EXHIBIT 99.1
CONTACT: Michael Berman FOR IMMEDIATE RELEASE
(312) 279-1496 July 17, 2006
ELS REPORTS SECOND QUARTER RESULTS
SOLID CORE PERFORMANCE; RENEWS CREDIT FACILITIES
CHICAGO, IL -- JULY 17, 2006 -- Equity LifeStyle Properties, Inc.
(NYSE: ELS) announced results for the quarter and six months ended June 30,
2006.
a) Financial Results
For the second quarter of 2006, Funds From Operations ("FFO") were
$16.3 million or $0.54 per share on a fully diluted basis, compared to $17.3
million or $0.58 per fully diluted share for the same period in 2005. For the
six months ended June 30, 2006, FFO were $43.9 million or $1.45 per share on a
fully diluted basis, compared to $42.7 million or $1.42 per fully diluted share
for the same period in 2005.
Net income available to common stockholders totaled $1.2 million or
$0.05 per fully diluted share for the quarter ended June 30, 2006. This compares
to net income available to common stockholders of $2.5 million or $0.11 per
fully diluted share for the second quarter of 2005. Net income available to
common stockholders totaled $11.3 million or $0.47 per fully diluted share for
the six months ended June 30, 2006. This compares to net income available to
common stockholders of $11.2 million or $0.48 per fully diluted share for the
six months ended June 30, 2005. The attachment to this press release reconciles
FFO to net income, the most directly comparable GAAP measure.
The results for the quarter and six months ended June 30, 2005 included
a one-time gain from refinancing proceeds from a joint venture of approximately
$1.2 million of FFO or approximately $0.9 million of net income available to
common stockholders.
b) Portfolio Performance
For the second quarter of 2006, property operating revenues were
approximately $84.2 million, compared to $75.2 million for the second quarter of
2005. Property operating revenues for the six months ended June 30, 2006 were
$174.6 million, compared to $160.4 million for the same period in 2005.
For the quarter ended June 30, 2006, Core(1) property operating
revenues increased approximately 4.5 percent, while operating expenses increased
approximately 7.0 percent, over the same period in 2005. Net Core property
operating income increased approximately 2.3 percent over the same period last
year. For the six months ended June 30, 2006, Core property operating revenues
increased 4.2 percent, while operating expenses increased 6.0 percent and net
Core property operating income increased 2.9 percent, over the same period last
year.
For the quarter ended June 30, 2006, the Company had 193 new home sales
(excluding 15 third-party dealer sales), an approximate 6.0 percent increase
over the quarter ended June 30, 2005. Gross revenues from home sales were
approximately $18.1 million for the quarter ended June 30, 2006, compared to
approximately $17.5 million for the quarter ended June 30, 2005. Net income from
sales operations was approximately $0.6 million for the quarter ended June 30,
2006, compared to approximately $0.4 million for the quarter ended June 30,
2005. For the six months ended June 30, 2006, the Company had 325 new home sales
(excluding 29 third-party dealer sales), an approximate 8.0 percent increase
over the six months ended June 30, 2005. Gross revenues from home sales were
approximately $30.0 million for the six months ended June 30, 2006, compared to
approximately $27.7 million for the same period last year. Net income from sales
operations was approximately $2.3 million for the six months ended June 30,
2006, compared to approximately $2.0 million for the six months ended June 30,
2005.
c) Asset-Related Transactions
The Company currently has four all-age properties held for disposition
and is in various stages of negotiations for sale of those properties. The
Company plans to reinvest sale proceeds or reduce its outstanding lines of
credit with the sale proceeds. One of the properties held for disposition, Del
Rey in Albuquerque, New Mexico, was under contract to be sold for $16.5 million
to a single-family home builder. The contract terminated on July 13, 2006, and
the Company retained a $1 million non-refundable deposit. The Company is
evaluating other indications of interest with respect to Del Rey.
During the second quarter of 2006, the Company closed on the previously
announced exchange of two all-age properties located in Indiana, previously
designated as held for disposition, containing 495 sites, together with $5.0
million, for the purchase of seven lifestyle-oriented properties with 1,594
sites, including 950 acres of developable expansion land. The seven properties
are located in Florida, New York, North Carolina, South Carolina, Michigan,
Kentucky and Alabama and have been leased to Privileged Access.
In April 2006, Indian Wells, a 350-site joint venture property located
in Indio, California, was sold. The Company recognized a net gain of
approximately $0.9 million this quarter as a result of the exchange of the two
Indiana properties and the sale of Indian Wells. These gains are excluded from
the Company's FFO.
In June 2006, we closed on the acquisition of Tranquil Timbers, a
270-site resort property located in Door County, Wisconsin, for a purchase price
of $2.8 million.
d) Privileged Access
As of June 30, 2006, the Company has leased 20,259 sites to Privileged
Access. The sites are comprised of 18,535 sites at 59 Thousand Trails
properties, 1,594 sites at the seven recently acquired
- ---------------------
(1) Properties we owned for the same period in both years.
properties noted above and 130 sites at Tropical Palms Resort. Tropical Palms is
a 541-site resort property near Orlando, Florida.
e) Balance Sheet
The Company's average long-term secured debt balance was approximately
$1.6 billion for the quarter ended June 30, 2006, with a weighted average
interest rate of approximately 6.0 percent per annum. Our unsecured debt balance
currently consists of approximately $140 million outstanding on our lines of
credit, and current availability is approximately $135 million. Interest
coverage was approximately 1.8 times in the quarter ended June 30, 2006.
The Company recently renewed its unsecured debt. A syndicated term loan
and $160 million in lines of credit was replaced with $275 million in lines of
credit with a four-year maturity and one-year extension option, bearing interest
at LIBOR plus 1.20 percent with a 0.15 percent facility fee. The renewal
increases our financial flexibility and lowers our credit spread. The interest
rate on the term loan was LIBOR plus 1.75 percent and the $160 million lines of
credit had an interest rate of LIBOR plus 1.65 percent and had a 0.15 percent
unused fee. The interest rate on $100 million of the outstanding balance on the
new lines of credit is fixed at 6.18 percent per annum through mid-December
2006.
f) Guidance
The Company projects 2006 fully diluted FFO per share to be in the
range of $2.70 - $2.75. The Company continues to expect inflationary pressures
to impact its expenses. The Company expects Core portfolio property operating
revenues to increase approximately 4.0 -- 4.25 percent and net Core portfolio
property operating income to grow approximately 2.5 - 3.0 percent. Our overall
interest rate (including amortization expense) is approximately 6.2 percent per
annum. The Company makes no assumptions concerning future acquisitions.
The Company recently conducted a three-year prospective review of its
business and expects a positive operating environment in 2007 and beyond. In
2007, the Company expects its Core portfolio to operate in line with its
historical growth patterns. However, the Company expects cost pressures,
primarily related to insurance and utilities, to continue to impact performance.
Short-term interest rates have increased almost 1.0 percent in the last six
months and approximately 2.0 percent in the last twelve months. Short-term
interest rates will impact the Company's borrowing costs and its 2007 financial
results.
Factors impacting 2006 and 2007 guidance include: i) mix of site usage
within the portfolio; ii) yield management on short-term resort sites; iii)
scheduled or implemented rate increases; and iv) occupancy changes. Results for
2006 and 2007 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; v) changes in interest rates; and vi) the
Company's continued initiatives regarding rent control legislation in
California and related legal fees. Quarter-to-quarter results during the year
are impacted by 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," "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.
These forward-looking statements are subject to numerous assumptions, risks and
uncertainties, including, but not limited to: in the age-qualified properties,
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 properties, 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 SEC. 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. The Company
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 294
quality properties in 30 states and British Columbia consisting of 108,440
sites. We are a self-administered, self-managed, real estate investment trust
(REIT) with headquarters in Chicago.
A live webcast of Equity LifeStyle Properties, Inc.'s conference call
discussing these results will be available via our website in the Investor Info
section at www.equitylifestyle.com at 10:00 a.m. Central Time on July 18, 2006.
The conference call 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 SIX MONTHS ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
2006 2005 2006 2005
--------- --------- --------- ---------
PROPERTY OPERATIONS(1):
Community base rental income........................... $ 56,409 $ 53,041 $ 111,739 $ 105,960
Resort base rental income.............................. 19,999 15,223 46,907 39,794
Utility and other income............................... 7,769 6,936 15,913 14,634
--------- --------- --------- ---------
Property operating revenues......................... 84,177 75,200 174,559 160,388
Property operating and maintenance..................... 29,544 24,510 57,261 50,804
Real estate taxes...................................... 6,753 6,286 13,351 12,446
Property management.................................... 4,374 3,966 9,226 7,615
--------- --------- --------- ---------
Property operating expenses......................... 40,671 34,762 79,838 70,865
--------- --------- --------- ---------
Income from property operations..................... 43,506 40,438 94,721 89,523
HOME SALES OPERATIONS:
Gross revenues from inventory home sales............... 18,068 17,450 30,001 27,687
Cost of inventory home sales........................... (15,793) (15,623) (26,104) (24,570)
--------- --------- --------- ---------
Gross profit from inventory home sales.............. 2,275 1,827 3,897 3,117
Brokered resale revenues, net.......................... 618 813 1,275 1,417
Home selling expenses.................................. (2,449) (2,224) (4,923) (4,262)
Ancillary services revenues, net....................... 199 (13) 2,002 1,710
--------- --------- --------- ---------
Income from home sales and other.................... 643 403 2,251 1,982
OTHER INCOME AND EXPENSES:
Interest income........................................ 555 312 840 683
Income from other investments, net..................... 4,779 4,347 9,283 8,396
Equity in income of unconsolidated joint ventures...... 854 3,401 2,605 4,544
General and administrative............................. (3,578) (3,815) (6,801) (6,685)
Rent control initiatives............................... (204) (43) (298) (613)
--------- --------- --------- ---------
Operating income (EBITDA)........................... 46,555 45,043 102,601 97,830
Interest and related amortization...................... (26,261) (25,003) (50,886) (50,002)
Income from discontinued operations.................... 193 554 437 1,173
Depreciation on corporate assets....................... (102) (223) (211) (439)
Income allocated to Preferred OP Units................. (4,038) (3,056) (8,068) (5,912)
--------- --------- --------- ---------
FUNDS FROM OPERATIONS (FFO)......................... $ 16,347 $ 17,315 $ 43,873 $ 42,650
Depreciation on real estate and other costs............ (15,101) (13,761) (29,475) (27,259)
Depreciation on unconsolidated joint ventures.......... (559) (398) (1,006) (824)
Depreciation on discontinued operations................ --- --- --- (329)
Gain on sale of properties............................. 852 --- 852 ---
Income allocated to Common OP Units.................... (320) (669) (2,963) (3,042)
--------- --------- --------- ---------
NET INCOME AVAILABLE TO COMMON SHARES............... $ 1,219 $ 2,487 $ 11,281 $ 11,196
========= ========= ========= =========
NET INCOME PER COMMON SHARE -- BASIC..................... $ 0.05 $ 0.11 $ 0.48 $ 0.49
NET INCOME PER COMMON SHARE -- FULLY DILUTED............. $ 0.05 $ 0.11 $ 0.47 $ 0.48
--------- --------- --------- ---------
FFO PER COMMON SHARE -- BASIC............................ $ 0.55 $ 0.59 $ 1.48 $ 1.45
FFO PER COMMON SHARE -- FULLY DILUTED.................... $ 0.54 $ 0.58 $ 1.45 $ 1.42
--------- --------- --------- ---------
Average Common Shares -- Basic........................... 23,384 23,042 23,358 23,008
Average Common Shares and OP Units -- Basic.............. 29,585 29,356 29,562 29,333
Average Common Shares and OP Units -- Fully Diluted...... 30,205 29,974 30,197 29,934
--------- --------- --------- ---------
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(1) Certain reclassifications have been made to prior periods in order to
conform with current period presentation.
EQUITY LIFESTYLE PROPERTIES, INC.
(UNAUDITED)
AS OF AS OF
JUNE 30, DECEMBER 31,
TOTAL COMMON SHARES AND OP UNITS OUTSTANDING: 2006 2005
----------------- -----------------
Total Common Shares Outstanding................ 23,393,229 23,295,956
Total Common OP Units Outstanding.............. 6,197,212 6,207,471
SELECTED BALANCE SHEET DATA: JUNE 30, DECEMBER 31,
2006 2005
(amounts in 000s) (amounts in 000s)
----------------- -----------------
Total real estate, net......................... $ 1,885,657 $ 1,774,242
Cash and cash equivalents...................... $ 945 $ 610
Total assets (1)............................... $ 2,058,069 $ 1,948,874
Mortgage notes payable......................... $ 1,573,682 $ 1,500,581
Unsecured debt................................. $ 148,000 $ 137,700
Total liabilities.............................. $ 1,806,293 $ 1,706,979
Minority interest.............................. $ 212,033 $ 209,379
Total stockholders' equity..................... $ 42,747 $ 32,516
MANUFACTURED HOME SITE FIGURES AND QUARTERS ENDED SIX MONTHS ENDED
OCCUPANCY AVERAGES: (2) JUNE 30, JUNE 30, JUNE 30, JUNE 30,
2006 2005 2006 2005
------- ------- ------- -------
Total Sites............................ 44,106 42,754 43,494 42,746
Occupied Sites......................... 39,672 38,581 39,194 38,660
Occupancy %............................ 89.9% 90.2% 90.1% 90.4%
Monthly Base Rent Per Site............. $473.96 $458.27 $475.15 $456.80
Core Monthly Base Rent Per Site........ $479.44 $458.27 $477.69 $456.80
QUARTERS ENDED SIX MONTHS ENDED
HOME SALES: (2) JUNE 30, JUNE 30, JUNE 30, JUNE 30,
($ in thousands) 2006 2005 2006 2005
------- ------- ------- -------
New Home Sales Volume (3).............. 208 186 354 313
New Home Sales Gross Revenues.......... $17,351 $16,253 $28,688 $25,856
Used Home Sales Volume (4)............. 104 92 180 138
Used Home Sales Gross Revenues......... $ 717 $ 1,197 $ 1,313 $ 1,831
Brokered Home Resale Volume............ 377 439 744 808
Brokered Home Resale Revenues, net..... $ 618 $ 813 $ 1,275 $ 1,417
(1) Includes hurricane related costs recoverable from insurance providers of
$3.2 million.
(2) Results of continuing operations.
(3) Quarter and six months ended June 30, 2006 includes 15 and 29 third-party
dealer sales, respectively. Quarter and six months ended June 30, 2005
includes 4 and 13 third-party dealer sales, respectively.
(4) Quarter and six months ended June 30, 2006 include two third-party dealer
sales. There were no third-party dealer sales of used homes for the six
months ended June 30, 2005.
EQUITY LIFESTYLE PROPERTIES, INC.
(UNAUDITED)
ANNUAL REVENUE RANGES:
TOTAL SITES AS OF APPROXIMATE ANNUAL
REVENUE RANGE (1)
6/30/06 3/31/06 12/31/05 2006
(rounded to 000s) (rounded to 000s) (rounded to 000s)
----------------- ----------------- ----------------- ------------------
Community sites (2) 45,700 46,200 44,900 $5,700 - $5,800 (3)
Resort sites:
Annuals.................. 18,800 18,700 15,500 $3,000 - $3,200
Seasonal................. 8,000 8,000 8,000 $1,900 - $2,000
Transient................ 7,200 7,000 6,500 $2,600 - $2,800
Membership (4)........... 20,100 17,900 17,900
Joint Ventures (5)......... 8,600 8,500 13,500
-------- -------- --------
108,400 106,300 106,300
======== ======== ========
(1) All ranges exclude utility and other income.
(2) Quarter ended June 30, 2006 includes 1,581 sites from discontinued
operations. Quarters ended March 31, 2006 and December 31, 2005 include
2,076 sites from discontinued operations.
(3) Based on occupied sites. Average occupancy for the six months ended June
30, 2006 was approximately 90.1%.
(4) All sites are currently leased to Privileged Access with an annual rent of
approximately $18.2 million.
(5) Joint Venture income is included in Equity in income from unconsolidated
joint ventures.
FUNDS AVAILABLE FOR DISTRIBUTION (FAD): QUARTERS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
2006 2005 2006 2005
-------- -------- -------- --------
Funds from operations.................................... $ 16,347 $ 17,315 $ 43,873 $ 42,650
Non-revenue producing improvements to real estate........ (2,777) (3,044) (5,436) (5,333)
-------- -------- -------- --------
Funds available for distribution....................... $ 13,570 $ 14,271 $ 38,437 $ 37,317
======== ======== ======== ========
FAD per Common Share -- Basic............................ $ 0.46 $ 0.49 $ 1.30 $ 1.27
FAD per Common Share -- Fully Diluted.................... $ 0.45 $ 0.48 $ 1.27 $ 1.25
-------- -------- -------- --------
EARNINGS AND FFO PER COMMON SHARE GUIDANCE (unaudited) FULL YEAR 2006
LOW HIGH
-------- --------
Projected net income per common share - fully diluted........... $ 0.61 $ 0.65
Projected depreciation and amortization......................... 1.93 1.93
Income allocated to Common OP Units............................. 0.16 0.17
-------- --------
Projected FFO available to common shareholders.................. $ 2.70 $ 2.75
======== ========
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"), is 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.