Q1 2022 Equity LifeStyle Properties Inc Earnings Call

April 19, 2022

Yes.

Our long term relationships with our customers and our manufactured home communities RV resorts and marinas are one of the hallmarks of our success.

The average tenure of our manufactured home residence is over 10 years.

Within our RV resorts, we see customers return for generations as they pass along the camping tradition.

During the quarter, we saw our new home sales increased 36%.

The primary driver of the new home sales volume increase was our Florida sales program, where we saw an increase in the volume of over 100%.

The increased demand for living in Florida has seen an increased home sales occupancy and lead flow.

That commitment from our homeowners results in pride of ownership in a long term resident base.

Core RV revenue increased over 21% in the quarter driven by the rebound of seasonal demand in the south and the west as we welcomed back our Canadian guests and our domestic customers were able to travel without restrictions.

Our first time transient customers from last year showed a desire to strengthen their relationship with us with 15, 18%, becoming an annual seasonal or member.

Our internal surveys as well as the RV industry survey support our view that our customers are looking forward to spending outdoors.

And our properties.

The internal survey results indicated the desire to be outdoors affordability and safety are the primary reasons for planning to camp more this year.

Our flexible work environment has propelled interest in camping with two out of three are viewers, indicating that having a flexible work in a remote environment influenced their decision to camp.

We considered a great responsibility to own and operate lifestyle oriented properties among diverse landscapes and natural habitats and to ensure our properties remain desirable destinations for future generations.

We focus on improving the environment within our footprint and we and we will continue to focus on preserving the natural <unk> in biodiversity at our property.

I wish to express my gratitude to the entire <unk> team for another great quarter, our operating team will now turn their attention towards the summer season properties and will focus on delivering excellent customer service to our residents members and guests as they explore our properties. This summer.

I'll now turn it over to Paul to walk through the numbers in detail.

Thanks, Marguerite and good morning, everyone.

I'll review, our first quarter 2022 results and provide an overview of our second quarter and full year 2022 guidance.

First quarter normalized <unk> was <unk> 72 per share.

Strong performance in our core portfolio generated 9% NOI growth for the first quarter contributing to normalized <unk> per share growth of 13, 8%.

Core community based rental income increased five 6% for the quarter compared to 2021.

<unk> growth of five 1% exceeded our expectations.

Growth in occupancy generated the additional 50 basis points of core MH rent growth compared to last year.

Our first quarter core occupancy increase included a gain of 191 homeowners.

The continued strong demand for home sales is reduced inventory available for rental as we are focused on growth in occupancy from home sales.

Our rental homes currently represent four 8% of our MH occupancy.

First quarter core resort in Marina base rental income increased 21, 4% compared to 2021.

On a full year basis more than 75% of our resort base rent is generated from long term annual and seasonal stays and 99% of our Marina rents are from annual customers.

Rent growth from annuals in the first quarter was eight 6% with five 5% from rate increases and three 1% from occupancy gains.

First quarter rent from core RV seasonal increased 65% compared to first quarter 2021, which was impacted by the Canadian border closure and other travel restrictions.

Core rent from transient customers increased 21, 2% for the quarter, consisting of 11% from rate and 10, 2% from occupancy.

For the first quarter, the net contribution from our membership business was $17 $4 million.

Subscription revenues increased 11%, reflecting a five 3% increase in the member base and a rate increase of five 7%.

The increase in average rate includes the impact of dues related to our trails collection product, which provides access to RV properties.

At the end of the quarter, 21% of our members held the trails collection past. This compares to 13% at the same time last year.

The increase in subscription revenues compared to last year offset the reduced contribution from upgrade sales. Following the introduction of the new adventure product last year.

We continue to see steady demand for upgrades, including the adventure product.

During the first quarter 2022, the eventual upgrade represented almost 25% of our upgrade sales.

The average upgrade sales price was nine 4% higher than last year.

Core utility and other income increased 12%, mainly as a result of increases in utility income and real estate tax pass throughs.

Utility expense was the largest contributor to core property operating expense growth.

We've added a table to our core income from operations page in the supplemental that shows utility income and expense with a recovery rate for the first quarter compared to the first quarter last year.

The recovery rate, we achieved in the first quarter of 2022 is consistent with our long term historical experience.

Increases in repairs and maintenance expense compared to last year are attributed to repairs to property utility system infrastructure building.

Building and common area maintenance and snow removal following events in the Midwest and northeast.

In terms of property payroll staffing levels were consistent with prior year. The payroll expense increase was mainly the result of wage increases along with a modest increase associated with overtime hours and temporary staffing to cover open positions.

Core property operating revenues increased nine 5% compared to the midpoint of our guidance of seven 6%, while core property operating expenses increased 10, 3% compared to the midpoint of our guidance of seven 9%, resulting in core and growth in core NOI before property management of 9%.

Compared to the midpoint of our guidance of seven 4%.

Our noncore properties contributed $10 $5 million in the quarter. This.

This group of properties is performed in line with our pro forma underwriting expectations.

The first quarter represents approximately 30% of our full year NOI expectation for this group of properties.

Property management, and corporate G&A were $30 2 million for the first quarter.

Other income and expenses net which includes our sales operations joint venture income as well as interest and other corporate income was $6 5 million for the quarter and interest and amortization expenses were $27 5 million in the quarter.

The press release and supplemental package provide an overview of 2022 second quarter and full year earnings guidance.

As I provide some context for the information we've provided keep in mind. My remarks are intended to provide our current estimate of future results.

All growth rates and revenue and expense projections represent mid points in our guidance range and are qualified by the risk factors included in our press release and supplemental package.

Our guidance for 2022 full year normalized <unk> is $2 73 per share at the midpoint of our guidance range of $2 68.

<unk> to $2 78.

We project core property operating income growth of six 8% at the midpoint of our range of six 3% to seven 3%.

Full year guidance assumes core rent rate growth in the ranges of five 1% to five 3% for MH and five 9% to six 1% for annual RV rents.

We assume occupancy in our stabilized MH portfolio will be flat to first quarter.

Our guidance model includes the impact of all acquisitions, we have announced and the impact of the debt capital events, we disclosed in our earnings release and supplemental package.

The full year guidance model makes no assumptions regarding other capital events or the use of free cash flow, we expect to generate in 2022.

Our second quarter guidance assumes normalized <unk> per share in the range of 59 to 65.

Core property operating income growth is projected to be 3% at the midpoint of our guidance range for the second quarter.

Which represents approximately 22% to 23% of our expected full year core NOI.

Our second quarter and full year guidance assumptions include our expectations for combined seasonal and transient growth of approximately 4% and 14% respectively.

The total sites table in our supplemental package shows sites occupied by annual and seasonal customers as well as sites available for transient stays.

Our comparison to last year shows that customer demand for longer term stays has reduced our inventory available for transient stays.

We expect the first six months of 2022 will generate approximately 51% of the full year core seasonal and transient rental income.

This compares to 2021 on approximately 46% of full year core seasonal and transient rent was generated during the first six months.

I'll now provide some comments on the financing market and our balance sheet.

As noted in the earnings release and supplemental package, we have closed on a $200 million secured debt refinancing at 336% for a 12 year term.

Loan proceeds were used to repay all secured debt maturing in 2022 as well as to repay amounts.

All amounts outstanding on our line of credit.

We are pleased with the execution of this refinancing as it further fortifies our rock solid balance sheet.

In this time of heightened volatility and uncertainty our debt maturity schedule shows that we have only 15% of our outstanding debt maturing over the next five years.

This compares to an average of approximately 45% for rights.

I'll also remind you that approximately 23% of our outstanding secured debt is fully amortizing and carries no refinancing risk.

Current secured debt terms have moved significantly since mid February when we locked rate on a refinancing.

Current 10 year loans are quoted between four and a quarter four and three quarters percent $60 to 75% loan to value and one four to one six times debt service coverage.

We continue to see solid interest from life companies and <unk> to lend for terms 10 years and longer.

While we haven't tapped the MBS market and some time because pricing has been wide relative to our other options, we understand that market that market has been experiencing some instability.

High quality age qualified MH assets continue to command best financing terms.

In terms of our liquidity position, we have $500 million available on our line of credit during the quarter, we expanded our ATM program to provide $500 million of capacity.

Our weighted average secured debt maturity is approximately 12 years adjusted for the impact of the refinancing I mentioned.

Our debt to adjusted EBITDA is around five two times and our interest coverage is five seven times.

We continue to place high importance on balance sheet flexibility and we believe we have multiple sources of capital available to us now.

Now we would like to open it up for questions.

Thank you.

Ladies and gentlemen, if you would like to ask a question. Please press Star then one when you touch tone telephone again, if you would like to ask a question. Please press Star then one.

One moment for our first question.

Our first question comes from Nick Joseph of Citi. Your line is open.

Very much good morning.

I guess I wanted to ask on the transient RV bookings.

And Marina and the impact from higher gas prices and I recognize it's not a big part of the business relative to annual and seasonal.

Just how those have trended and how you are assuming that trend guidance relative to what was previously assumed in guidance.

Yes sure good morning, Nick a couple of thing just as it relates to gas I think we have a long history of.

Transactions that really indicate that our customer will not defer a vacation due to the price of gas.

Weather has really always been the more likely culprit for volatility volatility in activity.

Reservation.

But as you know as it relates to the transient pace I think it is helpful to point out that our RV transient revenue is really less than 7% of our overall revenue.

And we focused our acquisition model over the years.

Long term RV resorts.

In 2020 as you see in 2021 as you see in our supplemental we saw an increased number of RV resorts converts from transient to seasonal and annual.

And then within our core portfolio, we have 1100 fewer sites that are available for transient customers than we did.

Last year at this time.

So as far as pacing I think its helpful. If we break down the reservation pace between the core properties that did not see a decline in the activity of available sites and that pace is really is 9% in the second quarter and 18% in the third quarter with the highest demand I think we see in California, and the north and northeast.

These properties.

And maybe it's also helpful to understand some of the changes in the booking patterns that we're seeing and maybe Paul if you could walk through those changes sure.

Nick I mean, when we when we think about the second quarter historically last year was a little bit different but historically, it's been a shoulder season as the transition from winter to summer shifts focus from those southern to northern resorts and we've traditionally looked at memorial day weekend as a gauge of demand as we kick off the summer season.

The average advanced booking window for transient stays is about 45 days within that average there are two pretty distinct customer groups. Those that book 90 days out and those that book a few days before they arrive.

The second quarter reservation pace for that group that books earlier is higher than it was last year. So when we think about that.

It's at a level that that.

Is reflective of the growth that we experienced in the first quarter.

But at the same time as Marguerite mentioned weather as the key driver of decision, making so we're very mindful of the impact of weather.

And I'm not sure how it's been where you are but in Chicago. It snowed yesterday. So April is proving to be a bit of a slow start to our second quarter.

If I look back to the second quarter of 2019, we had a strong start to the quarter and then we had unfavorable weather patterns in may and June that negatively impacted their results. So there's a lot of dependence on the weather.

Is that is the key takeaway.

Makes sense, we unfortunately had snow yesterday too.

Thank you.

If you are asking for it.

Yes.

I know it was 80 degrees on Saturday and snow on Monday.

But maybe just on the.

The acquisition pipeline I mean with interest rates rising, obviously cap rates across MH, and RV and marine as a compressed how do you think about the relationship.

As rates rise continue to rise or stay here, how much of a spread.

Do you see in the private transaction market relative to those base rates.

And we haven't we haven't seen any real change I mean last year, our cap rate in this year two cap rates ranging from four to six.

It really hasnt changed much with high quality MH trading at the lower end and transient RV at the higher end.

But I think that the meaningful change in cap rates.

Hasn't happened yet, but as a result of interest rate movement. We may see it may take a little bit time to work through the system you may see more sellers that are not quite committed yet.

And now they've become more committed as a result of this movement.

Thank you very much.

Thanks, Nick.

Thank you. Our next question comes from Brad Heffern of RBC capital markets. Your line is open.

Hey, good morning, everyone.

In the past quarters, you've talked about the trend weakened RV stay is extending into the weak given people's greater work flexibility has there been any any change to that trend at all.

Sure Brad so for the first quarter, we saw an increase of weekday nights of about 14%.

Obviously, we are really now comparing similar time periods in terms of flexible work arrangements, but we still believe our properties will be an attractive vacation option offer weekday activity and for those who are able to have flexibility in their work schedules.

Okay got it.

And then a question on the Opex guide the first quarter number was $10 three the second quarter guided six four and the annual guidance $4. Eight so I think if I'm doing the math right that would suggest some sort of like 1% to 2% growth number in the second half I guess can you confirm that that's correct and also talk about what gives confidence in significant <unk>.

Elevation there.

I think.

Overall, I think your math generally works, Brad what I would say overall with respect to our expense growth assumptions is.

<unk>.

Our process for preparing our budget as well as our re forecast is it's a bottoms up approach. It's at the property level figuring out where we expect the budget to be for the for the coming period and for the re forecast adjustments to that budget. We then come back after we're completed with that and we review it on a consolidated.

Level and focus in I'll give you kind of specific guideposts to look at our utility payroll and R&M expenses. Those three represent almost two thirds of our expenses and what we've seen over our long history is a strong correlation of those expenses.

Two our revenues so trades in a fairly tight band in terms of percent of revenues and as we look at the experience that we had in the first quarter. We look at our comparison to first quarter last year and look at our year over year for the full year, we see that percentage remaining consistent.

Okay. Thank you.

Sure. Thanks, Brett.

Thank you. Our next question comes from Michael Goldsmith with UBS. Your line is open.

Good morning, Thanks, a lot for taking my question.

First on the transient RV revenue how much of that occurs in April and as we think about the cadence of transient RV revenue through the period are you able to kind of provide us.

Because of the weather how much the underperformance it is relative to last year. It's been over the first couple of weeks and then.

We're kind of you expect to be kind of at the end of the quarter. So we can kind of get a re.

Run rate for how you would approach entering the third and the fourth back half of the year.

Yes.

I would say youre dive in into a level of detail that becomes challenging for us Michael.

The shorter.

Short short answer I'll give is that the.

The guidance that we have is <unk>.

Based on our current pace. So it says it is clear as I can give.

For the second quarter, given what we understand to be in our system that 4% growth that we provided is our guide again subject to what may happen in terms of weather and then just beyond the second quarter. The third quarter represents almost 40% of our core transient rent for the year and we're projecting a mid single digit growth for that but.

As I said earlier in my previous answer the booking windows in about 90 days out. So it's quite early for us to have good visibility into what we extent they expect in the largest quarter that we have for the transient business.

Just wanted to clarify it sounds like your guidance of 4% for the second quarter is based on the rate that you have.

Have seen kind of so far in combination with your forward bookings in the near term.

When the weather has been less.

Less cooperative is that right.

Yes, that's accurate.

Got it and then.

As we think about.

What's implied in the back half you.

You just mentioned mid.

Mid single digit and I think that's kind of like the how.

How the math.

Of your guidance plays out can you talk about kind of what your assumptions are that go into it I think you talked earlier in the call about the impact of of converting transient sites to annual but can you talk a little bit more about kind of the the trends there and how you expect the run.

First of the year to kind of play out and from the perspective, it sounds like the site's down but then.

How much strength you expect on the rate side. Thank you.

Yes, I think we continue to see could you see us convert some transient sites to annual from those are built into our budget.

And we do think that we have some pricing power and just as you consider.

What's happening with alternative travel travel activities I think hotel rooms are up 40%.

Airline tickets are up similar numbers in rental car rates are up similar percentages as well in terms of just being able to take vacation alternative option. So I think youll see us continue to push rate, where we see that.

Taking place in the market and then converting.

Some annual or seasonal sites and.

Transient sites to annual.

Thank you very much.

Thank you. Our next question comes from <unk> <unk>.

Matthew Your line is open.

Hi, good morning, everybody.

Just wondering how much of the core NOI growth this quarter came from the Marina.

And what does that growth look like for that kind of full year I think you all had mentioned 4%.

In the past call just.

If you could comment around expectation.

General.

Signs youre seeing within the Marina portfolio.

Sure I Olivia I think.

<unk> I'll take that and thanks for joining us on the call today.

Sure.

The marinas are performing well for us.

<unk> referenced it on.

Consistently across our earnings calls that the occupancy is stable we are holding at 90% we've had.

<unk> pick up for the quarter.

We feel like the demand profile is strong.

As well.

We have surveyed our customers seem kind of surveys that we do outreach for our beers in more than 60% of our marine customers plan to spend more time on the water in 2022 than they did in 2021, so good demand profile.

Our rate growth has been around 4% and that's that's tracking out about the same.

High level subject to some of the expense pressures that we see in the balance of the portfolio on things like insurance and real estate taxes.

Okay great.

And my second question is just around rent regulation now how much more of a concern.

Don.

And rent.

Rent caps around.

And your manufactured home portfolio and.

We're seeing continued to become more of a kiosks for multifamily and single family.

Are you wary.

Certain dates or location or even certain.

Property type.

As youre, keeping the issue of rent cap mine.

Sure. Thanks Lizzy.

So we have over the years opposed rent control for many years.

And for.

As far as our house or housing option, we do not see rent control, making overall housing more affordable it ends up really resulting in the price of the home increasing as the rental rate has decreased but the net monthly impact is really the same for the prospective buyer.

We really are working with the homeowners association to agree to a fair and reasonable rent rate.

And that incorporates really any of the concerns that they have at the property and we think that's the best approach and we've been successful over the years working with the homeowner groups.

To come to a meeting of the minds of what the what the rate should be.

I think over our 200 MH properties approximately 10% have mandated rent control and then there is others in states like Florida that have regulations around rent increases under the terms of our perspective, but.

But really you touch on other.

Multifamily we are unique in the residential space and that we've had ongoing long term relationships with our homeowner base.

And we invest in our properties and our homeowner base is aware of the proposed increases well before they are implemented.

So we're closely monitoring activity in all the states, we operate in and working with National associations to make sure that the information about.

About our industry and the rent increases is accurate.

Great. Thank you.

Thanks Lindsay.

Thank you. Our next question comes from Keegan call of <unk>. Your line is open.

Hey, guys. Thanks for taking the time kind of going off of Nicks earlier question, just kind of given elevated gas prices you guys seeing any theater of extended stay as yours.

So how do you think it will impact the number of trips taken this year do you think it will impact your pricing algorithms at all.

Yes, I think I think that the trips that are planned I think I've mentioned that.

Before if everybody could go on mute I think maybe we're getting a little bit of feedback here.

So in terms of trips I think our average RV or it takes about it's about a 90 mile trip. So.

Gas prices going up $2 isn't going to.

Dramatically impact them in terms of the cost to travel to our locations.

I do think that we have the ability to to.

To raise rates and Youll see us do that on a regular basis as we see demand increasing.

And so that's what I think youll see for the rest of the quarter and for next quarter.

As we see changes in on a market by market basis.

Got it just changing gears here to inflation are you guys seeing any material impact on demand across your business lines and I guess kind of similar to what happened last year I mean, how do you see your part time labor situations shaking out in the coming summer months.

I think in terms of.

In terms of labor and expenses, we've dialed into our assumptions for guidance for the remainder of the year.

Full employment as well as <unk>.

Market levels.

At our at our properties I think that what we've experienced to date.

There's been some number of open positions, but.

Across the portfolio.

<unk> been fairly consistent kind of a one position per property type level, so not expecting that to have a significant impact on operations over the summer.

And I think Keith in terms of just rapidly rising rates.

And touching on mortgage rates.

I think you think thinking about our portfolio and the majority of our buyers are cash buyers.

And we have.

95% I think pay cash.

Throughout in the four earned in the first quarter and Thats consistent throughout our community.

So they're not a big participant in the in the financing market.

Thank you. Our next question comes from America now of Evercore. Your line is open.

Hey, Paul.

Hey, good morning.

The G&A front EBIT close to $12 million for the quarter is that the right run rate to think about it I know we've talked about sort of upward pressure on expenses, just trying to think about the right run rate going forward here.

Yes, I think.

The way that I think about we always think about property management and corporate combined Samir and I look at those and I think that on a combined basis were more in the range of call. It 10% to 11% growth over last year is primarily a function of investments in technology.

As well as.

Some increase that we've had in our staffing costs.

So going forward kind of the balance of the year Youre thinking kind of that so it's not going to be about $12 million will be sort of slightly lower youre, saying.

Right right.

Okay.

Got it and then just looking at the income from rental home operations.

It was down year over year, but I also saw the total number of rental occupancy occupied sites were down I think it was put down what 600 sites.

Can you provide some color on that.

Sure Patrick.

Our trend in.

Really over the last I want to see.

24 quarters, I think we've had six quarters, where we've increased.

Renters, so long term trend of increasing homeowners and decreasing renters and.

For the quarter year over year were down almost 600 rentals down to 3300 overall.

So that.

That does our our view of the quality of occupancy.

And emphasizing long term homeowners as opposed to <unk>.

Renters.

Our renters are they're a part of the business and what we've seen.

Across our portfolio as success in converting those rental homes to homeowners roughly 25% of our new and used home sales in the quarter were two current residents either homeowners, who are either upsizing or downsizing their current home.

Our veterans, who are purchasing a home in the community.

Got it thanks, so much.

Thanks, Sameer thank you.

Our next question comes from Wes Golladay of Baird. Your line is open.

One I'd like to go back to that cash by your comment I was just curious is when they go buy a house with cash is that dependent on them selling their primary home or are these largely second home purchases.

It's a bit of a two step process. So.

A person will come down kind of visit and maybe stay with us for a month they may rent as as Patrick just mentioned.

And they are generally coming up from the north to mid Midwest or the northeast.

And in the beginning they'll come down and either buy or rent in Florida, Arizona, but also have their home up north it isn't for until a couple of years to five years later that they kind of decide that now they want to make.

Our homes, they're permanent resident D. So it's a little bit of all of our residents are in our resins are in various stages of those.

That curve of either having made the decision to move down already and move their primary residency or maybe they continue to have to if they are on the on the younger side.

Okay. Thanks for that and then when we look at the transient seasonal maybe combining the buckets are you at record occupancy right. Now is it maybe are structurally full occupancy when you look at the balance of the year or do you still have a lot of room to push occupancy going forward.

I think we still have we still have room to push occupancy I wouldn't characterize it as a lot of room, but the overall strategy to optimize our sites and.

And retain some portion of transient.

As a feeder to our longer term rental business, we will continue to.

See that.

Our business and I think one of the things we highlighted that weekday camping has increased.

But it is coming from very low levels. So in terms of on a transient basis, we still have room for increase in the in that activity.

<unk> on the weekdays.

Got it thanks, everyone.

Thanks, Thank you.

Our next question comes from John Kim of BMO capital markets. Your line is open.

Thank you.

You had a very strong seasonal and transient RV quarter, you talked about the favorable backdrop.

But your guidance for the year suggest deceleration.

I think we got to 4% for the remainder of the year.

So I'm just wondering why would why wouldn't it be higher if you still see the ability to convert transient seasonal.

I think a big part of it John is if you think about the you think about the seasonal business and the comparison year over year.

<unk> so to speak of the seasonality trend that we historically have experienced in the first quarter with the first quarter representing 60%.

Close to two thirds of our total full year seasonal.

And so what have you.

Okay.

Do you expect as far as additional conversions from transient to seasonal and can you remind us what the typical turnover rate is.

In your annual and seasonal RV customer.

The typical turnover is 10%.

And.

With respect.

Specced too.

Conversion I think that.

The.

Conversion rate that we that we have.

Is really dependent on.

What we're seeing.

Going into the summer season, I think that the winter season is a season when we.

We will gain greater talent in our <unk>.

Seasonal business in the summer season tends to be a greater season for driving annual fill in our portfolio.

And this is a heightened level of John of activity.

We've really seen post pandemic or I guess during the pandemic.

More people, especially in the northern resorts are interested in using our properties as their second home vacation home.

It resulted in an increase in annual.

Okay.

Got it thank you.

Thanks, Jonathan.

Thank you. Our next question comes from Anthony Powell of Barclays. Your line is open.

Hi, good morning.

A question on here.

A question on your MH rate growth guidance was up 40 basis points at the midpoint relative to last quarter.

Any help you give you should've had or probably have some good visibility on your rent increase ASP.

So I'm curious what drove that increase in your guidance.

Sure Anthony by the end of April we will have sent rent increase notices to about 75% of our in place residents.

Those increases are consistent with our prior guidance and the rates approximately four 3%.

We previously discussed at approximately 25% of our leases have tied to CPI and the remaining 75% are market driven.

We value our long term relationships with our residents and we have a full appreciation of the interplay between their investment in our home they've placed on our land and the rent they pay us therefore, we exercise discretion with respect to the rates we charge in place residents, who are subject to market leases as compared to rents we charge new residents, making an economic decision based on current circumstances.

<unk>.

And maybe Patrick can walk through the process for setting those market rents, which had been the key driver of the growth that you're referring to.

Yes.

The process for establishing market rates.

It starts at the core of our business with our existing residents.

We're monitoring housing costs competing housing in our Submarkets uncovers competing manufactured home communities multifamily singles.

Single family rental condos and others.

And when we are having those discussions that Paul described with our existing residents.

That's a recurring long term resident.

On that new customer coming into our property in purchasing.

Home and Thats, roughly 10% turnover.

As mentioned earlier in the call.

Those incoming customers are shopping in the open market. They are looking at alternatives.

They are choosing to purchase a home and one of our properties as Marguerite mentioned typically for cash.

And there they are.

They're moving in and agreeing to pay that market rate, which is kept current throughout the course of the year.

As we review those those other market comparables.

So if I understand basically that's driven more by our new residents coming in in a more of a market to market.

Great and I guess, that's more residents look to your product given the vulnerability and desirability.

You could see further upside to that over time.

Yes, I think thats potentially true yeah, it's really focused on what's happening at the local level in the market within those within those properties.

Got it thank you and I guess on acquisitions.

Volume is down year over year I understand that its competitive environment for all segments. I'm. Just curious if you could just remind us what the current transaction environment is availability people's willingness to sell youre willing to spy just mark to market there would be great.

Sure.

This year I think it is really starting out with a similar pattern to what we've seen in the past.

Theres, many highly marketed deals auctions, including the new term multiple best and final bidding rounds.

Thank the evolving interest rate environment.

Could start.

Provide an incentive to sellers.

But we're seeing consistent consistent demand.

For the for the assets, but we have great relationships throughout the industry. So we will continue to.

Continue to look at.

MH RV and Marina deals and be able to update you as we close them in the coming quarters.

Alright, thank you.

Thank you Anthony.

Thank you. Our next question comes from Rama Little Green Street. Your line is open.

Finally, everyone. Thank you for taking my question. My next question on the intake.

Given the rising price environment.

Looking now.

Do you think what do you see at this time.

Many of these events.

Further on the stock level.

Robyn Thank you and thanks for joining us I think we are getting a little feedback.

On our end I don't know, maybe if you could mute as we've talked if that's possible.

Yes, Robin can you hear okay.

Yes.

Okay, Okay great.

I would say.

Long looked at the.

The rental component as a way to increase occupancy at certainly at particular locations.

But we have always believed that the extent that there is a market where we have ability to sell we would we will want to do that and focus on the sales but.

But I think we've shown through the years that we have a proven operational plan for operating a large scale rental pool.

In areas in times, when we will have an inability to sell or are there. Some other factors that make it difficult to sell we would.

So to kind of our plan we are operating on.

Our rental pool.

Okay that makes sense.

And then on <unk>.

A quick question on expenses I wanted to touch on utility costs.

Are there ways that you can increase the share of deposits.

Cross selling is possible.

No.

Todd a question that's being offline.

There are robin I'll ask I'm not sure if youre able to mute. Your line there is a tremendous amount of feedback coming.

But with respect to utilities, we do have a process whereby we review opportunities too.

Separate utility charges from Rins and direct Bill our residents.

We pursued that.

Across the portfolio.

You still have some opportunities, although there are far fewer than they've been in the past.

One area of focus.

Potentially remains is shorter term stays in our transient business.

But regarding the the overall.

Recovery that we started to show.

Thank you.

Wanted to just refer back to the remarks that are made that.

46% recovery that we're showing in the quarter is very consistent with our long term historical average.

Thank you.

Thank you Robyn.

Thank you.

There are no more questions on the line at this time I'd like to turn it back over to novel <unk> Mehta for closing comments.

Thank you for joining us today, we look forward to seeing you at NAREIT and updating you on our next quarter call. Thank you very much.

Thank you ladies and gentlemen, this does conclude today's conference. Thank you all participating you may now disconnect have a great day.

[music].

Good day, everyone and thank you for joining us he's got equity lifestyle properties fourth quarter 2022 adult RP.

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 C O O.

And if after they've called management at least on.

Today's call will consist of opening remarks, and a Q&A session with management relating to the company's earnings release.

Well the only thing we'd like to participate in the Q&A session management asked that you limit yourself to two questions. So everyone, who would like to participate at ample opportunity.

This call is being recorded.

Certain matters discussed during this conference call may contain forward looking statements in the meaning of federal security laws. All forward looking statements are subject to certain economic with that uncertainty.

Company assumes no obligation to update or supplement any statements that become untrue because of subsequent events.

In addition, during today's call we would have got non-GAAP financial measures.

By SEC regulation G. Because we can filiation of these non-GAAP financial measures to comparable GAAP measures are included.

In our earnings release, our supplemental information and our historic S&P pilot.

At this time I'd like to turn the call over to Marguerite Nader, our president and CEO .

Good morning, and thank you for joining us today I'm pleased to report the results for the first quarter of 2022, we continued our record of strong core operations and <unk> growth with a 14% growth in normalized <unk> per share in the quarter.

At the core of the Oss strategy is a commitment to quality. We have built our organization focused on high quality team members properties cash flow and capital allocation. The result of the shared focus is sustained value for our residents customers and shareholders. Our properties are well located in areas, where the demographic trends create tailwind breo loss, we focus.

Our acquisition strategy on increasing our concentration of assets in high demand markets for the baby Boomer population.

That strategy continues to bear fruit as we see outsized demand and population growth in our key operating states.

Our high quality cash flows are reflected in our reported results and historical trends the quality of our cash flow as seen in our annual revenue stream.

Our long term relationships with our customers and our manufactured home communities and RV resorts and marinas are one of the hallmarks of our success.

The average tenure of our manufactured home residents is over 10 years.

Within our RV resorts, we see customers return for generations as they pass along the campaign tradition.

During the quarter, we saw our new home sales increased 36%.

The primary driver of the new home sales volume increase was our Florida sales program, where we saw an increase in the volume of over 100%.

The increased demand for living in Florida has seen an increased home sales occupancy and lead flow.

Over 95% of these new homebuyers were cash buyers. This investment is consistent with our entire portfolio as the vast majority of our residents have made a capital commitment to live in our communities that commitment from our homeowners results in pride of ownership and a long term resident base.

Our first time transient customers from last year showed a desire to strengthen their relationship with us with 15, 18%, becoming an annual seasonal or member.

Our internal surveys as well as the RV industry survey support our view that our customers are looking forward to spending outdoors and.

And our ore properties.

The internal survey results indicated the desire to be outdoors affordability and safety are the primary reasons for planning to camp more this year.

Our flexible work environment has propelled interest in camping with two out of three are beers, indicating that having a flexible work in a remote environment influenced their decision to camp.

We considered a great responsibility to own and operate lifestyle oriented properties among diverse landscapes and natural habitat and to ensure our properties remain desirable destinations for future generations.

We focus on improving the environment within our footprint and we will continue to focus on preserving the natural <unk> in biodiversity at our property.

I wish to express my gratitude to the entire <unk> team for another great quarter, our operating team will now turn their attention toward the summer season properties and we will focus on delivering excellent customer service to our residents members and guests as they explore our properties. This summer.

I will now turn it over to Paul to walk through the numbers in detail.

Thanks, Marguerite and good morning, everyone I will review, our first quarter of 2022 results and provide an overview of our second quarter and full year 2022 guidance.