ELS - Earnings call transcript Q4 2017 | Equity LifeStyle Properties, Inc.

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Operator

Good day, everyone, and thank you all for joining us to discuss Equity LifeStyle Properties' Fourth Quarter and Year end 2017 Results.

Our featured speakers today are Marguerite Nader, our President and CEO; Paul Seavey; our Executive Vice President and CFO; and Patrick Waite, our Executive Vice President and COO. In advance of today's call, management released earnings. Today's call will consist of opening remarks and a question-and-answer session with management relating to the company's earnings release.

As a reminder, this call is being recorded. this of may the during in forward-looking discussed meaning the Federal matters conference contain call statements Certain Securities Laws.

are assumes update statements uncertainty. of subsequent that forward-looking subject economic because certain Our risk become The untrue company supplement no or to events. obligation any statements to and

earnings financial included comparable Reconciliations I our addition, non-GAAP of At release, and In non-GAAP financial today's in GAAP by CEO. our defined measures filings. to turn President we call Nader, as during the Marguerite financial would the these are measures SEC our discuss to and our SEC information will measures Regulation to supplemental over like G. call historical time, this

Marguerite Nader

report the results thank XXXX. final morning, today. joining Good and to you for for pleased us I am

and record with a year our of growth growth FFO. operations demand. solid core strong XXXX FFO in continued marked was X.X% an We by

occupancy years. increased to are now for that has consecutive quarter-over-quarter eight We report pleased

Our sites while MH portfolio increased by more X%. or over sites, homeowners increasing than occupancy by XXX XXX

Our of are located year increase We continued average to growth and XX% in conversion decision XX% used for and purchase high MH conversion full the making strength rate new an quarter properties well our X.X%. trends in the markets. ability saw at finished are of Customers with growth rental We with the our rate our properties positive. the for strongest full at experiencing our home with before year. rent are sales properties

our population key some baby relocation year-over-year our robust is properties. signifying demographic resale with a market states. ownership boomer in our Our The overall of continue growth to in trend trends and in increase transfers favor

to advantage all of the live boomer predicted the at almost and opportunity five take X.X%, community grow newly offers in a Arizona, the next properties. anticipated retired double of our are the to amenities grow U.S. while U.S. is our ELS the Florida setting states, and average. key two years, an Over extensive population to

this Our RV well properties performance year.

This For growth X% the year, X.X% X.X%. X.X% a by growth grew in growth a and in fueled growth was seasonals a in our core RV transient revenue. income annuals,

continue Our fan bear XXX,XXX. increased to by media our base XX% social programs marketing We to fruit.

to a encourage increase customer in and we reservations have marketing online Our book compared coming through campaigns online to the XX% seen revenue as XXXX.

customers devices. continue on mobile Our migrate towards to their booking

year, and now the accounts XX% increased For our on site. revenue XX% revenue all of Web for mobile booked

acres contained of in purchased Chesapeake award sites flagship to The million. acquisitions. on properties quarter XXX and the we $XXX located multiple resorts Turning In XXXX park RV mega as have and expansion received a to like for and two detail. sites the will footprint. The have acquisition operating expansion the great on of properties total walk our top have a long I the is numbers appreciated. XXX as Bay employee this year would been and solid XX I The each target well and customers internal between to external over thank the of experience for our list. important turn Paul continuing to translates employees for repeat our now of business the deliver it of into effort in results. through as to

Paul Seavey

first guidance fourth quarter Thanks, year our and morning quarter review XXXX everyone. Marguerite I and will update our full guidance. discuss good our year results, and our full detailed

properties. well our for XXXX properties our I of results our core mention designation as reflect non-core as XXXX for Florida as that will Before I begin, Keys guidance the

properties includes and Our operated of presented. periods during core those owned comparative definition

we the have as interrupted. to because decided Florida non-core assets good towards the We in them RV properties been operations made progress in reopening quarter but fourth our have designate Keys

provides quarter that picture $X.XX, for guidance both core change generated year guidance the income FFO higher represented the growth impact core X.X% we operating the base than occupancy Core was resort year, minimal portfolio our of and higher occupancy. property the to The our in our west At the X.X% outperformance fourth portfolio income NOI was of than in the X% X.X% for core end accompanied was normalized believe rental home XXX financial rental by X%, transient rates, in quarter south occupancy. in core results occupancy XXXX. decrease to coming of from was X% and resorts prior higher year. coming sites clear base rental to has growth actual a Core increased basis We NOI growth strong our growth business. revenues. the the was of on While rate X.X% in core by driven XX and in Full rental for a income the by Full XX growth points homes X.X% share and driven from quarter sites. per full with including our was expectations rate seasonal year occupancy. compared increased of of results year. growth revenue Seasonal and

the of XX% and than utility price higher products almost of related hurricane because our income other the resorts and for quarter, RV result including business in revenues was fourth quarter fourth higher transient treatment average expenses, during and Our of sales sales state Irma. saw pass XXXX. higher of membership to the as of strong was increased dues upgrade sale compared and a in and Core guidance, demand mainly $XXXX The our was increase marketing Florida sales activity than accounting of upgrades. expenses expectations an the camping sales revenue fourth very quarter. Net quarter in priced approximately to upgrade and

repairs as XXXX. million quarter During quarter expenses property certain we of in revenue experienced to debris offset matters. than core in The property taxes maintenance to and Irma quarter the expenses offset is to operating related and removal expenses. $X We recognized to a favorable property cleanup planned adjusted of quarter, fourth Fourth revenue the higher X.X% result core $X expenses our compared maintenance guidance estate legal real for administrative and exclude portfolio. of million during the increased fourth variance

promotion an the in expenses X.X% was core increase advertising quarter than and NOI was year higher expected seasonal our realized X%. revenues. NOI and X.X%. to was Full fourth growth also growth core revenue We revenue X.X% our growth In increased core transient core related and

non-core modestly million non-core $XX.X full the the in acquisitions included contributed outperformed Our properties $X.X for in quarter million year. and a The guidance.

reserves. and Keys press not G&A than expenses as and by insurance for proceeds The guidance full at supplemental business The of the provides $XX.X corporate received Other addition, an million and the Grace expected quarter. were higher first quarter and by acquisition result than fourth of interruption our In was variance Property to guidance properties package detail. our in management fourth income guidance. in quarter. [indiscernible] increase impact generated of were result the was higher favorable offset insurance the included expenses In prior JV Point quarter properties. a in during of these interest our release were as the quarter Florida XXXX income, distribution a and a and year acquisition

in range. expense our are results. All revenue our my keep future estimate guidance, projections rates discuss and remarks guidance provide I growth and to of intended midpoints As mind represented current in

is XXXX normalized million guidance per FFO $X.XX Our range. the at share or midpoint our $XXX for of

based fourth performance, released RV October, the reflect quarter fourth our assumptions quarter we acquisition guidance since guidance in changes to the reclassification Keys in activity, updated revenue preliminary our of strong properties and on have Our XXXX non-core.

our million We business, with occupancy outperformance sites approximately revenue grow the we in resort In in is for strong in rates realize for continued higher view The is our to X.X% by We projected is prior X.X% and RV with the of saw expected year, from updated line and growth rate in in be as almost our property of from NOI X.X%. of assume is than XXXX. prior filled X.X% guidance. the supported properties before our For demand XXXX. the for our core XX core MH projected to points flat XXXX impact occupancy revenue year quarter. Base see basis rent XXXX. management our XXXX growth fourth guidance is $X properties we full expected

We in expect the X.X% for growth our year. annuals

reservation that our pacing our update. reviewed pace quarter incorporated and guidance our seasonal have into businesses transient for and first We

seasonal result related mind, some our in is from of result prior during our to property during rate as XXXX guidance quarter We Thousand annual we $XXX.X expenses. and anticipate midpoint revenue, sales in loss transient utility of growth dues the The to in a storm insurance a related the do quarterly guidance prior Trails the at guidance. guidance preliminary guidance. guidance revenue not million restoration guidance actual is our with which use with to insurance midpoint payment consistent change other assume our generate rates the approximately stays, including right includes We The of income and business of and with prior $XX.X from are other and of property that annual income. net change from range, million shows may shows sales, in Core growth supplemental does aggregate preliminary growth our our right contract results sales fluctuations consistent a The revenue expenses. rate membership mainly revenue use revenue, and contribution our Our approximately offset Keep expenses expenses, generated fourth by events Page is is our upgrade quarter. recognized package fourth of guidance $XXX.X core year. marketing XX million. project and and $XX.X line million properties. the

non-core Our from acquisitions guidance our XXXX regarding includes NOI our of additional We no $X.X million make properties. guidance. in assumptions

are guidance. management expected to use financing makes from other free prior the We generate cash consistent year in our to results income guidance. regarding and costs and expect debt changes in The we related XXXX. cost the prior resorts. and property of and Grace XXXX $XX.X no changed Other These have Point million and in [indiscernible] guidance expenses full ancillary with the expect corporate of assumptions flow activity model expenses

or approximately first guidance $X.XX midpoint Our million our share the guidance normalized is of per range. at quarter FFO $XX.X

growth We quarter. and expect NOI the of our in first of X.X%, core growth growth to generate expense X.X%, revenue X.X% of

quarter first not XX do we base XXXX. assume growth X.X% in of core rate We rent incremental increase related quarter and a assumes Our gains achieved occupancy points guidance. first occupancy our to X.X% in gains basis

of in growth in almost business quarter. the expect from X.X% to grow quarter first we from With complete, month of the RV core expected annuals our are quarter. first the Revenues the X.X%

and our to our seasonal expectation the of current is and Utility XXXX. reservation flat other recorded recovery in first driving of mentioned, year result is prior previously As as a X.X% the quarter X% transient insurance income growth in pace quarter. first

first the I growth quarterly expectation as and We fluctuations guidance in projected and higher quarter my year. anticipate that expense for an we of is are full the includes some mentioned first payroll R&M the core remainder year X.X%. growth in quarter expense than discussion, rates of

in the non-core our our to includes This quarter. million related approximately gradually operations. properties of expect Keys returning properties NOI to the contribute We stabilized assumptions first to $X.X

cash our Now million. on I The will shows balance press balance comment of $XX.X release the sheet. yearend

million ATM debt terms are on credit and provide quarter treasuries. XX million maturities at in from movement outstanding followed additional X% in We between value, XXXX. debt in available scheduled $XX service last coverage. is loan times and X%, XX% to have years X.X our to no We recent to The and to program XX% change $XXX line had debt secured our of X.X the liquidity. coupons rates Current

believe to life from multiple on years lend command companies, sources balance assets place high terms We importance GSEs High to and qualified available We interest terms. continue at sheet use. quality, MH lenders age historically we longer. for flexibility CMBS ten base low to continue to financing and strong have we rates capital of and see

Our is years. debt is maturity X.X to debt interest The EBITDA our times weighted of and our is X.X times. outstanding around secured average coverage XX

to like it open would for up questions. we Now

Operator

Instructions] ISI. the question comes Samir first with Our of [Operator Evercore line from Khanal

Samir Khanal

just I surprised but Can a know great. I that of little that improvements at sort did trying about would you debt midpoint rates more be if any I maybe up was just you a did, you the acquisition not the tapped go guys or there on is you I guess to penny. ATM with ask deal. than the to acquired. understand associated on the color the around Any capital assets that cap

Marguerite Nader

Sure.

been sites in think I purchased There really Point. is XX as I Bethpage for these assets quarter marketing assets think properties last both bringing expansion and Grey's to time. opening and to and going is potential interested These potential our were customer campaigns long my our expansion of a sites. these the we from years held in in I base. awareness comments, The the have family we these and in adding November So said, in is rate cap and assets the in X% for there upside upside two

the that So guidance. contributed increase that, between to ability us having to

Samir Khanal

why Okay. and this is fund of pretty out just more sort issue strong ATM leverage have at just and to I did And then you the of not debt? curiosity, the mean sheet still Why point. favorable tap low balance you pricing very acquisition? a

Paul Seavey

and I deal. use think we a was ATM mix of equity deal on have our attractive our a into it tap reviewed guidance. to a view very to found do which equity debt of our to we and And options and the the option dialed portion the fund

Operator

question the Citi. Our Nick comes with from of line next Joseph

Nick Joseph

Just sticking on the acquisitions.

for but a of expansion growth this are rate year terms sites mentioned that you in upside versus underwriting, what forward them, and on platform of portfolio marketing going you kind the terms I overall. core In as next guess, of, the of source

Marguerite Nader

Well, we get and in new us. which I there are and think to really operate, these seaboard flagship the and on as properties eastern operations are

as to grow going what probably it's So camp grounds. it in we our I northern of seen think excess have at look we in

and we starting pretty about So in that, excited are operate getting them. about to

Nick Joseph

Thanks. fourth do year you I didn’t Marinas. just in And year JV, last of update have on the quarter. kind growth the versus the you last relative the in rate performance then them know and own quarter a an in fourth another but of just,

Marguerite Nader

Loggerhead was the portfolio own limited didn’t also a fourth didn’t the quarter Loggerhead it Suntex of the we 'XX. pleased Actually of of with the time last at -- the in the we year, that portfolio [ph], partner. are not [Bay] Yes. we own for have But results been

is And that. on so no other update real than there that

Nick Joseph

population mentioned you expected finally, just your Maybe across footprint. Thanks. growth

tenants tax and more market from. could your impact broadly, where your certainly the are wondering kind of Just thoughts it have potential in resale reform home on, the moving

Paul Seavey

on think we ELS few in Nick, on reform impact about customer a base. the the impact ways. then tax Yes. Specific different and

amount together customers think I might and much take though assumptions is We considered their taxable their we in a The savings. see and customers for situation typical income, so income forth. whether levels, of couple most at of income to it could impact. put ELS some capital some dividends, customer thousand individual be In the from a maybe impact how a about did hundred our models was getting gains and typical wages, there our tax instances dollars range estimated making annually. not it dollar source a look or more of

way of that return, tax has amount $XXX. increase children dividend a dependent interest a And same closer that the dependent couple and could the $XXX married a reduction by are see married with should annually would income of example, children say. no couple refund has to wages their of Just see no in I but $XX,XXX on

we favorably impact a there overall to is impact on think modestly the their the income. we think about So customers when

Marguerite Nader

years. and last the our portfolio. people -- this resale of term, to longer a this have turn, to in north years coming over our Really also five of shows from is about the back both seen showing back the we And home of five their portfolio I over market a up sell think, I kind looking XX% us last in think in which are strength decline able in a Nick, homes

Operator

Robert go Our Baird. of Babin ahead. the next Please Drew question from comes line with W.

Drew Babin

with Florida seasonal some RV just wondering or, changing the in just anything just there in the noticed in comp tougher properties, looks annual like set XXXX Whether embedded guidance, revenues color. I marginally. comps is Keys it's if looking supplemental I the for that. it the came and was

Paul Seavey

Yes.

a change, that couple it's So things. impacted by of

XXXX. almost preliminary the And for our had by expectations First, almost January. quarter increased forecast designated the non-core. XXXX forecast fourth $X Keys But revenue basis had completed We on points. core the as million. guidance ten we for core portfolio properties is though impact expectations, was review RV different based we change for October that maybe on because of in results the no That we XXXX

So because of decline slight does QX expectations outperformed the it's a revenue. the really rates of but 'XX, core look like kind increase in an in growth impact overall in

Drew Babin

underway provide helpful. Okay. of on guess count. And whether just we elsewhere. a I one, of Is -- may one in be any to acquisitions going number that available quarterly sites are cadence the but last this expansion year very just expansions terms model should in being the sites I site sure delivered That’s new portfolio. opportunities the of in not increase there overall the Chesapeake with am are

Marguerite Nader

mean the have this won't we there, Bay line expansions I on Chesapeake year. Yes. those respect with to

I and they become down think available. about is XXXX that we quarterly sites will what we are XXX it planning breaking as be for

Operator

the with And line next question our of comes Kim John from BMO.

John Kim

you was process sale On any if the the recent can there just in market. are competitive entrants the new the or players acquisitions, usual if discuss was how and it

Marguerite Nader

think to would how interested same down the players, other process something I was as highly what be really going say. were very that some happen. would for lot there far the they is is have been come just long a these clear a were I together after we boiled I process, and sought mentioned, it once competitive. sold, a relationships that time. lot they But really which new assets Like this say of of in to a And kind interested. the players as people I it had that was was But of are that, assets have deals

John Kim

$XXX nearby. separate acres transaction. Okay. is Was an acquisition option referenced local reports part media XX that then purchase or a the of price And for million additional that a

Marguerite Nader

the all acquisition No, part that’s price. of

John Kim

timing and have what expansions it place. the gave if Okay. you And the I don’t do in is know for the approvals but already you already

Marguerite Nader

next are years. for There internal in timing expansions is the and approvals place the the over of some few

John Kim

your increasing years. in think will your it? referenced on X for, your Can how opening much also you said peak I do the Marguerite, occupancy runway remarks What hit you mind in occupancy consecutive left? is is you when you just think you comment and

Patrick Waite

is This Patrick.

perspective, watermark historical high a XX%. is for Just our

half that so vacancy, Gulf the Myers look Vero and current we Lauderdale, if And East up that We occupied run Clearwater, across the you Daytona, Fort level just away more And the XX% into sites range. you is XXX market. as market, watermark. high Coast in roughly occupancy of largest market sites our at the to at Tampa, high we at a low are coast from vacant XX.X%, on with on rates obviously XX% occupancy our Florida currently Florida the to portfolio. roughly Fort the XXXX north mid the to coast, are Orlando, [indiscernible] up And in range. move are in

in Florida highly runway So both for there us us, add continue occupied markets to occupancy. is additional California Arizona, for and XX%. to XX%,

seen have in those homes conversions, strength rental new with markets. particularly the on We both particularly last quarters in few of

to opportunity occupied. growth, last XX% continues been very occupancy is quality quarters as opportunity portfolio well some over look doing is well about you and us to several to contribute our is if of there portfolio Likewise, of our And broader XXX% the contribute occupancy. to overall at there the has that XX% So more to there. so to Colorado for continue

opportunity key markets that consumer concept confidence obviously grow vacancy starts in tight. holds mark but that And highlighted are that structural a all to lot the and those I together going market XX% into So I getting envision eclipse assumes we that continue have that to that holds below of but occupancy. to would a we

John Kim

is Okay. on then And question final Palms resort. RV Tropical my

store this or recently. but operation asset investment wondering at your on It's you over same taken you out if do an have of CapEx I the plan just was for could elaborate plans your You pool, of additional to asset.

Patrick Waite

again. Patrick It's Sure.

asset Orlando High demand there operations in profile and team. management premier Disneyworld it's consistent onsite that our Our team asset in view seen market. very the perspective of from with and Greater is obviously And have location. we our a an

area We that rental the had units amenities but at to also are that of in the invest not many continuing common property. only we

there market. have positioned to very So we strong competitively multiyear is that a to plan in that continue property keep

Marguerite Nader

and this party operate And John, owned had have we a then we for it operated it XXXX few years third property while. we a for since and a

operated a very have familiar the are think we couple and now with almost for and a we asset So I it of year months.

it be will in store same pool in So the XXXX.

John Kim

on expect What kind of returns do investment? you typically

Marguerite Nader

Investment on...

John Kim

Like additional on like this. something CapEx

Marguerite Nader

Well, cabin revenue what It or I put a think an depends it you when CapEx revenue. mean that we talking in I generates amenity producing base about. obviously are there is depends. additional

the what think I in would we So wide expect. range pretty is

Operator

from comes question Street Ryan with line the Green next of Lumb our And Advisors.

Ryan Lumb

in bit fourth So guidance above the core portfolio third the for expense a given came growth quarter. quarter, the in quarter in

can Just more during give delta what the the you wondering color there on if fourth some was quarter.

Paul Seavey

Yes.

main of and the offsets respect the the properties. over were guidance we the administrative And As it I RV at legal certain cost. have then of to incremental The mentioned, that of million cost related revenue to drivers then in matters some in promotion some dollars promotion relative a our administrative advertising and million, quarter. advertising little

Ryan Lumb

in largest on industry for And the then Champion plans what you month, of thoughts or announced the homes broadly. impact U.S. become to the earlier and Okay. manufactured Any Skyline more Homes builder might merge be and the this

Patrick Waite

Patrick. it's Yes,

with those relationships have We manufacturers. both

We Over across manufacturing from Homes. platform the consolidation have ten there, manufacturing all to last of we purchase the out years large Kabco another seen them. seven with including

of we individual I geographic the of if for and the it who them us homes volume change That’s largely manufacturers. by the with that from. So to of the manufacturing we don’t purchase that the particularly landscape distribution plants will dictated respect purchase

Marguerite Nader

strength think really industry. MH the there is I in And

over impact folks years. have XX,XXX five Arizona, seen in look each there shipments year years. the last shipments just growth last this they have when the for of are us, And I and Florida, five of think to double that shipments in we at digit is double other in California, you states

the a going is on of lot manufacturing front. activity on there So

Operator

Stender Wells Instructions] from the Todd line next question Our [Operator of comes Fargo. with

Todd Stender

How levels, the emphasis Just we In least, as look is X.X% the we these think on growth, high rate that reaching guess, I the fairly MH at at at QX occupancies I you look did MH growth. how the alone? the push around saying that I you the that’s the what's rates high average, you base high Just can range rent. push it can just If MH in business. average? in

Marguerite Nader

really on market by a depends It obviously basis. market

You XXXX. look X.X%, at we quarter the for highest since MH have our rate growth seen of level this it's

there other so think the that XX% Patrick market obviously at is that have And lever. on occupied for and a then lot we out, as look properties a that by we I to key have as rates years. have way And also that go been of the through they occupancy many growing our ability but pointed market determine push the market are we where to is surveys and basis

So sustainable considerable property. the where down are capital these levels live in the to business is the in putting customer

Todd Stender

volume what update any hear sales? want traffic sounds and numbers. the And Just any foot Thanks, Marguerite. like to home

Paul Seavey

good. been has traffic Well,

Our fully leads The marketing mobile and XX%. on focusing SEO. our site. It's almost strong platform, year-over-year increased the devices is from responsive have to re-launching we Web deal that

also holding coordinated And national Internet site. And our have once lead in track you We a ads monthly national workflow around at we houses perspective open level, the the those are management. we remarketing just platform. have visited marketing with you our that from have property improvements

see consistent we demand. So

But seeing XX% earlier, and we homes. where to have also than I a in more new Arizona on, bit as resorts we year-over-year. based flagship mentioned of selling and couple strength good the little part strength demand in quarter new rental a seen in sections with That Phoenix had in we up conversions. expansion are were our California overall in respect is is for sales home New

Todd Stender

helpful. And just that finally back the discussion. extension site, That’s to

when at and reminder, It per allocating look Just excellent Can to talk site, can of use how and a the some get returns payback sites. like it's economics an land as it next existing community. just spending to of seems the cost such an you maybe extension about entitled returns When period capital capital. metrics the discuss of you you it to entitle long takes IRR. you

Marguerite Nader

between depends revenue that timing to to is it additional generally we out. relatively area, be at are quickly. get we it. on of the and certainly about $XXXX build costs need Generally site Sure. a there and in that the that put to $XX,XXX terms kind in $XX,XXX amenities happen the And And if of then location

what are of Patrick building example and the we filling at property just them Mesa, mentioned an As in them effectively.

So the quickly. return quite happens

Todd Stender

And in is fair? IRRs XX% XX%, that the range,

Marguerite Nader

I think that’s fair.

Operator

line Marguerite Nader And we since to comments. you. would Thank time, this back questions more have turn it like on over closing no the I to at for

Marguerite Nader

all Paul around much. for Thank you joining today. very further us questions. Thanks Seavey is for any

Operator

thank This now your for participation may Ladies and conclude gentlemen, have program you you the today's conference. a disconnect. and Everyone in does great day.

Equity LifeStyle Properties (ELS) 30 Jan 182017 Q4 Earnings call transcript