Q4 2024 Equity LifeStyle Properties Inc Earnings Call

January 28, 2025

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Including ongoing expansion projects.

For RV, the five year revenue gag or in these primary markets was mid 6% Lara.

Largely driven by the same submarkets in Florida and Arizona.

A key driver of the consistent growth in both MH and RV and our primary submarkets are population growth that I referenced earlier.

As long as the expansion opportunities that will support future growth in East, Florida, and Arizona markets.

Over the last five years, we developed nearly 5000, MH and RV sites across the portfolio with over half of those sites in Florida and Arizona.

Stabilized yields range from 7% to 10% and we have a pipeline of projects with an additional 3000 sites in various stages of entitlement and construction.

Two projects that are good examples of our approach to expansions our colony Cove MH with 293 expansion sites in Florida, and Monovisc mixed use MH RV with 513 sites in Arizona.

Both projects are development of parcels that are part of the property rather than acquisition of additional land.

Expansions of properties presented an attractive risk reward because we have an in place operating business with staffing amenities name recognition and an established base of residence and gas.

Good day, everyone and thank you all for joining us to discuss equity lifestyle properties fourth quarter and full year 2024 results.

Among the benefits are expansions or new leads generated through referrals from our core customers.

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

Referrals represent approximately 20% of our new customers.

Lease up rates for the MH and annual RV expansions at these properties have been 30 to 40 sites per year.

Patrick Waite: And Patrick Waite, our executive Vice President and C O O.

During the lease up process RV expansions also offer flexibility to book transient reservations bacon sites to generate revenue as well as introducing new customers to the property.

Patrick Waite: 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 for those who would like to participate in a question and answer session management asked that you limit yourself to two questions. So everyone, who would like to participate has ample opportunity.

It was our best source of conversions to longer term stays.

We continue to see consistent demand for our properties, which supports the in place business as well as our expansions.

We've focused on stable long term occupancy and that resulted in annual revenue streams for MH and RV, representing nearly 75% of total property revenues.

Patrick Waite: This call is being recorded.

Patrick Waite: Certain matters discussed during this conference call may contain forward looking statements in the meanings of the federal securities laws or 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.

Demand as demonstrated by more than 100000, new qualified leads we receive annually from potential customers, who provide their contact information.

Paul: Part of the inquiry for manufactured home Park model, our RV annual site at one of our properties I'll now turn it over to Paul.

Patrick Waite: In addition, during today's call, we will discuss non-GAAP financial measures as defined by SEC regulation G. Reconciliations of these non-GAAP financial measures to the comparable GAAP financial measures are included in our earnings release.

Paul: Thanks, Patrick Good morning, everyone, I will discuss our fourth quarter and full year results.

Paul: Review, our guidance assumptions for 2025, including some key considerations for the first quarter and close with a discussion of our balance sheet.

Patrick Waite: Our supplemental information and our historical SEC filings at this time I would like to turn the call over to Marguerite Nader, our president and CEO.

Quarter normalized <unk> is 76 per share in line with our guidance.

Paul: Growth in normalized <unk> per share was six 9% and five 9% in the fourth quarter and year to date periods, respectively compared to prior year.

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

Marguerite Nader: I am pleased to report the final results for 2024.

Paul: Strong core portfolio performance generated seven 6% NOI growth in the quarter and six 5% year to date.

Marguerite Nader: The strength of E. L F can be seen in all facets of our business.

Marguerite Nader: We continued our record of strong core operations and <unk> growth with full year growth in NOI of six 5% and a five 9% increase in normalized <unk> per share.

Paul: Core community based rental income increased six 1% for the full year 2024, compared to 2023, primarily because of noticed increases to renewing residents and market rent paid by new residents after resident turnover.

Marguerite Nader: Our year end report is a good time to reflect on our business and our industry over the last 10 years, our average core NOI grew five 3% and normalized <unk> grew nearly 8% both outpacing the REIT industry average over that time.

Paul: Rent growth from occupancy was 20 basis points and we increased homeowners 379 sites during the year.

Paul: Full year core RV, and marine and annual base rental income, which represents approximately 70% of total RV and marine of base rental income increased six 5% compared to prior year are.

Marguerite Nader: Our balance sheet is in great shape with an average determined a maturity of nine years 'twenty.

Paul: Our full year core seasonal rent decreased four 7% and transient decreased four 3%.

Marguerite Nader: 20% of our debt is fully amortizing and not subject to refinance risk and our debt maturity schedule through 2027 shows only 9% of our debt coming due compared to the REIT average of 36%.

Paul: The net contribution from our membership business was $59 $9 million in 2024.

Paul: We sold approximately 19000 and 500000 trails camping pass memberships and members purchased approximately 4100 upgrades during 2024.

Marguerite Nader: Last night, we issued initial guidance for 2025 or.

Marguerite Nader: Our guidance is built based on the operating environment, each property, including a robust market survey process and communication with our residents.

Paul: Core utility and other income increased seven 2% for the full year compared to prior year, which includes pass through recovery of real estate tax increases from 2023.

Marguerite Nader: The results showed strength in both top line revenue and NOI.

Marguerite Nader: Importantly, we have continued our focus on translating NOI growth into <unk> growth.

Paul: Full year 2024 property operating expenses increased two 6% compared to the same period in 2023.

Marguerite Nader: For the full year 2025, we anticipate normalized <unk> growth of 5%.

Paul: Our income from property operations generated by our noncore portfolio was $5 $4 million in the quarter and $16 million for the full year of 2024.

Marguerite Nader: This strong growth rate is possible because of the strength of our properties as well as the overall industry landscape.

Marguerite Nader: The MH industry has evolved impressively over the last 20 years. The current homes that we are purchasing for our communities are generally two bedroom two bath homes with contemporary floor plans configurations.

Paul: The press release and supplemental package provide an overview of 2025 first quarter and full year earnings guidance.

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

Marguerite Nader: Holmes, our energy efficient with centerpiece kitchens and bathrooms.

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

The changes to the homes over time have increase our perspective customer base and have strengthened our communities.

Paul: Our guidance for 2025 full year normalized <unk> is $3 six per share at the midpoint of our guidance range of $3 <unk> to.

Marguerite Nader: Just like in any neighborhood in the U S. We operate in an environment, where the retail activity in our communities is important we focus our efforts on maintaining our high quality communities and the residents pride of ownership results in a robust home sale market for our existing customers.

Paul: To $3 11.

Paul: We project core property operating income growth of four 9% at the midpoint of our range of four 4% to five 4%.

Marguerite Nader: 97% of our occupancy is from residents who own their home.

Paul: We project the noncore properties will generate between eight 8% and $12 $8 million of NOI during 2025.

Marguerite Nader: This high level of homeowner occupancy results and the impressive neighborhoods that our residents have helped us create.

Paul: Property management, and G&A expense guidance range is $120 million to $126 million.

Marguerite Nader: This year, we saw 9% of our resident sell their homes in our communities. The primary reasons our residents choose to sell their home to another residents continues to be a life event right.

Paul: In the core portfolio, we project the following full year growth rate ranges three 4% to four 4% for core revenues, 2% to 3% per core expenses and four 4% to five 4% for core NOI.

Marguerite Nader: Within our RV footprint, we have nearly 70% of our revenue derived from annual customers. These customers stay with US and park models resort cottages and arby's similar to our MH customer our RV annual customer develops root and considers our property as their second home.

Paul: Full year guidance assumes core MH rent growth in the range of five 2% to six 2% was 10 basis points coming from occupancy.

Marguerite Nader: Our properties offer the chance to have a second home near major metros at an affordable price.

Paul: Full year guidance for combined RV and marine our rent growth is two 7% to three 7%.

Marguerite Nader: The average price of a park model slogan or communities in 2024 with $80000. We continue to expose new customers to our properties through the transients day, which is an important building block for our longer term revenue streams.

Annual RV and Marina represents approximately 70% of the full year RV and marine are rent and we expect five 2% growth in rental income from annuals at the mid point of our guidance range.

Paul: Our first quarter guidance assumes normalized <unk> per share in the range of 80 to 86.

Marguerite Nader: Next I would like to update you on our 2025 dividend policy.

Marguerite Nader: The board has approved setting the annual dividend rate of $2 six per share an 8% increase.

Paul: And that represents approximately 27% of full year normalized <unk> per share.

Paul: Core property operating income growth is projected to be in the range of three 6% to four 2% for the first quarter first.

Marguerite Nader: The stability and growth of our cash flow, our solid balance sheet and the strong underlying trends in our business are the primary drivers of the decision to increase the dividend.

Paul: First quarter growth in MH rent is five 8% at the midpoint of our guidance range. We project first quarter annual RV and marine our rent growth to be approximately three 8% at the midpoint of our guidance range.

Marguerite Nader: In 2025, we expect to have approximately $100 million of discretionary capital after meeting our obligations for dividend payments recurring capex and principal payments.

Paul: Our guidance assumes first quarter seasonal and transient RV revenues performed in line with our current reservation pacing.

Marguerite Nader: Over the past 10 years, we have increased our dividend by an average of 11% per year compared to the REIT average of four 5% and this year's dividend marks the 20 <unk> consecutive year of annual dividend growth.

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

Paul: Our balance sheet is well positioned to execute on capital allocation opportunities. In addition to modest near term maturities and our weighted average maturity for all debt of $8 six years, our debt to EBITDA is four five times and interest coverage at five two times.

Marguerite Nader: I want to thank our team members for closing out another successful year, we have been able to post REIT, leading NOI growth provide details into the strength, we see in 2025 and announced an increase to our dividend because of the hard work done in the field regional and corporate offices by our 4000 team members.

Paul: We have access to $1 $2 billion of capital from our combined line of credit and ATM programs.

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

Patrick Waite: I will now turn it over to Patrick to provide more details about property operations.

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

Patrick Waite: Thanks Margaret.

Patrick Waite: More than 30 years since our IPO, we've made a deliberate effort to grow our portfolio in areas that provide a quality lifestyle for our customers.

Paul: Current 10 year loans are quoted between 575% and 625%, 50% to 75% loan to value and one four to one six times debt service coverage.

Patrick Waite: And those markets have experienced consistent population growth over the years, we have divested of properties unless promising markets and recycled that capital in a coastal sunbelt locations, where our residents and guests who want to live in vacation.

Paul: We continued to see solid interest from life companies and <unk> to lend for 10 year terms high quality age qualified MH assets continue to command best financing terms.

Patrick Waite: Our three largest states are Florida, California, and Arizona and.

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

Patrick Waite: And with our winter season in full swing I thought it'd be helpful to provide some detail about our operations in these markets.

Paul: Thank you.

Paul: And as a reminder to ask a question you will need to press star one one on your telephone and wait for a name to be announced to withdraw your question. Please press star one again.

Patrick Waite: Our sunbelt locations continue to see favorable population growth trends.

Patrick Waite: Over the next five years, Florida, California, and Arizona are expected expected to experience steady population growth, particularly among our focused demographic of those aged 55 plus.

Paul: Moment for our first question.

Speaker Change: Our first question will come from the line of Eric Wolfe from Citi. Your line is open.

During that timeframe S&P global estimates growth of nine 4% in Florida. Among this demographic for California, and Arizona are estimated at six 4% and 6% respectively.

Hi, Thanks, I was just wondering if you could talk about your buildup to your expense guidance and what the key drivers are its a low number of falling some good expense controls in 2024.

Patrick Waite: Both our MH and RV portfolios in the Sun belt markets have benefited from consistent demand.

Speaker Change: Yeah, Good morning, Eric.

Speaker Change: Can you hear are you still with us.

Eric Wolfe: Yes, I'm here.

Patrick Waite: CAGR for MH and RV revenue in the primary markets within these states it emphasizes the strength of our portfolio.

Speaker Change: Okay wonderful Paul will walk through that sure sure. So we've guided to expense growth to generally track to CPI with anticipated savings in a few line items.

Patrick Waite: Primary markets in Florida, Tampa, St Pete on the Gulf Coast and.

Speaker Change: Our assumption for real estate taxes is in line with our past experience of mid single digit growth.

Patrick Waite: In Fort Lauderdale, West Palm Beach on the East Coast.

Patrick Waite: In California, there in northern California, anchored by San Francisco, and San Jose and Southern California anchored by Los Angeles and San Diego.

Speaker Change: We have assumed savings in certain line items, including administrative expenses and membership commissions.

Eric Wolfe: That brings us to the to the guide for next year Eric.

Patrick Waite: And in Arizona, the primary market as Phoenix Mesa.

Eric Wolfe: Alright, and then it looks like you're guiding to about a $4 million increase in other income and expenses.

Patrick Waite: And these core sunbelt markets. The five year revenue CAGR for MH was nearly 6% supported by 900, new home sales.

Speaker Change: A new line item. So maybe maybe you could maybe confirm that but I was just wondering what's causing that because I think you had a 5 million JV distributions in 2024 that won't repeat this year. So the actual increase might be more like $9 million on a core basis again not sure. If that's right, but let me know if that's right and if so what's causing that.

Patrick Waite: Florida markets Tampa, St Pete and Fort Lauderdale, West Palm Beach, and Arizona markets Phoenix Mesa led the growth with 6%, while northern and Southern California was mid 4% largely as a result of rent control.

Patrick Waite: Note that our California portfolio is more than 98% occupied while Florida, and Arizona present opportunities to increase occupancy above our current occupancy of 95%, including ongoing expansion projects.

Speaker Change: Yes, so the primary driver of the increase year over year. It is about $4 million as you said and the primary driver is our expectation for sales and ancillary activity. We do periodically as I mentioned, when we were talking about the JV distribution that we recognized in the third quarter of 2024.

Patrick Waite: For RV, the five year revenue CAGR in these primary markets was mid 6%.

Patrick Waite: Largely driven by the same sub markets in Florida and Arizona.

Patrick Waite: A key driver of the consistent growth in both MH and RV and our primary submarkets are population growth that I referenced earlier.

Speaker Change: We do periodically have those distributions and we do anticipate a similar distribution in the first quarter of 'twenty five.

Speaker Change: Got it so about $5 million distributions in the first quarter.

Patrick Waite: As long as the expansion opportunities that will support future growth in East, Florida, and Arizona markets.

Speaker Change: Yes.

Speaker Change: Okay, great. Thank you.

Over the last five years, we developed nearly 5000, MH and RV sites across the portfolio with over half of those sites in Florida and Arizona.

Speaker Change: Thank you Eric.

Speaker Change: One moment for our next question.

Speaker Change: Our next question comes from the line of Michael Goldsmith from UBS. Your line is open.

Stabilized yields range from 7% to 10% and we have a pipeline of projects with an additional 3000 sites in various stages of entitlement and construction.

Michael Goldsmith: Good morning, Thanks for taking my question My first question.

Speaker Change: Good morning.

Speaker Change: First question is on transient RV transient seasonal RV.

Patrick Waite: Two projects that are good examples of our approach to expansions our colony Cove MH with 293 expansion sites in Florida, and Monovisc mixed use MH RV was 513 sites in Arizona.

Guidance for the first quarter implies it's down 6% and then for the balance of the year implies about down 2% can you walk through kind of like your visibility to the softness in the first quarter and then also.

Patrick Waite: Both projects are in development of parcels that are part of the property rather than acquisition of additional land.

Speaker Change: What makes you a little bit more confident that trends improved through the balance of the year.

Patrick Waite: Expansions of properties present, an attractive risk reward because we are in an in place operating business with staffing amenities name recognition and an established base of residence and gas.

Michael Goldsmith: Sure So Michael.

Michael Goldsmith: As I mentioned in my remarks, we've used our current reservation pacing to put together our guidance for the first quarter, that's for both seasonal and transient there essentially tracking in line with our budget at this point for the quarter I think Patrick can walk through some color by region.

Patrick Waite: Among the benefits of our expansions or new leads generated through referrals from our core customers referrals represent approximately 20% of our new customers.

Patrick Waite: Lease up rates for the MH and annual RV expansions at these properties have been 30 to 40 sites per year.

Patrick: I'll highlight.

Michael Goldsmith: The seasonal component.

Michael Goldsmith: Just as a reminder, roughly half of the seasonal revenue for the full year. It comes to us in the first quarter.

Patrick Waite: During the lease up process RV expansions also offer flexibility to book transient reservations on vacant sites to generate revenue as well as introducing new customers to the property, which is our best source of conversions to longer term stays.

Michael Goldsmith: And those seasonal customers are really rolling stock customers either drive down from the north.

Michael Goldsmith: To the sunbelt or are they fly down.

Michael Goldsmith: And they will store their RV.

Patrick Waite: We continue to see consistent demand for our properties, which supports the in place business as well as our expansions.

Michael Goldsmith: During the off season, or they'll drive it back up to their own destination up north.

Michael Goldsmith:

Michael Goldsmith: The.

Patrick Waite: We've focused on stable long term occupancy and that resulted in annual revenue streams for MH and RV, representing nearly 75% of total property revenues.

Michael Goldsmith: But the some of the factors leading to.

Michael Goldsmith: The performance for the full Sunbelt season started in really Q4 and in Q4 Q1 kind of book and the Sun belt season, starting late Q1.

Patrick Waite: Demand as demonstrated by more than 100000, new qualified leads we receive annually from potential customers, who provide their contact information as part of their inquiry for manufactured home Park model, our RV annual site at one of our properties.

Michael Goldsmith: As a reminder, the <unk>.

Michael Goldsmith: Packed from the Hurricanes led to a disruption of demand in Florida.

Michael Goldsmith: We also had experienced a lag in our Canadian business.

Paul: I will now turn it over to Paul.

Paul: Thanks, Patrick Good morning, everyone, I will discuss our fourth quarter and full year results.

Michael Goldsmith: It's partially driven by.

Michael Goldsmith: But what we're hearing from our customers some.

Paul: Our guidance assumptions for 2025, including some key considerations for the first quarter and close with a discussion of our balance sheet.

Michael Goldsmith: Some uncertainty around the presidential election, that's now behind us.

Got it thanks for that and then my follow up has to do with kind of the continuation of disruptions from the hurricane in general is there any more.

Paul: Fourth quarter normalized <unk> was 76 per share in line with our guidance.

Paul: Growth in normalized <unk> per share was six 9% and five 9% in the fourth quarter and year to date periods, respectively compared to prior year.

Michael Goldsmith: Is there any sort of continued influence on the financials as a result of that.

Michael Goldsmith: And then particularly reasonable cooler sales seemed like they were down pretty materially on them on a volume basis and also on the revenue per home basis. So maybe if you could could you touch on a little bit on that.

Paul: Strong core portfolio performance generated seven 6% NOI growth in the quarter and six 5% year to date.

Michael Goldsmith: Yeah and it was.

Michael Goldsmith: As you pointed out the new home sales for the quarter.

Michael Goldsmith: We're down a little over 30% year over year that.

Paul: Rent growth from occupancy was 20 basis points and we increased homeowners 379 sites during the year.

That was significantly are the result of disruptions from the hurricane.

Paul: Yes.

Paul: Full year core RV, and marine and annual base rental income, which represents approximately 70% of total RV and Marina base rental income increased six 5% compared to prior year are.

Michael Goldsmith: We also had a relatively mild start to the to the sunbelt season.

Michael Goldsmith: Contributed to the decline.

Michael Goldsmith: And we had some some locations where we sold out of inventories so expansions that were filled up.

Paul: Our full year core seasonal rent decreased four 7% and transient decreased four 3%.

Michael Goldsmith: I consider the demand profile to still be very stable.

Paul: The net contribution from our membership business was $59 $9 million in 2024.

Michael Goldsmith: And I would highlight that.

Michael Goldsmith: Good year pre COVID-19 on new home sales would've been in the neighborhood of five to 600 and.

Paul: We sold approximately 19000 500000 trails camping pass memberships and members purchased approximately 4100 upgrades during 2024.

Michael Goldsmith: And we've talked about it just you know over the last couple of years that there was peak demand through.

Michael Goldsmith: Through Covid and that the normalizing that's having an impact as well, we're just getting into a normal run rate for <unk> for the MH business largely.

Paul: Core utility and other income increased seven 2% for the full year compared to prior year, which includes pass through recovery of real estate tax increases from 2023.

Michael Goldsmith: And so.

Michael Goldsmith: The first part of your question about Milton all of our properties are operational and have been since.

Full year 2024 property operating expenses increased two 6% compared to the same period in 2023.

Michael Goldsmith: Right after the storm effectively.

Paul: Our income from property operations generated by our noncore portfolio was $5 4 million in the quarter and $16 million for the full year 2024.

Speaker Change: Got it so it sounds like the wholesales are.

Speaker Change: The home sales fell out of the fourth quarter may not come back in 2025, just as in Italy.

Paul: The press release and supplemental package provide an overview of 2025 first 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.

Speaker Change: As home sales continued to normalize is that fair.

Speaker Change: Yes, I guess, that's where I bet, but I'd also highlight that some of the some of the disruption from the hurricane can be something that comes back in that.

Speaker Change: In the following weeks. It's just you know people who are shopping for a for a home when a hurricane comes through that can delay their plans and the ultimate decision.

Paul: Our guidance for 2025 full year normalized <unk> is $3 <unk> per share at the midpoint of our guidance range of $3 <unk> to.

Speaker Change: Thank you very much good luck in 2025.

Paul: To $3 11.

Thanks, Michael.

Paul: We project core property operating income growth of four 9% at the midpoint of our range of four 4% to five 4%.

Speaker Change: One woman for next question.

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

Paul: We project the noncore properties will generate between eight 8% and $12 $8 million of NOI during 2025.

Speaker Change: Great.

Speaker Change: Morning.

Speaker Change: Jamie.

Speaker Change: So your current guidance implies four 8% base rental income growth for MH RV Marina, but your total core revenue growth guidance is three 9%. So we're wondering what's driving that delta whether it's rental home income slower demand for thousand trails are utility and other income.

Paul: Property management, and G&A expense guidance range is $120 million to $126 million.

Paul: In the core portfolio, we project the following full year growth rate ranges three 4% to four 4% for core revenues, 2% to 3% for core expenses and four 4% to five 4% for core NOI.

I think it's [noise].

Speaker Change: I would point, primarily to utility and other income in the other income.

Paul: Full year guidance assumes core MH rent growth in the range of five 2% to six 2% was 10 basis points coming from occupancy.

Speaker Change: One of the drivers in there is the timing of recognition of.

Paul: Full year guidance for combined RV and marine our rent growth is two 7% to three 7%.

Speaker Change: Business interruption insurance proceeds from prior storm.

Speaker Change: Okay.

Paul: Annual RV and Marina represents approximately 70% of the full year RV and marine are rent and we expect five 2% growth in rental income from annuals at the midpoint of our guidance range.

Speaker Change: And as a follow up so your thousand trails membership count in 24, a decline year over year. It is now lower than 2020 levels, while you've increased sites from 24800 in 2020 to 26024.

Paul: Our first quarter guidance assumes normalized <unk> per share in the range of 80 to 86.

Speaker Change: How long until we see a re inflection in RV demand either in revenue growth or more within the thousand trails portfolio.

Paul: And that represents approximately 27% of full year normalized <unk> per share.

Paul: Core property operating income growth is projected to be in the range of three 6% to four 2% for the first quarter first.

Speaker Change: Yes, I think Jamie that the absolute number of members has changed over the years and that if you look at the beginning of our ownership of thousand trails.

Paul: First quarter growth in MH rent is five 8% at the midpoint of our guidance range.

Speaker Change: We saw decline in membership followed by growth than we saw a spike during COVID-19 and now we're seeing kind of attrition with those numbers, but I think it's important to point out that over the last five years. The dues membership subscription revenue has increased an average of about over 5% and our focus is on growing that recur.

Jack: Jack first quarter annual RV and marine our rent growth to be approximately three 8% at the midpoint of our guidance range.

Jack: Our guidance assumes first quarter seasonal and transient RV revenues performed in line with our current reservation pacing.

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

Speaker Change: Staple rabbit.

Jack: Our balance sheet is well positioned to execute on capital allocation opportunities. In addition to modest near term maturities and a weighted average maturity for all debt of $8 six years, our debt to EBITDA is four five times and interest coverage at five two times, we have access to $1 $2 billion of capital from our combined line of credit and ATM programs.

Speaker Change: And so we'll we'll continue to do that and focused on our focus on those line items within the thousand trails portfolio.

Speaker Change: So I guess, if you don't mind me following up I mean, if you just think about the next few years I mean do you think the market is looking at this wrong or maybe is there a better way we should all be thinking about this because theres so much focus on.

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

Speaker Change: Declining RV revenue and memory are and just usage levels I.

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

Speaker Change: I guess I would think of it like this I think if you look at the growth we've seen in our initial membership offering them can't pass it has really been impressive and our subscription offering in 2013, we were selling 4600 passes and last year. We sold almost 20000, so I really I think that shows the demand for the product in.

Jack: Current 10 year loans are quoted between 575% and 625%, 50% to 75% loan to value and one four to one six times debt service coverage, we continue to see solid interest from life companies and Gse's to lend for 10 year terms high quality age qualified MH assets continue to command best financing.

Speaker Change: It allows people to belong to a system, where they can camp in many different locations and I think the demand is very strong and will continue.

Jack: Terms now we would like to open it up for questions.

Speaker Change: Okay. Thank you.

Dan: Thank you Dan.

Jack: Thank you.

Speaker Change: One moment for our next question.

Jack: And as a reminder to ask a question you will need to press star one one on your telephone and wait for name to be announced to withdraw. Your question. Please press star one again.

Speaker Change: Our next question will come from line of Steve Sochua from Evercore ISI. Your line is open.

Steve Sochua: Yeah. Thanks, Good morning, just to kind of zero in on the RV and marine of base rental income.

Jack: For the first question.

Speaker Change: Our first question will come from the line of Eric Wolfe from Citi. Your line is open.

Steve Sochua: You had said on the last call you reiterated here that the annual increases were about five 5% to 95% of those customers.

Speaker Change: Hey, Thanks, I was just wondering if you could talk about your buildup to your expense guidance and what the key drivers are its a low number falling some good expense controls in 2024.

Speaker Change: But the midpoint of that annual numbers like five two so it's a little bit below the five and a half which would sort of imply maybe slower growth on the Marina business. So could you maybe just talk about pricing on the marinas in what you're saying kind of up for 25.

Speaker Change: Sure Good morning, Eric.

Speaker Change: Can you hear are you still with us.

Speaker Change: Yes, I'm here, Okay. Okay wonderful Paul will walk through that sure sure. So we guided to expense growth that generally tracks to CPI with anticipated savings in a few line items, our assumption for real estate taxes in line with our past experience of mid single digit growth.

Speaker Change: Yeah, I mean, the the difference between a five and a half on the guidance and the 5.2 for revenue.

Speaker Change: Is it lower starting occupancy point for 2025.

Speaker Change: And that's driven largely by higher attrition in RV annual gas for 2020 for Tim.

Speaker Change: We have assumed savings in certain line items, including administrative expenses and membership commissions.

Speaker Change: Typical nutrition for our customers.

Speaker Change: That brings us to the to the guide for next year Eric.

Speaker Change: In the RV space is around 5%.

Speaker Change: Got it and then it looks like you're guiding to about a $4 million increase in other income and expenses.

Speaker Change: I'll just reference that trend through Covid.

Speaker Change: That number was lower through Covid as people were not moving around as much had more time for <unk>.

Speaker Change: A new line item. So maybe maybe you could maybe confirm that but I was just wondering what's causing that I think you had a $5 million JV distributions in 2024 that won't repeat this year. So the actual increase might be more like $9 million on a core basis again not sure. If that's right, but let me know if that's right and if so what's causing that.

Speaker Change: Leisure activities and spending some time with with family and friends and our schedules as.

Speaker Change: Normalized that attrition has accelerated its accelerated above the kind of the historical norm because of the kind of the pent up.

Speaker Change: So the primary driver of the increase year over year. It is about $4 million as you said and the primary driver is our expectation for sales and ancillary Act.

Speaker Change: <unk> has some of the some of our RV annual customers. So as we've worked our way through that attrition.

Speaker Change: We ended up having a lower starting point.

Speaker Change: For 2025.

Speaker Change: Activity, we do periodically as I mentioned, when we were talking about the JV distribution that we recognized in the third quarter of 2024, we.

Speaker Change: Patrick can you just comment on where Marina pricing is is it kind of in line with that five and a half Oh, yeah. Yeah, Yeah sure Yeah, Yeah. It's online it's in line with that it's in line with the the the overall guide.

Speaker Change: We do periodically have those distributions and we do anticipate a similar distribution in the first quarter of 'twenty five.

Speaker Change: Got it so about $5 million distributions in the first quarter.

Speaker Change: Okay. Thanks, and then maybe.

Speaker Change: Paul just to go back to Eric's question. Initially on the expense guidance, you know theres been a lot of focus on insurance and I also noticed that your R&M and your payroll were basically flat to down in 'twenty. Four so could you maybe just speak to where you are on the insurance renewal and what steps did you take.

Speaker Change: Yes.

Speaker Change: Okay, great. Thank you.

Speaker Change: Thank you Eric.

Speaker Change: One moment for our next question.

Speaker Change: Our next question comes from the line of Michael Goldsmith from UBS. Your line is open.

Speaker Change: Good morning, Thanks for taking my question My first question.

Speaker Change: To mitigate R&M and payroll and if you think about labor and twenty-five how would you sort of thinking about labor.

Speaker Change: Good morning.

Speaker Change: First question is on transient RV transient seasonal RV.

Speaker Change: Yes.

Our guidance for the first quarter implies it's down 6% and then for the balance of the year implies about down 2% can you walk through kind of like your visibility to the softness in the first quarter and then also what makes you a little bit more confident that trends improved through the balance of the year.

Speaker Change: Sure I mean, a couple of things as it relates to.

Speaker Change: Insurance, we do have an expense growth assumption, we are in the process of our renewals. So we're not disclosing that.

Speaker Change: Don't make that guidance expectation public because we are inactive negotiations with respect to alright.

Speaker Change: Alright M. The year over year comparison that we had in 2004 I've talked about this a few times during 2024 that we had.

Speaker Change: Thanks.

Speaker Change: Sure So Michael.

Speaker Change: As I mentioned in my remarks, we've used our current reservation pacing to put together our guidance for the first quarter, that's for both seasonal and transient.

Speaker Change: <unk> comp to a difficult start to 2023.

Patrick Waite: Essentially tracking in line with our budget at this point for the quarter I think Patrick can walk through some color by region.

Speaker Change: And so we see normalizing, which is why I made reference to kind of CPI type growth broadly across our expenses.

Speaker Change: I'll highlight.

Patrick Waite: The seasonal component.

Patrick Waite: Just as a reminder, roughly half of the seasonal revenue for the full year. It comes to us in the first quarter.

Speaker Change: Then I'd say the same applies to payroll as well.

Patrick Waite: And those seasonal customers are really rolling stock customers, they either drive down from the north.

Speaker Change: Hey, Thank you.

Steve Sochua: Thanks, Steve.

Steve Sochua: One moment for our next question.

Patrick Waite: To the sunbelt or are they fly down.

Speaker Change: Our next question will come from the line of John Kim from BMO capital markets. Your line is open.

Patrick Waite: And they will store their RV.

Patrick Waite: During the off season, or they'll drive it back up to their own destination up north.

Speaker Change: Thank you Aldo.

All the talk about deep sea kind of put the California wildfires.

Patrick Waite: Ed.

Patrick Waite: The.

Patrick Waite: The some of the factors leading to.

Speaker Change: In back of our minds, but I just wanted to make sure that there were no. There was no impact on the wildfires to your operations.

Patrick Waite: The performance through the full Sun belt season.

Patrick Waite: <unk> really Q4 and Q4 Q1.

Speaker Change: And as a follow up to steves questions on insurance I mean, do you think the wildfires and hurricane Milton will have an impact on your insurance when all of this year.

Patrick Waite: Book and the Sun belt season, starting late Q1.

Patrick Waite: As a reminder, the impact from the Hurricanes led to a disruption.

Speaker Change: Sure Good morning, John.

Patrick Waite: Demand in Florida.

Speaker Change: We have 11 properties in southern California.

Patrick Waite: And we also have experienced a lag in our Canadian business.

Speaker Change: And but our properties were not impacted by any of the fires thankfully.

Patrick Waite: That's partially driven by.

Patrick Waite: But what we're hearing from our customers.

Speaker Change: Where applicable we worked with local fire department and in many instances our properties kind of provided staging areas for some of the fire trucks and emergency workers.

Patrick Waite: Uncertainty around the presidential election that is now behind us.

Patrick Waite: Got it thanks for that and then my follow up has to do is kind of the continuation of disruption from the hurricane in general is there any more.

Speaker Change: And we're ready to accommodate any displaced residents and temporary workers.

Speaker Change: Rebuild the cities and so that's as it relates to California as it relates to the insurance renewal.

Patrick Waite: Is there any sort of continued into Williams on the financials as a result of that.

Patrick Waite: In particular sales seemed like they were down pretty materially.

Speaker Change: As Paul mentioned, it's too early to tell what the impact will be to rates for next year.

Patrick Waite: Volume basis, and we're also on a revenue per home basis. So maybe if you could could you touch on a little bit on that site.

Speaker Change: You know our claims are important and it's important what's happening in the in the global and the global level of claims and I think it's too early to tell what you know what.

Patrick Waite: Yeah and that was.

Speaker Change: Happens outside of inside of the California clean.

Patrick Waite: As you pointed out the new home sales for the quarter.

Patrick Waite: We're down a little over 30% year over year.

Speaker Change: So just.

Speaker Change:

Speaker Change: Clarify your two 5% expense guidance includes an assumption on the insurance renewal increase or ignores the impact of insurance.

Patrick Waite: That was significantly the result of disruptions from the hurricane.

Patrick Waite: We also had a relatively mild start to the to the sunbelt season.

Speaker Change: No. It includes an assumption, but as Paul said, we're in the middle of negotiations and so we generally don't talk about you know what our assumptions are due to those negotiations and we will let everybody.

Patrick Waite: That contributed to the decline.

Patrick Waite: And we.

Patrick Waite: We had some some locations where we sold out of inventories so expansions that were filled up.

Speaker Change: Everybody know I'm on the next quarter call.

Patrick Waite: I consider the demand profile to still be very stable.

Speaker Change: Okay, and then Patrick talked a lot about expansion science and the high returns and what you delivered last year was 736, which was in line with your guidance.

Patrick Waite: And I would highlight that Goodyear pre COVID-19 on new home sales would've been in the neighborhood of five to 600.

Speaker Change: But below your five year average of over 1000.

Patrick Waite: And we've talked about it over the last couple of years that there was peak demand through Covid and then normalizing that's <unk>.

Speaker Change: Do you expect to get back to that thousand expansion site level. This year I know you mentioned last year it was somewhat timing related.

Patrick Waite: Having an impact as well.

Patrick Waite: We're just getting into a normal run rate for <unk> for the MH business largely.

Speaker Change: Yes. It is.

Speaker Change: It is timing related and also related to some longer timelines on getting projects.

Patrick Waite: And so there's nothing in there.

Patrick Waite: The first part of your question about Milton all of our properties are operational.

Speaker Change: From entitlements through completion.

Patrick Waite: Ben.

Ben: Right after the storm effectively.

Speaker Change: For 2025, I'd expect the number to be somewhere in the neighborhood of four to 600.

Patrick Waite: Got it.

Patrick Waite: It sounds like the wholesales are.

Speaker Change: We continue to develop that timeline on it or that pipeline and I referenced it in my opening comments.

Patrick Waite: The home sales fell out of the fourth quarter may not come back in 2025, just as kind of like continue as home sales continued to normalize is that fair.

I would highlight that Ed.

Speaker Change: A significant portion of our expansion projects.

Roughly half are in Florida.

Patrick Waite: Yes, I guess, that's very bad, but I'd also highlight that some of the some of the disruption from the hurricane can be something that comes back in.

Speaker Change: If you think about the growth going on in Florida and then.

Speaker Change: Periodic impact from Hurricanes.

Speaker Change: <unk> that the level of entitlements permitting and activity that works its way through these county and city offices ends up creating some blockages.

Patrick Waite: The following weeks, it's just people who are shopping for a for a home when a hurricane comes through that can delay their plans and the ultimate decision.

Patrick Waite: Thank you very much and good luck in 2025.

Speaker Change: Where it just it slows down the.

Michael Goldsmith: Thanks, Michael.

Speaker Change: One moment for our next question.

Speaker Change: The timing on our projects from start to finish.

Speaker Change: And what is that typical breakdown of expansions between MH and RV.

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

Speaker Change:

Speaker Change: Great.

Speaker Change: In.

Speaker Change: 2024, it was roughly.

Speaker Change: Good morning, Jamie.

Speaker Change: So your current guidance implies four 8% base rental income growth for MH, RV and Marina, but your total core revenue growth guidance is three 9%. So we're wondering what's driving that delta whether it's rental home income slower demand for thousand trails are utility and other income.

Speaker Change: 60 42.

Speaker Change: To the outside of RV.

Speaker Change: And I think that's going to come more into line leaning towards MH in coming years, we have a couple of larger projects that are that are going to be working their way through the pipeline and John as a reminder, about 85% of our excess land is on the RV footprint.

I think it's.

Speaker Change: I would point, primarily to utility and other income in the other income.

Speaker Change: Just to give you a sense of that.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: Thank you John.

Speaker Change: One of the drivers in there is the timing of recognition of <unk>.

One moment for our next question.

Speaker Change: Our next question will come from the line of Anthony Hau from tourists Securities. Your line is open.

Business interruption insurance proceeds from prior storms.

Speaker Change: Okay.

Anthony Hau: Hey, guys. Thanks for taking my question good morning, Nancy.

Speaker Change: And as a follow up so your thousand trails membership count.

Speaker Change: Denis.

Nancy: Good morning.

Speaker Change: 24, a decline year over year. It is now lower than 2020 levels, while you've increased sites from 24000 802020 to 26024, how long until we see a re inflection in RV demand either in revenue growth or more within the thousand trails portfolio.

Speaker Change: Provide a little bit more color on why the guidance assumed lower non core NOI than last year.

Speaker Change: Sure Anthony so.

Speaker Change: Our guidance is $10 $8 million at the midpoint for 2025 that compares to $16 million in 24 that just over $5 million difference. There's a slight change from property property is moving from non core to core.

Speaker Change: Yes, I think Jamie the absolute number of members has changed over the years and that if you look at the beginning of our ownership 1000 trails.

Speaker Change: We saw a decline in membership followed by growth than we saw a spike during COVID-19 and now we're seeing some attrition with those numbers, but I think it's important to point out.

Speaker Change: It really the remainder is the impact of timing associated with insurance recovery that we received in 2024 and assumptions for 'twenty five NOI for certain of the noncore properties returning to stabilize operations.

Speaker Change: That over the last five years the dues membership subscription revenue has increased an average of about over 5% and our focus is on growing that recurring stable revenue.

Speaker Change: Okay. So what does that assume that all of the.

Speaker Change: Properties that were affected by hurricane in to be fully operational and stabilized by now this year.

Speaker Change: So we'll continue to do that and focus on our focus on those line items within the thousand trails portfolio.

Speaker Change: Hum.

Speaker Change: Now that's a bold statement I guess fully stabilized but.

Speaker Change: We're working to return them to stabilize operations they do remain in noncore.

Speaker Change: Because they haven't yet reached that level.

Speaker Change: Gotcha, and then what does the guidance assume for business interruption income in 'twenty 25, I think you guys collect around $10 million in 'twenty 'twenty four.

Speaker Change: Declining RV revenue and memory or just usage levels.

Speaker Change: I guess I would think of it like this I think if you look at the growth we've seen in our initial membership operative can't pass it has really been impressive and our subscription offering in 2013, we were selling 4600 passes and last year. We sold almost 20000, so I really I think that shows the demand for the product.

Speaker Change: We did collect around $10 million in 2024.

Speaker Change: That number is essentially embedded in our assumption, but it is impacted by the timing of the return to normalized operations. So I don't really have a number to disclose because it toggles as we as we improve operations and generate NOI than we received less business interruption.

Speaker Change: It allows people to belong to a system, where they can camp in many different locations and I think the demand is very strong and will continue.

Speaker Change: Okay. Thank you.

Anthony Hau: Thanks Anthony.

Speaker Change: Thank you Dan.

Speaker Change: One moment for our next question.

Speaker Change: The next question will come from the line of Steve Sochua from Evercore ISI. Your line is open.

Speaker Change: Our next question will come from the line of Wesley Golladay from Baird. Your line is open.

Wesley Golladay: Hey, good morning, everyone I just want to go to the annual site. It looks like you have about 34000, just over 34000 annual sites and you did mention some attrition just curious if theres any seasonality to the attrition and does your guidance embed that number I guess, increasing throughout the year a decrease in throughout the year.

Steve Sochua: Yes. Thanks, good morning, just to kind of zero in on the RV and marine the base rental income I think you had said on the last call you reiterated here that the annual increases were about five 5% to 95% of those customers.

Steve Sochua: But the midpoint of that annual numbers like five two so it's a little bit below the five and a half which would sort of imply maybe slower growth on the Marina business. So could you maybe just talk about pricing on the marine isn't what you are saying kind of up for 25.

Speaker Change: Yeah.

Speaker Change: I'll go back to the debt.

Speaker Change: Earlier question and answer which is largely driven by attrition some.

Speaker Change: Some of the contributing factors Hurricanes Helene and Milton.

Steve Sochua: Yeah, I mean the.

Speaker Change: Negatively impacted the business in Florida, our year over year, and we had a transition in Florida related to transitional work force housing from Hurricane in.

Steve Sochua: The difference between a five and a half on the guidance and the five two for revenue.

Steve Sochua: Is it lower starting occupancy point for 2025.

Speaker Change: The attrition that I mentioned with respect to turnover.

Steve Sochua: And that's driven largely by higher attrition in RV annual gas for 2020 for typical attrition.

Speaker Change: It was particularly president in north and North East that build through Covid and then a normalization.

Steve Sochua: Attrition for our customers.

Speaker Change: And as that slows.

Steve Sochua: In the RV space is around 5%.

Speaker Change: Back to normal levels I would expect.

Steve Sochua: I'll just reference that trend through Covid.

Speaker Change: We will continue to build the business as we had pre COVID-19, but that's really the driver of those.

Steve Sochua: That number was lower through Covid as people were not moving around as much had more time for <unk>.

Speaker Change: That reduction is.

Leisure activities and spending some time with <unk>.

Speaker Change: Ben.

Speaker Change: Turnover in the annual base.

Steve Sochua: With family and friends and his schedule says nor.

Speaker Change: Okay, and then maybe going back to the thousand trails membership I mean could you maybe segment the different tiers of members that maybe I'm looking at it.

Steve Sochua: Normalized that attrition has accelerated its accelerated above the kind of the historical norm because of the kind of the pent up.

What I'm, saying is maybe it sounds like you have you're maybe higher opinion here of the people that are more of the power users that business seems to be stable may be growing and you may be turning some of the lower tier business, where even the free business is that a good way to look at it.

Steve Sochua: Duration of some of the some of our RV annual customers. So as we've worked our way through that attrition.

Steve Sochua: We ended up having a lower starting point.

Steve Sochua: For 2025.

Speaker Change: Yes, I think you can see on the in the supplemental that shows the reduction in the promotional membership originations. So you see some of that happening inside of inside of the portfolio and that comes from just a yeah those.

Steve Sochua: Patrick can you just comment on where Marina pricing is is it kind of in line with that five and a half Oh, yeah. Yeah, Yeah sure Yeah, Yeah. It's online it's in line with that it is in line with the overall guide.

Steve Sochua: Okay. Thanks, and then maybe.

Speaker Change: Those are the RV dealer leaves that we talk about and we've seen a reduction in those and a reduction in transient activity at the property, which are which is how we sell the passes at the property level and if there are if the transient activity isn't if there isn't a lot of transient activity that <unk>.

Speaker Change: Impacts are those lower line item initial memberships.

Speaker Change: Gate, R&M and payroll and if you think about labor and 25, how do you sort of thinking about labor.

Speaker Change: Okay. Thank you.

Speaker Change: Yes.

Speaker Change: Thanks, Matt.

Speaker Change: Sure I mean, a couple of things as it relates to.

Speaker Change: One moment for our next question.

Speaker Change: Insurance, we do have an expense growth assumption, we are in the process of our renewals. So we're not disclosing that.

Speaker Change: Our next question comes from the line.

Speaker Change: Tayo Okusanya from Deutsche Bank. Your line is open.

Speaker Change: Don't make that guidance expectation public because we are in active negotiations with respect to alright.

Speaker Change: Hi, Yes, good morning, everyone just touch base.

Speaker Change: Good morning, I wanted to touch base on the memberships.

Speaker Change: The year over year comparison that we had in 2004 I've talked about this a few times during 2024 that we had.

Speaker Change: Again, and just the sequential decrease in total membership to Q.

Speaker Change: Again all.

Speaker Change: Obviously, the seasonality associated with that business will be the spill.

Speaker Change: Favorable comp to a difficult start to 2023.

Speaker Change: It looks like the decrease was probably.

Speaker Change: And so we see normalizing, which is why I made reference to kind of CPI type growth broadly across our expenses.

Speaker Change: Little higher than we expected probably just purely.

Speaker Change: Seasonality just kind of curious what else may have been going on during the quarter.

Speaker Change: Then.

Speaker Change: The same applies to payroll as well.

I mean to me.

Speaker Change: Implications for how total memberships may grow in 2025.

Speaker Change: Hey, Thank you.

Speaker Change: Yeah.

Steve Sochua: Thanks, Steve.

Speaker Change: Actually it's it really is kind of the change in the member count is really the two things I think I touched on a little bit just that reduced RV dealer member and then a a.

Steve Sochua: One moment for our next question.

Speaker Change: Our next question comes from the line of John Kim from BMO Capital markets. Your line is open.

Speaker Change: Thank you.

Speaker Change: A reduction in transient activity rich.

Speaker Change: All the talk about deep sea kind of put the California wildfires.

Speaker Change: The overall number of of can't pass sales. So those are the two drivers that we that we saw.

Speaker Change: In back of our minds, but I just wanted to make sure that there were there was no.

Speaker Change: <unk> on the wildfires to your operations and as a follow up to steves questions on insurance I mean, do you think the wildfires and Hurricane Melton, who will have an impact on your insurance when all this year.

Speaker Change: And so as transient traffic picks up and as as RV dealer.

Speaker Change: Membership pick up.

Speaker Change: And then the conversion of those RV dealer members to paid members.

Speaker Change: Sure Good morning, John.

Speaker Change: You'd see an increase in our in the member base.

Speaker Change: We have 11 properties in southern California.

Speaker Change: Yes.

Speaker Change: But our properties were not impacted by any of the fires thankfully.

Speaker Change: Okay. That's helpful and then.

Speaker Change: Just in regards to base rental income growth.

Where applicable we worked with local fire department and in many instances our properties kind of provided staging areas for some of the fire trucks and emergency workers.

Both for the MH business until the RV Marina business, if we can find that.

Speaker Change: More of the annual business. It does sound like expectations. When you fly was sort of a.

Speaker Change: And we're ready to accommodate any displaced residents and temporary workers.

Speaker Change: A bit of a slowdown.

Speaker Change: In that number.

Speaker Change: Talk a little bit about is that just kind of are there year over year comp is there anything kind of change in the demand is there.

Speaker Change: Rebuild the cities.

Speaker Change: So that's as it relates to California as it relates to the insurance renewal.

Speaker Change: You know, it's harder to kind of push rents just trying to understand a little bit of kind of pick up on a annual business itself isn't that needs to be.

Speaker Change: As Paul mentioned, it's too early to tell what the impact will be to rates for next year.

Speaker Change: Our claims are important and it's important what's happening in the in the global global level of claims and I think it's too early to tell what what happens outside of inside of the California clean.

Speaker Change: Sure and some a little bit of a slowdown in regards to baseline coming from group good 25 versus 2004.

Speaker Change: Yes, I mean, I guess I'll start with.

Speaker Change: Okay.

Speaker Change: So.

Speaker Change: And I just highlight that the.

Speaker Change: Just to clarify.

Speaker Change: Clarify your two 5% expense guidance.

Speaker Change: The rate growth that we're able to achieve but it's really driven and supported by.

Speaker Change: <unk> assumption on the insurance renewal increase or ignores the impact of insurance.

Speaker Change: The strength of our locations and just the fundamentals of that business.

Speaker Change: It includes an assumption, but as Paul said, we're in the middle of negotiations and so we generally don't talk about you know what our assumptions are due to those negotiations and we will let everybody know how the next quarter call.

Speaker Change: As I highlighted in my opening comments.

Speaker Change: We have some really strong demographic tailwind.

Speaker Change: That are going to work their way through.

Speaker Change: Not only the baby boomers, but success at aging cohorts in the U S. So that's it.

Speaker Change: Okay, and then Patrick talked a lot about expansion science and the high returns and would you delivered last year was 736, which was in line with your guidance, but below your five year average of over 1000 do you expect to get back to that thousand expansion site level. This year I know you mentioned last year it was somewhat timing related.

Speaker Change: We're in a very good spot with respect to.

Speaker Change: Long term demand.

Speaker Change: And.

Speaker Change: I'd highlight that the rate increases that we're achieving now.

Speaker Change: <unk> reflected a favorable spread too.

Speaker Change: CPI and that's.

Speaker Change: That's been a.

Speaker Change: Yes. It is.

Speaker Change: Strong relationship for us over our history.

Speaker Change: It is timing related and also related to some longer timelines.

Speaker Change: On getting projects from.

Speaker Change: But specifically as it pertains to the slowdown in 25 basis points for Beacon.

Speaker Change: From entitlements through completion.

Speaker Change: For 2025, I'd expect the number to be somewhere in the neighborhood of 4% to 600.

Speaker Change: We can.

Speaker Change: 0.2, the occupancy gains and twenty-five versus 24.

Speaker Change: We continue to develop that timeline for that pipeline and I referenced it in my opening comments.

Speaker Change: Just kind of curious about specifically why it kind of like 200 basis points laid out.

Speaker Change: I would highlight that Ed.

Speaker Change: A significant portion of our expansion projects.

Speaker Change: I think I think Tayo. If you if you keep in mind the composition of the MH rents I think that all the demand points that Patrick made or are absolutely true and we do continue to see.

Speaker Change: Roughly half are in Florida.

Speaker Change: If you think about the growth going on in Florida and then.

Speaker Change: Periodic impact from.

Speaker Change: Hurricanes that the level of entitlements permitting and activity that works its way through these.

Speaker Change: Increases on resident turnover to <unk>.

Speaker Change: Market that are 13%, but when you look at the composition of the leases. We do have a portion that are tied to CPI and CPI is lower.

Speaker Change: <unk> city offices.

Speaker Change: Ends up creating some blockages.

Speaker Change: 24, which drives the 25 increase than it was in <unk>.

Speaker Change: Where it just it slows down.

Speaker Change: Timing on our projects from start to finish.

Speaker Change: 'twenty, three which drove the 24 increase.

Speaker Change: And what is that typical breakdown of expansions between MH and RV.

Speaker Change: Perfect.

Speaker Change: Do you.

Thank you Dan.

Speaker Change: Thank you one moment for our next question.

Speaker Change: In.

Speaker Change: 2024, it was roughly.

Speaker Change: The next question will come from the line of David Siegel from Green Street Advisors. Your line is open.

Speaker Change: I think 60 42.

Speaker Change: To the outside of RV.

David Siegel: Alright. Thank you I just wanted to clarify a bit on the annual RFP churn or are you assuming that the churn levels for 25, our batch that historical 5% level.

Speaker Change: I think thats going to come more into line leaning towards MH in coming years, we have a couple of larger projects that are that are going to be working their way through the pipeline and John as a reminder, about 85% of our excess land is on the RV footprint.

Speaker Change: More acceptable yes.

Speaker Change: Just to give you a sense of that.

David Siegel: Sure.

David Siegel: Projecting that we're going to run the business in it.

Okay. Thank.

Speaker Change: Thank you.

David Siegel: In a way that's consistent with our history than me.

Speaker Change: Thank you John.

Speaker Change: One moment for our next question.

David Siegel: As I mentioned there were there were a couple of different impacts.

Speaker Change: Our next question will come from the line of Anthony Hau from <unk> Securities. Your line is open.

David Siegel: Certainly then.

Our attrition is part of it and that's normalizing is as our other components of our business, but we also had some disruptions.

Speaker Change: Hey, guys. Thanks for taking my question.

Speaker Change: Any.

Speaker Change: Good morning.

Speaker Change: Provide a little bit more color on why the guidance assumed lower non core NOI than last year.

David Siegel: Associated with Hurricanes, just in the ordinary course as well as our transition over the last couple of years on transitional workforce housing in Florida.

Speaker Change: Sure Anthony so.

Speaker Change: Our guidance is $10 $8 million at the midpoint for 2025 that compares to $16 million and 24 that just over $5 million difference. There's a slight change from property property is moving from non core to core.

Great.

David Siegel: With regards to the transient.

David Siegel: Seasonal expectations over the balance of the year the guidance seems to imply.

David Siegel: An improvement from four <unk> and beyond versus <unk> and I'm just curious.

David Siegel: If you can help us understand the breakout of how much of that is attributable to easier comps period versus improvements in underlying demand.

David Siegel: Yeah, I think David it goes to our process essentially and so when we when we put together our budget and then we update our forecast on a quarterly basis for seasonal and transient.

Speaker Change: Okay. So it does assume that all of the.

Speaker Change: Properties that were affected by hurricane in to be fully operational and stabilized by now this.

Speaker Change: This year.

David Siegel: <unk>.

David Siegel: Do you think about first of all the amount that we are in the first quarter, we earn about 50% of our anticipated full year seasonal and almost 20% of our full year transient.

Speaker Change: That's a bold statement I guess fully stabilized but.

Speaker Change: We're working to return them to stabilize operations they do remain in noncore.

David Siegel: And then it starts to shift and we earn more transient and seasonal.

Speaker Change: Because they haven't yet reached that level.

Speaker Change: Gotcha, and then what does the guidance assume for business interruption income in 'twenty 25, I think you guys collect at around $10 million in 'twenty 'twenty four.

David Siegel: Such that by the by the end of the third quarter, where we're at.

David Siegel: 85% of our transient rent earned but what we're talking about when we talk about that business is a business that has a short booking window and so we don't have a significant amount of visibility. So the presentation of information as we head into each quarter is based on the reservation pacing that we see for that.

Speaker Change: We did collect around $10 million in 2024.

Speaker Change: That number is essentially embedded in our <unk>.

Speaker Change: Sumption, but is impacted by the timing of the return to normalized operations. So I don't really have a number to disclose because it toggles as we've as we improve operations and generate NOI than we received less business interruption.

David Siegel: That period, and then beyond that we're using.

David Siegel: Flat.

David Siegel: Flat to up slightly assumption for the revenues because we just don't have better visibility into the variables such as weather that drive those components of the business.

Speaker Change: Okay. Thank you.

Anthony Hau: Thank you Anthony.

Speaker Change: One moment for our next question.

David Siegel: Great. Thank you.

Speaker Change: Our next question will come from the line of Wesley Golladay from Baird. Your line is open.

David Siegel: Thanks, Thank you.

David Siegel: Thank you.

David Siegel: And 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.

Wesley Golladay: Hey, good morning, everyone I just wanted to go to the annual site.

Wesley Golladay: Looks like you have about 34000, just over 34000 annual sites and you did mentioned some attrition just curious if theres any seasonality to the attrition and does your guidance embed that number I guess, increasing throughout the year a decrease in throughout the year.

David Siegel: Thank you very much for your participation in today's call. We look forward to providing update for you next quarter take care.

Wesley Golladay: Yes, I guess I'll go back to the debt.

Wesley Golladay: Earlier question and answer which is largely driven by attrition.

David Siegel: [music].

Wesley Golladay: Some of the contributing factors Hurricanes Helene and Milton.

David Siegel: Yeah.

Wesley Golladay: Negatively impacted the business in Florida, our year over year.

David Siegel: [music].

Wesley Golladay: And we had a transition in Florida related to transitional workforce housing from Hurricane and.

Hum.

David Siegel: [music].

Wesley Golladay: The attrition that I mentioned with respect to turnover.

Wesley Golladay: It was particularly president in north and North East that build through Covid and then a normalization.

Wesley Golladay: And as that slows.

Wesley Golladay: Back to normal levels I would expect.

David Siegel: Yes.

David Siegel: Mhm.

Wesley Golladay: We will continue to build the business as we had pre COVID-19, but that's really the driver of those.

David Siegel: Hum.

David Siegel: [music].

Of that reduction.

Wesley Golladay: Ben turnover in the annual base.

Wesley Golladay: Okay, and then maybe going back to the thousand trails membership.

Wesley Golladay: You maybe segment the different tiers of members that maybe I'm looking at it.

David Siegel: Okay.

Wesley Golladay: We haven't seen it as maybe it sounds like you have you're maybe higher paying tiers. The people that are more of the power users that business seems to be stable may be growing and as you may be churning some of the lower tier business or even the free business is that a good way to look at it.

Wesley Golladay: Yes, I think you can see on the in the supplemental that shows the reduction in the promotional membership originations. So you see some of that happening inside of inside of the portfolio and that comes from just a.

Wesley Golladay: Those are the RV dealer leads that we talk about and we've seen a reduction in those and a reduction in transient activity at the property, which are which is how we sell the passes at the property level and if there are if the transient activity isn't.

Wesley Golladay: If there isn't a lot of transient activity that impacts those lower line item initial memberships.

Wesley Golladay: Okay. Thank you.

Speaker Change: Thanks, Matt.

Wesley Golladay: One moment for our next question.

Wesley Golladay: Our next question comes from the line of.

Speaker Change: Matteo Okusanya from Deutsche Bank. Your line is open.

Speaker Change: Hi, Yes, good morning, everyone just touch base.

Speaker Change: Good morning, I wanted to touch base on the memberships.

Speaker Change: Again, just the sequential decrease in total memberships for Q.

Speaker Change: Again all.

Speaker Change: Well I'll, just do the seasonality associated with that business, but we just felt it.

Speaker Change: It looks like the decrease was probably a.

Speaker Change: A little higher than we expected from just purely.

Speaker Change: Seasonality just kind of curious what else may have been going on during the quarter.

Speaker Change: I mean to me.

Speaker Change: Indications will help total memberships make growth 2025.

David Siegel: [music].

Speaker Change: Yeah.

Speaker Change: Actually it's it really is kind of the change in the member count is really the two things I think I touched on a little bit just that reduced RV dealer member and then.

Speaker Change: A reduction in transient activity reduced the overall number of of can't pass sales. So those are the two drivers.

Speaker Change: We that we saw.

Speaker Change: And so as transient traffic picks up and as and as RV dealer.

Speaker Change: Membership pick up.

Speaker Change: And then the conversion of those RV dealer members to paid members.

Speaker Change: You'd see an increase in our in the member base.

Speaker Change: Yes.

Speaker Change: Okay. That's helpful and then.

Speaker Change: Just in regards to base rental income growth.

Speaker Change: Both for the MH business until the RV Marina business, if we just kind of stick with more of the annual business. It does sound like.

Speaker Change: <unk> was a.

Speaker Change: A bit of a slowdown.

Speaker Change: And that number can you just talk a little bit about is that just kind of harder year over year comps is there anything kind of change in the demand is there.

Speaker Change: Yeah.

Speaker Change: So thats.

Speaker Change: Thats kind of push rents just trying to understand a little bit of kind of what the annual business itself.

Speaker Change: That needs to be sure and some a little bit of a slowdown in regards to baseline coming from group.

Speaker Change: 25 versus 2004.

Speaker Change: Yes, I mean, I guess I will start with <unk>.

Speaker Change: <unk>.

Speaker Change: And I just highlight that the.

Speaker Change: The rate growth that we're able to achieve but it's really driven and supported by.

The strength of our locations and just the fundamentals of that business.

Speaker Change: As I highlighted in my opening comments.

Speaker Change: We have some really strong demographic tailwind.

That are going to work their way through.

Speaker Change: Not only the baby boomers, but successive aging cohorts in the U S. So that said we're in a very good spot with respect to.

Speaker Change: Long term demand.

Speaker Change: And.

Speaker Change: I'd highlight that the rate increases that we're achieving now.

Speaker Change: The favorable spread too.

Speaker Change: CPI and.

Speaker Change: That's been a.

Speaker Change: Strong relationship for us over our history.

Speaker Change: But most of it.

Speaker Change: As it pertains to the slowdown in 25 versus 2004.

Speaker Change: We can.

Speaker Change: Two there is just less occupancy gains in 2005 versus 24.

Speaker Change: Just kind of curious about specifically was kind of like a few hundred basis points laid out.

Patrick Waite: I think I think Tayo. If you if you keep in mind the composition of the MH rents I think that all the demand points that Patrick made or are absolutely true and we do continue to see.

Patrick Waite: Increases on resident turnover to market that are 13%, but when you look at the composition of the leases. We do have a portion that are tied to CPI and CPI is lower in 24, which drives the 25% increase than it was in.

Patrick Waite: 'twenty, three which drove the 24 increase.

Speaker Change: Perfect. Thank you.

Dan: Thank you Dan.

Dan: Thank you one moment for our next question.

Speaker Change: Our next question will come from the line of David Siegel from Green Street Advisors. Your line is open.

David Siegel: Alright. Thank you I just wanted to clarify a bit on the annual RFP churn.

David Siegel: Are you assuming that the churn levels for 25, our batch that historical 5% level.

David Siegel: More acceptable, yes, where we are.

David Siegel: We're projecting that we're going to run the business in and in a way that's consistent with our history that the.

David Siegel: As I mentioned there were there were a couple of different impacts certainly than the attrition is part of it and that's normalizing is as our other components of our business, but we also had some disruptions.

David Siegel: Associated with Hurricanes, just in the ordinary course, as well as our transition over the last couple of years.

David Siegel: Transitional workforce housing in Florida.

David Siegel: Great.

David Siegel: With regards to the transient.

David Siegel: No expectations over the balance of the year the guidance seems to imply.

David Siegel: Improvements from.

David Siegel: For <unk> and beyond versus <unk> and I'm. Just curious if you can help us understand the breakout of how much of that is attributable to easier comps period versus improvements in underlying demand.

Yes, I think David it goes to our process essentially and so when we when we put together our budget and then we update our forecast on a quarterly basis for seasonal and transient.

David Siegel: We think about first of all the amount that we are in the first quarter, we earn about 50% of our anticipated full year seasonal and almost 20% of our full year transient.

David Siegel: [music].

David Siegel: And then it starts to shift and we earn more transient and seasonal.

David Siegel: Such that by the by the end of the third quarter, where we're at.

David Siegel: And then beyond that we're using.

David Siegel: Flat.

David Siegel: That to up slightly assumption for the revenues because we just don't have better visibility into the variables such as weather that drive those components of the business.

Speaker Change: Great. Thank you.

David Siegel: Thank you.

Speaker Change: Thank you.

Speaker Change: And 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 Nader: Thank you very much for your participation in today's call. We look forward to providing an update for you next quarter take care.

Q4 2024 Equity LifeStyle Properties Inc Earnings Call

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