and Rentals
Operations Consolidated
Operations revenues $ 984,535 $ 109,675 $ 1,094,210
Operations expenses (506,739) (95,847) (602,586)
Income from segment operations 477,796 13,828 491,624
Interest income 4,198 1,143 5,341
Depreciation and amortization (145,200) (7,537) (152,737)
Loss on sale of real estate and impairment,, net (2,289) (1,458) (3,747)
Income from operations $ 334,505 $ 5,976 $ 340,481
Reconciliation to consolidated net income:
Corporate interest income 5
Income from other investments, net 6,920
General and administrative (1)
(34,834)
Other expenses (1)
(6,880)
Interest and related amortization (85,276)
Equity in income of unconsolidated joint ventures 2,889
Early debt retirement (1,156)
Consolidated net income $ 222,149
Total assets $ 5,160,230 $ 245,216 $ 5,405,446
Capital improvements (2)
$ 169,233 $ 16,683 $ 185,916

~~________________~~

~~(1)Prior period amounts have been reclassified to conform to the current period presentation.~~

~~(2)Amounts are restated. See~~ ~~Part I. Item 1. Financial Statements - Note 2. Summary of Significant Accounting Policies: (e) Prior Period Correction~~ ~~for more information.~~

~~Equity LifeStyle Properties, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~Note 13 – Reportable Segments (continued)~~

The following table summarizes our financial information for the Property Operations segment for the quarters ~~and nine months~~ ended ~~September 30,~~March 31, 2023 and 2022:


		Quarters Ended September 30,				Nine Months Ended September 30,					Quarters Ended March 31,
(amounts in thousands)	(amounts in thousands)	2023		2022		2023		2022		(amounts in thousands)	2023		2022
Revenues:	Revenues:									Revenues:
Rental income	Rental income	$	299,781	$	285,272	$	877,310	$	837,892	Rental income	$	292,579	$	281,104
Annual membership subscriptions	Annual membership subscriptions	16,673		16,254		48,832		47,003		Annual membership subscriptions	15,970		15,157
Membership upgrade sales (1)	Membership upgrade sales (1)	3,744		3,308		10,863		9,543		Membership upgrade sales (1)	3,505		3,067

Other income	Other income	15,658		15,580		51,283		43,316		Other income	17,714		13,542
Gross revenues from ancillary services	Gross revenues from ancillary services	15,387		17,794		41,321		46,781		Gross revenues from ancillary services	11,969		12,556
Total property operations revenues	Total property operations revenues	351,243		338,208		1,029,609		984,535		Total property operations revenues	341,737		325,426
Expenses:	Expenses:									Expenses:
Property operating and maintenance	Property operating and maintenance	125,081		121,692		357,660		337,363		Property operating and maintenance	111,524		102,590
Real estate taxes	Real estate taxes	19,017		17,734		56,165		56,373		Real estate taxes	18,316		19,457
Membership sales and marketing (1)	Membership sales and marketing (1)	5,696		5,937		16,055		15,720		Membership sales and marketing (1)	4,838		4,331

Cost of ancillary services	Cost of ancillary services	8,226		9,765		20,562		24,639		Cost of ancillary services	5,297		5,721
Ancillary operating expenses	Ancillary operating expenses	5,672		5,644		16,900		16,671		Ancillary operating expenses	5,584		5,018
Property management	Property management	19,887		19,003		58,710		55,973		Property management	19,464		17,871
Total property operations expenses	Total property operations expenses	183,579		179,775		526,052		506,739		Total property operations expenses	165,023		154,988
Income from property operations segment	Income from property operations segment	$	167,664	$	158,433	$	503,557	$	477,796	Income from property operations segment	$	176,714	$	170,438

_____________________

(1)We present membership upgrade sales and related commissions on a net basis in the Consolidated Statements of Income and Comprehensive Income.

The following table summarizes our financial information for the Home Sales and Rentals Operations segment for the quarters ~~and nine months~~ ended ~~September 30,~~March 31, 2023 and 2022:


		Quarters Ended September 30,				Nine Months Ended September 30,					Quarters Ended March 31,
(amounts in thousands)	(amounts in thousands)	2023		2022		2023		2022		(amounts in thousands)	2023		2022
Revenues:	Revenues:									Revenues:
Rental income (1)	Rental income (1)	$	3,553	$	3,744	$	11,130	$	11,519	Rental income (1)	$	3,872	$	3,961
Gross revenue from home sales and brokered resales	Gross revenue from home sales and brokered resales	29,408		34,753		74,520		98,156		Gross revenue from home sales and brokered resales	20,164		27,139
Total revenues	Total revenues	32,961		38,497		85,650		109,675		Total revenues	24,036		31,100
Expenses:	Expenses:									Expenses:
Rental home operating and maintenance	Rental home operating and maintenance	1,765		1,489		3,883		4,117		Rental home operating and maintenance	959		1,402
Cost of home sales and brokered resales	Cost of home sales and brokered resales	25,245		30,459		65,318		87,255		Cost of home sales and brokered resales	17,844		24,963
Home selling expenses	Home selling expenses	1,492		1,436		4,358		4,475		Home selling expenses	1,340		1,463
Total expenses	Total expenses	28,502		33,384		73,559		95,847		Total expenses	20,143		27,828
Income from home sales and rentals operations segment	Income from home sales and rentals operations segment	$	4,459	$	5,113	$	12,091	$	13,828	Income from home sales and rentals operations segment	$	3,893	$	3,272

______________________

(1)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.

~~Equity LifeStyle Properties, Inc.~~

~~Notes to Consolidated Financial Statements~~

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/A and in our Annual Report on Form 10-K for the year ended December 31, 2022, as amended on January 22, 2024 (“2022 Form 10-K/A”), as well as information in Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2022 Form 10-K/A.

Certain items within this ~~Management’s~~Management's discussion and analysis have been updated as a result of the amendment and

restatement of this Quarterly Report on Form 10-Q/A, as described in further detail in the “Explanatory ~~Note”.~~Note.” For further detail regarding the restatement, also see Part I. Item 1. Financial Statements and Supplementary Data—Note 3, Restatement of Previously Issued Consolidated Financial Statements and Item 4. Controls and Procedures.

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 ~~September 30,~~March 31, 2023, we owned or had an ownership interest in a portfolio of 450 Properties located throughout the United States and Canada containing ~~171,707~~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 ~~ten~~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.

2117

Management's Discussion and Analysis (continued)

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


						Total Sites as of ~~September 30,~~March 31, 2023
MH Sites						72,700
RV Sites:
Annual						~~35,300~~34,900
Seasonal						12,500
Transient						~~14,900~~15,000
Marina Slips						6,900
Membership (1)						25,800
Joint Ventures (2)						3,600
Total						~~171,700~~171,400

_________________________

(1)Primarily utilized to service approximately ~~125,300~~127,700 members. Includes approximately ~~6,200~~6,300 Sites rented on an annual basis.

(2)Includes approximately 2,000 annual Sites and 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. 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 property management, and (v) Core Portfolio income from property operations, excluding property management (operating results for Properties owned and operated in both periods under comparison). We use these measures internally to evaluate the operating performance of our portfolio and provide a basis for comparison with other real estate companies. Definitions and reconciliations of these measures to the most comparable GAAP measures are included below in this discussion.

Results Overview

For the quarter ended ~~September 30,~~March 31, 2023, net income available for Common Stockholders ~~increased $9.8~~decreased $0.5 million to ~~$77.0~~$82.4 million, or ~~$0.41~~$0.44 per fully diluted Common Share, compared to ~~$67.2~~$82.9 million, or $0.36 per fully diluted Common Share, for the same period in 2022. For the nine months ended September 30, 2023, net income available for Common Stockholders increased $10.7 million, to $222.3 million, or $1.19, per fully diluted Common Share, compared to $211.6 million, or $1.14$0.45 per fully diluted Common Share, for the same period in 2022. Net income available for Common Stockholders for the ~~nine months ended September 30, 2023 includes accelerated vesting of stock-based compensation expense of $6.3 million recognized during the~~ quarter ended ~~June 30,~~March 31, 2023 ~~and~~includes an impairment charge of approximately ~~$3.6~~$2.6 million ~~recognized during the nine months ended September 30, 2023 primarily~~ related to flooding events at certain Properties in California.

For the quarter ended ~~September 30,~~March 31, 2023, FFO available for Common Stock and Operating Partnership unit (“OP Unit”) holders increased ~~$6.0~~$2.9 million, or ~~$0.03~~$0.02 per fully diluted Common Share, to ~~$133.8~~$140.3 million, or ~~$0.68~~$0.72 per fully diluted Common Share, compared to ~~$127.8~~$137.4 million, or $0.65 per fully diluted Common Share, for the same period in 2022. For the nine months ended September 30, 2023, FFO available for Common Stock and OP Unit holders increased $10.2 million, or $0.05 per fully diluted Common Share, to $407.1 million, or $2.08 per fully diluted Common Share, compared to $396.9 million, or $2.03 per fully diluted Common Share for the same period in 2022.

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

For the quarter ended September 30, 2023, Normalized FFO available for Common Stock and OP Unit holders increased $3.7 million, or $0.01 per fully diluted Common Share, to $133.9 million, or $0.68 per fully diluted Common Share, compared to $130.2 million, or $0.67 per fully diluted Common Share, for the same period in 2022. For the nine months ended September 30, 2023, Normalized FFO available for Common Stock and OP Unit holders increased $10.2 million, or $0.05 per fully diluted Common Share, to $413.7 million, or $2.12 per fully diluted Common Share, compared to $403.5 million, or $2.07$0.70 per fully diluted Common Share, for the same period in 2022.

For the quarter ended ~~September 30,~~March 31, 2023, Normalized FFO available for Common Stock and OP Unit holders increased $2.6 million, or $0.01 per fully diluted Common Share, to $140.5 million, or $0.72 per fully diluted Common Share, compared to $137.9 million, or $0.71 per fully diluted Common Share, for the same period in 2022.

For the quarter ended March 31, 2023, our Core Portfolio property operating revenues, increased ~~5.0%~~6.3% and property operating expenses, excluding property management, increased ~~5.1%~~7.3%, from the same period in 2022, resulting in an increase in income from property operations, property management, of 5.0%, compared to the same period in 2022. For the nine months ended September 30, 2023, our Core Portfolio property operating revenues, increased 5.6% and property operating expenses, excluding property management, increased 6.5% from the same period in 2022, resulting in an increase in income from property operations, excluding property management, of ~~4.9%~~5.6%, compared to the same period in 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 ~~95.2%~~95.0% for the quarters ended ~~September 30,~~March 31, 2023, December 31, 2022 and ~~September 30,~~March 31, 2022, respectively. For the quarter ended ~~September 30,~~March 31, 2023, our Core Portfolio occupancy ~~increased~~decreased by 4279 sites, which included an increase in homeowner occupancy of ~~225~~30 sites and a decrease in rental occupancy of ~~183~~109 compared to ~~June 30, 2023.~~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 depending on local market conditions, availability of vacant sites and success with converting renters to homeowners. As of ~~September 30,~~March 31, 2023, we had ~~2,345~~2,702 occupied rental homes in our Core MH communities.

RV and marina base rental income in our Core Portfolio increased ~~2.0%~~5.5% for the quarter ended ~~September 30,~~March 31, 2023, compared to the same period in 2022 driven by ~~an increase in Annual RV rental income, partially offset by a decline in Seasonal~~annual and ~~Transient RV~~seasonal rental income. Core RV and marina base rental income from annuals represents ~~66.1%~~more than 60% of total Core RV and marina base rental income and increased ~~8.0%~~8.4% for the quarter ended ~~September 30,~~March 31, 2023, compared to the same period in 2022 due to ~~a 7.8%~~an 8.0% increase in rate and ~~0.2%~~0.4% increase in occupancy. Core seasonal RV and marina base rental income ~~decreased 8.5%~~increased 11.9% for the quarter ended ~~September 30,~~March 31, 2023, compared to the same period in 2022. Core transient RV and marina base rental income decreased by ~~$2.3~~$2.4 million, or ~~7.6%~~14.9% for the quarter ended ~~September 30,~~March 31, 2023, compared to the same period in 2022. ~~Since September 30, 2022,~~Across the portfolio we have ~~increased our Core RV and marina annual site count by approximately 40% resulting in a reduction in the number of transient~~fewer sites available for ~~use. We also~~transient stays and we experienced ~~local storm~~operating disruptions in California as a result of flooding events ~~across the portfolio~~ during the quarter ended ~~September 30, 2023, particularly in the North, Northeast and California, which impacted our transient RV and marina base rental income.~~March 31, 2023.

Demand for our homes and communities remains strong as evidenced by factors including our high occupancy levels. We closed ~~285~~176 new home sales during the quarter ended ~~September 30,~~March 31, 2023, compared to ~~331~~261 new home sales during the quarter ended ~~September 30,~~March 31, 2022, a decrease of ~~13.9%~~32.6%. The ~~decrease in~~ new home sales during the quarter ended ~~September 30,~~March 31, 2023 were primarily in the Florida ~~and Arizona markets.~~market.

Our gross investment in real estate increased ~~$255.9~~$84.7 million to ~~$7,625.5~~$7,454.3 million as of ~~September 30,~~March 31, 2023 from $7,369.6 million as of December 31, 2022, primarily due to capital improvements and an acquisition during the ~~nine months~~quarter ended ~~September 30,~~March 31, 2023.

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

The following chart lists the Properties acquired or sold from January 1, 2022 through ~~September 30,~~March 31, 2023 and Sites added through expansion opportunities at our existing Properties:

Location

Type of Property

Transaction Date

Sites

Total Sites as of January 1, 2022 (1)

169,300

Acquisition Properties:

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 2022

1,034

Sites added (reconfigured) in 2023

~~236~~6

Ground Lease Termination:

Westwinds

San Jose, California

August 31, 2022

(723)

Total Sites as of ~~September 30,~~March 31, 2023 (1)

~~171,700~~171,400

______________________

(1)Sites are approximate.

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 and Normalized FFO.

We believe investors should review Income from property operations and Core Portfolio, FFO and Normalized FFO along with GAAP net income and cash flow from operating activities, investing activities and financing activities, when evaluating an equity REIT’s operating performance. A discussion of Income from property operations and Core Portfolio, FFO, ~~and~~ Normalized FFO 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 property management, and Core Portfolio income from property operations, excluding 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, membership sales and marketing expenses and property management expenses. Income from property operations, excluding property management, represents income from property operations excluding property management expenses. Property management ~~represents~~represent the expenses associated with indirect costs such as off-site payroll and certain administrative and professional expenses. We believe exclusion of property management expenses is helpful to investors and analysts as a measure of the operating results of our properties, excluding items that are not directly related to the operation of the ~~properties. For~~properties.For comparative purposes, we present bad debt expense within Property operating and maintenance in the current and prior periods. We believe that this Non-GAAP financial measure is helpful to investors and analysts as a measure of the operating results of our properties.

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

Our Core Portfolio consists of our Properties owned and operated during all of 2022 and 2023. Core Portfolio income from property operations, excluding 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 2022 and 2023. This includes, but is not limited to, four RV communities and one membership RV community acquired during 2022 and one RV community acquired during 2023. The Non-Core Properties also include Fish Tale Marina, Fort Myers Beach, Gulf Air, Palm Harbour Marina, Pine Island and Ramblers ~~Rest, Rancho Oso and Turtle Beach.~~Rest.

FFO and Normalized 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 believe FFO, as defined by the Board of Governors of NAREIT, is generally a measure of performance for an equity REIT. While FFO is a relevant and widely used measure of operating performance for equity REITs, it does not represent cash flow from operations or net income as defined by GAAP, and it should not be considered as an alternative to these indicators in evaluating liquidity or operating performance.

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, 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 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

Management's Discussion and Analysis (continued)

components of FFO and Normalized FFO because it allows investors, analysts and our management to assess the impact of those items.

Our definitions and calculations of these Non-GAAP financial and operating measures and other terms may differ from the definitions and methodologies used by other REITs and, accordingly, may not be comparable. These Non-GAAP financial and operating measures do not represent cash generated from operating activities in accordance with GAAP, nor do they represent cash available to pay distributions and should not be considered as an alternative to net income, determined in accordance with GAAP, as an indication of our financial performance, or to cash 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 ~~and nine months~~ ended ~~September 30,~~March 31, 2023 and 2022:


		Quarters Ended September 30,				Nine Months Ended September 30,					Quarters Ended March 31,
(amounts in thousands)	(amounts in thousands)	2023		2022		2023		2022		(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	$	76,969	$	67,163	$	222,260	$	211,578	Net income available for Common Stockholders	$	82,371	$	82,906
Redeemable preferred stock dividends		—		—		8		8

Income allocated to non-controlling interests – Common OP Units	Income allocated to non-controlling interests – Common OP Units	3,772		3,346		10,981		10,563		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	(661)		(1,465)		(2,158)		(2,889)		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	80,080		69,044		231,091		219,260		Income before equity in income of unconsolidated joint ventures	85,935		86,879
Loss on sale of real estate and impairment, net (1)	Loss on sale of real estate and impairment, net (1)	949		3,747		3,581		3,747		Loss on sale of real estate and impairment, net(1)	2,632		—
Total other expenses, net	Total other expenses, net	91,094		90,755		280,976		268,617		Total other expenses, net	92,040		86,831
Gain from home sales operations and other	Gain from home sales operations and other	(4,160)		(5,243)		(8,703)		(11,897)		Gain from home sales operations and other	(2,068)		(2,530)
Income from property operations	Income from property operations	$	167,963	$	158,303	$	506,945	$	479,727	Income from property operations	$	178,539	$	171,180

_____________________

(1)During the ~~nine months~~quarter ended ~~September 30,~~March 31, 2023, we recorded an impairment ~~charges~~charge of approximately ~~$3.6~~$2.6 million ~~primarily~~ 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 ~~and nine months~~ ended ~~September 30,~~March 31, 2023 and 2022:


		Quarters Ended September 30,				Nine Months Ended September 30,					Quarters Ended March 31,
(amounts in thousands)	(amounts in thousands)	2023		2022		2023		2022		(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	$	76,969	$	67,163	$	222,260	$	211,578	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	3,772		3,346		10,981		10,563		Income allocated to non-controlling interests – Common OP Units	4,088		4,144

Depreciation and amortization	Depreciation and amortization	50,968		52,547		152,934		152,737		Depreciation and amortization	50,502		49,394
Depreciation on unconsolidated joint ventures	Depreciation on unconsolidated joint ventures	1,141		1,035		3,357		2,811		Depreciation on unconsolidated joint ventures	1,135		941
Gain on unconsolidated joint ventures	Gain on unconsolidated joint ventures	—		—		(416)		—		Gain on unconsolidated joint ventures	(416)		—
Loss on sale of real estate and impairment, net	Loss on sale of real estate and impairment, net	949		3,747		3,581		3,747		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	133,799		127,838		392,697		381,436		FFO available for Common Stock and OP Unit holders	140,312		137,385
Early debt retirement	Early debt retirement	68		—		68		1,156		Early debt retirement	—		516
Transaction/pursuit costs (1)	Transaction/pursuit costs (1)	—		302		117		3,384		Transaction/pursuit costs (1)	116		—
Accelerated vesting of stock-based compensation (2)		—		—		6,320		—
Lease termination expenses (3)		—		2,073		90		2,073
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	$	133,867	$	130,213	$	399,292	$	388,049	Normalized FFO available for Common Stock and OP Unit holders	$	140,518	$	137,901
Weighted average Common Shares outstanding – Fully Diluted	Weighted average Common Shares outstanding – Fully Diluted	195,440		195,269		195,414		195,248		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 and Comprehensive~~ Income.

(2)~~Represents accelerated vesting of stock-based compensation expense of $6.3 million recognized during the quarter ended June 30, 2023 as a result of the passing of a member of our Board of Directors.~~

~~(3)~~Represents non-operating expenses associated with the Westwinds ground leases that terminated on August 31, 2022 and is included in General and ~~administrative expense~~

Administrative expenses in the Consolidated ~~Statements~~Statement of ~~Income and Comprehensive~~ Income.

2622

Management's Discussion and Analysis (continued)

Results of Operations

This section discusses the comparison of our results of operations for the quarters ~~and nine months~~ ended ~~September 30,~~March 31, 2023 and ~~September 30,~~March 31, 2022 and our operating activities, investing activities and financing activities for the ~~nine months~~quarters ended ~~September 30,~~March 31, 2023 and ~~September 30,~~March 31, 2022. For the comparison of our results of operations for the quarters ~~and nine months~~ ended ~~September 30,~~March 31, 2022 and ~~September 30,~~March 31, 2021 and discussion of our operating activities, investing activities and financing activities for the ~~nine months~~quarters ended ~~September 30,~~March 31, 2022 and ~~September 30,~~March 31, 2021, refer to Part 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 ~~September 30,~~March 31, 2022, filed with the SEC on ~~October 21,~~April 27, 2022.

Comparison of the ~~Quarter Ended September 30,~~quarter ended March 31, 2023 to the ~~Quarter Ended September 30,~~quarter ended March 31, 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 ~~September 30,~~March 31, 2023 and ~~September 30,~~March 31, 2022:


		Core Portfolio								Total Portfolio									Core Portfolio								Total Portfolio
		Quarters Ended September 30,								Quarters Ended September 30,									Quarters Ended March 31,								Quarters Ended March 31,
(amounts in thousands)	(amounts in thousands)	2023		2022		Variance		% Change		2023		2022		Variance		% Change		(amounts in thousands)	2023		2022		Variance		% Change		2023		2022		Variance		% Change
MH base rental income (1)	MH base rental income (1)	$	167,780	$	157,037	$	10,743	6.8	%	$	167,937	$	159,045	$	8,892	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)	3,542		3,729		(187)		(5.0)	%	3,553		3,744		(191)		(5.1)	%	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)	106,426		104,297		2,129		2.0	%	112,819		109,882		2,937		2.7	%	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	16,242		15,833		409		2.6	%	16,673		16,254		419		2.6	%	Annual membership subscriptions	15,780		15,075		705		4.7	%	15,970		15,157		813		5.4	%
Membership upgrades sales (2)	Membership upgrades sales (2)	3,331		2,427		904		37.2	%	3,744		3,308		436		13.2	%	Membership upgrades sales (2)	3,512		2,935		577		19.7	%	3,505		3,067		438		14.3	%
Utility and other income (1)	Utility and other income (1)	31,350		29,582		1,768		6.0	%	35,840		32,746		3,094		9.4	%	Utility and other income (1)	29,483		26,957		2,526		9.4	%	35,331		30,044		5,287		17.6	%
Property operating revenues	Property operating revenues	328,671		312,905		15,766		5.0	%	340,566		324,979		15,587		4.8	%	Property operating revenues	325,443		306,094		19,349		6.3	%	334,823		318,329		16,494		5.2	%

Property operating and maintenance (1)(3)	Property operating and maintenance (1)(3)	122,469		117,640		4,829		4.1	%	126,238		122,513		3,725		3.0	%	Property operating and maintenance (1)(3)	110,015		100,686		9,329		9.3	%	112,707		104,088		8,619		8.3	%
Real estate taxes	Real estate taxes	18,529		16,577		1,952		11.8	%	19,017		17,734		1,283		7.2	%	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	1,762		1,483		279		18.8	%	1,765		1,489		276		18.5	%	Rental home operating and maintenance	959		1,392		(433)		(31.1)	%	959		1,402		(443)		(31.6)	%
Membership sales and marketing (4)	Membership sales and marketing (4)	5,595		5,413		182		3.4	%	5,696		5,937		(241)		(4.1)	%	Membership sales and marketing (4)	4,842		4,289		553		12.9	%	4,838		4,331		507		11.7	%
Property operating expenses, excluding property management	Property operating expenses, excluding property management	148,355		141,113		7,242		5.1	%	152,716		147,673		5,043		3.4	%	Property operating expenses, excluding property management	133,475		124,342		9,133		7.3	%	136,820		129,278		7,542		5.8	%
Income from property operations, excluding property management (5)	Income from property operations, excluding property management (5)	180,316		171,792		8,524		5.0	%	187,850		177,306		10,544		5.9	%	Income from property operations, excluding property management (5)	191,968		181,752		10,216		5.6	%	198,003		189,051		8,952		4.7	%
Property management	Property management	19,887		19,003		884		4.7	%	19,887		19,003		884		4.7	%	Property management	19,464		17,871		1,593		8.9	%	19,464		17,871		1,593		8.9	%
Income from property operations (5)	Income from property operations (5)	$	160,429	$	152,789	$	7,640	5.0	%	$	167,963	$	158,303	$	9,660	6.1	%	Income from property operations (5)	$	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)Membership upgrade sales revenue is net of deferrals of ~~$7.0~~$4.5 million and ~~$7.8~~$4.1 million for the quarters ended ~~September 30,~~March 31, 2023 and ~~September 30,~~March 31, 2022, respectively.

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

(4)Membership sales and marketing expense is net of sales commission deferrals of ~~$1.2~~$0.7 million and $0.6 million for ~~both~~the quarters ended ~~September 30,~~March 31, 2023 and ~~September 30, 2022.~~March 31, 2022, respectively.

(5)See Part I. Item 2. Management's Discussion and Analysis—Non-GAAP Financial Measures 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 ~~September 30,~~March 31, 2023, increased ~~$9.7~~$7.4 million, or ~~6.1%~~4.3%, from the quarter ended ~~September 30,~~March 31, 2022, driven by an increase of ~~$7.6~~$8.6 million, or ~~5.0%~~5.3%, from our Core Portfolio, ~~and an increase~~partially offset by a decrease of ~~$2.1~~$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, primarily in MH base rental income and RV and marina base rental ~~income and Utility and other~~ income, partially offset by an increase in property operating expenses, excluding property management. The decrease in income from property operations from our Non-Core Portfolio was primarily due to lower MH base rental income and ~~maintenance expenses~~RV and ~~real estate taxes.~~

marina base rental income, partially offset by business interruption income related to Hurricane Ian of $3.6 million recognized during the quarter ended March 31, 2023.

2723

Management's Discussion and Analysis (continued)

Property Operating Revenues

MH base rental income in our Core Portfolio for the quarter ended ~~September 30,~~March 31, 2023 increased ~~$10.7~~$10.0 million, or ~~6.8%~~6.5%, from the quarter ended ~~September 30,~~March 31, 2022, which reflects ~~7.1%~~6.6% growth from rate increases and a decline of ~~0.3%~~0.1% in occupancy. The average monthly base rental income per Site in our Core Portfolio increased to approximately ~~$813~~$797 for the quarter ended ~~September 30,~~March 31, 2023 from approximately ~~$759~~$747 for the quarter ended ~~September 30,~~March 31, 2022. The average occupancy for our Core Portfolio was 94.9% for the quarter ended ~~September 30,~~March 31, 2023 and ~~95.2%~~95.0% for the quarter ended ~~September 30,~~March 31, 2022.

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


		Core Portfolio								Total Portfolio									Core Portfolio								Total Portfolio
		Quarters Ended September 30,								Quarters Ended September 30,									Quarters Ended March 31,								Quarters Ended March 31,
(amounts in thousands)	(amounts in thousands)	2023		2022		Variance		% Change		2023		2022		Variance		% Change		(amounts in thousands)	2023		2022		Variance		% Change		2023		2022		Variance		% Change
Annual	Annual	$	70,374	$	65,181	$	5,193	8.0	%	$	74,125	$	68,008	$	6,117	9.0	%	Annual	$	67,058	$	61,848	$	5,210	8.4	%	$	69,401	$	64,333	$	5,068	7.9	%
Seasonal	Seasonal	8,035		8,779		(744)		(8.5)	%	8,462		9,478		(1,016)		(10.7)	%	Seasonal	27,400		24,496		2,904		11.9	%	27,960		26,625		1,335		5.0	%
Transient	Transient	28,017		30,337		(2,320)		(7.6)	%	30,232		32,396		(2,164)		(6.7)	%	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	$	106,426	$	104,297	$	2,129	2.0	%	$	112,819	$	109,882	$	2,937	2.7	%	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 ~~September 30,~~March 31, 2023 increased ~~$2.1~~$5.7 million, or ~~2.0%~~5.5%, from the quarter ended ~~September 30,~~March 31, 2022, driven by an increase in Annual and Seasonal RV and marina base rental income, partially offset by a decrease in Transient ~~and Seasonal RV and marina base~~ rental income. The increase in Annual RV and marina base rental income of ~~8.0%~~8.4% was driven by an increase in ~~rate~~rate. The increase in Seasonal RV and marina base rental income of ~~7.8%.~~11.9% was driven by an increase in the South and West regions. The decrease in Transient RV and marina base rental income of ~~7.6%~~14.9% was primarily due to a decrease in ~~Transient~~transient RV revenue as a result of a reduction in the number of Transient sites available and ~~local storm~~flooding events ~~across the portfolio, particularly~~at certain Properties in ~~the North, Northeast and~~ California during the ~~quarter ended September 30, 2023.~~quarter.

Utility and other income in our Core Portfolio for the quarter ended ~~September 30,~~March 31, 2023 increased ~~$1.8~~$2.5 million, or ~~6.0%~~9.4%, from the quarter ended ~~September 30,~~March 31, 2022. The increase was primarily due to a ~~$1.3 million and $1.0~~$1.9 million increase in utility income, ~~and other property income, respectively. The increase in utility income~~which was primarily due to an increase in ~~trash and~~ electric income in all regions except ~~California~~the Northeast, gas income in the South and ~~sewer~~trash income in all regions ~~except~~and an increase of $0.4 million in other property income primarily due to business interruption income related to Hurricane Ian recognized during the ~~Northeast.~~quarter ended March 31, 2023.

Property Operating Expenses

Property operating expenses, excluding property management, in our Core Portfolio for the quarter ended ~~September 30,~~March 31, 2023 increased ~~$7.2~~$9.1 million, or ~~5.1%~~7.3%, from the quarter ended ~~September 30,~~March 31, 2022, driven by increases in property operating and maintenance expenses of ~~$4.8~~$9.3 million. Core property operating and maintenance expenses were higher in 2023 primarily due to increases in ~~insurance~~utility expenses of ~~$2.0~~$4.1 million, repair and maintenance ~~expenses~~ of ~~$1.8~~$2.5 million and ~~utility expenses~~property payroll of ~~$1.4~~$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 September 30,									Quarters Ended March 31,
(amounts in thousands, except home sales volumes)	(amounts in thousands, except home sales volumes)	2023		2022		Variance		% Change		(amounts in thousands, except home sales volumes)	2023		2022		Variance		% Change
Gross revenues from new home sales	Gross revenues from new home sales	$	27,684	$	32,850	$	(5,166)	(15.7)	%	Gross revenues from new home sales	$	18,314	$	25,530	$	(7,216)	(28.3)	%
Cost of new home sales	Cost of new home sales	24,068		29,380		(5,312)		(18.1)	%	Cost of new home sales	16,662		23,326		(6,664)		(28.6)	%

Gross revenues from used home sales	Gross revenues from used home sales	1,020		972		48		4.9	%	Gross revenues from used home sales	1,175		998		177		17.7	%
Cost of used home sales	Cost of used home sales	932		747		185		24.8	%	Cost of used home sales	945		1,410		(465)		(33.0)	%

Gross revenue from brokered resales and ancillary services	Gross revenue from brokered resales and ancillary services	16,091		18,725		(2,634)		(14.1)	%	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	8,471		10,097		(1,626)		(16.1)	%	Cost of brokered resales and ancillary services	5,534		5,948		(414)		(7.0)	%

Home selling and ancillary operating expenses	Home selling and ancillary operating expenses	7,164		7,080		84		1.2	%	Home selling and ancillary operating expenses	6,924		6,481		443		6.8	%

Home sales volumes	Home sales volumes									Home sales volumes
New home sales (1)		285		331		(46)		(13.9)	%
Total new home sales (1)										Total new home sales (1)	176		261		(85)		(32.6)	%
Used home sales	Used home sales	84		81		3		3.7	%	Used home sales	102		72		30		41.7	%
Brokered home resales	Brokered home resales	160		223		(63)		(28.3)	%	Brokered home resales	134		188		(54)		(28.7)	%

_________________________

(1)Total new home sales volume for the quarter ended ~~September 30,~~March 31, 2022 includes 2122 home sales from our ECHO JV.

Gross revenues from new home sales decreased ~~$5.2~~$7.2 million and Cost of new home sales decreased ~~$5.3~~$6.7 million

during the ~~quarter~~three months ended ~~September 30,~~March 31, 2023, compared to the ~~quarter~~three months ended ~~September 30,~~March 31, 2022, primarily due to a decrease in new home sales.

~~Rental Operations~~

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

Quarters Ended September 30,
(amounts in thousands, except rental unit volumes) 2023 2022 Variance %
Change
Rental operations revenue (1)
$ 9,406 $ 10,420 $ (1,014) (9.7) %
Rental home operating and maintenance expenses 1,762 1,483 279 18.8 %
Depreciation on rental homes (2)
2,726 2,521 205 8.1 %
Gross investment in new manufactured home rental units (3)
$ 249,568 $ 221,840 $ 27,728 12.5 %
Gross investment in used manufactured home rental units $ 12,606 $ 15,226 $ (2,620) (17.2) %
Net investment in new manufactured home rental units (3)
$ 207,303 $ 180,299 $ 27,004 15.0 %
Net investment in used manufactured home rental units $ 7,481 $ 8,657 $ (1,176) (13.6) %
Number of occupied rentals – new, end of period (4)
2,086 2,594 (508) (19.6) %
Number of occupied rentals – used, end of period 259 355 (96) (27.0) %

~~______________________~~

~~(1)~~Consists of Site rental income and home rental income. Approximately $5.9 million and $6.7 million for the quarters ended September 30, 2023 and September 30, 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)~~Includes both occupied and unoccupied rental homes in our Core Portfolio. New home cost basis does not include the costs associated with our ECHO JV. Our investment in the ECHO JV as of September 30, 2022 was $19.0 million.

~~(4)Occupied rentals as of the end of the period in our Core Portfolio. Included in occupied rentals as of September 30, 2022 were 165 homes rented through our ECHO JV.~~

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

Rental operations revenues were $1.0 million or 9.7% lower during the quarter ended September 30, 2023, compared to the quarter ended September 30, 2022, primarily due to a decrease in the number of occupied rentals.

~~Other Income and Expenses~~

~~The following table summarizes other income and expenses, net:~~

Quarters Ended September 30,
(amounts in thousands, expenses shown as negative) 2023 2022 Variance %
Change
Depreciation and amortization $ (50,968) $ (52,547) $ 1,579 3.0 %
Interest income 2,276 1,865 411 22.0 %
Income from other investments, net 2,333 2,399 (66) (2.8) %
General and administrative (9,895) (11,086) 1,191 10.7 %
Other expenses (1,338) (1,627) 289 17.8 %
Early debt retirement (68) — (68) — %
Interest and related amortization (33,434) (29,759) (3,675) (12.3) %
Total other income and expenses, net $ (91,094) $ (90,755) $ (339) (0.4) %

Total other income and expenses, net increased $0.3 million for the quarter ended September 30, 2023, compared to the quarter ended September 30, 2022, primarily due to higher interest and related amortization expense as a result of an increase in interest rates, partially offset by decreases in depreciation and amortization and general and administrative expenses.

~~Casualty-related charges/(recoveries), net~~

During the quarter ended September 30, 2023, we recorded $1.8 million of expenses for debris removal and cleanup costs and an offsetting insurance recovery revenue of $1.8 million related to Hurricane Ian.

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

~~Comparison of the Nine Months Ended September 30, 2023 to the Nine Months Ended September 30, 2022~~

~~Income from Property Operations~~

~~The following table summarizes certain financial and statistical data for the Core Portfolio and the total portfolio for the nine months ended September 30, 2023 and 2022:~~

Core Portfolio Total Portfolio
Nine Months Ended September 30, Nine Months Ended September 30,
(amounts in thousands) 2023 2022 Variance %
Change 2023 2022 Variance %
Change
MH base rental income (1)
$ 498,442 $ 467,233 $ 31,209 6.7 % $ 498,906 $ 475,070 $ 23,836 5.0 %
Rental home income (1)
11,096 11,487 (391) (3.4) % 11,130 11,519 (389) (3.4) %
RV and marina base rental income (1)
311,228 301,112 10,116 3.4 % 326,280 316,984 9,296 2.9 %
Annual membership subscriptions 47,738 45,885 1,853 4.0 % 48,832 47,003 1,829 3.9 %
Membership upgrade sales (2)
10,127 8,217 1,910 23.2 % 10,863 9,543 1,320 13.8 %
Utility and other income (1)
90,062 83,457 6,605 7.9 % 107,029 92,612 14,417 15.6 %
Property operating revenues 968,693 917,391 51,302 5.6 % 1,003,040 952,731 50,309 5.3 %
Property operating and maintenance (1)(3)
351,319 328,194 23,125 7.0 % 361,282 340,821 20,461 6.0 %
Real estate taxes 54,403 52,025 2,378 4.6 % 56,165 56,373 (208) (0.4) %
Rental home operating and maintenance 3,879 4,094 (215) (5.3) % 3,883 4,117 (234) (5.7) %
Membership sales and marketing (4)
15,821 15,060 761 5.1 % 16,055 15,720 335 2.1 %
Property operating expenses, excluding property management 425,422 399,373 26,049 6.5 % 437,385 417,031 20,354 4.9 %
Income from property operations, excluding property management (5)
543,271 518,018 25,253 4.9 % 565,655 535,700 29,955 5.6 %
Property management 58,710 55,972 2,738 4.9 % 58,710 55,973 2,737 4.9 %
Income from property operations (5)
$ 484,561 $ 462,046 $ 22,515 4.9 % $ 506,945 $ 479,727 $ 27,218 5.7 %

~~__________________________~~

~~(1)~~Rental income consists of the following total portfolio income items: 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 maintenance expense in this table.

~~(2)Membership upgrade sales revenue is net of deferrals of $17.2 million and $18.2 million for the nine months ended September 30, 2023 and September 30, 2022, respectively.~~

~~(3)Includes bad debt expense for all periods presented.~~

~~(4)Membership sales and marketing expense is net of sales commission deferrals of $2.8 million and $2.7 million for the nine months ended September 30, 2023 and September 30, 2022, respectively.~~

~~(5)See~~ ~~Part I. Item 2. Management's Discussion and Analysis—Non-GAAP Financial Measures~~ ~~for definitions and reconciliation of these Non-GAAP measures to Net Income available for Common Shareholders.~~

Total Portfolio income from property operations for the nine months ended September 30, 2023 increased $27.2 million , or 5.7%, from the same period in 2022, driven by an increase of $22.5 million, or 4.9%, from our Core Portfolio and an increase of $4.7 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, primarily in MH base rental income, RV and marina base rental income and Utility and other income, partially offset by an increase in property operating and maintenance expenses.

~~Property Operating Revenues~~

MH base rental income in our Core Portfolio for the nine months ended September 30, 2023 increased $31.2 million, or 6.7%, from the same period in 2022, which reflects 6.9% growth from rate increases and 0.2% decline in occupancy. The average monthly base rental income per Site increased to approximately $805 for the nine months ended September 30, 2023 from approximately $753 for the nine months ended September 30, 2022. The average occupancy for the Core Portfolio was 94.9% for the nine months ended September 30, 2023 compared to 95.1% for the nine months ended September 30, 2022.

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

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

Core Portfolio Total Portfolio
Nine Months Ended September 30, Nine Months Ended September 30,
(amounts in thousands) 2023 2022 Variance %
Change 2023 2022 Variance %
Change
Annual $ 206,440 $ 191,018 $ 15,422 8.1 % $ 216,163 $ 198,994 $ 17,169 8.6 %
Seasonal 44,518 42,186 2,332 5.5 % 45,908 45,576 332 0.7 %
Transient 60,270 67,908 (7,638) (11.2) % 64,209 72,414 (8,205) (11.3) %
RV and marina base rental income $ 311,228 $ 301,112 $ 10,116 3.4 % $ 326,280 $ 316,984 $ 9,296 2.9 %

RV and marina base rental income in our Core Portfolio for the nine months ended September 30, 2023 increased $10.1 million, or 3.4%, from the same period in 2022 primarily due to increases in Annual and Seasonal RV and marina base rental income, partially offset by a decrease in Transient RV base rental income. The increase in Annual RV and marina base rental income of $15.4 million, or 8.1% was primarily due to the South, Northeast and West regions. The increase in Seasonal RV and marina base rental income of $2.3 million, or 5.5% was driven by increases in the South and West regions during the first quarter where we had 15.0% and 9.1% increases, respectively. Since September 30, 2022, we have increased our Core RV and marina annual site count by approximately 40% resulting in a reduction in the number of transient sites available for use. We also experienced significant weather events during the nine months ended September 30, 2023 in California, the Pacific Northwest, and the East Coast, which impacted our Transient RV and marina base rental income.

Utility and other income in our Core Portfolio for the nine months ended September 30, 2023 increased $6.6 million, or 7.9%, from the same period in 2022. The increase was primarily due to an increase in utility income and other property income of $4.7 million and $2.1 million, respectively. The increase in utility income was primarily due to increases in trash, sewer and electric income. The utility recovery rate (utility income divided by utility expenses) for 2023 and 2022 was approximately 45% and 44%, respectively.

~~Property Operating Expenses~~

Property operating expenses, excluding property management, in our Core Portfolio for the nine months ended September 30, 2023 increased $26.0 million, or 6.5%, from the same period in 2022, driven by increases in property operating and maintenance expenses of $23.1 million. Core property operating and maintenance expenses were higher during the nine months ended September 30, 2023, compared to the same period in 2022 due to increases in utility expenses of $7.6 million, repair and maintenance expenses of $6.5 million, insurance of $5.9 million, and property payroll expenses of $2.9 million.

3225

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 Home Sales and Other Operations:~~

Nine Months Ended September 30,
(amounts in thousands, except home sales volumes) 2023 2022 Variance %
Change
Gross revenues from new home sales $ 69,036 $ 92,228 $ (23,192) (25.1) %
Cost of new home sales 61,542 82,726 (21,184) (25.6) %
Gross revenues from used home sales 3,229 3,337 (108) (3.2) %
Cost of used home sales 2,987 3,594 (607) (16.9) %
Gross revenue from brokered resales and ancillary services 43,576 49,372 (5,796) (11.7) %
Cost of brokered resales and ancillary services 21,351 25,574 (4,223) (16.5) %
Home selling and ancillary operating expenses 21,258 21,146 112 0.5 %
Home sales volumes
New home sales (1)
687 957 (270) (28.2) %
Used home sales 252 250 2 0.8 %
Brokered home resales 495 674 (179) (26.6) %

~~_________________________~~

~~(1)Total new home sales volume for the nine months ended September 30, 2022 includes 72 home sales from our ECHO JV.~~

Gross revenues from new home sales decreased $23.2 million and Cost of new home sales decreased $21.2 million during the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022, primarily due to a decrease in new home sales.

Rental Operations

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


		Nine Months Ended September 30,									Quarters Ended March 31,
(amounts in thousands, except rental unit volumes)	(amounts in thousands, except rental unit volumes)	2023		2022		Variance		% Change		(amounts in thousands, except rental unit volumes)	2023		2022		Variance		% Change
Rental operations revenue (1)	Rental operations revenue (1)	$	29,491	$	32,635	$	(3,144)	(9.6)	%	Rental operations revenue (1)	$	10,258	$	11,347	$	(1,089)	(9.6)	%
Rental home operating and maintenance expenses	Rental home operating and maintenance expenses	3,879		4,094		(215)		(5.3)	%	Rental home operating and maintenance expenses	959		1,392		(433)		(31.1)	%

Depreciation on rental homes (2)	Depreciation on rental homes (2)	8,275		7,538		737		9.8	%	Depreciation on rental homes (2)	2,747		2,517		230		9.1	%

Gross investment in new manufactured home rental units ~~(3)~~	Gross investment in new manufactured home rental units ~~(3)~~	$	249,568	$	221,840	$	27,728	12.5	%	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	$	12,606	$	15,226	$	(2,620)	(17.2)	%	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	$	207,303	$	180,299	$	27,004	15.0	%	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	$	7,481	$	8,657	$	(1,176)	(13.6)	%	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)~~	2,086		2,594		(508)		(19.6)	%	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	259		355		(96)		(27.0)	%	Number of occupied rentals – used, end of period	313		402		(89)		(22.1)	%

______________________

(1)~~Rental operations revenue consists~~Consists of Site rental income and home rental ~~income in our Core Portfolio.~~income. Approximately ~~$18.4~~$6.4 million and ~~$21.1~~$7.4 million for the quarters ended March 31, 2023 and March 31, 2022, respectively, of Site rental income ~~for the nine months ended September 30, 2023 and 2022, respectively, are~~is included in MH base rental income ~~within~~in the Core Portfolio Income from Property Operations table. The remainder of home rental income is included in ~~Rental~~rental home income ~~within the~~in our Core Portfolio Income from Property Operations table.

(2)Presented in Depreciation and amortization in the Consolidated Statements of Income and Comprehensive Income.

~~(4)Occupied rentals as of the end of the period in our Core Portfolio. Included in occupied rentals as of September 30, 2022 were 165 homes rented through our ECHO JV.~~

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

~~Rental~~Gross rental operations ~~revenues were $3.1~~revenue was $10.3 million ~~or 9.6% lower during~~for the ~~nine months~~quarter ended ~~September 30,~~March 31, 2023, a decrease of $1.1 million, compared to $11.3 million for the ~~nine months~~quarter ended ~~September 30, 2022,~~March 31, 2022. The decrease in gross rental operations revenue was primarily due to a decrease in the number of new occupied ~~rentals.~~rentals

Other Income and Expenses

The following table summarizes other income and expenses, net:


		Nine Months Ended September 30,									Quarters Ended March 31,
(amounts in thousands, expenses shown as negative)	(amounts in thousands, expenses shown as negative)	2023		2022		Variance		% Change		(amounts in thousands, expenses shown as negative)	2023		2022		Variance		% Change
Depreciation and amortization	Depreciation and amortization	$	(152,934)	$	(152,737)	$	(197)	(0.1)	%	Depreciation and amortization	$	(50,502)	$	(49,394)	$	(1,108)	(2.2)	%
Interest income	Interest income	6,623		5,346		1,277		23.9	%	Interest income	2,088		1,759		329		18.7	%
Income from other investments, net	Income from other investments, net	6,897		6,920		(23)		(0.3)	%	Income from other investments, net	2,091		1,904		187		9.8	%
General and administrative	General and administrative	(38,163)		(34,834)		(3,329)		(9.6)	%	General and administrative	(11,661)		(12,072)		411		3.4	%
Other expenses	Other expenses	(4,187)		(6,880)		2,693		39.1	%	Other expenses	(1,468)		(1,048)		(420)		(40.1)	%
Early debt retirement	Early debt retirement	(68)		(1,156)		1,088		94.1	%	Early debt retirement	—		(516)		516		100.0	%
Interest and related amortization	Interest and related amortization	(99,144)		(85,276)		(13,868)		(16.3)	%	Interest and related amortization	(32,588)		(27,464)		(5,124)		(18.7)	%
Total other income and expenses, net	Total other income and expenses, net	$	(280,976)	$	(268,617)	$	(12,359)	(4.6)	%	Total other income and expenses, net	$	(92,040)	$	(86,831)	$	(5,209)	(6.0)	%

Total other income and expenses, net increased ~~$12.4~~$5.2 million ~~during~~for the ~~nine months~~quarter ended ~~September 30,~~March 31, 2023 compared to the ~~nine months~~quarter ended ~~September 30,~~March 31, 2022, primarily due to higher interest and related amortization expense as a result of an increase in interest rates and ~~higher general~~depreciation and ~~administrative expense primarily as a result of accelerated vesting of stock-based compensation~~amortization expense.

~~Casualty-related~~Casualty related charges/(recoveries), net

During the ~~nine months~~quarter ended ~~September 30,~~March 31, 2023, we recorded ~~$12.1~~$8.5 million of expenses for debris removal and cleanup costs and an offsetting insurance recovery revenue of ~~$12.1~~$8.5 million related to Hurricane Ian.

Loss on sale of real estate and impairment, net

During the ~~nine months~~quarter ended ~~September 30,~~March 31, 2023, we recorded an impairment charge of approximately ~~$3.6~~$2.6 million ~~primarily~~ 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 of 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.

Our at-the-market (“ATM”) equity offering program allows us, from time-to-time, to sell shares of our common stock, par value $0.01 per share, having an aggregate offering price up to $500.0 million. As of ~~September 30,~~March 31, 2023, the full capacity of our ATM equity offering program remained available for issuance.

As of March 31, 2023, we had available liquidity in the form of approximately ~~413.6~~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.

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

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

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 9.10. Derivative Instruments and Hedging Activities.

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 8.9. Borrowing Arrangements for further details. As of ~~September 30,~~March, 31, 2023, the Company has no remaining LIBOR based borrowings.

In June 2023, we closed on a secured financing transaction generating gross proceeds of $89.0 million (the “June 2023 financing”). The loan represents an incremental borrowing from an existing secured facility, has a fixed interest rate of 5.04% per annum and matures in ten years.

In July and August 2023, we closed on three secured financing transactions generating gross proceeds of $375.0 million. The loans are secured by 20 MH and RV properties, have a weighted average fixed interest rate of 5.05% per annum and a weighted average maturity of approximately eight years.

During the quarter ended September 30, 2023, proceeds from the four secured financing transactions were used to repay $100.4 million of principal on three mortgage loans that were due to mature in 2023 and 2024 and the remaining outstanding balance on the LOC. The repaid mortgage loans had a weighted average fixed interest rate of 4.94% per annum and were secured by 14 MH and RV properties.

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 ~~nine months~~quarter ended ~~September 30,~~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 9.10. Derivative Instruments and Hedging Activities 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 9.10. Derivative Instruments and Hedging Activities 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 ~~September 30,~~March 31, 2023, our LOC had a borrowing capacity of ~~$500.0~~$288.0 million.

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.~~securities or the issuance of equity including under our ATM equity offering program.

Management's Discussion and Analysis (continued)

The following table summarizes our cash flows activity:


		Nine Months Ended September 30,					For the quarters ended March 31,
(amounts in thousands)	(amounts in thousands)	2023		2022		(amounts in thousands)	2023		2022
Net cash provided by operating activities (1)	Net cash provided by operating activities (1)	$	418,658	$	405,123	Net cash provided by operating activities (1)	$	158,980	$	154,642
Net cash used in investing activities (1)	Net cash used in investing activities (1)	(237,519)		(316,186)		Net cash used in investing activities (1)	(66,447)		(82,493)
Net cash used in financing activities	Net cash used in financing activities	(143,806)		(181,825)		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	$	37,333	$	(92,888)	Net increase (decrease) in cash and restricted cash	$	8,314	$	(85,278)

~~______________________~~____________________

(1)Amounts are restated. See Part I. Item 1. Financial Statements—Note 3. Restatement of Previously Issued Consolidated Financial Statements ~~– Note 2. Summary of Significant Accounting Policies: (e) Prior Period Correction~~ for more information.

Operating Activities

Net cash provided by operating activities increased ~~$13.5~~$4.4 million to ~~$418.7~~$159.0 million for the ~~nine months~~quarter ended ~~September 30,~~March 31, 2023 from ~~$405.1~~$154.6 million for the ~~nine months~~quarter ended ~~September 30,~~March 31, 2022. The increase in net cash provided by operating activities was primarily due to ~~a net increase in proceeds from insurance claims and~~ higher income from property operations of $7.4 million and the change in accounts payable and other liabilities and compensation expense related to incentive plans, partially offset by ana net increase in ~~Manufactured~~manufactured homes, net.

The following table summarizes our purchase and sale activity of manufactured homes:

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


		Nine Months Ended September 30,					Quarters Ended March 31,
(amounts in thousands)	(amounts in thousands)	2023		2022		(amounts in thousands)	2023		2022
Purchase of manufactured homes	Purchase of manufactured homes	$	(90,477)	$	(82,698)	Purchase of manufactured homes	$	(35,481)	$	(22,689)
Sale of manufactured homes	Sale of manufactured homes	58,497		75,726		Sale of manufactured homes	15,907		21,311
Manufactured homes, net	Manufactured homes, net	$	(31,980)	$	(6,972)	Manufactured homes, net	$	(19,574)	$	(1,378)

Investing Activities

Net cash used in investing activities decreased ~~$78.7~~$16.1 million to ~~$237.5~~$66.4 million for the ~~nine months~~quarter ended ~~September 30,~~March 31, 2023 from ~~$316.2~~$82.5 million for the ~~nine months~~quarter ended ~~September 30,~~March 31, 2022. The decrease was due to a decrease in spending on acquisitions of ~~$109.9~~$6.6 million, ~~and~~ a decrease in investments in unconsolidated joint ventures of ~~$10.0~~$6.2 million ~~partially offset by~~and an increase in ~~capital improvement spending~~insurance proceeds of ~~$45.3~~$2.7 million.

Capital Improvements

The following table summarizes capital improvements:


		Nine Months Ended September 30,					For the quarters ended March 31,
(amounts in thousands)	(amounts in thousands)	2023		2022		(amounts in thousands)	2023		2022
Asset preservation (1)	Asset preservation (1)	$	41,246	$	32,302	Asset preservation (1)	$	11,154	$	9,906
Improvements and renovations(2)	Improvements and renovations(2)	29,505		26,950		Improvements and renovations(2)	6,958		6,431
Property upgrades and development ~~(3)~~	Property upgrades and development ~~(3)~~	132,310		97,800		Property upgrades and development ~~(3)~~	33,204		30,302
Site development (4)		22,596		16,683
Site Development(3) (4)						Site Development(3) (4)	9,562		5,968

Total property improvements(4)	Total property improvements(4)	225,657		173,735		Total property improvements(4)	60,878		52,607
Corporate	Corporate	5,515		12,181		Corporate	96		8,351
Total capital improvements(4)	Total capital improvements(4)	$	231,172	$	185,916	Total capital improvements(4)	$	60,974	$	60,958

______________________

(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)Includes ~~$28.3 million of restoration and improvement capital expenditures related to Hurricane Ian for the nine months ended September 30, 2023.~~

~~(4)Includes capital~~ expenditures to improve the infrastructure required to set manufactured homes.

(4)Amounts are restated. See Part I. Item 1. Financial Statements—Note 3. Restatement of Previously Issued Consolidated Financial Statements for more information.

Financing Activities

Net cash used in financing activities decreased ~~$38.0~~$73.2 million to ~~$143.8~~$84.2 million for the ~~nine months~~quarter ended ~~September 30,~~March 31, 2023 from ~~$181.8~~$157.4 million for the ~~nine months~~quarter ended ~~September 30,~~March 31, 2022. The decrease was primarily due to a decrease in net debt repayments of approximately ~~$90.6~~$107.1 million during the quarter ended March 31, 2023, compared to the same period in the prior year ~~partially offset by a decrease in~~and proceeds from the sale of common stock under our prior ~~at-the-market equity offering~~ATM program of approximately $28.4 ~~million.~~million recognized during the quarter ended March 31, 2022.

Management's Discussion and Analysis (continued)

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 Obligations in our 2022 Form 10-K/A.

Off-Balance Sheet Arrangements

As of ~~September 30,~~March 31, 2023, 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 2022 Form 10-K/A 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 ~~September 30,~~March 31, 2023.

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

Forward-Looking Statements

This Quarterly Report on Form 10-Q/A 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 potential impact of, and our ability to remediate, material weaknesses in our internal control over financial reporting;

•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.

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

Management's Discussion and Analysis (continued)

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.

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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 2022 Form 10-K/A. There have been no material changes in the assumptions used or results obtained regarding market risk since December 31, 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 ~~September 30,~~March 31, 2023. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not 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 ~~September 30, 2023. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving~~March 31, 2023 due to the ~~desired control objectives.~~

~~Remediation of Material Weakness~~

~~As previously disclosed~~material weakness in our ~~Amended~~internal control over financial reporting described below. In light of the material weakness, we performed additional analyses as deemed necessary to ensure that our financial statements were prepared in accordance with U.S. generally accepted accounting principles. Accordingly, management concluded that the restated financial statements included in this Quarterly ~~Reports~~Report on Form 10-Q/A present fairly in all material respects our financial position, results of operations and cash flows for each of the ~~quarters ended March 31, 2023 and June 30, 2023, management~~periods presented.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

Management identified a material weakness related to a lack of an effectively designed control activity related to the evaluation of the classification of cash flows pursuant to the predominance principle in ASC 230 associated with the purchase and sale of manufactured homes within the Consolidated Statements of Cash Flows. ~~During~~

Remediation of Material Weakness

In order to remediate the material weakness, during the quarter ended June 30, 2023, we enhanced our control activities related to the evaluation of the classification of cash flows pursuant to the predominance principle in ASC 230 associated with the purchase and sale of manufactured homes within the Consolidated Statement of Cash Flows.We tested the enhanced control activities as of June 30, 2023 and September 30, 2023 and management has concluded, through its testing, that the control is operating effectively and the material weakness was remediated as of September 30, 2023.

Changes in Internal Control Over Financial Reporting

Other than the item noted above, during the quarter ended ~~September 30,~~March 31, 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 ~~12.~~13. Commitments and Contingencies accompanying the Consolidated Financial Statements in this Quarterly Report on Form 10-Q/A.

Item 1A.Risk Factors

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

During the quarter ended September 30, 2023, none of the Company’s directors or officers adopted, terminated or modified any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act of 1933).None.

Item 6.Exhibits


10.1*			~~3.1~~Amendment, dated March 1, 2023, to the Third Amended and Restated Credit Agreement, dated 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.
10.2(a)			Third Amended and Restated Credit Agreement, dated as of April 19, 2021, by and among MHC Operating Limited Partnership, as Borrower, Equity LifeStyle Properties, Inc. ~~Fourth Amended~~, as Parent, Wells Fargo Bank, National Association, as Administrative Agent, and ~~Restated Bylaws, effective as~~each of ~~July 25, 2023~~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 ~~July 28, 2023~~April 19, 2021

* Filed herewith

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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: January 22, 2024	By:	/s/ Marguerite Nader
		Marguerite Nader
		President and Chief Executive Officer
		(Principal Executive Officer)

Date: January 22, 2024	By:	/s/ Paul Seavey
		Paul Seavey
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)

Date: January 22, 2024	By:	/s/ Valerie Henry
		Valerie Henry
		Senior Vice President and Chief Accounting Officer
		(Principal Accounting Officer)

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