EXHIBIT 99.1
CONTACT: Michael Berman FOR IMMEDIATE RELEASE
(312) 279-1496 January 23, 2006
ELS REPORTS FOURTH QUARTER RESULTS
STRONG OPERATING PERFORMANCE
CHICAGO, IL - Equity LifeStyle Properties, Inc. (NYSE: ELS) announced
results for the quarter and year ended December 31, 2005.
a) Financial Results
For the fourth quarter of 2005, Funds From Operations ("FFO") were
($5.7 million) or ($0.19) per share on a fully diluted basis, compared to $14.1
million or $0.47 per fully diluted share for the same period in 2004. For the
year ended December 31, 2005, FFO were $52.8 million or $1.77 per share on a
fully diluted basis, compared to $54.4 million or $1.85 per fully diluted share
for the year ended December 31, 2004.
Net loss available to common stockholders totaled ($14.6 million) or
($0.63) per fully diluted share for the quarter ended December 31, 2005. This
compares to net loss available to common stockholders of ($0.08 million) or
($0.00) per fully diluted share for the fourth quarter of 2004. Net loss
available to common stockholders totaled ($2.3 million) or ($0.10) per fully
diluted share for the year ended December 31, 2005. This compares to net income
available to common stockholders of $4.0 million or $0.17 per fully diluted
share for the year ended December 31, 2004.
The fourth quarter of 2005 included approximately ($0.72) FFO and net
loss per fully diluted share related to refinancing costs ($0.67) and
hurricane-related costs ($0.05). See the attachment to this press release for
reconciliation of FFO and FFO per share to net income and net income per share,
respectively, the most directly comparable GAAP measures.
b) Portfolio Performance
Fourth quarter 2005 property operating revenues were $77.5 million,
compared to $72.9 million in the fourth quarter of 2004. Property operating
revenues for the year ended December 31, 2005 were $313.9 million, compared to
$283.3 million for the year ended December 31, 2004.
For the three months ended December 31, 2005, our Core(1) properties'
operating revenues increased approximately 4.3 percent, while operating expenses
increased approximately 8.8 percent, over the same period in 2004. Net Core
income from property operations increased approximately 1.4 percent over the
same period last year (approximately 5.2 percent, excluding hurricane-related
costs). For the year ended December 31, 2005, our Core properties' operating
revenues increased approximately 3.9 percent, while
- --------
1 Properties we owned for the same period in both years.
operating expenses increased approximately 5.8 percent, over the year ended
December 31, 2004. Net Core income from property operations increased
approximately 2.5 percent over last year (approximately 3.5 percent, excluding
hurricane-related costs). On a year-over-year basis, our Core resort income from
property operations increased approximately 7.2 percent on a 4.1 percent
increase in revenues.
For the quarter ended December 31, 2005, the Company had 259 new home
sales (including 34 third-party sales), a 53 percent increase over the quarter
ended December 31, 2004. Gross revenues from home sales were approximately $22.6
million for the quarter ended December 31, 2005, compared to approximately $16.7
million for the quarter ended December 31, 2004. For the year ended December 31,
2005, the Company had 771 new home sales (including 84 third-party sales), a 50
percent increase over the same period in 2004. Gross revenues from home sales
were approximately $66.0 million for the year ended December 31, 2005, compared
to approximately $47.4 million for the same period in 2004. Our ancillary net
income increased from $2.7 million to $3.9 million on a year-over-year basis,
primarily due to acquisitions.
The combination of general administrative costs and rent control
initiatives were flat quarter-over-quarter. On a year-over-year basis, these
costs increased from $11.7 million to $14.7 million. We added resources to
manage our growth and experienced increased costs due to the changing regulatory
environment.
Excluding the impact of the refinancing, our acquisitions contributed
$0.07 per share of fully diluted FFO in the fourth quarter of 2005 compared to
$0.13 per share of fully diluted FFO in the fourth quarter of 2004. Excluding
the impact of the refinancing, for the year ended December 31, 2005, our
acquisitions contributed $0.70 per share of fully diluted FFO compared to $0.25
per share for the year ended December 31, 2004.
c) Asset-related Transactions
We currently have six all-age properties held for disposition and are
in various stages of negotiations for sale of same. The Company plans to
reinvest its sale proceeds or reduce outstanding line of credit debt with the
sale proceeds. We closed on the sale of Five Seasons, a 390-site community
located in Cedar Rapids, Iowa for approximately $6.7 million, generating a net
gain of $2.3 million. We are evaluating the potential acquisition of other
assets.
d) Balance Sheet
During the quarter, we refinanced approximately $293 million of secured
debt maturing in 2007 with an effective interest rate of 6.8 percent per annum.
This debt was secured by two cross-collateralized loan pools consisting of 35
properties. The transaction generated approximately $337 million in proceeds
from loans secured by individual mortgages on 20 properties. The blended
interest rate on the refinancing was approximately 5.3 percent per annum, and
the loans mature in 2015. Transaction costs were approximately $20 million
($0.67 per fully diluted share). The remaining excess proceeds were used to
repay outstanding amounts on our lines of credit.
Our average long-term secured debt balance was approximately $1.5
billion in the quarter, with a weighted average interest rate of approximately
6.1 percent per annum. Our unsecured debt balance consists of $100 million
outstanding of a $120 million term loan with a fixed interest rate of
approximately 6.6
percent per annum, and approximately $38 million outstanding on our lines of
credit, which have a current availability of approximately $135 million.
Interest coverage was approximately 1.7 times in the quarter.
As a result of the changes in the law relating to deferred compensation
plans, the Company terminated its Supplemental Retirement Savings Plan.
Termination of the Plan had no material effect on results of operations and no
material impact on the Company's balance sheet.
e) Guidance
Preliminary guidance for 2006 fully diluted FFO per share is projected
to be in the range of $2.75 to $2.85. We expect our Core property operating
revenues to increase approximately 4 percent. We anticipate our 2006 quarterly
resort revenues to approximate the pattern in 2005. Our 2005 acquisitions
contributed approximately $3.5 million in property operating revenues in 2005,
with a 50 percent operating margin. We expect our 2005 acquisitions to
contribute approximately $11 million in property operating revenues in 2006.
Overall, we expect Core net operating income to grow between 3.5 and 4.0
percent. We expect our home sales operation to be consistent with or better than
our 2005 performance and anticipate our 2005 acquisitions to add approximately
$1.5 million in sales-related income. Our 2005 Other Income included
approximately $2.5 million of one-time gains on some of our joint venture
properties, and our Thousand Trails income will increase by 3.25 percent
pursuant to the terms of the lease. General and administrative expenses are
expected to increase approximately 4 percent. Our overall interest rate
(including amortization expense) is approximately 6.1 percent per annum. We make
no assumptions concerning acquisitions.
Factors impacting this guidance include i) the mix of site usage within
the Company's portfolio; ii) the Company's yield management on its short term
resort sites; iii) scheduled or implemented rate increases; and iv) occupancy
changes. Results for 2006 also may be impacted by, among other things i)
continued competitive housing options and new home sales initiatives impacting
occupancy levels at certain properties; ii) variability in income from home
sales operations, including anticipated expansion projects; iii) potential
effects of uncontrollable factors such as hurricanes; iv) potential
acquisitions, investments and dispositions; and v) Rent Control Initiatives and
other legal defense costs. Quarter-to-quarter results during the year are
impacted by the seasonality at certain of the properties.
This news release 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", "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. These
forward-looking statements are subject to numerous assumptions, risks and
uncertainties, including, but not limited to: in the age-qualified communities,
home sales results could be impacted by the ability of potential homebuyers to
sell their existing residences as well as by financial markets volatility; in
the all-age communities, results from home sales and occupancy will continue to
be impacted by local economic conditions, lack of affordable manufactured home
financing, and competition from alternative housing options including site-built
single-family housing; our ability to maintain rental rates and occupancy with
respect to properties currently owned or pending acquisitions; our assumptions
about rental and home sales markets; the completion of pending acquisitions and
timing with respect thereto; the effect of interest rates as well as 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. ELS is under no obligation to, and expressly disclaims any
obligation to, update or alter its forward-looking statements whether as a
result of such changes, new information, subsequent events or otherwise.
Equity LifeStyle Properties, Inc. owns or has an interest in 285
quality properties in 28 states and British Columbia consisting of 106,337
sites. The Company is a self-administered, self-managed, real estate investment
trust (REIT) with headquarters in Chicago.
A live webcast of the Company's conference call discussing these
results will be available via the Company's website in the Investor Info section
at www.mhchomes.com at 10:00 a.m. Central time on January 24, 2006. The
conference call will not have any prerecorded remarks and will be limited to
questions and answers from interested parties.
###
Tables follow
EQUITY LIFESTYLE PROPERTIES, INC.
SELECTED FINANCIAL DATA
(UNAUDITED)
(AMOUNTS IN THOUSANDS EXCEPT FOR PER SHARE DATA)
QUARTERS ENDED TWELVE MONTHS ENDED
DEC. 31, DEC. 31, DEC. 31, DEC. 31,
2005 2004 2005 2004
---------- --------- --------- ----------
PROPERTY OPERATIONS:
Community base rental income .......................... $ 53,813 $ 51,661 $ 213,280 $ 204,190
Resort base rental income ............................. 17,434 15,381 73,398 54,841
Utility and other income .............................. 6,214 5,867 27,210 24,278
--------- --------- --------- ---------
Property operating revenues ........................ 77,461 72,909 313,888 283,309
Property operating and maintenance .................... 27,193 24,376 104,150 92,121
Real estate taxes ..................................... 6,042 5,721 24,688 22,723
Property management ................................... 4,106 3,267 15,919 12,852
--------- --------- --------- ---------
Property operating expenses ........................ 37,341 33,364 144,757 127,696
--------- --------- --------- ---------
Income from property operations .................... 40,120 39,545 169,131 155,613
HOME SALES OPERATIONS:
Gross revenues from inventory home sales .............. 22,621 16,713 66,014 47,404
Cost of inventory home sales .......................... (19,367) (14,632) (57,471) (41,577)
--------- --------- --------- ---------
Gross profit from inventory home sales ............. 3,254 2,081 8,543 5,827
Brokered resale revenues, net ......................... 619 555 2,714 2,176
Home selling expenses ................................. (2,286) (2,249) (8,838) (8,630)
Ancillary services revenues, net ...................... 385 351 3,864 2,743
--------- --------- --------- ---------
Income from home sales and other ................... 1,972 738 6,283 2,116
OTHER INCOME AND EXPENSES:
Interest income ....................................... 412 315 1,406 1,391
Other corporate income ................................ 3,980 2,516 16,609 3,475
Equity in income of unconsolidated joint ventures ..... 1,033 1,259 8,468 4,969
General and administrative ............................ (3,427) (2,554) (13,624) (9,243)
Rent Control Initiatives .............................. (274) (1,117) (1,081) (2,412)
--------- --------- --------- ---------
Operating income (EBITDA) .......................... 43,816 40,702 187,192 155,909
Interest and related amortization ..................... (25,528) (23,998) (100,832) (90,970)
Early debt retirement ................................. (20,148) -- (20,630) --
Income from discontinued operations ................... 319 667 1,875 2,450
Depreciation on corporate assets ...................... (122) (426) (804) (1,657)
Income allocated to Preferred OP Units ................ (4,045) (2,825) (13,974) (11,284)
--------- --------- --------- ---------
FUNDS FROM OPERATIONS (FFO) ........................ $ (5,708) $ 14,120 $ 52,827 $ 54,448
Depreciation on real estate and other costs ........... (14,446) (13,346) (55,689) (47,541)
Depreciation on unconsolidated joint ventures ......... (619) (506) (1,960) (1,230)
Depreciation on discontinued operations ............... -- (349) (329) (1,353)
Gain on sale of properties ............................ 2,279 -- 2,279 638
Income (loss) allocated to Common OP Units ............ 3,874 1 539 (936)
--------- --------- --------- ---------
NET (LOSS) INCOME ............................... $ (14,620) $ (80) $ (2,333) $ 4,026
========= ========= ========= =========
NET (LOSS) INCOME PER COMMON SHARE - BASIC .................... $ (0.63) $ (0.00) $ (0.10) $ 0.18
NET (LOSS) INCOME PER COMMON SHARE - FULLY DILUTED ............ $ (0.63) $ (0.00) $ (0.10) $ 0.17
--------- --------- --------- ---------
FFO PER COMMON SHARE - BASIC .................................. $ (0.19) $ 0.48 $ 1.80 $ 1.88
FFO PER COMMON SHARE - FULLY DILUTED .......................... $ (0.19) $ 0.47 $ 1.77 $ 1.85
--------- --------- --------- ---------
Average Common Shares - Basic ................................. 23,208 22,906 23,081 22,849
Average Common Shares and OP Units - Basic .................... 29,450 29,360 29,366 28,916
Average Common Shares and OP Units - Fully Diluted, Net Loss... 29,450* 29,360 29,366 29,465
Average Common Shares and OP Units - Fully Diluted, FFO Loss.... 29,450* 29,925 29,927 29,465
--------- --------- --------- ---------
*Average Common Shares and OP Units - Fully Diluted, 30,055
EQUITY LIFESTYLE PROPERTIES, INC.
(UNAUDITED)
AS OF AS OF
DECEMBER 31, DECEMBER 31,
TOTAL SHARES AND OP UNITS OUTSTANDING: 2005 2004
------------- -------------
Total Common Shares Outstanding................. 23,295,956 22,937,192
Total Common OP Units Outstanding............... 6,207,471 6,340,805
SELECTED BALANCE SHEET DATA: DECEMBER 31, DECEMBER 31,
2005 2004
(amounts in 000's) (amounts in 000's)
------------------ ------------------
Total real estate, net......................... $ 1,774,222 $ 1,712,923
Cash and cash equivalents...................... $ 610 $ 5,305
Total assets (1)............................... $ 1,948,693 $ 1,886,289
Mortgage notes payable......................... $ 1,500,481 $ 1,417,251
Unsecured debt................................. $ 137,800 $ 235,800
Total liabilities.............................. $ 1,706,798 $ 1,719,674
Minority interest.............................. $ 209,379 $ 134,771
Total stockholders' equity..................... $ 32,516 $ 31,844
MANUFACTURED HOME SITE AND QUARTERS ENDED TWELVE MONTHS ENDED
OCCUPANCY AVERAGES: DEC. 31, DEC. 31, DEC. 31, DEC. 31,
2005 2004 2005 2004
----------- ---------- ----------- -----------
Total Sites ......................... 42,834 42,657 42,776 42,179
Occupied Sites ...................... 38,616 38,790 38,629 38,512
Occupancy % ......................... 90.2% 90.9% 90.3% 91.3%
Monthly Base Rent Per Site .......... $ 464.51 $ 443.95 $ 460.10 $ 441.83
Core* Monthly Base Rent Per Site .... $ 467.23 $ 446.39 $ 462.84 $ 441.99
(*) Represents rent per site for properties owned in both periods of comparison.
QUARTERS ENDED TWELVE MONTHS ENDED
HOME SALES (2): DEC. 31, DEC. 31, DEC. 31, DEC. 31,
($ in thousands) 2005 2004 2005 2004
---------- ----------- ----------- -----------
New Home Sales Volume (3)..................... 259 169 771 514
New Home Sales Gross Revenues................. $ 21,923 $ 15,730 $ 62,664 $ 43,324
Used Home Sales Volume........................ 65 57 271 341
Used Home Sales Gross Revenues................ $ 698 $ 983 $ 3,350 $ 4,080
Brokered Home Resale Volume................... 342 350 1,526 1,415
Brokered Home Resale Revenues, net............ $ 619 $ 555 $ 2,714 $ 2,176
(1) Includes hurricane related costs recoverable from insurance providers of
approximately $4 million.
(2) Results of continuing sales operations.
(3) Quarter and twelve months ended December 31, 2005 includes 34 and 84
third-party sales, respectively.
EQUITY LIFESTYLE PROPERTIES, INC
(UNAUDITED)
ANNUAL REVENUE RANGES:
Total Sites as of December 31 Approximate Annual
(rounded to 100s) Revenue Range (1)
----------------------------- -----------------------------------------
2005 2004 2006 2005
----------- ----------- ----------------- -------------------
Community sites (2) ....... 44,900 45,200 $5,700 - $5,800 $5,400 - $5,500 (3)
Resort sites:
Annuals ................. 15,500 13,100 $3,000 - $3,200 $3,000 - $3,200
Seasonal ................ 8,000 7,200 $1,900 - $2,000 $1,800 - $1,900
Transient ............... 6,500 6,000 $2,600 - $2,800 $2,300 - $ 2,500
Thousand Trails ......... 17,900 17,900 (4)
Joint Ventures ............ 13,500 11,800 (5)
------- -------
106,300 101,200
======= =======
(1) All Ranges exclude utility and other income.
(2) Includes 2,076 sites from discontinued operations.
(3) Based on occupied sites. Average occupancy as of 12/31/05 was
approximately 90%.
(4) 17,911 sites are reserved for Thousand Trails members pursuant to a
sale-leaseback agreement with Thousand Trails Operations Holding Company,
L.P. with an annual rent of $16.5 million
(5) Joint Venture income is included in Equity in income from unconsolidated
joint ventures.
FUNDS AVAILABLE FOR DISTRIBUTION (FAD): QUARTERS ENDED TWELVE MONTHS ENDED
DEC. 31, DEC. 31, DEC. 31, DEC. 31,
2005 2004 2005 2004
---------- ---------- ---------- ----------
Funds from operations................................ $ (5,708) $ 14,120 $ 52,827 $ 54,448
Non-revenue producing improvements to real estate.... (3,533) (4,156) (12,549) (13,663)
---------- ---------- ---------- ----------
Funds available for distribution................... $ (9,241) $ 9,964 $ 40,278 $ 40,785
========== ========== ========== ==========
FAD per Common Share - Basic......................... $ (0.31) $ 0.34 $ 1.37 $ 1.41
FAD per Common Share - Fully Diluted................. $ (0.31) $ 0.33 $ 1.35 $ 1.38
---------- ---------- ---------- ----------
EARNINGS AND FFO PER SHARE GUIDANCE (unaudited) Full Year 2006
Low High
------ ------
Projected net income per common share - fully diluted....... $ 0.64 $ 0.73
Projected depreciation and amortization..................... 1.93 1.93
Projected income allocated to Common OP Units............... 0.18 0.19
------ ------
Projected FFO available to common stockholders.............. $ 2.75 $ 2.85
====== ======
"Funds from Operations ("FFO") is a non-GAAP financial measure. The Company
believes that FFO, as defined by the Board of Governors of the National
Association of Real Estate Investment Trusts ("NAREIT"), to be an appropriate
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.
FFO is defined as net income, computed in accordance with GAAP, excluding
gains or losses from sales of properties, plus real estate related depreciation
and amortization, and after adjustments for unconsolidated partnerships and
joint ventures. Adjustments for unconsolidated partnerships and joint ventures
are calculated to reflect FFO on the same basis. The Company believes that FFO
is helpful to investors as one of several measures of the performance of an
equity REIT. The Company further believes that by excluding the effect of
depreciation, amortization and gains or losses from sales of real estate, all of
which are based on historical costs and which may be of limited relevance in
evaluating current performance, FFO can facilitate comparisons of operating
performance between periods and among other equity REITs. The Company computes
FFO in accordance with standards established by 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. Funds available for distribution
("FAD") is a non-GAAP financial measure. FAD is defined as FFO less non-revenue
producing capital expenditures. Investors should review FFO and FAD, along with
GAAP net income and cash flow from operating activities, investing activities
and financing activities, when evaluating an equity REIT's operating
performance. FFO and FAD do not represent cash generated from operating
activities in accordance with GAAP, nor do they represent cash available to pay
distributions and should not be considered as an alternative to net income,
determined in accordance with GAAP, as an indication of our financial
performance, or to cash flow from operating activities, determined in accordance
with GAAP, as a measure of our liquidity, nor is it indicative of funds
available to fund our cash needs, including our ability to make cash
distributions."