Q1 2024 Equity LifeStyle Properties Inc Earnings Call

April 23, 2024

Yeah.

Operator: Good morning, everyone, and thank you for joining us to discuss Equity Lifestyle Properties' first quarter 2024 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 Chief Executive Officer. In advance of today's call, management released, Today's call will consist of opening remarks and a question and answer session with management relating to the company's earnings. For those who would like to participate in the question-and-answer session, management asks that you limit yourself to two questions, so everyone who would like to participate has ample opportunity. As a reminder, this call is being recorded.

Speaker Change: Good day, everyone and thank you for joining us to discuss equity lifestyle properties first quarter 2024 results.

Speaker Change: Our featured speakers today are Marguerite Nader, our president and CEO, Paul Seavey, our executive Vice President and CFO and Patrick Waite our.

Speaker Change: I can give vice president and C O O.

Speaker Change: 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.

Speaker Change: For those who would like to participate in the question and answer session management asks that you limit yourself to two questions. So everyone, who would like to participate has ample opportunity.

Speaker Change: As a reminder, this call is being recorded.

Operator: Certain matters discussed today on this conference call may contain forward-looking statements in the meaning of the Federal Security Council. Such forward-looking statements are subject to certain economic risk and uncertainties. The company assumes no obligation to update or supplement any statements that become untrue because of subsequent...

Speaker Change: Certain matters discussed today on this conference call may contain forward looking statements in the meaning of the federal Securities laws.

Speaker Change: Our forward looking statements are subject to certain economic risk and uncertainty.

Speaker Change: The company assumes no obligation to update or supplement any statements that become untrue because of subsequent events.

Operator: In addition, during today's call, we will discuss non-GAAP financial measures as defined by SEC Regulation 2. Reconciliations of these non-GAAP financial measures to the comparable GAAP financial measures are included in our earnings, our supplemental information, and our historical essay. At this time, I would like to turn the call over to Marguerite Nader, our President and CEO. Good morning, and thank you for joining us today.

Speaker Change: In addition, during today's call, we will discuss non-GAAP financial measures as defined by SEC regulation G.

Speaker Change: Reconciliations of these non-GAAP financial measures to the comparable GAAP financial measures are included in our earnings release, our supplemental information and our historical SEC filings.

Speaker Change: At this time I would like to turn the call over to Marguerite Nader, our president and CEO.

Marguerite M. Nader: Good morning, and thank you for joining us today.

Marguerite M. Nader: I am pleased to report the results for the first quarter of 2024. The quality of our cash flow, our in-demand location, the lack of new supply, and the strength of our balance sheet continue to allow us to report impressive results. In times of macroeconomic uncertainty, we continue to deliver strong revenue growth as well as expense controls throughout our portfolio. Our core NOI for the quarter was strong, with a 7.1% increase compared to last year, supported by MH&RV rate growth and controlling expenses.

Marguerite M. Nader: I am pleased to report the results for the first quarter of 2024.

Marguerite M. Nader: Quality of our cash flow are in demand locations.

Marguerite M. Nader: Lack of new supply and the strength of our balance sheet continue to allow us to report impressive results.

Marguerite M. Nader: In times of macroeconomic uncertainty, we continued to deliver strong revenue growth as well as expense controls throughout our portfolio.

Marguerite M. Nader: Our core NOI for the quarter was strong with a seven 1% increase compared to last year supported by MH and RV rate growth and controlling expenses.

Marguerite M. Nader: Our results for the first quarter and our view of continued strength for the remainder of 2024 support our guidance. Over a 10-year period of time, we have increased the dividend on average 14% compared to the REIT average of 5.5%. Our balance sheet is in great shape with an average term to maturity of 9 years. 18% of our debt is fully amortizing and not subject to refinance risk, and our debt maturity schedule through 2026 shows only 11% of our debt coming due compared to the REIT average of 29%. We have spent the last 30 years building a portfolio focused on high-quality coastal and sunbelt retirement and vacation destinations. We are in locations where active adults want to be.

Marguerite M. Nader: Our results for the first quarter and our view for the continued strength for the remainder of 2024 support our guidance rates.

Marguerite M. Nader: Over a 10 year period of time, we have increased the dividend on average 14% compared to the REIT average of five 5% our balance sheet is in great shape with an average term to maturity of nine years.

Marguerite M. Nader: 18% of our debt is fully amortizing and not subject to refinance risk and our debt maturity schedule through 2026 shows only 11% of our debt coming due you compared to the REIT average of 29%.

Marguerite M. Nader: We have spent the last 30 years building a portfolio focused on high quality coastal and sunbelt retirement and vacation destinations. We are in locations where active adults want to be our customer base is seeking a place to escape from the cold winter and lead an active lifestyle in locations, such as Florida, Arizona and California.

Marguerite M. Nader: Our customer base is seeking a place to escape from the cold winter and lead an active lifestyle in locations such as Florida, Arizona, and California. We are in states where there is an outsized growth in seniors, and we appeal to the right demographic. The population of people age 55 and older in the U.S. is expected to grow 15% from now until 2039, with 10,000 baby boomers turning 65 each day in the near future.

Marguerite M. Nader: We are in states, where there is outsized growth in seniors and we appeal to the right demographic.

Marguerite M. Nader: Population of people age 55 and older in the U S is expected to grow 15% from now until 2039 with 10000 Baby Boomers, turning 65, each day for the near future.

Marguerite M. Nader: Our MH portfolio comprises approximately 60% of our total revenue, and our properties are 95% occupied. The MH business is unique in that once an elevated level of occupancy is achieved at a property, the occupancy is sustainable for a long time. For ELS, the key to that stickiness is an elevated level of homeowners in the portfolio.

Marguerite M. Nader: Our MH portfolio comprises approximately 60% of our total revenue and our properties are 95% occupied.

Marguerite M. Nader: The MH business is unique in that once an elevated level of occupancy is achieved at a property. The occupancy is sustainable for a long time for us the key to that stickiness is an elevated level of homeowners in the portfolio our portfolio is 96% occupied by homeowners.

Marguerite M. Nader: This composition of our resident base is important to protect an uninterrupted cash flow stream as new residents are welcomed into our community. Our residents enjoy the community found in our properties and spend time focused on building new relationships with their fellow residents. We continue to engage our existing customers and attract new prospects through media outreach, engaging in social media campaigns, and targeted digital advertising. Our public relations strategy helps build awareness and credibility through coverage of the lifestyle offered at our properties and interesting stories about our customers who make a difference in the communities in which we operate.

Marguerite M. Nader: This composition of our resident base is important to protect an uninterrupted cash flow stream as new residents are welcomed to our communities.

Marguerite M. Nader: Our residents enjoy the community found in our properties and spend time focused on building new relationships with their fellow residents.

Marguerite M. Nader: We continue to engage our existing customers and attract new prospects through media outreach engaging and social media campaigns and targeted digital advertising.

Marguerite M. Nader: Our public relations strategy helps build awareness and credibility through coverage of the lifestyle offered at our properties and interesting stories about our customers who make a difference in the communities in which we operate.

Marguerite M. Nader: Our social media media strategy seeks to engage both customers and prospects in a wide variety of platforms. So we can reach people where they spend time, we have almost 2 million fans and followers across social media networks over the past 10 years, we've grown our social media fans and followers by an average of 19% annually.

Marguerite M. Nader: Our social media strategy seeks to engage both customers and prospects on a wide variety of platforms so we can reach people where they spend time. We have almost 2 million fans and followers across social media networks.

Marguerite M. Nader: Over the past 10 years, we have grown our social media fans and followers by an average of 19% annually. Our property teams in the north are gearing up to open the summer season. This year, Thousand Trails will celebrate its 55th anniversary.

Marguerite M. Nader: Our property teams in the north are gearing up to open. This summer season. This year 1000 trails will celebrate its 55th anniversary.

Marguerite M. Nader: Thousand trails as one of America's most well known camping brands and we have earned strong customer loyalty with hundreds of thousands of viral beers, making memories with families and friends throughout the campaign for the company's long history.

Marguerite M. Nader: Thousand Trails is one of America's most well-known camping brands, and we have earned strong customer loyalty with hundreds of thousands of our viewers, making memories with families and friends throughout the company's long history. We have closed another successful quarter, and our teams will now begin to focus on welcoming our residents to our northern locations as we kick off the summer season. I would like to thank all of our team members for their hard work in making this winter season so successful. I will now turn it over to Patrick to provide an operational overview. Thank you, Marguerite.

Marguerite M. Nader: We have closed another successful quarter and our teams will now begin to focus on welcoming our residents to our northern locations as we kick off the summer season, I would like to thank all of our team members for their hard work in making this winter season. So successful I will now turn it over to Patrick to provide an operational overview. Thank.

Patrick Waite: Thank you Margaret.

Patrick Waite: As we wind down the 2023 2024, sunbelt season, and look forward to the 2020 for summer season, I'll provide color on the sunbelt seasonal results and a view into the summer season, including drivers of demand.

Patrick Waite: Overall, we continue to see consistent demand across each of our lifestyle property types, reflecting the high quality of our property locations.

Patrick Waite: I will start by highlighting our MH business.

Patrick Waite: Over my 30 years in the industry my responsibilities have ranged from acquisitions to asset management to operations and regardless of my area of focus the consistency of our high quality image portfolio has been a constant.

Patrick Waite: Each properties operate year round and seasonality is not a consideration.

Patrick Waite: Our MH portfolio maintains high occupancy and each year, approximately 10% of our resident base turns over.

Patrick Waite: This turnover results in an uninterrupted revenue stream for yellows as a current homeowner sells their home to an incoming homebuyer and the new resident pays marker then.

Patrick Waite: Year to date, we have seen an average rent increase of five 6% to renewing residents.

Patrick Waite: Over my 30 years in the industry, my responsibilities have ranged from acquisitions to asset management to operations. And regardless of my area of focus, the consistency of our high-quality MH portfolio has been a constant. MH properties operate year round, and seasonality is not a consideration.

Patrick Waite: Our resident base generally consist of retired individuals who are cash buyers.

Patrick Waite: Due to the high homeowner base and our portfolio occupancy is resilient and the delinquency rate is very low which is reflected in bad debt that is typically 40% to 45 basis points.

Patrick Waite: Basis points of revenue.

Patrick Waite: This low level of delinquency has been consistent over the last 30 years in all economic cycles move.

Patrick Waite: RMH Portfolio maintains high occupancy, and each year, approximately 10% of our resident population needs to turn over. This turnover results in an uninterrupted revenue stream for ELS, as a current homeowner sells their home to an incoming homebuyer, and the new resident pays market price. Year-to-date, we have seen an average rent increase of 5.6% for renewing residents. Our resident base generally consists of retired individuals who are cash buyers due to the high homeowner base in our portfolio.

Patrick Waite: Moving to the RV portfolio. The Sunbelt season runs from December to April, peaking in February and demand is largely comprised of snowbirds from the northern U S and Canada <unk>.

Other temporary climate of Florida, California, Arizona and Texas.

Patrick Waite: In Q1 annual has delivered steady occupancy and strong rate growth.

Patrick Waite: Combined seasonal and transient increased in line with expectations supported by demand with consistent rate growth.

Patrick Waite: I'd also note that nearly 50% of our seasonal revenue for the full year comes to us in Q1 during the sunbelt season, while Q1 transient represents less than 20% of the full year transient revenue.

Patrick Waite: Occupancy is resilient, and the delinquency rate is very low, which is reflected in bad debt that is typically 40 to 45 basis points of revenue. This low level of delinquency has been consistent over the last 30 years in all economic sectors.

Patrick Waite: We're now looking forward to the summer season, which is comprised of the 100 days of camping from Memorial day to Labor day and spans 14 weeks.

Patrick Waite: This is the time that our annual customers at 125 summer resorts in campgrounds visit their getaways on weekends holidays and summer vacations.

Patrick Waite: Moving to the RV portfolio, the Sun Belt season runs from December to April, peaking in February. And demand is largely comprised of snowbirds from the northern US and Canada seeking out the temperate climate of Florida, California, Arizona, and Texas. Q1 Annuals Delivered, Steady Occupancy, and Strong Rate Growth Combined seasonal and transient revenue increased in line with expectations, supported by demand with consistency. I'd also note that nearly 50% of our seasonal revenue for the full year comes to us in Q1 during the Sun Belt, while Q1 transient represents less than 20% of the full year transient revenue. We are now looking forward to the summer season, which is comprised of 100 days of camp from Memorial Day to Labor Day and spans 14 weeks.

Patrick Waite: Seasoning annuals have a vacation on a lake house basically their resort cottage or park model located in one of our properties.

Patrick Waite: The resorts are now active with customers focus on spring cleaning and getting their homes ready for summer activities.

Patrick Waite: These customers are from the local or regional Submarkets and are typically a one hour to one and a half hour drive from their homes to their campgrounds.

Patrick Waite: In contrast to the overweight of seasonal revenue in the sunbelt season during the summer season, approximately two thirds of our transient revenue for the full year is earned in the second and third quarters.

Patrick Waite: Our reservation pace is similar to last year with the holiday weekends in demand or booking windows or similar to last year, the booking window as short and therefore, we have limited visibility.

Patrick Waite: More than 50% of transient reservations are booked within 10 days of arrival and are subject to short term disruptors.

Patrick Waite: Weather.

Patrick Waite: Finally, I would like to focus on our home sales efforts over the last five years, we've sold 4500 new homes.

Patrick Waite: This is the time that our annual customers at 125 summer resorts and camps visit their getaways on weekends, holidays, and summer vacations. Summer season annuals have a vacation or a lake house, basically their resort cottage or park model, located at one of our properties. The resorts are now active with customers, focused on spring cleaning and getting their homes ready for summer activities. These customers are from the local or regional sub markets and are typically a one hour to one and a half hour drive from their homes to their camp.

Patrick Waite: Investing in these new homes as an upgrade for the community.

Patrick Waite: The new homes construction quality meats stick built construction standards, including primary bedrooms with walk in closets open floor plan kitchens with high end high efficiency appliances, and exterior finishes like gable roofs, and architectural shingles, and then remain affordable when compared to other housing options, we've been able to sell.

Patrick Waite: Our homes for an average price of about $100000 with limited concessions.

Patrick Waite: Demand for these homes and our locations is evident from new leads and referrals from current residents all supporting an eight 5% increase in Q1, new home sales year over year, and our more than 100% increase from the pre COVID-19 timeframe in Q1 2019.

Patrick Waite: In contrast to the overweight of seasonal revenue in the Sunbelt, during the summer, approximately two-thirds of our transient revenue for the full year is earned in the second and third quarters. Our reservation pace is similar to last year, with the holiday weekends in demand. However, while booking windows are similar to last year, the booking window is short, and therefore, we have limited visibility. More than 50% of transient reservations are booked within 10 days of arrival and are subject to short-term disruptors like weather.

Patrick Waite: The ageing trends from 70 million Baby Boomers, who are currently moving through their retirement years, almost $140 million combined Gen Xers, and millennials, who will follow the boomers into their own retirement years, all support generational demand for MH and all of our property offerings for decades to come I'll now turn it over to Paul.

Paul Seavey: Thanks, Patrick and good morning, everyone.

Paul Seavey: I will review, our first quarter 2024 results and provide an overview of our second quarter and full year 2020 for guidance.

Paul Seavey: First quarter normalized <unk> was <unk> 78 per share in line with our guidance strong core portfolio performance generated seven 1% growth in the quarter.

Patrick Waite: Finally, I would like to focus on our home sales. Over the last five years, we've sold 4,500 new homes. Investing in these new homes is an upgrade for the community. The new home's construction quality meets stick-built construction standards, including primary bedrooms with walk-in closets, open floor plans with high-end, high-efficiency appliances, and exterior finishes like gable roofs and architectural shingles, and they remain affordable when compared to other housing options.

Speaker Change: Also in line with our expectations.

Speaker Change: <unk> was <unk> 86 per share and includes $14 $8 million of insurance recovery revenue that had been deducted from normalized <unk>.

Speaker Change: Core community based rental income increased six 4% for the quarter compared to 2023, primarily as a result of noticed increases to renewing residents and market rent paid by new residents after resident turnover.

Speaker Change: We increased homeowners by 123 sites in the quarter.

Patrick Waite: We've been able to sell our homes for an average price of about $100,000 with limited concession. Demand for these homes and our locations is evident from new leads and referrals from current residents, all supporting an 8.5% increase. Q1 new home sales year-over-year and a more than 100% increase from the pre-COVID timeframe in Q1 2019. The aging trends from 70 million baby boomers who are currently moving through their retirement, to almost 140 million combined Gen Xers and Millennials who will follow the boomers into their own retirement, all support generational demand for MH and all of our property offerings for decades. I'll now turn it over to Patrick. Thanks, Patrick, and good morning, everyone.

Speaker Change: Rental homes currently represent three 1% of our MH occupancy.

Speaker Change: First quarter core resort in Marina base rental income increased five 8% compared to 2023.

Speaker Change: Rent growth from annuals in the first quarter was 8%.

Speaker Change: As a reminder, 2024 is a leap year, which results in an additional day of revenue allocated to the first quarter, resulting in higher rate growth and we expect in the subsequent quarters of 2024.

Speaker Change: Our first quarter rent from core RV seasonal and transient generally performed in line with expectations seasonal rent increased two 4% and transient rent increased one 4% compared to first quarter 2023.

For the first quarter, the net contribution from our membership business, which consists of annual subscription and upgrade sales revenues offset by sales and marketing expenses was $14 9 million, an increase of 3% compared to the prior year.

Speaker Change: Net deferral impact for the quarter was $3 $2 million.

Speaker Change: Subscription revenues increased two 7% as a result of rate increases effective for 2024.

Paul Seavey: I will review our first quarter 2024 results and provide an overview of our second quarter and full year 2024 guidance. First quarter normalized FFO of 78 cents per share was in line with our guidance. Strong core portfolio performance generated 7.1% growth in the quarter, also in line with our expectations. FFO is 86 cents per share and includes $14.8 million of insurance recovery revenue that has been deducted from normalized FFO. Core Community-Based Rental Income increased 6.4% for the quarter compared to 2023, primarily as a result of noticed increases to renewing residents and market rent paid by new residents after resident turnover.

Speaker Change: During the quarter, we sold just over 800 upgrades are average upgrade sale price increased 4% with the percentage of sales attributed to our adventure upgrade product representing 28% of our first quarter 2024 sales.

Speaker Change: Core utility and other income increased five 6%, which includes pass through recovery of real estate tax increases from 2023.

Speaker Change: Utility income recovery percentage was 46, 5% about 70 basis points higher than the first quarter of 2023.

Speaker Change: First quarter core operating expenses increased three 9% compared to the same period in 2023 growth in real estate taxes and insurance reflect the run rate impact of increases that took effect after the first quarter of 2023.

Speaker Change: Repairs and maintenance decreased compared to 2023, when we incurred expenses to recover from several winter storms.

Paul Seavey: We increased the number of homeowners by 123 sites in the quarter. Rental homes currently represent 3.1% of our MHR. First quarter core resort and marina based rental income increased 5.8% compared to 2023. Rent growth from annuals in the first quarter was 8%.

Speaker Change: Utility expenses reflect moderating rate growth, along with reduced gas consumption, particularly in California.

Speaker Change: Yeah.

We renewed our property and casualty insurance programs April one and the premium increase was approximately 9%.

Speaker Change: We're pleased with the result, which reflects no change in our program deductibles and expansion of coverage limits for named windstorm damage.

Speaker Change: Core property operating revenues increased five 8%, while core property operating expenses increased three 9% 50 basis points lower than the midpoint of our guidance, resulting in growth in core NOI before property management of seven 1% 10 basis points higher than the midpoint of our guidance.

Paul Seavey: As a reminder, 2024 is a leap year which results in an additional day of revenue allocated to the first quarter, resulting in higher rate growth than we expect in the subsequent quarters of 2024. Our first quarter rental from Cora RV Seasonal and Transient generally performed in line with expectations. Seasonal rent increased 2.4% and transient rent increased 1.4% compared to the first quarter of 2023. For the first quarter, the net contribution from our membership business, which consists of annual subscription and upgrade sales revenues offset by sales and marketing expenses, was $14.9 million, an increase of 3% compared to the prior year.

Our noncore properties contributed $5 3 million in the quarter in line with our expectations.

Speaker Change: The press release and supplemental package to provide an overview of 2020 for second quarter and full year earnings guidance.

Speaker Change: The following remarks are intended to provide context for our current estimate of future results.

Speaker Change: All growth rate ranges and revenue and expense projections are qualified by the risk factors included in our press release and supplemental package.

Speaker Change: Our guidance for 2020 for full year normalized <unk> is $2 89 per share at the midpoint of our guidance range of $2 84 to $2 94.

Speaker Change: An increase of a penny per share compared to prior guidance.

Speaker Change: We project full year core property operating income growth of five 8% at the midpoint of our range of five 3% to six 3%.

Paul Seavey: The net deferral impact for the quarter was $3.2 million. Subscription revenues increased 2.7% as a result of rate increases effective for 2024. During the quarter, we sold just over 800 upgrades. Our average upgrade sale price increased 4%, with the percentage of sales attributed to our adventure upgrade product, representing 28% of our first quarter 2024 sales.

Speaker Change: Full year guidance assumes core base rent growth in the ranges of five 6% to six 6% for MH and four 5% to five 5% for RV and Marina.

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

Speaker Change: Core property operating expenses are projected to increase four 2% to five 2%.

Speaker Change: Our full year expense growth assumption includes the benefit of first quarter savings in repairs and maintenance and payroll expense as well as the impact of our April 1st insurance renewal for the rest of 2024.

Speaker Change: Our guidance model includes the impact of the fixed rate swaps, we disclosed in our earnings release and supplemental package.

Paul Seavey: Core Utility and Other Income increased 5.6%, which includes pass-through recovery of real estate tax increases from 2023. Our utility income recovery percentage was 46.5%, about 70 basis points higher than the first quarter of 2023. First quarter core operating expenses increased 3.9% compared to the same period in 2023.

Speaker Change: The full year guidance model makes no assumptions regarding other capital events or the use of free cash flow, we expect to generate in 2024.

Speaker Change: Our second quarter guidance assumes normalized <unk> per share in the range of 61 to 67.

Speaker Change: Core property operating income growth is projected to be four 6% at the midpoint of our guidance range for the second quarter, which represents approximately 23% of our expected full year core NOI.

Speaker Change: In our core portfolio property operating revenues are projected to increase five 1% and expenses are projected to increase five 6% both at the midpoint of the guidance range.

Paul Seavey: Growth in real estate taxes and insurance reflect the run rate impact of increases that took effect after the first quarter of 2023. However, repairs and maintenance decreased compared to 2023 when we incurred expenses to recover from several winter storms. Utility expenses reflect moderating rate growth along with reduced gas consumption, particularly in California. We renewed our property and casualty insurance programs April 1st, and the premium increase was approximately nine percent. We are pleased with the result, which reflects no change in our program deductibles and expansion of coverage limits for named windstorm jams. Core property operating revenues increased 5.8%, while core property operating expenses increased 3.9% 50 basis points lower than the midpoint of our guide, resulting in growth in core NOI before property management of 7.1%, 10 basis points Our non-core properties contributed $5.3 million in the quarter, in line with our expectations.

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

Speaker Change: As noted in the earnings release and supplemental package, we executed fixed rate swaps on our $300 million unsecured term loan maturing in 2026.

Speaker Change: The swaps fixed the all in borrowing cost at six 5% through maturity.

Speaker Change: We are pleased with this execution as it eliminates floating rate exposure, except balances outstanding from time to time on our line of credit.

Speaker Change: Current secured debt terms vary depending on many factors, including lender borrower sponsor and asset type and quality.

Speaker Change: Current 10 year loans are quoted between 6% and six and three quarters percent $60 to 75% loan to value and one four to one six times debt service coverage we.

Speaker Change: We continued to see solid interest from life companies and Gse's to lend for 10 year terms.

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

Speaker Change: Regarding our liquidity position, we have approximately $470 million available on our line of credit and our ATM program has $500 million of capacity.

Speaker Change: Our weighted average secured debt maturity is almost 10 years.

Speaker Change: Our debt to adjusted EBITDA is five one times and interest coverage is five two times.

Paul Seavey: The press release and supplemental package provide an overview of 2024 second quarter and full year earnings guidance. The following remarks are intended to provide context for our current estimate of future results. All growth rate ranges and revenue and expense projections are qualified by the risk factors included in our press release and supplemental package. Our guidance for 2024 full-year normalized FFO is $2.89 per share, at the midpoint of our guidance range of $2.84 to $2.94, an increase of a penny per share compared to prior guidance.

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

Speaker Change: Now we would like to open it up for questions.

Speaker Change: To ask a question at this time, please press star one on your telephone and wait for your name to be announced.

Speaker Change: Draw. Your question. Please press star one again.

Speaker Change: Our first question comes from the line of Josh <unk> with Bank of America.

Josh: Yeah, Hey, guys. Thanks for the time, so I just wanted.

Josh: Wanted to dig into the guidance update a little bit it looks like you lowered your.

Josh: RV and marine our revenue range, the midpoint of 540 basis points.

Josh: I'm, assuming there was a corresponding drop in expenses is that all.

Josh: Transient related or is it somewhat marina I guess, how to think about the next year.

Paul Seavey: We project full-year core property operating income growth of 5.8% at the midpoint of our range of 5.3% to 6.3%. Full-year guidance assumes core base rent growth in the ranges of 5.6% to 6.6% for MH and 4.5% to 5.5% for RV and marine. We assume occupancy in our stabilized MH portfolio will be flat to the first quarter. Core property operating expenses are projected to increase 4.2% to 5.2%.

Speaker Change: Yeah, I think Josh Josh maybe it'll help if I just walk through the process.

Speaker Change: Yeah.

Speaker Change: So just when we think about our budget and re forecast process for seasonal and transient rent overall.

Speaker Change: I'll start by framing the timing and the composition of those revenue streams. During the first quarter. We earned approximately 50% of our anticipated full year seasonal rent and almost 20% of our full year transient round.

Speaker Change: And then by the end of the second quarter. We have earned almost two thirds of our anticipated full year seasonal rent and close to 45% of our full year transient.

Speaker Change: The last thing on that is just in the third quarter, we earned almost 40% of our transient brand.

Speaker Change: We've talked often about the impact of weather on the on those variable.

Paul Seavey: Our full-year expense growth assumption includes the benefit of first-quarter savings and repairs and maintenance and payroll expense, as well as the impact of our April 1st insurance renewal for the rest of 2024. Additionally, our guidance model includes the impact of the fixed rate swaps 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 2024.

Rental income streams, both seasonal and transient, particularly considering the short booking window for the transient customers.

Speaker Change: I mentioned on the call in January that when we prepared our 2020 for budget, we focused on reservation pacing at that time for rent that we anticipated, earning in the first quarter and we had expectations for modest rates of growth in subsequent quarters.

Speaker Change: Pleased with our first quarter results for seasonal and transient, particularly the seasonal which as I mentioned represents half of the seasonal ramp we expect in the year.

Speaker Change: Guidance update for the second quarter and full year employs the same methodology, we use for the budget we.

Paul Seavey: Our second quarter guidance assumes normalized FFO per share in the range of $0.61 to $0.67. Core property operating income growth is projected to be 4.6% at the midpoint of our guidance range for the second quarter, which represents approximately 23% of our expected full-year core NOI. In our core portfolio, property operating revenues are projected to increase 5.1%, and expenses are projected to increase 5.6%, both at the midpoint of the guidance range. I'll now provide some comments on our balance sheet and the financing mark.

Speaker Change: We focused on reservation pacing for rent, we anticipate earning in the second quarter and we didn't assume any change to our original budget assumptions for the third and fourth quarters. Our current view on second quarter reservation pacing reflects some softness mainly as a result of weather in April and I think Patrick can provide a little bit more color on that.

Yes.

During during the first half of April precipitation was significantly above average.

Patrick Waite: In California, the Midwest, and the northeast, but especially so in California.

Patrick Waite: The RV portfolio experienced precipitation in around 300% of average.

Patrick Waite: California's experienced more precipitation in the first half of April than in the entirety of April last year. So that's been a headwind to the business sub markets in the Midwest and the northeast have also experienced above average rainfall by about 200%.

Paul Seavey: As noted in the earnings release and supplemental package, we executed fixed rate swaps on our $300 million unsecured term loan maturing in 2026. The swaps fix the all-in borrowing cost at 6.05% through maturity. We are pleased with this execution as it eliminates floating rate exposure, except the balance is outstanding from time to time on our line of credit. Current secured debt terms vary depending on many factors, including lender, borrower-sponsor, and asset type and quality.

Speaker Change: I'd also point out.

Speaker Change: The relatively cool and wet sunbelt season in Florida.

Speaker Change: The relatively mild winter in the northern U S.

Speaker Change: Resulted to a difficult year over year comparison regarding seasonal guests extending from Q1 into Q2. So these are seasonal that are down for the for the winter season, extending their reservations.

Speaker Change: Into April the <unk>.

Speaker Change: Winter.

Speaker Change: 123 was very cold in those extensions.

Speaker Change: We're we're pretty robust.

Speaker Change: Just with respect to the current period, there have been headwinds again really weather related.

Speaker Change: Okay.

Speaker Change: Appreciate that color and then maybe just on the thousand trails membership.

Operator: Current 10-year loans are quoted between 6% and 6.75%, 60% to 75% loan-to-value, and 1.4 to 1.6 times debt service coverage. We continue to see solid interest from life companies and GSEs to lend for 10-year terms. High-quality, age-qualified MH assets continue to command the best financing terms. Regarding our liquidity position, we have approximately $470 million available on our line of credit, and our ATM program has $500 million of capacity. Our weighted average secured debt maturity is almost 10 years.

Speaker Change: In the quarter just curious just what's driving that is there is just normal seasonality or works.

Any kind of color would be helpful.

Speaker Change: Sure.

Certainly there is some seasonality to that at the end of the quarter, We had 100 and I think 119000 members.

Members are made up of really those dues paying members and then the free trial members.

Speaker Change: And the drivers of the decrease is a reduction in free trials and a reduction in the sales activity at the at the property level.

Speaker Change: Really you see a lot of that happened in the first quarter than in other years.

Speaker Change: There's a few things to focus on regarding that the membership line.

Speaker Change: If you go back kind of to the beginning when we started operating the thousand trails properties, which I think was in 2008.

Operator: Our debt to adjusted EBITDA is 5.1 times, and interest coverage is 5.2 times. We continue to place a high importance on balance sheet flexibility, and we believe we have multiple sources of capital available to us. Now we would like to open it up for questions. To ask a question at this time, please press star 1 1 on your telephone and wait for your name to be entered. To withdraw your question, please press star 1 once again.

Speaker Change: Youll see some years, where there has been a drop in our member count, but even with that decrease in those various times, we've really been able to grow the dues revenue base meaningfully through rate increases and additional product offerings and so I think youll continue to see us do that.

Speaker Change: Thanks for the color.

Speaker Change: Thanks, Josh.

Speaker Change: Okay.

Speaker Change: Our next question will come from the line of Jamie Feldman with Wells Fargo.

James Colin Feldman: Great Thanks, and good morning.

James Colin Feldman: Morning, Jamie.

Joshua Dennerlein: The first question comes from the line of Josh Dennerlein with Bank of America. Yeah, hey guys. Thanks for the time.

James Colin Feldman: Alright.

James Colin Feldman: So I guess just to start I was just.

James Colin Feldman: Want to follow up on the insurance renewal of 9% can you talk about the assumption that was originally embedded in your guidance.

Joshua Dennerlein: I just wanted to dig into the guidance update a little bit. It looks like you lowered your RV and marina revenue range. I'm assuming there's a corresponding like drop. Is that all?

James Colin Feldman: And then also how much the full year decrease in property expense growth operating expense growth results of the lower insurance premium than expected.

Paul Seavey: transient related, or is it somewhat marina related? I guess how to think about the mix here. Yeah, I think Josh, Josh, maybe it'll help if I just walk through the process. So just when we think about our budget and re-forecast process for seasonal and transient rent overall, I'll start by framing the timing and the composition of those revenue streams. During the first quarter, we earn approximately 50% of our anticipated full-year seasonal rent and almost 20% of our full-year transient.

James Colin Feldman: And are there other areas on the expense line, where youre seeing more relief than you expected in your initial numbers.

Speaker Change: Yes, I think generally Jamie.

Speaker Change: We're pleased with the 9% premium increase on renewal I would say that in terms of the other line items, we saw in the first quarter.

A reduction in our repairs and maintenance.

In place savings on R&M.

Speaker Change: We did have some portion of that was timing related and we've included that in the re forecast going forward, but there wasn't meaningful savings compared to our budget that we consider permanent in R&M.

Paul Seavey: And then by the end of the second quarter, we've earned almost two-thirds of our anticipated full-year seasonal rent and close to 45% of our full-year transit. The last thing on that is just in the third quarter, we earn almost 40% of our transient revenue. So we've talked often about the impact of weather on those variable rental income streams, both seasonal and transient, particularly considering the short booking window for the transient customer.

Speaker Change: Yeah.

Speaker Change: Okay, and then on the insurance side, how did the 9% compare to your initial guidance.

Speaker Change: He was favorable.

Yeah.

Speaker Change: Thank you me on that.

Speaker Change: Can you ballpark it I think a lot of people were thinking like 20% to 30%.

Speaker Change: When you that high or maybe not.

Speaker Change: We didn't we didn't have an assumption thats high at 30% and our budget now.

Speaker Change: Okay Alright.

Paul Seavey: I mentioned on the call in January that when we prepared our 2024 budget, we focused on reservation pacing at that time for rent that we anticipated earning in the first quarter, and we had expectations for modest rates of growth in subsequent quarters. We're pleased with our first quarter results for seasonal and transient, particularly seasonal, which, as I mentioned, represents half of the seasonal rent we expect in the year. Our guidance update for the second quarter and full year employs the same methodology we used for the budget.

Speaker Change: We're kind of further into this cycle in the banks seem to be working through more loans is there anything starting to look more promising or interesting to you.

Speaker Change: That we might be able to see you get your handset.

Speaker Change: Sure Yes.

Speaker Change: Yes, we continue to have discussions with owners that really the overall market has been slow as you point out.

Speaker Change: There is really little distress in the market.

Speaker Change: As far as owners of our assets.

Speaker Change: Owners have generally been conservative over the years with their balance sheet and they have the really the luxury of taking the time to to transact.

Patrick Waite: We focused on reservation pacing for rent. We anticipate earnings in the second quarter, and we didn't assume any change to our original budget assumptions for the third and fourth quarter. Our current view on second quarter reservation pacing reflects some softness, mainly as a result of weather in April, and I think Patrick can provide a little bit more color on that. During the first half of April, precipitation was significantly above average in California, the Midwest, and the Northeast, but especially so in California, where the RV portfolio experienced precipitation around 300% of average.

Speaker Change: I think it's a good idea Jamie do you think about a longer term perspective on how we've grown as a company from 41 properties 30 years ago to 450 properties today, the acquisition that acquisition environment have been episodic.

And I think there's been a few times in our history, where we've had a very low level of acquisition volume followed by a year of outsized growth.

Speaker Change: So we really work on planting the seeds for that growth over the years and then.

Speaker Change: Ready to act when it makes sense dress.

Speaker Change: Okay. I mean are you for shattering it could get better soon.

Speaker Change: Just.

Speaker Change: Just to flag that you keep working on it yes.

Joshua Dennerlein: California experienced more precipitation in the first half of April than in the entirety of April last year, so that's been a headwind for business. Some markets in the Midwest and the Northeast have also experienced above average rainfall by about 200%. I'd also point out that the relatively cool and wet sunbelt season in Florida and the relatively mild winter in the northern U.S. resulted in a difficult year-over-year comparison regarding seasonal guests extending from Q1 into Q2.

Speaker Change: Yes.

Speaker Change: Think that we continue to be in conversations with with owners and to the extent we have closings will certainly.

Speaker Change: Let everyone know as students as soon as we are.

Speaker Change: <unk>.

Speaker Change: Have information to talk about.

Speaker Change: Do you think there is opportunities to get involved in the capital stack that investments are.

Speaker Change: Anything you would do would be straight equity.

Speaker Change: No I mean, we have looked at in the past certainly.

Speaker Change: That structure, where we have the ability to to own the asset at some point also.

Joshua Dennerlein: So these are seasonals that are down for the winter season, extending their reservations into April. The winter of 2023 was very cold, and those extensions were pretty robust, just with respect to the current period. They've been headwinds, again, really weather-related. Yeah, I appreciate that color.

Speaker Change: We've looked at management along those same lines. So we have looked at things over the years and continue to look at unique structures that could.

Speaker Change: Could make sense for us.

Speaker Change: Okay alright, thank you.

Speaker Change: Thanks Jane.

Speaker Change: Okay.

Speaker Change: Our next question will come from the line of Eric Wolfe with Citi.

Eric Wolfe: Alright, if I look at the other income in employer services is about 9% of your revenues.

Eric Wolfe: I know a lot of that is just utility income, but was curious whether youre implementing any new initiatives to grow the other piece of it because I would assume that annualized number and then incentives might love things like on the internet or smart home equipment.

Eric Wolfe: Just curious if there is an opportunity to grow that business more quickly.

Speaker Change: I guess before Eric we talk about maybe some new initiatives, which I would characterize this kind of modest in terms of generating incremental revenue I would point to a couple of things first utility income as you've said, we've continued to segregate utility charges from Rins and bill customer.

Paul Seavey: And then just on the Thousand Trails membership, it's like it, Order. Just curious about just what's driving that. Sure, Josh, and certainly there is some seasonality to that. At the end of the quarter, we had 100, I think 119,000 members. Those members are made up of both dues-paying members and then the free trial members. And the drivers of the decrease are a reduction in free trials and a reduction in sales activity at the property level. Really, you see a lot of that happening in the first quarter and in other years.

Speaker Change: For those we also have the impact of the real estate tax pass throughs that you see driving some of that growth excuse me in 2004 compared to 23.

Speaker Change: And then we do also have.

Speaker Change: The.

Speaker Change: Business interruption insurance proceeds impacting.

Joshua Dennerlein: I think there are a few things to focus on regarding the membership line. If you go back kind of to the beginning when we started operating the Thousand Trails properties, which I think was in 2008, you'll see some years where there's been a drop in the member count. But even with that decrease in revenue at various times, we've really been able to grow the dues revenue base meaningfully through rate increases and additional product offerings. And so I think you'll continue to see us do that. Thanks for the call. Thanks, Josh.

Speaker Change: That line item.

Speaker Change: Year over year.

Speaker Change: Yes, yes, yes.

Speaker Change: We picked up somewhat conversation on some departments enough on a call that an email like 50 basis points of same store revenue per year.

Speaker Change: It sounds like its probably something thats going to be needle moving there. So I guess the second question you mentioned the collection of property taxes, which is great.

Speaker Change: That is going so far and if you could share with you sort of baked into your forecast this year for that specifically.

Speaker Change: Yes, so in.

Speaker Change: In terms of the recovery, we have noticed those customers for.

Speaker Change: The for the amount.

Have they been paying it so no issues with respect to that.

Speaker Change: And it was it represented about 95% of the increase that we realized in the MH portfolio the amount that we billed back to the customers.

James Colin Feldman: Our next question will come from the line of Jamie Feldman with Wells Fargo. Great, thanks and good morning. Morning, Jamie.

Speaker Change: Yes.

Speaker Change: There is a way for us to think about the aggregate amount that could have been other income right.

A million dollar number.

Speaker Change: It is embedded in there.

James Colin Feldman: Hi. So I guess just to start, I just want to follow up on the insurance renewal of 9%. Can you talk about the assumption that was originally embedded in your guidance and then also how much the full year decrease in property expense growth and operating expense growth results from the lower insurance premium than expected, and are there other areas on the expense line where you're seeing more relief than you expected in your initial numbers?

Speaker Change: Thank you.

Speaker Change: It's a little it's a little bit tricky when you think about it quarter to quarter, but for the full year.

Speaker Change: Because because of the timing of the leases and when those pass throughs might start but on a full year basis.

Speaker Change: It's a couple million dollars in recovery.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: Thanks, Eric.

Speaker Change: Okay.

Speaker Change: Our next question will come from the line of Michael Goldsmith with UBS.

Michael Goldsmith: Good morning, Thanks, a lot for taking my question.

Michael Goldsmith: Okay.

Michael Goldsmith: Can you hear me.

We can hear you.

Michael Goldsmith: Good morning.

Michael Goldsmith: Good morning, guys.

Michael Goldsmith: In the prepared remarks, you talked a little bit about the reservation piece.

Michael Goldsmith: Similar to last year is that less encouraging than you were expecting at this point of the year or was the base case.

Michael Goldsmith: In line with last year.

Michael Goldsmith: I think it's in line when we think about the reservation pacing that we used for seasonal and transient.

Paul Seavey: We did have some portion of that that was timing-related, and we've included that in the re-forecast going forward, but there was a meaningful savings compared to our budget that we consider permanent in R&M. Okay, and then on the insurance side, how did the 9% compare to your initial guidance? It was favorable. Yeah. I think we all know that.

Michael Goldsmith: Certainly the seasonal is tracking in line, where reserve for almost 80% of that second quarter rent.

Michael Goldsmith: Which is consistent.

Michael Goldsmith: I mean, we talk often about the variability in the transient but the current pacing is in line with our expectation.

Speaker Change: No surprises there.

Speaker Change: And then.

Speaker Change: My second question relates to <unk>.

James Colin Feldman: I mean, can you ballpark it? I think a lot of people were thinking like 20 to 30 percent. Were you that high, or maybe not?

Speaker Change: The last couple of years demand on the transient has been choppy, but I think.

Speaker Change: What it.

Speaker Change: There has been a pleasant surprise has been the ability to kind of match expenses to the choppiness in demand. So as you think about the outlook for this year would have been the learnings from.

James Colin Feldman: We didn't have an assumption as high as 30% in our budget, no. OK. All right, and then I guess the second question is, you know, I know you guys have said in the past that there isn't a ton happening on the distressed acquisition front, but maybe if you could provide an update, you know, as we're kind of further into this cycle and the banks seem to be working through more loans, is anything starting to look more promising or interesting to you that we might be able to see you get your hands Sure.

Speaker Change: Managing payroll to transient demand.

Are there already preparations in place too.

Speaker Change: Flex up flex down payroll, depending on how the peso reservations.

Speaker Change: He's out through the kind of peak transient here. Thanks.

Speaker Change: There is a great deal of focus on matching.

Speaker Change: The resources, we have on site, particularly with that transient.

Paul Seavey: Yeah, we continue to have discussions with owners, but really, the overall market has been slow, as you point out. There's really little distress in the market as far as owners of our assets are concerned. The owners have generally been conservative over the years with their balance sheets, and they really have the luxury of taking the time to transact. I think it's a good idea, Jamie, to think about a longer-term perspective on how we've grown as a company from 41 properties 30 years ago to 450 properties today.

Speaker Change: Customer flow too.

Speaker Change: As an example.

Speaker Change: Seasonal employees that are that are there to provide.

Speaker Change: Services and activities for for those transient customers.

Literally this morning, I was I was talking to one of my Svp's about exactly that as we're moving through ramping up for the summer season and and.

Speaker Change: And what that what that plan looks like in the next couple of weekends.

Speaker Change: Thank you very much.

Speaker Change: Thanks, Michael.

Paul Seavey: That acquisition environment has been episodic, and I think there have been a few times in our history where we've had a very low level of acquisition volume followed by a year of outsized growth. So we really work on planting the seeds for that growth over the years and then, you know, are ready to act when it makes sense for us. Okay, I mean, are you foreshadowing that it could get better soon? Or just, we know you're, just the flag that you keep working on it?

Our next question will come from the line of Keegan Carl with Wolfe Research.

Keegan Grant Carl: Yes, thanks for the time guys.

Keegan Grant Carl: Maybe first just your noncore portfolio outlook was increase just curious what's driving that.

Keegan Grant Carl: Yes, Kian I mean, the noncore.

Speaker Change: <unk> sorry.

Speaker Change: Primarily it's.

Speaker Change: It's the mix of performance in encores little bit tricky frankly, because of the business interruption proceeds in the restoration of the properties that were impacted by the hurricane So theres a bit of an uptick just in terms of the.

Speaker Change: Return to.

Speaker Change: Normalized business operation.

Speaker Change: Got it and then bigger picture if I take a look your rental home portfolio pretty material decline on a year over year basis and down over 100 units sequentially I guess I'm just curious what's driving this and how we should think about this relative to the mix of home sales versus the potential for you to add homes that you don't sell it to you to your rental portfolio. This year.

James Colin Feldman: It's certainly a debt structure where we have the ability to own the asset at some point. Also, you know, we've looked at management along those same lines. So we have looked at things over the years and continue to look at unique structures that could make sense for us. Okay, all right. Thank you.

Speaker Change: Yes, certainly what what's driving that activity is.

Speaker Change: People buying the homes, so they're either in the home and renting it and want to buy it or there is somebody else that is interested maybe inside of the community.

Speaker Change: That wants to buy that home you've seen over the last few years, a significant conversion of the rental homes to owned homes.

James Colin Feldman: Thanks, James. Our next question will come from the line of Eric Wolfe with. Hi, if I look at your other income and answer services, it's about 9% of your revenues. I know a lot of it is just utility income, but I was curious whether you're implementing any new initiatives to grow the other piece of it. Because I would assume that the annual RV numbers and then it might launch things like bundled internet or smart home equipment.

Speaker Change: And I think we've been very successful in.

Speaker Change: Reducing our rental program.

Speaker Change: From a high of about 9% to down to now 3%.

Speaker Change: So I think.

Speaker Change: That's really a function of the demand for our properties.

James Colin Feldman: But it's just curious; there is an opportunity to grow that side of the business more quickly. I guess before, Eric, we talk about maybe some new initiatives, which I would characterize as kind of modest in terms of generating incremental revenue, I would point to a couple things. First, utility income, as you said, we've continued to segregate utility charges from rents and bill customers for those. We also have the impact of the real estate tax pass-throughs that you see driving some of that growth, excuse me, in 24 compared to 23.

Speaker Change: And for people wanting to enjoy that lifestyle.

Speaker Change: Got it thanks for the time guys.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: Our next question will come from the line of Samir Khanal with Evercore ISI.

Samir Upadhyay Khanal: Hi, Good morning, everyone, Hey, Margaret maybe maybe.

Samir Upadhyay Khanal: Spanned on.

Samir Upadhyay Khanal: The property and casualty insurance renewals I know it was up 9% I guess to a question earlier I mean, it is less than what you were sort of may be baking in and maybe walk us through the process in conversations you had.

Samir Upadhyay Khanal: Can maybe get sort of a lower increase in the premium because it is surprising based on kind of.

Samir Upadhyay Khanal: What the peers have been reporting so maybe walk us through that process.

Speaker Change: Sure I think we have a pretty robust disclosure.

James Colin Feldman: And then we do also have the... Business Interruption Insurance Proceeds impacting that line item year over year. Yeah, yeah, yeah, I guess it takes up so much conversation in the department and that's a far call to add, you know, like 50 basis points to face the revenue per year. But I guess it doesn't sound like there's probably something that's going to be needed in there.

Speaker Change: Included in our filings about.

Speaker Change: What makes up our insurance program, it's difficult to determine and see what what others in the REIT space or in general have for coverage because there isn't as much details. So I think we have a pretty detailed analysis of where we end up in the process.

Speaker Change: Is really.

Eric Wolfe: So, I guess the second question is, you mentioned the collection of property taxes. I was just curious how that is going so far. And if you could just share what you've sort of baked into your forecast this year for that specific reason. Yeah, so in terms of the recovery, we have noticed that customers for the amount they have, they've been paying it, so no issues with respect to that. And it represented about 95% of the increase that we realized in the MH portfolio, the amount that we built back to the customer.

Speaker Change: Built up of.

Speaker Change: A lot of time and effort focused on making sure. The carriers appreciate our properties understand what we have.

To offer at the at the property level and then of course the experience and the claim experience is a big part of the discussions as we head over to London to have the discussions and we had a very good year from a claims perspective and that certainly helps us as we as we go into.

Speaker Change: The discussions with the carriers.

Speaker Change: Okay got it and then I guess my second question is around that.

Eric Wolfe: Yeah, and there's just a way for us to think about the aggregate amount that's been because it's in other income, right? So I didn't know if there's a million, like a dollar, million lease number that's sort of embedded in there. Yeah, it's a little bit tricky when you think about a quarter to quarter, but for the full year, because of the timing of the leases and when those pass-throughs might start, but on a full year basis, it's a couple million dollars in recovery. Thank you.

Speaker Change: Transient business.

I guess, Paul or Patrick.

Speaker Change: What are you what are you expecting for transient to be down this year I mean, how much I know that combined number seasonal and transient because you can do the math.

Paul Seavey: Maybe that sort of flat to down but I'm trying to understand if you were to.

Paul Seavey: The breakdown seasonal trends and sort of what is that projection for this year. Thanks.

Speaker Change: Yes, I think Sameer.

Speaker Change: As we think about those.

Speaker Change: Those revenue streams and the volatility associated with them, we've adopted a practice over the last couple of years of combining for guidance purposes.

Paul Seavey: Thanks, Eric. Our next question will come from the line of Michael Goldsmith with UBS. Good morning. Thanks a lot for taking my question. Can you hear me?

Speaker Change: Two and we think that we think that the.

Speaker Change: And that is that it helps too.

Speaker Change: Kind of reduced to a degree some of the volatility that we see from quarter to quarter. So we don't have a transient number to quote independent of the seasonal.

Michael Goldsmith: We can hear you. Good morning. Good morning, guys. In the prepared remarks, you talked a little bit about the reservation piece being similar to last year. Is that less encouraging than you were expecting at this point in the year? Or was the base case kind of in line with your expectations? I think it's in line.

Speaker Change: Okay. Thank you.

Speaker Change: Thanks, Thank you.

Okay.

Speaker Change: Our next question comes from the line of John Kim with BMO capital markets.

John P. Kim: Good morning.

John P. Kim: Good morning, Tom.

John P. Kim: Hey, Margaret just had one question on expansion sites I know historically, you would like to guide or deliver about 1000 per year.

John P. Kim: Last year, it was a little bit lower than that.

John P. Kim: But I was wondering if you could talk about the constraints to doing more as far as.

Delivering expansion sites.

Speaker Change: Yes sure.

Michael Goldsmith: And then my second question relates to, you know, the last couple of years, demand for transients has been choppy, but I think what has been a pleasant surprise has been the ability to kind of match expenses to the choppiness of demand. So, as you think about the outlook for this year, what have been the learnings from matching payroll to transient demand? And, you know, are there already preparations in place to flex up or flex down payroll depending on how that piece of reservations plays out? Through the kind of peak train.

Speaker Change: The as you pointed out last year, we were just shy of a 1000 and thats been a its been a goal of ours, but noting that they are going to be some.

Speaker Change: Some.

Speaker Change: <unk> constraints on any particular calendar year.

Speaker Change: For the current year were expecting the number of sites to be developed in the neighborhood of 700 to 800.

Speaker Change: And one of the one of the variables.

Speaker Change: Get some pressure on the delivery timeline is just the cadence of getting.

Patrick Waite: There is a great deal of focus on matching the resources we have on site, particularly with that transient customer flow to, as an example, seasonal employees that are there to provide services and activities for those transient customers. And literally this morning, I was talking to one of my SVPs about exactly that, how we're moving through ramping up for the summer season and what that plan looks like in the next couple of weeks. Thank you very much.

Speaker Change: Plans through approval, which can also meet frequently be a multistep processes you submitted plans for development you need to pull a permit.

To the extent that there are comments you need to resubmit.

Speaker Change: That is happening frequently and the timeline for the review of each one of those some middles.

Speaker Change: <unk> is also running long.

Speaker Change: We're finding that in particular in the higher activity markets, where we're where we're doing expansions of Florida has continued to see some pressure.

Michael Goldsmith: Our next question will come from the line of Keegan Carl with Wolf Research. Yeah, thanks for the time, guys. Um, maybe first just your non-core portfolio outlook. I'm just curious what's driving that. Yeah, Keegan, I mean the non-core, excuse me, sorry, primarily it's the mix of performance.

Speaker Change: With respect to those approvals and working through those agencies that's.

Speaker Change: That's in part due to continued build back from Ian in the state overall, but also just the high level of construction activity and Mr.

Speaker Change: And do you think that's a structural headwind in other words are you going to be delivering.

Speaker Change: I think the number you said seven to 800.

Speaker Change: Going forward.

Keegan Grant Carl: The non-core is a little bit tricky, frankly, because of the business interruption proceeds and the restoration of the properties that were impacted by the hurricane. So there's a bit of an uptick just in terms of the return to normalized business operations.

Speaker Change: Or is it some is it just timing.

Speaker Change: And the next year.

I would say, it's probably largely timing, we'll work our way through those headwinds I would expect those headwinds to subside.

Speaker Change: For perspective, we have.

Speaker Change: Over 1000 sites over 100 sites currently in construction so.

Paul Seavey: And then bigger picture, if I take a look at your rental home portfolio, pretty material decline on a year over year basis and down over 100 units sequentially. I guess I'm just curious what's driving this and how we should think about this relative to the mix of home sales versus the potential for you to add homes that you don't sell to your rental portfolio. Yes, certainly what's driving that activity is people buying homes. So they're either in the home and renting it and want to buy it, or there is somebody else that is interested, maybe inside of the community, that wants to buy that home.

Speaker Change: So the timing of completion and then getting.

Speaker Change: Getting a shovel in the ground on the pipeline.

Speaker Change: Two things are going to play out over time, and I would expect we're going to be in that neighborhood of a 1000 sites on a run rate basis, but.

Speaker Change: As evidenced by the current year.

Speaker Change: There may be some some headwinds from time to time.

Speaker Change: And Patrick can you just remind us of the stabilized yields that you expect and how that's trended over time, yes.

<unk> been in the 8% to 10%, 7% to 10% range.

Speaker Change: Recently.

Patrick Waite: When we started really building our pipeline.

Patrick Waite: Those yields were higher single digits and low double digits.

Patrick Waite: So you've seen over the last few years a significant conversion of rental homes to owned homes. And I think we've been very successful in reducing our rental program from a high of about 9% to down to now 3%. So I think that's really a function of the demand for our properties and for people wanting to enjoy that lifestyle.

We've been able to continue to grow the topline revenue as we've been developing at these sites.

Patrick Waite: But there have been some some pressures on construction costs.

Patrick Waite: I guess part of the good news is.

Patrick Waite: In recent quarters the pressure on some of the construction activity has started to subside somewhat.

Speaker Change: Got it thank you.

Speaker Change: Sure. Thanks, Dan.

Speaker Change: Our next question will come from the line of Wes Golladay with Baird.

Keegan Grant Carl: Thanks for the time, guys. Thank you. Our next question will come from the line of Samir Khanal with Evercore ISD. Hi, good morning, everyone.

Wesley Keith Golladay: Hey, good morning, everyone.

Wesley Keith Golladay: The decline in the seasonal sites because we went from 12500 to about 1800 and do you think it stays at this level.

Samir Upadhyay Khanal: Hey, Marguerite, maybe expand on the property and casualty insurance renewals. I know, you know, it was up 9%. I guess to the question earlier, I mean, it is less than what you were sort of maybe baking in.

Wesley Keith Golladay: Yes, I think.

Speaker Change: Excuse me that's on the seasonal side count.

Speaker Change: Essentially the the adjustment reflects.

Speaker Change: Change in occupancy across the seasonal footprint, it's primarily driven by locations in California, and the south and represents.

Marguerite M. Nader: Maybe walk us through the process and conversations you had to maybe get sort of a lower increase in the premium because it is surprising based on kind of, you know, what the peers have been sort of reporting. So maybe walk us through that process. Sure. I think we have a pretty robust disclosure included in our filings about, you know, what makes up our insurance program. It's difficult to determine and see what others in the REIT space or, you know, in general, have for coverage because there isn't as much detail.

Speaker Change: The transient workers, we are traveling nurses and construction workers that stay in our properties for longer periods of time and qualify as seasonal so that's the driver of that.

Okay, and then are you seeing any pushback on the price increases for your various upgrade.

Speaker Change: Upgrade options and do you notice any members moving up the tiers for more moving down.

Speaker Change: With respect to the membership upgrades, we haven't seen any issues relative to the price of the product I think the members are very excited to be able to upgrade.

Marguerite M. Nader: So I think we have a pretty detailed analysis of where we end up, and the process is really a buildup of a lot of time and effort focused on making sure the carriers appreciate our properties, understand what we have to offer at the property level, and then, of course, the experience and the claim experience are a big part of the discussions as we head over to London to have the discussions. And we had a, you know, a very good year from a claims perspective, and that certainly helps us as we go into the discussions with the carriers. Okay, I got it.

Speaker Change: And get the additional benefits.

Speaker Change: I think what you are what you see is that during during Covid, we had an outsized number of memberships.

Speaker Change: Upgrade memberships upgraded and youre seeing that kind of.

Speaker Change: Go back down to a pre COVID-19 level.

Speaker Change: Okay. Thanks for the time.

Speaker Change: Thank you Wes.

Speaker Change: Our next question will come from the line of Anthony Hau with tourists Securities Hey, guys. Thanks for taking my question.

Speaker Change: Okay.

Samir Upadhyay Khanal: And I guess my second question is around, The Transient Business, I guess Paul or Patrick. What are you expecting for the transient business to be down this year? I mean, how much?

Hey, Matt.

Anthony Hau: It's a bit too early to tell but have you guys see alright, I guess seeing any benefits from the recent changes to the increase of the loan limits of title one manufactured housing.

Paul Seavey: I know the combined number, seasonal and transient, because you can do the math and maybe that sort of slapped it down. But I'm trying to understand, you know, if you were to break down seasonal and transient, sort of what is that projection for this year? Thanks.

Matt: I think I think a couple of things on that.

It is early to tell Anthony but B I would also just remind you that the vast majority over 95% of our customers are paying cash for their homes in our communities. So there is not tremendous reliance on financing.

Samir Upadhyay Khanal: Yeah, I think, Samir, as we think about those revenue streams and the volatility associated with them, we've adopted a practice over the last couple years of combining, for guidance purposes, those two. And we think that the value in that is that it helps to kind of reduce, to a degree, some of the volatility that we see from quarter to quarter. So we don't have a transient number to quote independent of the season. Okay, thank you.

In our portfolio.

Speaker Change: Well I would think that would probably help your pulp you guys sell those homes right.

Speaker Change: Just because.

Speaker Change: I think some of those loans can go up to $195000.

Speaker Change: Right, great and customers are coming in they are buying homes.

Speaker Change: 100, 100, plus thousand dollars homes in our communities and paying cash for them and thats consistent with our long history of our customers paying cash.

Speaker Change: <unk>, which adds to just stay.

John P. Kim: Thanks. Thank you. Our next question comes from the line of John Kim with BMO Capital Markets. Good morning.

Speaker Change: The ability at the property level for people to really feel ownership.

Speaker Change: At the community.

Speaker Change: Gotcha.

John P. Kim: Good morning, John. Marguerite, just had one question on expansion sites. I know historically, you'd like to guide or deliver about 1000 per year. Last year, it was a little bit lower than that. But I was wondering if you could talk about the constraints to doing more as far as delivering expansion sites. Yeah, sure.

Speaker Change: And also if you guys expect the membership to start growing again.

Speaker Change: <unk> shipments.

Speaker Change: Up 15% this year.

Speaker Change: Certainly having.

Speaker Change: Predictions for RV shipments to be up as a positive overall for our business, including including the membership side.

Speaker Change: Okay. Thanks, guys.

Marguerite M. Nader: As you pointed out last year, we were just shy of 1,000, and that's been a goal of ours, but noting that there are going to be some timing constraints on any particular calendar year. For the current year, we're expecting the number of sites to be developed in the neighborhood of 700 to 800. One of the variables that puts some pressure on the delivery timeline is just the cadence of getting plans through approval, which can also frequently be a multi-step process. For example, you submit plans for development. You need to pull out a permit.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: Our next question will come from the line of John Pawlowski with Green Street.

Thanks for the time, Paul or the revenue declines for the seasonal and transient business over the balance of the year. That's implied in your guidance solely driven by the rainy April and tough seasonal RV comp in <unk> or are there additional signs of price sensitivity popping up from customers.

Speaker Change: Excuse me.

Speaker Change: The adjustment is limited to Q2 and is driven by the April activity that Patrick talked about.

Speaker Change: Okay.

Speaker Change: And then I'd love to just hear you guys.

Marguerite M. Nader: To the extent that there are comments, you need to resubmit. That is happening frequently, and the timeline for the review of each one of those submittals is also running long. We're finding that, in particular, in the higher activity markets where we're doing expansions, Florida has continued to see some pressure with respect to those approvals and working through those agencies. That's in part due to continued build-back from Ian and the state overall, but also just the high level of construction activity.

Speaker Change: Talk through.

Speaker Change: Shifts in the transaction market I know, it's the volumes quiet right now, but very quickly and we're looking at pretty deeply negative leverage here given the secured financing costs you alluded to so if you assumed interest rate stay stay in a similar range right now where would you expect.

Speaker Change: MH cap rates to settle out for quality product in the coming quarters. Once we do see more transaction volume come in.

Marguerite M. Nader: And do you think that's a structural headwind? In other words, are you going to be delivering? I think the number you said, 7800, going forward, or is it just timing for the next year? I would say it's probably largely timing.

I think it's a it's a <unk>.

Speaker Change: Little bit difficult to say kind of where that cap rates will end up being in the future, but over the past 18 to 24 months there've been very few deal so it's difficult to say.

Patrick Waite: We'll work our way through those headwinds. I would expect those headwinds to subside. For perspective, we have over 1,000 sites; over 1,100 sites are currently in construction. So the timing of completion and then getting a shovel in the ground on the pipeline, those two things are going to play out over time. And I would expect we're going to be in that neighborhood of 1,000 sites on a run rate basis. But, as evidenced by the current year, there may be some headwinds from time to time.

Speaker Change: Kind of pinpoint cap rates I think you really need more robust market with many data points to be able to quote that.

Speaker Change: But what we have seen is continued demand.

Speaker Change: And it's really still very high for our asset class.

Speaker Change: People want to own these properties people don't want to get.

Speaker Change: Sell the property. So there is a lot of demand for even new people coming into the space. One off owners are interested in buying so I.

Patrick Waite: And Patrick, can you just remind us of the stabilized yields that you expect and how that's trended over time? Yeah, they've been in the 8 to 10%, 7 to 10% range. Recently, you know, when we started really building our pipeline, those yields were, you know, higher single digits and low double digits. We've been able to, you know, continue to grow the top line revenue as we've been developing these sites.

Speaker Change: Think that.

Speaker Change: We'll continue to see that that those levels of demand.

Speaker Change: Certainly.

Speaker Change: Where we're at in the debt markets are an important discussion, but as I kind of pointed out I think earlier in this call.

Speaker Change: Theres not a lot of leverage on these assets that we're interested in so that discussion falls a little flat on the to the owners, who who haven't put there.

Patrick Waite: But there have been some pressures on construction costs. But I guess part of the good news is that in recent quarters, the pressure on some of the construction activities has started to subside. Thank you. Sure. Our next question will come from the line of Wes Golladay with Barry. Hey, good morning, everyone.

Speaker Change: A lot of debt on their property. So the movement in the rates isn't as big of a concern for them.

Speaker Change: But certainly it certainly is something that we look at so.

Speaker Change: Our our acquisition Department is very focused very focused on continuing the conversations that we've had with the owners that we've had for a long time now and will continue to do that but.

Wesley Keith Golladay: What drove the decline in the seasonal sites? It looks like they went from 12,500 to 11,800. And do you think it stays at this level? Yeah, I think. Excuse me, Wes, on the seasonal site count. Essentially, the adjustment reflects a change in occupancy across the seasonal footprint. It's primarily driven by locations in California and the South and represents transient workers. You know, we have traveling nurses and construction workers that stay in our properties for longer periods of time and qualify as seasonal. So that's the driver of that.

We have seen times, where there's not a lot of activity and then all of a sudden there is.

You tend to see deals popping up so.

Speaker Change: Hopefully that is something that we will see this year.

Speaker Change: Okay. Thank you for the time.

Speaker Change: Thank you John.

Speaker Change: Since we have no more questions on the line at this time I would like to turn it back over to Marguerite Nader for closing comments.

Marguerite M. Nader: Thank you for joining us today, we look forward to updating you on our second quarter call take care.

This concludes today's conference call. Thank you for participating you may now disconnect.

Paul Seavey: Okay, and then are you seeing any pushback on the price increases for your various thousand trail upgrade options, and do you notice any members moving up the tiers, or more moving down? With respect to the membership upgrades, we haven't seen any issues relative to the price of the product. I think the members are very excited to be able to upgrade and get the additional benefits. I think what you see is that during COVID, we had an outsized number of memberships upgraded. You're seeing that kind of go back down to a pre-COVID level. Okay, thanks for the time. Thank you. Bye.

Marguerite M. Nader: [music].

Okay.

Marguerite M. Nader: Yes.

Marguerite M. Nader: [music].

Marguerite M. Nader: Okay.

Marguerite M. Nader: [music].

Marguerite M. Nader: Yes.

Sure.

Marguerite M. Nader: Yes.

Marguerite M. Nader: [music].

Yes.

Marguerite M. Nader: Hum.

Marguerite M. Nader: Okay.

Marguerite M. Nader: Yes.

Marguerite M. Nader: [music].

Anthony Hau: Our next question will come from the line of Anthony Hau with Truist Security. Hey guys, thanks for taking my question. Hey, maybe it's a bit too early to tell, but have you guys seen any benefits from the recent changes to the increase in the loan limits for Title I manufactured housing? I think a couple things about that. A, it is early to tell, Anthony, but B, I would also just remind you that the vast majority, over 95% of our customers, are paying cash for the homes in our communities, so there's not a tremendous reliance on financing in our portfolio. But I would think that would probably help you guys sell those homes, right? Or just because I think some of those loans can go up to $195,000.

Okay.

Marguerite M. Nader: Okay.

Marguerite M. Nader: Yes.

Marguerite M. Nader: [music].

Paul Seavey: Right, right. And customers are coming in and they're buying homes, you know, $100,000+ homes in our communities and paying cash for them. And that's consistent with our long history of our customers paying cash, which adds to just the ability at the property level for people to really feel ownership in the community. Gotcha.

Anthony Hau: And also, do you guys expect the membership to start growing again since RV shipments are up 15% this year? Certainly, having a prediction for RV shipments to be up is a positive overall for our business, including the membership side. Thanks guys.

John Joseph Pawlowski: Thank you. Our next question will come from the line of John Pawlowski with Greenstone. Thanks for your time.

Paul Seavey: Paul, are the revenue declines for the seasonal and transient business over the balance of the year that's implied in your guidance solely driven by the rainy April and tough seasonal RV comp and 2Q? Are there additional signs of price sensitivity popping up from customers? Excuse me, the adjustment is limited to Q2 and is driven by the April activity that Patrick talked about. Okay.

John Joseph Pawlowski: And then I would love to just hear you guys talk through the shifts in the transaction market. I know the volume is quiet right now, but very quickly, we're looking at pretty deeply negative leverage here, given the secured financing costs you alluded to. So if you assume interest rates stay in a similar range right now, where would you expect MH cap rates to settle out for ELS quality products in the coming quarters once we do see more transaction volume come in?

John Joseph Pawlowski: I think it's a little bit difficult to say kind of where the cap rates will end up being in the future. But, you know, over the past 18 to 24 months, there have been very few deals.

Paul Seavey: So it's difficult to say, you know, kind of pinpoint cap rates. I think you really need a more robust market with many data points to be able to quote that. But what we have seen is continued demand. And, you know, it's really still very high for our asset class. People want to own these properties. They don't want to get, you know, sell the property.

Paul Seavey: So there is a lot of demand for even new people coming into the space. Even one-off owners are interested in buying. So I think that, you know, we'll continue to see those levels of demand. Certainly, you know, where we're at in the debt markets is an important discussion. But as I kind of pointed out earlier in this call, you know, there's not a lot of leverage on these assets that we're interested in. So that discussion falls a little flat on the owners who, you know, haven't put a lot of debt on their property.

Paul Seavey: So the movement in the rates isn't as big of a concern for them, but certainly is something that we look at. So, you know, our acquisition department is very focused, very focused on continuing the conversations that we've had with the owners that we've had for a long time now. And we'll continue to do that. But, you know, we have seen times where there's not a lot of activity.

John Joseph Pawlowski: And then all of a sudden, you tend to see deals popping up. So hopefully, that is something that we'll see this year. Okay, thank you for your time.

Marguerite M. Nader: Thank you, John. Since we have no more questions on the line at this time, I would like to turn it back over to Marguerite Nader for closing comments. Thank you for joining us today. We look forward to updating you on the second quarter call. Take care.

Operator: This concludes today's conference. Thank you for participating. You may now disconnect.

Operator: ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ? ? ? ? ? ? ? ? ? ? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? [inaudible] 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 CEO. In advance of today's call, management released, Today's call will consist of opening remarks and a question and answer session with management relating to the company's earnings.

Operator: For those who would like to participate in the question and answer session, management asks that you limit yourself to two questions so everyone who would like to participate has an ample opportunity. As a reminder, this call is being recorded.

Operator: Certain matters discussed today on this conference call may contain forward-looking statements in the meanings of the Federal Security... Our forward-looking statements are subject to certain economic risk and uncertainty. The company assumes no obligation to update or supplement any statements that become untrue because of subsequent events. In addition, during today's call, we will discuss non-GAAP financial measures as defined by SEC Regulation. Reconciliations of these non-GAAP financial measures to the comparable GAAP financial measures are included in our earnings, our supplemental information, and our historical essay. At this time, I would like to turn the call over to Marguerite Nader, our President and CEO. Good morning, and thank you for joining us today.

Marguerite M. Nader: [music].

Marguerite M. Nader: Our results for the first quarter and our view of continued strength for the remainder of 2024 support our guidance increase. Over a 10-year period of time, we have increased the dividend on average by 14 percent compared to the REIT average of 5.5 percent. Our balance sheet is in great shape with an average term to maturity of nine years, 18 percent of our debt is fully amortizing and not subject to refinance risk, and our debt maturity schedule through 2026 shows only 11 percent of our debt coming due compared to the REIT average of 29 percent. We have spent the last 30 years building a portfolio focused on high-quality coastal and sunbelt retirement and vacation destinations. We are in locations where active adults want to be.

Marguerite M. Nader: [music].

Marguerite M. Nader: Thousand Trails is one of America's most well-known camping brands, and we have earned strong customer loyalty with hundreds of thousands of our viewers making memories with families and friends throughout the company's long history. We have closed another successful quarter, and our teams will now begin to focus on welcoming our residents to our northern locations as we kick off the summer season. I would like to thank all of our team members for their hard work in making this winter season so successful. I will now turn it over to Patrick to provide an operational overview. Thank you, Marguerite.

Marguerite M. Nader: 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.

Marguerite M. Nader: 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.

Marguerite M. Nader: For those who would like to participate in the question and answer session management asks that you limit yourself to two questions. So everybody would like to participate has ample opportunity.

Patrick Waite: As we wind down the 2023-2024 sunbelt season and look forward to the 2024 summer season, I will provide color on the sunbelt season results and a view into the summer season, including Drivers of Demand. Overall, we continue to see consistent demand across each of our lifestyle property types, reflecting the high quality of our property locations. I will start by highlighting our M.A. Over my 30 years in the industry, my responsibilities have ranged from acquisitions to asset management to operations. And regardless of my area of focus, the consistency of our high-quality MH portfolio has been a constant. MH properties operate year round, and seasonality is not a consideration.

Marguerite M. Nader: As a reminder, this call is being recorded.

Marguerite M. Nader: Certain matters discussed today on this conference call may contain forward looking statements in the meetings of the federal Securities laws.

Marguerite M. Nader: Our forward looking statements are subject to certain economic risk and uncertainty.

Marguerite M. Nader: The company assumes no obligation to update or supplement any statements that become untrue because of subsequent events.

Marguerite M. Nader: In addition, during today's call, we will discuss non-GAAP financial measures as defined by SEC regulation G.

Marguerite M. Nader: Reconciliations of these non-GAAP financial measures to the comparable GAAP financial measures are included in our earnings release, our supplemental information and our historical SEC filings.

Marguerite M. Nader: At this time I would like to turn the call over to Marguerite Nader, our president and CEO.

Patrick Waite: Our MH portfolio maintains high occupancy, and each year, approximately 10% of our resident mates turn over. This turnover results in an uninterrupted revenue stream for ELS, as a current homeowner sells their home to an incoming homebuyer, and the new resident pays market price. Year-to-date, we have seen an average rent increase of 5.6% for renewing residents.

Marguerite M. Nader: Good morning, and thank you for joining us today.

I am pleased to report the results for the first quarter of 2024.

Marguerite M. Nader: Quality of our cash flow are in demand locations, the lack of new supply and the strength of our balance sheet continue to allow us to report impressive results.

Marguerite M. Nader: In times of macroeconomic uncertainty, we continued to deliver strong revenue growth as well as expense controls throughout our portfolio.

Patrick Waite: Our resident base generally consists of retired individuals who are cash buyers. Due to the high homeownership rate in our portfolio, occupancy is resilient, and the delinquency rate is very low, which is reflected in bad debt that is typically 40 to 45 basis points of revenue. This low level of delinquency has been consistent over the last 30 years in all economics.

Marguerite M. Nader: Our core NOI for the quarter was strong with a seven 1% increase compared to last year supported by MH and RV rate growth and controlling expenses.

Marguerite M. Nader: Our results for the first quarter and our view for the continued strength for the remainder of 2024 support our guidance rates.

Patrick Waite: Moving to the RV Portfolio, the Sun Belt season runs from December to April, peaking in February. And demand is largely comprised of snowbirds from the northern US and Canada seeking out the temperate climate of Florida, California, Arizona, and Texas. Q1 Annuals Delivered, Steady Occupancy, and Strong Rate Growth Combined seasonal and transient revenue increased in line with expectations, supported by demand with a consistent rate. I'd also note that nearly 50% of our seasonal revenue for the full year comes to us in Q1 during the Sun Belt, while Q1 transient represents less than 20% of the full year transient revenue. We are now looking forward to the summer season, which is comprised of the 100 days of King's Day, from Memorial Day to Labor Day and spans 14 weeks.

Marguerite M. Nader: 14% of our debt is fully amortizing and not subject to refinance risk in our debt maturity schedule through 2026 shows only 11% of our debt coming due compared to the REIT average of 29%.

Marguerite M. Nader: We are in states, where there is outsized growth in seniors and we appeal to the right demographic. The population of people age 55 and older in the U S is expected to grow 15% from now until 2039 with 10000 Baby Boomers, turning 65, each day for the near future.

Patrick Waite: This is the time that our annual customers at 125 summer resorts in Canada visit their getaways on weekends, holidays, and summer vacations. Summer season annuals have a vacation or a lake house, basically their resort cottage or park model located at one of our properties. The resorts are now active with customers, focused on spring cleaning and getting their homes ready for summer activities. These customers are from the local or regional submarkets and are typically a one hour to one and a half hour drive from their homes to their camp.

Marguerite M. Nader: Our MH portfolio comprises approximately 60% of our total revenue and our properties are 95% occupied.

Marguerite M. Nader: Our portfolio is 96% occupied by homeowners.

Marguerite M. Nader: This composition of our resident base is important to protect an uninterrupted cash flow stream as new residents are welcome to our communities.

Patrick Waite: In contrast to the overweight of seasonal revenue in the Sunbelt, during the summers, approximately two-thirds of our transient revenue for the full year is earned in the second and third quarters. Our reservation pace is similar to last year, with the holiday weekends in demand. However, while booking windows are similar to last year, the booking window is short, and therefore, we have limited visibility. More than 50% of transient reservations are booked within 10 days of arrival and are subject to short-term disruptors like weather.

Marguerite M. Nader: Our residents enjoy the community found in our properties and spend time focused on building new relationships with their fellow residents.

Marguerite M. Nader: We continue to engage our existing customers and attract new prospects through media outreach engaging and social media campaigns and targeted digital advertising.

Marguerite M. Nader: Our public relation strategy helps build awareness and credibility through coverage of the lifestyle offered at our properties and interesting stories about our customers who make a difference in the communities in which we operate.

Marguerite M. Nader: Our social media media.

Marguerite M. Nader: Media strategy seeks to engage both customers and prospects in a wide variety of platforms. So we can reach people where they spend time, we have almost 2 million fans and followers across social media networks over the past 10 years, we have grown our social media fans and followers by an average of 19% annually.

Marguerite M. Nader: Our property teams in the north are gearing up to open. This summer season. This year 1000 trails will celebrate its 55th anniversary.

Marguerite M. Nader: Trails as one of America's most well known camping brands and we have earned strong customer loyalty with hundreds of thousands of viral beers, making memories with families and friends throughout the campaign for the company's long history.

Patrick Waite: We've been able to sell our homes for an average price of about $100,000 with limited concession. Demand for these homes and our locations is evident from new leads and referrals from current residents, all supporting an eight and a half percent increase. Q1 new home sales year-over-year and a more than 100% increase from the pre-COVID timeframe in Q1 2019. The aging trends from 70 million baby boomers who are currently moving through their retirement to almost $140 million combined, Gen Xers and Millennials, who will follow the Boomers into their own retirement, all support generational demand for MH and all of our property offerings for decades. I'll now turn it over to Patrick. Thanks, Patrick, and good morning, everyone.

Marguerite M. Nader: Marguerite.

Patrick Waite: As we wind down the 2023 2024, sunbelt season, and look forward to the 2020 for summer season, I will provide color on the sunbelt season results and a view into the summer season, including drivers of demand.

Patrick Waite: Overall, we continue to see consistent demand across each of our lifestyle property types, reflecting the high quality of our property locations.

Patrick Waite: I will start by highlighting our MH business.

Patrick Waite: Over my 30 years in the industry. My responsibilities are range from acquisitions to asset management to operations and regardless of my areas of focus the consistency of our high quality of <unk> portfolio has been a constant.

Paul Seavey: I will review our first quarter 2024 results and provide an overview of our second quarter and full year 2024 guidance. First quarter normalized FFO is $0.78 per share, in line with our guidance. Strong core portfolio performance generated 7.1% growth in the quarter, also in line with our expectations. Adjusted FFO is 86 cents per share and includes $14.8 million of insurance recovery revenue that has been deducted from normalized FFO.

Patrick Waite: These properties operate year round and seasonality is not a consideration.

Patrick Waite: Our MH portfolio maintains high occupancy and each year, approximately 10% of our resident base turns over.

Patrick Waite: This turnover resulted an uninterrupted revenue stream for.

Patrick Waite: As a current hormone ourselves of their home to an incoming homebuyer and the new resident pays market man.

Patrick Waite: Year to date, we have seen an average rent increase of five 6% to renewing residents.

Patrick Waite: Our resident base generally consist of retired individuals who are cash buyers.

Paul Seavey: Core Community-Based Rental Income increased 6.4% for the quarter compared to 2023, primarily as a result of noticed increases to renewing residents and market rent paid by new residents after resident turnover. We increased the number of homeowners by 123 sites in the quarter. Rental homes currently represent 3.1% of our MHR. First quarter core resort and marina rental income increased 5.8% compared to 2023. Rent growth from annuals in the first quarter was 8%. As a reminder, 2024 is a leap year which results in an additional day of revenue allocated to the first quarter, resulting in higher rate growth than we expect in the subsequent quarters of 2024.

Patrick Waite: This low level of delinquency has been consistent over the last 30 years in all economic cycles.

Moving to the RV portfolio. The Sunbelt season runs from December to April, peaking in February and demand is largely comprised of snowbirds from the northern U S and Canada seeking out the temporary climate of Florida, California, Arizona and Texas.

Patrick Waite: In Q1 annual has delivered.

Patrick Waite: <unk> occupancy and strong rate rate growth combined.

Patrick Waite: Combined seasonal and transient increased in line with expectations supported by demand with consistent rate growth.

Patrick Waite: I would also note that nearly 50% of our seasonal revenue for the full year comes to us in Q1 during the sunbelt season, while Q1 transient represents less than 20% of the full year transient revenue.

Patrick Waite: We're now looking forward to the summer season, which is comprised of the 100 days of camping from Memorial day to Labor day and spanned 14 weeks.

Paul Seavey: Our first quarter rent from Cora RV Seasonal and Transient generally performed in line with expectations. Seasonal rent increased 2.4%, and transient rent increased 1.4% compared to first quarter 2023. For the first quarter, the net contribution from our membership business, which consists of annual subscription and upgrade sales revenues offset by sales and marketing expenses, was $14.9 million, an increase of 3% compared to the prior year. The net deferral impact for the quarter was $3.2 million.

Patrick Waite: This is the time that our annual customers at 125 summer resorts in campgrounds.

Patrick Waite: Theyre getaways on weekends holidays and summer vacations.

Patrick Waite: Summer season annuals have a vacation on a lake house basically their resort cottage or park model located in one of our properties.

Patrick Waite: The resorts are now active with customers focus on spring cleaning and getting their homes ready for summer activities.

These customers are from the local or regional Submarkets and are typically a one hour to one and a half hour drive from their homes to their campgrounds.

Patrick Waite: In contrast to the overweight of seasonal revenue in the sunbelt season during the summer season, approximately two thirds of our trade ins unit revenue for the full year is earned in the second and third quarters.

Paul Seavey: Subscription revenues increased 2.7% as a result of rate increases effective for 2024. During the quarter, we sold just over 800 upgrades. Our average upgrade sale price increased 4%, with the percentage of sales attributed to our adventure upgrade product representing 28% of our first quarter 2024 sales.

Patrick Waite: 50% of transient reservations are booked within 10 days of arrival and are subject to short term disruptors like weather.

Patrick Waite: Finally, I would like to focus on our home sales efforts over the last five years, we've sold 4500 new homes.

Patrick Waite: Investing in these new homes as an upgrade for the community.

Patrick Waite: New homes construction quality meats stick built construction standards, including primary bedrooms with walk in closets open Floorplan kitchens with high end high efficiency appliances, and exterior finishes like gable roofs, and architectural shingles, and then remain affordable when compared to other housing options, we've been able to sell it.

Patrick Waite: Homes for an average price of about $100000 with limited concessions.

Patrick Waite: The ageing trends from 70 million Baby Boomers, who are currently moving through their retirement years to almost $140 million combined Gen Xers, and millennials, who will follow the boomers into their own retirement years, all support generational demand for MH and all of our property offerings for decades to come I'll now turn it over to Paul.

Paul Seavey: Growth in real estate taxes and insurance reflects the run rate impact of increases that took effect after the first quarter of 2023. However, repairs and maintenance decreased compared to 2023 when we incurred expenses to recover from several winter storms. Utility expenses reflect moderating rate growth along with reduced gas consumption, particularly in California. We renewed our property and casualty insurance programs on April 1st, and the premium increase was approximately nine percent. We are pleased with the result, which reflects no change in our program deductibles and an expansion of coverage limits for named windstorms.

Paul Seavey: Thanks, Patrick and good morning, everyone.

Paul Seavey: I will review, our first quarter of 2024 results and provide an overview of our second quarter and full year 2020 for guidance.

Paul Seavey: First quarter normalized <unk> was <unk> 78 per share in line with our guidance strong core portfolio performance generated seven 1% growth in the quarter.

Paul Seavey: Also in line with our expectations.

Paul Seavey: <unk> was <unk> 86 per share and includes $14 8 million of insurance recovery revenue that had been deducted from normalized <unk>.

Core community based rental income increased six 4% for the quarter compared to 2023, primarily as a result of noticed increases to renewing residents and market rent paid by new residents after resident turnover we.

Paul Seavey: We increased homeowners by 123 sites in the quarter Ren.

Paul Seavey: Rental homes currently represent three 1% of our MH occupancy.

Paul Seavey: First quarter core resort in Marina base rental income increased five 8% compared to 2023.

Paul Seavey: Core property operating revenues increased 5.8%, while core property operating expenses increased 3.9%, 50 basis points lower than the midpoint of our guide, resulting in growth in core NOI before property management of 7.1%, 10 basis points higher than the midpoint of our guide. Our non-core properties contributed $5.3 million in the quarter, in line with our expectations.

Paul Seavey: Rent growth from annuals in the first quarter was 8% as a reminder, 2024 is a leap year, which results in an additional day of revenue allocated to the first quarter, resulting in higher rate growth and we expect in the subsequent quarters of 2024.

Paul Seavey: Our first quarter rent from core RV seasonal and transient generally performed in line with expectations seasonal rent increased two 4% and transient rent increased one 4% compared to first quarter 2023.

Paul Seavey: For the first quarter, the net contribution from our membership business, which consists of annual subscription and upgrade sales revenues offset by sales and marketing expenses was $14 9 million, an increase of 3% compared to the prior year.

Paul Seavey: The net deferral impact for the quarter was $3 $2 million.

Paul Seavey: Subscription revenues increased two 7% as a result of rate increases effective for 2024.

Paul Seavey: During the quarter, we sold just over 800 upgrades are average upgrade sale price increased 4% with the percentage of sales attributed to our adventure upgrade product representing 28% of our first quarter 2024 sales.

Paul Seavey: Core utility and other income increased five 6%, which includes pass through recovery of real estate tax increases from 2023.

Paul Seavey: Our utility income recovery percentage was 46, 5% about 70 basis points higher than the first quarter of 2023.

Paul Seavey: First quarter core operating expenses increased three 9% compared to the same period in 2023 growth in real estate taxes and insurance reflect the run rate impact of increases that took effect after the first quarter of 2023.

Paul Seavey: Repairs and maintenance decreased compared to 2023, when we incurred expenses to recover from several winter storms, Utah.

Paul Seavey: Utility expenses reflect moderating rate growth, along with reduced gas consumption, particularly in California.

Paul Seavey: We've renewed our property and casualty insurance programs April one and the premium increase was approximately 9%. We are pleased with the result, which reflects no change in our program deductibles and expansion of coverage limits for named windstorm damage.

Paul Seavey: Core property operating revenues increased five 8%, while core property operating expenses increased three 9% 50 basis points lower than the midpoint of our guidance, resulting in growth in core NOI before property management of seven 1% 10 basis points higher than the midpoint of our guidance.

Paul Seavey: Our noncore properties contributed $5 3 million in the quarter in line with our expectations.

Paul Seavey: The press release and supplemental package to provide an overview of 2020 for second quarter and full year earnings guidance. The following remarks are intended to provide context for our current estimate of future results all growth rate ranges and revenue and expense projections are qualified by the risk factors included in our press release and supplemental package.

Our guidance for 2020 for full year normalized <unk> is $2 89 per share at the midpoint of our guidance range of $2 84 to $2 94.

Paul Seavey: An increase of a penny per share compared to prior guidance.

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

Paul Seavey: Full year guidance assumes core base rent growth in the ranges of five 6% to six 6% for MH and four 5% to five 5% for RV and Marina.

Paul Seavey: I'll now provide some comments on our balance sheet and the financing market. As noted in the earnings release and supplemental package, we executed fixed rate swaps on our $300 million unsecured term loan maturing in 2026. The swaps fix the all-in borrowing cost at 6.05% through maturity. We are pleased with this execution as it eliminates floating rate exposure, except the balance is outstanding from time to time on our line of credit. Current secured debt terms vary depending on many factors, including lender, borrower-sponsor, and asset type and quality.

Paul Seavey: We assume occupancy in our stabilized MH portfolio will be flat to the first quarter.

Paul Seavey: Core property operating expenses are projected to increase four 2% to five 2%.

Paul Seavey: Our full year expense growth assumption includes the benefit of first quarter savings in repairs and maintenance and payroll expense as well as the impact of our April 1st insurance renewal for the rest of 2024.

Paul Seavey: Our guidance model includes the impact of the fixed rate swaps, we disclosed in our earnings release and supplemental package.

Paul Seavey: Full year guidance model makes no assumptions regarding other capital events or the use of free cash flow, we expect to generate in 2024.

Our second quarter guidance assumes normalized <unk> per share in the range of 61 to 67.

Paul Seavey: Current 10-year loans are quoted between 6% and 6.75%, 60% to 75% loan-to-value, and 1.4 to 1.6 times debt service coverage. We continue to see solid interest from life companies and GSEs to lend for 10-year terms. High-quality, age-qualified MH assets continue to command the best financing terms. Regarding our liquidity position, we have approximately $470 million available on our line of credit, and our ATM program has $500 million of capacity. Our weighted average secured debt maturity is almost 10 years.

Paul Seavey: Core property operating income growth is projected to be four 6% at the midpoint of our guidance range for the second quarter, which represents approximately 23% of our expected full year core NOI.

Paul Seavey: In our core portfolio property operating revenues are projected to increased five 1% and expenses are projected to increase five 6% both at the midpoint of the guidance range.

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

Paul Seavey: As noted in the earnings release and supplemental package, we executed fixed rate swaps on our $300 million unsecured term loan maturing in 2026.

Paul Seavey: The swaps fixed the all in borrowing cost at six 5% through maturity.

Paul Seavey: We are pleased with this execution as it eliminates floating rate exposure, except balances outstanding from time to time on our line of credit.

Paul Seavey: Current secured debt terms vary depending on many factors, including lender borrower sponsor and asset type and quality.

Paul Seavey: Our debt to adjusted EBITDA is 5.1 times, and interest coverage is 5.2 times. We continue to place a high importance on balance sheet flexibility, and we believe we have multiple sources of capital available to us. Now we would like to open it up for questions. To ask a question at this time, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 once.

Paul Seavey: Current 10 year loans are quoted between 6% and six and three quarters percent, 60% to 75% loan to value and one four to one six times debt service coverage.

Paul Seavey: We continue to see solid interest from life companies and <unk> to lend for 10 year terms.

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

Paul Seavey: Regarding our liquidity position, we have approximately $470 million available on our line of credit and our ATM program has $500 million of capacity.

Joshua Dennerlein: Our first question comes from the line of Josh Dennerlein with Bank of America. Yeah, hey guys. Thanks for the time.

Paul Seavey: Our weighted average secured debt maturity is almost 10 years.

Paul Seavey: Our debt to adjusted EBITDA is five one times and interest coverage is five two times.

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

Speaker Change: Now we would like to open it up for questions.

Paul Seavey: transient related, or is it somewhat marina related, I guess how to think about the mix here? Yeah, I think Josh, maybe it'll help if I just walk through the process. So just when we think about our budget and reforecast process for seasonal and transient rent overall, I'll start by framing the timing and the composition of those revenue streams. During the first quarter, we earn approximately 50% of our anticipated full-year seasonal rent and almost 20% of our full-year transient.

Speaker Change: To ask a question at this time, please press star one on your telephone and wait for your name to be announced.

Speaker Change: Draw. Your question. Please press star one again.

Our first question comes from the line of Josh <unk> with Bank of America.

Josh: Yeah, Hey, guys. Thanks for the time, so I just wanted.

Josh: Wanted to dig into the guidance update a little bit it looks like you lowered your.

Josh: RV and marine our revenue range, the midpoint by 40 basis points.

Josh: I'm, assuming there is a corresponding drop in expenses is that all.

Josh: Transient related or is it somewhat marina I guess, how to think about the next year.

Paul Seavey: And then by the end of the second quarter, we've earned almost two-thirds of our anticipated full-year seasonal rent and close to 45% of our full-year transit. And the last thing about that is that, just in the third quarter, we earn almost 40% of our transient. So we've talked often about the impact of weather on those variable rental income streams, both seasonal and transient, particularly considering the short booking window for the transient customer.

Speaker Change: Yeah, I think Josh Josh maybe it'll help if I just walk through the process.

Speaker Change: Yeah.

Speaker Change: So just when we think about our budget and re forecast process for seasonal and transient rent overall.

Speaker Change: And then by the end of the second quarter. We have earned almost two thirds of our anticipated full year seasonal rent and close to 45% of our full year transient.

Speaker Change: The last thing on that is just in the third quarter, we earned almost 40% of our transient brand.

Speaker Change: We've talked often about the impact of weather on the on those variable.

Speaker Change: Rental income streams, both seasonal and transient, particularly considering the short booking window for the transient customers.

Speaker Change: Pleased with our first quarter results for seasonal and transient, particularly the seasonal which as I mentioned represents half of the seasonal ramp we expect in the year.

Speaker Change: Guidance update for the second quarter and full year employs the same methodology, we use for the budget we.

We focused on reservation pacing for rent, we anticipate earning in the second quarter and we didn't assume any change to our original budget assumptions for the third and fourth quarters. Our current view on second quarter reservation pacing reflects some softness mainly as a result of weather in April and I think Patrick can provide a little bit more color on that.

Speaker Change: Yes.

During during the first half of April precipitation was significantly above average.

Patrick Waite: In California, the Midwest and the northeast, but especially so in California, where the RV portfolio experienced precipitation in around 300% of average.

Patrick Waite: California has experienced more precipitation in the first half of April than in the entirety of April last year, so that's been a headwind to business. Some markets in the Midwest and the Northeast have also experienced above average rainfall by about 200%. I'd also point out that the relatively cool and wet sunbelt season in Florida and the relatively mild winter in the northern U.S. resulted in a difficult year-over-year comparison regarding seasonal guests extending from Q1 into Q2.

California's experienced more precipitation in the first half of April than in the entirety of April last year. So that's been a headwind to the business sub markets in the Midwest and the northeast have also experienced above average rainfall by about 200%.

Speaker Change: I'd also point out.

Speaker Change: That's the relatively cool and wet Sun belt season in Florida.

Speaker Change: And a relatively mild winter in the northern U S resulted to a difficult year over year comparison regarding seasonal guests extending from Q1 into Q2. So these are seasonal that are down for the for the winter season, extending their reservations into.

Patrick Waite: So these are seasonals that are down for the winter season, extending their reservations into April. The winter of 2023 was very cold, and those extensions were pretty robust, just with respect to the current period. They've been headwinds, again, really weather-related. Yeah, I appreciate that color.

Speaker Change: Into April.

Speaker Change: The winter of.

Speaker Change: 2023 was very cold and those extensions.

Speaker Change: We're we're pretty robust.

Just with respect to the current period headwinds again really weather related.

Speaker Change: Okay.

Speaker Change: Appreciate that color and then maybe just on the thousand trails membership.

Joshua Dennerlein: And then just on the Thousand Trails membership, it's like it, Order. Just curious just what's driving that, seasonality, or what. Any kind of color would be fine. Sure, Josh, and certainly there is some seasonality to that. At the end of the quarter, we had 100, I think 119,000 members. Those members are made up of both dues-paying members and then the free trial members. And the drivers of the decrease are a reduction in free trials and a reduction in sales activity at the property level. Really, you see a lot of that happening in the first quarter and in other years.

Speaker Change: Good.

Speaker Change:

Speaker Change: In the quarter just curious just what's driving that is there is just normal seasonality or works.

Speaker Change: Any kind of color would be helpful.

Speaker Change: Sure.

Speaker Change: Certainly there is some seasonality to that at the end of the quarter, We had 100 and I think 119000 members.

Speaker Change: Those members are made up of really those dues paying members and then the free trial members.

Speaker Change: And the drivers of the decrease is a reduction in free trials and a reduction in the sales activity.

Speaker Change: At the at the property level.

Speaker Change: Really you see a lot of that happening in the first quarter than in other years.

Paul Seavey: I think there are a few things to focus on regarding the membership line. If you go back kind of to the beginning, when we started operating the Thousand Trails properties, which I think was in 2008, you'll see some years where there's been a drop in the member count. But even with that decrease, at those various times, we've really been able to grow the dues revenue base meaningfully through rate increases and additional product offerings. And so I think you'll continue to see us do that. Thanks for the call. Thanks, Josh.

Speaker Change: I think theres, a few things to focus on regarding that the membership line.

Speaker Change: If you go back kind of to the beginning when we started operating the thousand trails properties, which I think it was in 2008 youll.

You'll see some years, where there has been a drop in our member count, but even with that decrease in those various times, we've really been able to grow the revenue base meaningfully through rate increases and additional product offerings and so I think youll continue to see us do that.

Speaker Change: Thanks for the color.

James Colin Feldman: Our next question will come from the line of Jamie Feldman with Wells Fargo. Great, thanks and good morning. Good morning, Jamie.

Speaker Change: Thanks, Josh.

Speaker Change: Our next question will come from the line of Jamie Feldman with Wells Fargo.

James Colin Feldman: Great Thanks, and good morning.

James Colin Feldman: Hi. So I guess just to start, I just wanna follow up on the insurance renewal of 9%. Can you talk about the assumption that was originally embedded in your guidance and also how much the full year decrease in property expense growth and operating expense growth resulted from the lower insurance premium than expected? And are there other areas on the expense line where you're seeing more relief than you expected in your initial numbers?

Jamie.

James Colin Feldman: Hi.

James Colin Feldman: So I guess just to start.

James Colin Feldman: I just wanted to follow up on the insurance renewal of 9% can you talk about the assumption that was originally embedded in your guidance.

James Colin Feldman: And then also how much the full year decrease in property expense growth operating expense growth results of the lower insurance premium than expected and are there other areas on the expense line, where youre seeing more relief than you expected in your initial numbers.

James Colin Feldman: Yeah, I think generally, Jamie, we're pleased with the 9% premium increase on renewal. I'd say that in terms of the other line items, we saw in the first quarter a reduction in our repairs and maintenance that was a savings on R&M. We did have some portion of that that was timing-related, and we've included that in the re-forecast going forward. But there was a meaningful savings compared to our budget that we consider permanent in R&M.

Speaker Change: Yes, I think generally Jamie.

Speaker Change: We're pleased with the 9% premium increase on renewal I would say that in terms of the other line items.

Speaker Change: We saw in the first quarter a.

Speaker Change: A reduction in our repairs and maintenance that was in place savings on R&M we.

Speaker Change: We did have some portion of that that was timing related and we've included that in the re forecast going forward, but there wasn't meaningful savings compared to our budget that we consider permanent in R&M.

James Colin Feldman: Okay, and then on the insurance side, how did the 9% compare to your initial guidance? He was favorable. Yeah, I think we all know that. I mean, you ballpark it. I think a lot of people were thinking like 20 to 30 percent. Were you that high, or maybe not?

Speaker Change: Yes.

Speaker Change: Okay, and then on the <unk>.

Speaker Change: <unk> side, how did the 9% compare to your initial guidance.

Speaker Change: He was favorable.

Speaker Change: Yeah.

Speaker Change: We all know that I mean ballpark I think a lot of people were thinking like 20% to 30%.

Speaker Change: Will you that high or maybe not.

Paul Seavey: We didn't have an assumption as high as 30% in our budget, no. OK. All right, and then I guess the second question is, you know, I know you guys have said in the past that there isn't a ton happening on the distressed acquisition front, but maybe if you could provide an update, you know, as we're kind of further into this cycle and the banks seem to be working through more loans, is anything starting to look more promising or interesting to you that we might be able to see you get your hands Sure.

Speaker Change: We didn't we didn't have an assumption thats high at 30% and our budget now.

Okay.

Speaker Change: Alright, and then I guess second question is just I know you guys have said in the past not a ton of happening on the distressed acquisition front, but maybe if you could provide an update as we're kind of further into this cycle in the banks seem to be working through more loans is there anything starting to look more promising or interesting to you.

Speaker Change: That we might be able to see you get your hands.

Speaker Change: Sure.

Speaker Change: Yes, we continue to have discussions with owners that really the overall market has been slow as you as you pointed out.

Speaker Change: There is really little distress in the market as far as owners of our assets.

Speaker Change: Owners have generally been conservative over the years with their balance sheet and they have the really the luxury of taking the time to to transact.

James Colin Feldman: And I think there's been a few times in our history, where we've had a very low level of acquisition volume followed by a year of outsized growth.

James Colin Feldman: So we really work on planting the seeds for that growth over the years and then a ready to act when it makes sense dress.

Speaker Change: Okay. I mean are you for shattering it could get better soon.

Speaker Change #100: Or just we know just to flag that you you keep working on it yeah.

Paul Seavey: Yeah, I mean, I think that we continue to be in conversations with owners, and to the extent we have closings, we'll certainly let everyone know as soon as we have, you know, information to talk about. Do you think there are opportunities to get involved in the capital stack, like debt investments, or is anything you do would be straight equity? No, I mean, we have looked at it in the past, certainly a debt structure where we have the ability to own the asset at some point. Also, you know, we've looked at management along the same lines. So we have looked at things over the years and continue to look at unique structures that could make sense for us. Okay, all right, thank you. Thanks, John.

Speaker Change #100: Yes.

Speaker Change #100: We continue to be in conversations with with owners and to the extent, we have closings will certainly.

Speaker Change #100: Let everyone know as students as soon as we are.

Has the.

Speaker Change #100: Information to talk about.

Speaker Change #100: Do you think there is opportunities to get involved in the capital stack.

Speaker Change #100: Net investments or.

Speaker Change #100: Anything you would do would be straight equity.

Speaker Change #101: No I mean, we have looked at it in the past certainly.

Speaker Change #101: A desk structure, where we have the ability to to own the asset at some point also.

Speaker Change #101: We've looked at management along those same lines. So we have looked at things over the years and continue to look at unique structures that that could make sense for us.

Eric Wolfe: Our next question will come from the line of Eric Wolfe, "Hi, if I look at your other income and answer services, it's about 9% of your revenues." I know a lot of it is just utility income, but I was curious whether you're implementing any new initiatives to grow the other piece of it. Because I would assume that the annual RV numbers and MH-10X might launch things like bundled internet or smart home equipment. But I was just curious if there's an opportunity to grow that side of the business more quickly.

Speaker Change #102: Okay alright, thank you.

Speaker Change #103: Thanks Jane.

Speaker Change #103: Okay.

Speaker Change #103: Our next question will come from the line of Eric Wolfe with Citi.

Alright.

Looking at the other income in employer services is about 9% of the revenues.

Eric Wolfe: I know a lot of it is just utility income, but was curious whether you're implementing any new initiatives to grow the other piece of it because I would assume that the annualized new members and then incentives might lung things like bundled internet or smart home equipment.

Eric Wolfe: Just curious if there's an opportunity to grow that side of the business more quickly.

Eric Wolfe: I guess before, Eric, we talk about maybe some new initiatives, which I would characterize as kind of modest in terms of generating incremental revenue, I would point to a couple things. First, utility income. As you said, we've continued to segregate utility charges from rents and bill customers for those.

Eric Wolfe: I guess before Eric we talked about.

Eric Wolfe: And maybe some new initiatives, which I would characterize as kind of modest in terms of generating incremental revenue I would point to a couple of things first utility income as you've said, we've continued to segregate utility charges from rents and build customers for those we also have the impact of the real estate tax pass throughs.

Paul Seavey: We also have the impact of the real estate tax pass-throughs that you see driving some of that growth, excuse me, in 24 compared to 23. And then we do also have the... Business Interruption Insurance Proceeds impacting that line item year over year. Got it. Yeah, yeah, I guess it takes up so much conversation in some of the departments, and that's our call is adding, you know, like 50 basis points if they start generating revenue per year. But I guess this doesn't sound like it's probably something that's going to be needed out there.

Eric Wolfe: That you see driving some of that growth excuse me in 2004 compared to 23.

Eric Wolfe: And then we do also have.

Eric Wolfe: The.

Eric Wolfe: Business interruption insurance proceeds impacting.

Eric Wolfe: That line item.

Eric Wolfe: Year over year.

Eric Wolfe: Yes, yes, I guess it takes us somewhat conversation on some departments.

All of that immuno like 50 basis points of same store revenue per year.

So it doesn't sound like this is probably something that's going to be needle moving there. So I guess the second question you mentioned the collection of property taxes, which is great.

Paul Seavey: So I guess the second question is, you mentioned the collection of property taxes. I was just curious how that is going so far and if you could just share what you've sort of baked into your forecast this year for that specific. Yeah, so in terms of the recovery, we have noticed that customers for the amount they have, they've been paying it, so no issues with respect to that. And it represented about 95% of the increase that we realized in the MH portfolio, the amount that we gave back to the customer.

Eric Wolfe: That is going so far and if you could share with you sort of baked into your forecast this year for that specifically.

Speaker Change #104: Yes, so in.

Speaker Change #104: In terms of the recovery.

Speaker Change #104: Have noticed those customers.

Speaker Change #104: For the for the amount.

Have they have been paying it so no issues with respect to that.

Speaker Change #104: And.

Speaker Change #104: Was it represented about 95% of the increase that we realized in the MH portfolio the amount that we billed back to the customers.

Paul Seavey: Yeah, and there's just a way for us to think about the aggregate amount that's been because it's in other income, right? So I don't know if there's a million, like a dollar million lease number that's sort of embedded in there.

Yes, there is a way for us to think about the aggregate amount that's been because there have been other income right.

Speaker Change #104: As a million dollar number.

What is embedded in there.

Paul Seavey: Yeah, it's a little bit tricky when you think about it quarter to quarter, but for the full year, because of the timing of the leases and when those pass-throughs might start, but on a full year basis, it's a couple million dollars in recovery. Thank you. Thanks, Eric. Our next question will come from the line of Michael Goldsmith with UBS. Good morning. Thanks a lot for taking my question. Can you hear me?

Speaker Change #104: Yes.

Speaker Change #104: It's a little it's a little bit tricky when you think about it quarter to quarter, but for the full year.

Speaker Change #104: Because because of the timing of the leases and when those pass throughs might start but on a on a full year basis.

Speaker Change #104: It's a couple million dollars in recovery.

Speaker Change #104: Okay.

Speaker Change #105: Thank you.

Speaker Change #106: Thanks, Eric.

Speaker Change #106: Okay.

Speaker Change #106: Our next question will come from the line of Michael Goldsmith with UBS.

Michael Goldsmith: Good morning, Thanks, a lot for taking my question.

Michael Goldsmith: We can hear you. Good morning. Good morning, guys. In the prepared remarks, you talked a little bit about the reservation piece being similar to last year. Is that less encouraging than we're expecting at this point in the year? Or was the base case kind of in line with? I think it's in line.

Michael Goldsmith: Can you hear me.

We can hear you.

Michael Goldsmith: Good morning.

Michael Goldsmith: Good morning, guys.

Michael Goldsmith: In the prepared remarks, you talked a little bit about the reservation piece be similar to last year.

Michael Goldsmith: Less encouraging than you were expecting at this point of the year or was the base case.

Michael Goldsmith: In line with last year.

Paul Seavey: I mean, when we think about the reservation pacing that we used for seasonal and transient, certainly the seasonal is tracking in line; we're reserved for almost 80% of that second quarter rent, which is consistent. And I mean, we talk often about the variability in the transient, but the current pacing is in line with our expectations. No surprises. And then my second question relates to, you know, the last couple of years, demand for transient has been choppy, but I think what has been a pleasant surprise has been the ability to kind of match expenses to the choppiness of demand.

I think it's in line when we think about the reservation pacing that we used for seasonal and transient.

Michael Goldsmith: The seasonal is tracking in line were reserved for almost 80% of that second quarter rent.

Michael Goldsmith: Which is consistent.

Michael Goldsmith: And I mean.

Michael Goldsmith: We talk often about the variability in the transient but the current pacing is in line with our expectation.

Speaker Change #107: No surprises there.

Speaker Change #107: And then.

Speaker Change #107: My second question relates to <unk>.

Speaker Change #107: The last couple of years demand on the transient has been choppy, but I think.

Speaker Change #107: What it.

Speaker Change #107: There has been a pleasant surprise has been the ability to kind of manage expenses to the choppiness in demand. So as you think about the outlook for this year would have been the learnings from <unk>.

Paul Seavey: So, as you think about the outlook for this year, you know, what have been the learnings from matching payroll to transient demand? And, you know, are there already preparations in place to flex up or flex down payroll depending on how that piece of reservations plays out? through the kind of peak training.

Speaker Change #107: Managing payroll to transient demand.

Speaker Change #107: Are there already preparations in place too.

Speaker Change #107: Flex up or flex down payroll, depending on how the piece of reservations.

Speaker Change #108: He's out through the kind of peak transient here. Thanks.

There is a great deal of focus on matching.

Patrick Waite: There is a great deal of focus on matching the resources we have on site, particularly with that transient customer flow to, as an example, seasonal employees that are there to provide services and activities for those transient customers. And literally this morning, I was talking to one of my SVPs about exactly that, as we're moving through ramping up for the summer season and what that plan looks like in the next couple of weekends. Thank you very much.

Speaker Change #108: The resources, we have on site, particularly with that transient.

Speaker Change #108: Customer flow too.

Speaker Change #108: As an example.

Speaker Change #108: Seasonal employees that are that are there to provide.

Speaker Change #108: Services and activities for for those transient customers.

Speaker Change #108: Literally this morning, I was I was talking to one of my Svp's about exactly that as we're moving through ramping up for the summer season and and.

Speaker Change #108: And what that what that plan looks like in the next couple of weekends.

Speaker Change #109: Thank you very much.

Keegan Grant Carl: Our next question will come from the line of Keegan Carl with Wolf Research. Yeah, thanks for the time, guys. Um, maybe first just your non-core portfolio outlook. I'm just curious what's driving that. Yeah, Keegan, I mean, the non-core, excuse me, sorry, primarily it's the mix of performance.

Speaker Change #110: Thanks, Michael.

Speaker Change #110: Our next question will come from the line of Keegan Carl with Wolfe Research.

Keegan Grant Carl: Yeah. Thanks for the time guys.

Keegan Grant Carl: Maybe first just your noncore portfolio outlook was increase just curious what's driving that.

Keegan Grant Carl: Yes, Kian I mean, the noncore.

<unk> sorry.

Keegan Grant Carl: Primarily it's.

Paul Seavey: The non-core is a little bit tricky, frankly, because of the business interruption proceeds and the restoration of the properties that were impacted by the hurricane. So there's a bit of an uptick just in terms of the return to normalized business operations.

Keegan Grant Carl: It's the mix of performance in encores little bit tricky frankly, because of the business interruption proceeds in the restoration of the properties that were impacted by the hurricane.

Keegan Grant Carl: So theres a bit of an uptick just in terms of the.

Keegan Grant Carl: Return to.

Keegan Grant Carl: Normalized business operation.

Patrick Waite: And then bigger picture, if I take a look at your rental home portfolio, pretty material decline on a year over year basis and down over 100 units sequentially. I guess I'm just curious what's driving this and how we should think about this relative to the mix of home sales versus the potential for you to add homes that you don't sell to your rental portfolio. Yes, certainly what's driving that activity is people buying homes. So they're either in the home and renting it and want to buy it, or there is somebody else that is interested, maybe inside of the community, that wants to buy that home.

Speaker Change #111: Got it and then bigger picture if I take a look your rental home portfolio pretty material decline on a year over year basis and down over 100 units sequentially.

Speaker Change #112: I guess I'm just curious what's driving this and how we should think about this relative to the mix of home sales versus the potential for you to add homes that you don't sell it to you to your rental portfolio. This year.

Speaker Change #113: Yes, certainly what what's driving that activity is.

Speaker Change #113: People buying the homes so.

Speaker Change #113: They're either in the home and renting it and want to buy it or are there is somebody else that is interested maybe inside of the community.

Speaker Change #113: That wants to buy that home say you've seen over the last few years, a significant conversion of the rental homes to owned homes.

Speaker Change #113: And I think we've been very successful in.

Speaker Change #113: Reducing our rental program.

Speaker Change #113: From a high of about 9% to down to now 3%.

Speaker Change #113: So I think.

Speaker Change #113: And that's really a function of the demand for our properties.

Speaker Change #113: And for people wanting to enjoy that lifestyle.

Keegan Grant Carl: Thanks for the time, guys. Thank you. Our next question will come from the line of Samir Khanal with Evercore ISD. Hi, good morning, everyone.

Speaker Change #114: Got it thanks for the time guys.

Speaker Change #115: Thank you.

Speaker Change #115: Yes.

Speaker Change #115: Our next question will come from the line of Samir Khanal with Evercore ISI.

Samir Upadhyay Khanal: Hi, Good morning, everyone, Hey, Margaret maybe.

Samir Upadhyay Khanal: Spend on.

Marguerite M. Nader: Maybe walk us through the process and conversations you had to maybe get sort of a lower increase in the premium because it is surprising based on kind of what the peers have been sort of reporting. So maybe walk us through that process. Sure. I think we have a pretty robust disclosure included in our filings about what makes up our insurance program. It's difficult to determine and see what others in the REIT space or in general have for coverage because there isn't as much detail.

Samir Upadhyay Khanal: Just to maybe get sort of a lower increase in the premium because it is surprising based on Canada.

Samir Upadhyay Khanal: What the peers have been reporting so maybe walk us through that process.

Speaker Change #116: Sure I think we have a pretty robust disclosure.

Speaker Change #116: Included in our filings about what makes up our insurance program, it's difficult to determine and see what what others in the REIT space or in general have for coverage because there isn't as much details. So I think we have a pretty detailed analysis of where we end up.

Samir Upadhyay Khanal: So I think we have a pretty detailed analysis of where we end up, and the process is really a buildup of a lot of time and effort focused on making sure the carriers appreciate our properties and understand what we have to offer at the property level. And then, of course, experience and claims experience is a big part of the discussions as we head over to London to have the discussions. And we had a very good year from a claims perspective, and that certainly helps us as we go into the discussions with the carriers. Okay, I got it.

Speaker Change #116: And the process.

Is really.

Speaker Change #116: <unk> built up of.

A lot of time and effort focused on making sure. The carriers appreciate our properties understand what we have.

Speaker Change #116: To offer at the at the property level and then of course, the experience and the claim experience is a big part of the discussions as we head over.

Speaker Change #116: To the to London to have the discussions and we had a very.

Speaker Change #116: Very good year from a claims perspective and that certainly helps us as we as we go into the discussions with the carriers.

Speaker Change #116: Yeah.

Paul Seavey: And I guess my second question is around the transient business, Paul or Patrick. What are you expecting for the transient business to be down this year? I mean, how much?

Okay got it and I guess my second question is around.

Speaker Change #116: The transient business.

Speaker Change #117: I guess, Paul or Patrick.

Speaker Change #118: What are you expecting for transient to be down this year I mean, how much I know that combined number seasonal and transient because you can do the math.

Samir Upadhyay Khanal: I know the combined number, seasonal and transient, because you can do the math and maybe that sort of slapped it down. But I'm trying to understand, you know, if you were to break down seasonal and transient, sort of what that projection for this year is? Thanks. Yeah, I think Samir, as we think about those revenue streams and the volatility associated with them, we've adopted a practice over the last couple years of combining those two, and we think that the value in that is that it helps to kind of reduce, to a degree, some of the volatility that we see from quarter to quarter. So we don't have a transient number to quote independent of the season. Okay, thank you. Thank you. Our next question comes from the line of John Kim with BMO Capital Markets. Good morning.

Paul Seavey: Maybe that sort of flat to down, but I'm trying to understand the breakdown seasonal and transient sort of what is that projection for this year. Thanks.

Speaker Change #119: Yes, I think Sameer.

Speaker Change #120: As we think about those.

Those revenue streams and the volatility associated with them, we've adopted a practice over the last couple of years of combining for guidance purposes.

Speaker Change #121: Those two and we think that we think that the value and that is that it helps too.

Speaker Change #121: Kind of reduce to a degree some of the volatility that we see from quarter to quarter. So we don't have a <unk>.

Speaker Change #121: <unk> number to quote independent of the seasonal.

Speaker Change #122: Okay. Thank you.

Speaker Change #123: Thank you.

Speaker Change #123: Our next question comes from the line of John Kim with BMO capital markets.

John P. Kim: Good morning, John. Marguerite, I just had one question on expansion sites. I know historically, you'd like to guide or deliver about 1000 per year. Last year, it was a little bit lower than that.

John P. Kim: Good morning.

Good morning, Jim.

John P. Kim: Hey, Margaret just had one question on expansion sites I know historically, you would like to guide or deliver about 1000 per year last year was a little bit lower than that.

John P. Kim: But I was wondering if you could talk about the constraints to doing more as far as delivering expansion sites. Yeah, sure. As you pointed out last year, we were just shy of 1,000, and that's been a goal of ours, but noting that there are going to be some timing constraints on any particular calendar year. For the current year, we're expecting the number of sites to be developed in the neighborhood of 700 to 800.

John P. Kim: I was wondering if you could talk about the constraints to doing more as far as.

John P. Kim: Delivering expansion sites.

Speaker Change #124: Yes sure.

Speaker Change #124: The as you pointed out last year, we were just shy of 1000 and that's been that's been a goal of ours, but noting that they are going to be some.

Speaker Change #124: Some timing constraints on any particular calendar year.

Speaker Change #124: For the current year were expecting the number of sites to be developed in the neighborhood of 700 to 800.

John P. Kim: One of the variables that puts some pressure on the delivery timeline is just the cadence of getting plans through approval, which can also frequently be a multi-step process. For example, you submit plans for development. You need to pull a permit.

Speaker Change #124: And one of the one of the variables.

Speaker Change #124: You get some pressure.

Speaker Change #124: The delivery timeline is just.

Speaker Change #124: The cadence of getting.

Speaker Change #124: <unk> through approval, which can also.

Speaker Change #124: Frequently be a multi step process you submitted plans for development you need to pull a permit.

Speaker Change #124: To the extent that there are comments you need to resubmit.

That is happening frequently and the timeline for the review of each one of those some middle <unk>.

Speaker Change #124: <unk> is also running long.

Speaker Change #124: Finding that in particular in the higher activity markets, where we're where we're doing expansions of Florida has continued to see some pressure.

Speaker Change #124: With respect to those approvals and working through those agencies that's.

Speaker Change #124: That's in part due to continued build back from Ian in the state overall, but also just the high level of construction activity in this deal.

And do you think that's a structural headwind in other words are you going to be delivering.

I think the number you said seven to 800.

Speaker Change #124: Going forward.

Or is it something is it just timing.

And the next year.

Speaker Change #125: I would say, it's probably largely timing, we'll work our way through those headwinds I would expect those headwinds to subside.

Marguerite M. Nader: We'll work our way through those headwinds. I would expect those headwinds to subside. For perspective, we have over 1,000 sites; over 1,100 sites are currently in construction. So the timing of completion and then getting a shovel in the ground on the pipeline, those two things are going to play out over time. And I would expect we're going to be in that neighborhood of 1,000 sites on a run rate basis. But, as evidenced by the current year, there may be some headwinds from time to time.

Speaker Change #125: For perspective, we have.

Speaker Change #125: Over 1000 sites over 1100 sites currently in construction.

Speaker Change #125: So the timing of completion and then getting.

Speaker Change #125: Getting a shovel in the ground on the pipeline.

Speaker Change #125: Two things are going to play out over time, and I would expect we're going to be in that neighborhood of a 1000 sites on a run rate basis, but.

Speaker Change #125: As evidenced by the current year.

Speaker Change #125: There may be some some headwinds from time to time.

Marguerite M. Nader: And Patrick, can you just remind us of the stabilized yields that you expect and how that's trended over time? Yeah, they've been in the 8 to 10 percent, 7 to 10 percent range recently. You know, when we started really building our pipeline, those yields were, you know, higher single digits and low double digits. But we've been able to continue to grow the top line revenue as we've been developing these sites. But there have been some pressures on construction costs.

Speaker Change #125: And Patrick can you just remind us of the stabilized yields that you expect and how that's trended over time, yes.

Patrick Waite: <unk> been in the 8% to 10%, 7% to 10% range.

Patrick Waite: Recently.

Patrick Waite: When we started really building our pipeline.

Patrick Waite: Those yields were higher single digits and low double digits.

Patrick Waite: We've been able to continue to grow the topline revenue as we've been developing at these sites.

Patrick Waite: But there have been some some pressures on construction costs.

Patrick Waite: But I guess part of the good news is that in recent quarters, the pressure on some of the construction activities has started to subside. Thank you. Sure. Our next question will come from the line of Wes Golladay with Barry. Hey, good morning, everyone.

Patrick Waite: I guess part of the good news is.

Patrick Waite: In recent quarters.

Patrick Waite: The pressure on some of the construction activity has started to subside somewhat.

Speaker Change #126: Got it thank you.

Speaker Change #127: Sure. Thanks, Dan.

Speaker Change #127: Our next question will come from the line of Wes Golladay with Baird.

Wesley Keith Golladay: Hey, good morning, everyone.

Wesley Keith Golladay: What drove the decline in the seasonal sites? Looks like they went from 12,500 to 11,800. And do you think it will stay at this level? Yeah, I think. Excuse me, Wes, on the seasonal site count, essentially the adjustment reflects a change in occupancy across the seasonal footprint. It's primarily driven by locations in California and the South and represents transient workers.

Wesley Keith Golladay: Drove the decline in the seasonal sites because we went from 12500 to about 1800 and do you think it stays at this level.

Speaker Change #128: Yes, I think.

Speaker Change #128: Excuse me on the seasonal side count.

Speaker Change #128: Essentially the the adjustment reflects.

Speaker Change #128: Change in occupancy across the seasonal footprint, it's primarily driven by locations in California, and the south and represents.

Paul Seavey: You know, we have traveling nurses and construction workers that stay in our properties for longer periods of time and qualify as seasonal. So that's the driver of that. Okay, and then are you seeing any pushback on the price increases for your various Thousand Trail upgrade options, and do you notice any members moving up the tiers, or more moving down? With respect to the membership upgrades, we haven't seen any issues relative to the price of the product.

Speaker Change #128: Transient workers, we are traveling nurses and construction workers that stay in our properties for longer periods of time and qualify as seasonal so that's the driver of that.

Speaker Change #129: Okay, and then are you seeing any pushback on the price increases for your various.

Speaker Change #129: Upgrade options and you noticed that.

Speaker Change #129: Moving up the tiers for more moving down.

Speaker Change #130: With respect to the membership upgrades, we haven't seen any issues relative to the price of the product I think the members are.

Paul Seavey: I think the members are very excited to be able to upgrade and get the additional benefits. I think what you see is that during COVID, we had an outsized number of memberships upgraded. Now, you're seeing that kind of go back down to a pre-COVID level.

Speaker Change #130: And excited to be able to upgrade and get the additional benefits.

Speaker Change #130: What what you see is that during during COVID-19.

Speaker Change #130: Had an outsized number of memberships.

Speaker Change #130: Great memberships upgraded and you're seeing that kind of.

Wesley Keith Golladay: Okay, thanks for the time. Thank you. Our next question will come from the line of Anthony Hau with Truist Security. Hey guys, thanks for taking my question. Hey, maybe it's a bit too early to tell, but have you guys seen any benefits from the recent changes to the increase in the loan limits for Title I manufactured housing? I think a couple things about that. A, it is early to tell, Anthony, but B, I would also just remind you that the vast majority, over 95% of our customers, are paying cash for the homes in our communities, so there's not a tremendous reliance on financing in our portfolio. But I would think that would probably help you guys sell those homes, right? Or just because I think some of those loans can go up to $195,000.

Speaker Change #130: Go back down to a pre COVID-19 level.

Speaker Change #131: Okay. Thanks for the time.

Speaker Change #132: Thank you.

Speaker Change #132: Our next question will come from the line of Anthony Hau with tourists Securities Hey, guys. Thanks for taking my question.

Speaker Change #132: Hello.

Anthony Hau: Okay, maybe it's a bit too early to tell but have you guys see alright are you seeing any benefits from the recent changes to the increase of the <unk>.

Anthony Hau: Loan limits title one manufactured housing.

Speaker Change #133: I think I think a couple of things on that.

Speaker Change #134: It's early to tell Anthony but I would also just remind you that the vast majority over 95% of our customers are paying cash for the homes in our communities. So there is not tremendous reliance on financing.

Speaker Change #134: In our portfolio.

Anthony Hau: Well I would think that would probably help your pulp you guys sell those homes right.

Speaker Change #135: Just because.

Speaker Change #136: I think some of those loans can go up to $195000.

Anthony Hau: Right, right. And customers are coming in and they're buying homes, you know, $100,000+ homes in our communities and paying cash for them. And that's consistent with our long history of our customers paying cash, which adds to just the ability at the property level for people to really feel ownership in the community. Gotcha.

Speaker Change #137: Right right and customers are coming in there they are buying homes.

Speaker Change #137: 100, 100, plus thousand dollars homes in our communities and paying cash for them and thats consistent with our long history of our customers paying cash.

Speaker Change #137: <unk>, which adds to just the.

Speaker Change #137: The ability at the property level for people to really feel ownership.

Speaker Change #137: At the community.

Paul Seavey: And also, do you guys expect the membership to start growing again since RV shipments are up 15% this year? Certainly, having a prediction for RV shipments to be up is a positive overall for our business, including the membership side. Thanks, guys. Thank you. Our next question will come from the line of John Pawlowski with Greensboro. Thanks for your time. Paul, are the revenue declines for the seasonal and transient business over the balance of the year that's implied in your guidance solely driven by the rainy April and tough seasonal RV comp and 2Q? Are there additional signs of price sensitivity popping up from customers? Excuse me, the adjustment is limited to Q2 and is driven by the April activity that Patrick talked about. Okay.

Speaker Change #137: Gotcha.

Speaker Change #138: And also if you guys expect the membership to start growing again.

Speaker Change #138: <unk> shipments.

Speaker Change #138: Up 15% this year.

Speaker Change #138: Certainly having.

Speaker Change #138: Predictions for RV shipments to be up as a positive overall for our business, including including the membership side.

Speaker Change #139: Okay. Thanks, guys.

Speaker Change #140: Thank you.

Okay.

Speaker Change #140: Our next question will come from the line of John Pawlowski with Green Street.

John Joseph Pawlowski: Thanks for the time, Paul or the revenue declines for the seasonal and transient business over the balance of the year. That's implied in your guidance solely driven by the rainy April and tough seasonal RV comp in <unk> or are there additional signs of price sensitivity popping up from customers.

Speaker Change #142: Excuse me.

Speaker Change #142: Adjustment is limited to Q2 and is driven by the April activity that Patrick talked about.

Speaker Change #142: Okay.

John Joseph Pawlowski: And then I would love to just hear you guys talk through the shifts in the transaction market. I know the volume is quiet right now, but very quickly, we're looking at pretty deeply negative leverage here, given the secured financing costs you alluded to. So if you assumed interest rates stay in a similar range right now, where would you expect, call it, MH cap rates to settle out for ELS quality products in the coming quarters once we do see more transaction volume come in?

Speaker Change #143: And then I'd love to just hear you guys.

Speaker Change #143: Talk through.

Speaker Change #143: Shifts in the transaction market I know, it's the volumes quiet right now, but very quickly and we're looking at pretty deeply negative leverage here given the secured financing costs you alluded to so if you assumed interest rates stay stay in a similar range right now where would you expect.

Called MH cap rates to settle out for quality product in the coming quarters. Once we do see a more transaction volume come in.

John Joseph Pawlowski: I think it's a little bit difficult to say kind of where the cap rates will end up being in the future, but, you know, over the past 18 to 24 months, there have been very few deals, so it's difficult to say, you know, kind of pinpoint cap rates. I think you really need a more robust market with many data points to be able to quote that. But what we have seen is continued demand, and, you know, it's really still very high for our asset class.

Speaker Change #144: I think it's a it's a little bit difficult to say kind of where that cap rates will end up being in the future, but you know over the past 18 to 24 months there've been very few deal so it's difficult to say.

Kind of pinpoint cap rates I think you really need more robust market with many data points to be able to quote that.

Speaker Change #144: But what we have seen is continued demand.

And it's really still very high for our asset class.

John Joseph Pawlowski: People want to own these properties; people don't want to get, you know, sell the property, so there is a lot of demand for even new people coming into the space; one-off owners are interested in buying. So I think that, you know, we'll continue to see that those levels of demand, certainly where we are in the debt markets is an important discussion, but as I kind of pointed out earlier in this call, there's not a lot of leverage on these assets that we're interested in.

Speaker Change #144: People want to own these properties people don't want to get.

Speaker Change #144: Sell the property. So there is a lot of demand for even new people coming into the space. One off owners are interested in buying so I.

Speaker Change #144: Think that.

Speaker Change #144: We will continue to see that that those levels of demand.

Speaker Change #144: Certainly.

Speaker Change #144: Where we're at in the debt markets are an important discussion, but as I kind of pointed out I think earlier in this call.

Speaker Change #144: Theres not a lot of leverage on these assets that we're interested in so that discussion falls a little flat on the to the owners, who who haven't put there.

John Joseph Pawlowski: So that discussion falls a little flat on the owners who, you know, haven't put a lot of debt on their property, so the movement in the rates isn't as big of a concern for them, but certainly is something that we look at.

Speaker Change #144: A lot of debt on their property so over there the movement in the rates isn't as big of a concern for them.

Speaker Change #144: But certainly it certainly is something that we look at so.

Paul Seavey: So, you know, our acquisition department is very focused, very focused on continuing the conversations that we've had with the owners that we've had for a long time now, and we'll continue to do that, but, you know, we have seen times where there's not been a lot of activity, and then all of a sudden, you tend to see deals popping up, so hopefully that is something that we'll see this year. Okay, thank you for your time.

Speaker Change #144: Our our acquisition Department is very focused very focused on continuing the conversations that we've had with the owners that we've had for a long time now and will continue to do that but.

Speaker Change #144: We haven't seen times, where there's not a lot of activity and then all of a sudden there is you tend to see deals popping up so.

Speaker Change #144: Hopefully that is something that we will see this year.

Speaker Change #145: Okay. Thank you for the time.

Paul Seavey: Thank you, John. Since we have no more questions on the line at this time, I would like to turn it back over to Marguerite Nader for closing comments. Thank you for joining us today. We look forward to updating you on the second quarter call. Take care. This concludes today's conference. Thank you for participating. You may now disconnect.

Speaker Change #146: Thank you John.

Speaker Change #146: Since we have no more questions on the line at this time I would like to turn it back over to Marguerite Nader for closing comments.

Marguerite M. Nader: Thank you for joining us today, we look forward to updating you on our second quarter call take care.

Speaker Change #147: This concludes today's conference call. Thank you for participating you may now disconnect.

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