Q1 2025 Equity LifeStyle Properties Inc Earnings Call
Good day everyone, and thank you all for joining us to discuss Equity LifeStyle Properties' first quarter 2025 results Our feature speakers today are Marguerite Nader, our President and CEO Paul Seavey, our Executive Vice President and CFO and Patrick Waite, our Executive Vice President and COO in advance of today's call, Management Release 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 the Question and Answer session, management asks that you limit yourselves to two questions, so everyone who would like to participate has ample opportunity. As a reminder, this call is being recorded.
Certain matters discussed during this conference call may contain forward-looking statements in the meanings of the federal securities laws.
Our forward-looking statements are subject to certain economic risks and uncertainties The company assumes no obligation to update or supplement any statements that become untrue because of those subsequent events
In addition, during today's call, we will discuss non-GAAP financial measures as defined by SEC regulation G.
Reconciliation 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'd like to turn the call to Marguerite Nader, our president and CEO .
Marguerite Nader: Good morning and thank you for joining us today. I am pleased to report the results for the first quarter of 2025. The quality of our cash flow, our in-demand locations, the lack of new supply and the strength of our balance sheet allow us to report impressive results.
Marguerite Nader: We continued our long-term record of strong core operations and FFO growth with growth in NOI of 3.8% and a 6.7% increase in normalized FFO per share in the first quarter.
Marguerite Nader: We are pleased with our outlook for the remainder of 2025. We have maintained our strong full year ethical guidance of $3.06 per share.
Marguerite Nader: Over the last 10 years, our average core NOI grew 5.3%, and normalized FFO grew nearly 8%, both outpacing the reap industry average over that time.
Marguerite Nader: Our balance sheet is in terrific shape with an average terminal maturity of more than eight years. [inaudible]
Marguerite Nader: 19% of our debt is fully amortizing and not subject to refinanced risk, and our debt maturity schedule through 2027 shows only 9% of our debt coming due compared to the rate average of 30%
Marguerite Nader: During uncertain times, it's helpful to appreciate the stability of our business and the reasons it will continue to be stable.
Marguerite Nader: Our MH portfolio comprises approximately 60% of our total revenue and our properties are 94% occupied.
Marguerite Nader: Our property stand out due to their ability to maintain high occupancy levels once achieved.
Marguerite Nader: This is driven by the unique composition of our resident base. Homeowners occupy 97% of our MH portfolio, creating long-term stability and reducing turnover. A high percentage of homeowners play the key role of maintaining consistent cash flow. This is driven by the unique composition of our resident base. The unique composition of our resident base.
Marguerite Nader: Our communities foster a strong sense of connection where residents are focused on building relationships and contributing to an engaged neighborhood environment.
Marguerite Nader: Within our RV footprint, our annual revenue grew 4.1% in the quarter. Our annual customers stay with us in park models, resort cottages, and RVs.
Marguerite Nader: We welcome many multi-generational customers who consider our properties as part of their family history.
Marguerite Nader: Our transient stays serve it as an important entry point for introducing new customers to our properties, laying the foundation for long-term revenue growth.
Marguerite Nader: Turning to demand, our offering to cross our portfolio are unique. We offer great long-term experiences in sought-after locations at a fraction of the cost in those locations.
Marguerite Nader: We are engaging with our customers through traditional email campaigns, social media outreach, digital advertising, and ambassador programs.
Marguerite Nader: For the quarter, our website attracted a combined 1.7 million unique visitors and generated 72,000 online leads reflecting strong engagement.
Marguerite Nader: The drivers of the lead generation are from our RV annual site lease campaign and trip planning lead generation
Marguerite Nader: Our social media strategy seeks to engage both customers and prospects in a wide variety of platform.
Marguerite Nader: We have over 2.2 million fans and followers across the social media networks.
Marguerite Nader: Over the past ten years, we have grown our social media fans and followers by an average of 30% annually.
Marguerite Nader: I want to thank our team members for a great start of the year. They've done an excellent job supporting our snowbird guests and now we're getting ready to welcome our customers for the upcoming spring and summer season.
Speaker Change: Our re-leading performance is made possible because of the efforts of our 4,000 team members across the country. I will now turn it over to Patrick to provide more details about property operations.
Thanks, Marguerite
Patrick Waite: Our business is currently in its spring seasonal shift with snowbirds in our summer locations beginning to head north and our northern locations preparing for the summer rush.
Speaker Change: This shoulder season is an opportunity to look at the elements that shaped our first quarter results, as well as what we see ahead for the summer season.
Patrick Waite: The fundamentals of our business remain strong. New supply of manufactured home communities and RV resorts continues to be limited.
with M.H. entitlements remaining most challenging. [inaudible]
Patrick Waite: Our portfolio of MH and RV properties offer prime locations and meet demand from home buyers and RV vacations [inaudible]
First, I'll focus on our MH business [inaudible]
Patrick Waite: Our MH occupancy is at historically high levels, and on average, GLS homeowners pay $80-$100,000 for a new home, and renters pay $1,500 per month.
Our high homeowner count is Alton's table occupancy.
Patrick Waite: with homeowners and our communities remaining in average of 10 years.
Patrick Waite: for Perspective on the Relative Value of Homes in our MH communities.
I'll highlight three states.
Patrick Waite: Florida, California, and Arizona that comprise the largest share of our image business.
Patrick Waite: In our primary submarkets in Florida, the average single family home price ranges from over 370,000 in Tampa, St. Pete, genuinely 460,000 in the Fort Lauderdale Lex Palm Beach
Patrick Waite: Holmes and Northern California, around San Francisco and CN Jose, average over 1.4 million, and in Southern California, in Los Angeles and San Diego, it's just over 1 million. Well, Holmes and the Phoenix and Mesa Submarket, average more than 425,000.
In each sub-market, our communities offer great value to residents.
Both homeowners and renters
Patrick Waite: Our largest market is Florida, and last quarter we discussed the impact of recent hurricanes on MH occupancy.
Patrick Waite: The results of last season's hurricanes, we lost approximately 170 occupied sites in Q1, in addition to more than 90 occupied sites in Q4.
Patrick Waite: We are ordering a placement omes and we will see the positive impact on the community and cash flow in coming quarters.
Patrick Waite: On the RV side of our business, we continue to see strength from our annual sites.
where we saw 4.1% revenue growth in the quarter. [inaudible]
Patrick Waite: Customers are averaging annual, I'm sorry, leveraging annual sites for their RV or park model as an attractive and affordable path to a vacation home or a lake house.
Patrick Waite: The annual site print on one of our properties is a fraction of the cost of a mortgage on a second home, particularly on a home offering amenities.
Patrick Waite: like Water Access, a swimming pool, and a clubhouse with sports courts, so among others.
Patrick Waite: For many customers, the annual site run ranging from five to six thousand dollars in the north and averaging about eight thousand dollars in the sunbelt is equivalent to the cost of their annual week long vacation considering travel expenses and accommodations.
Patrick Waite: Annual customers typically purchase a pork model for $25-$100,000, which compares favorably to vacation loans that often exceed $500,000 in some markets where our properties are located.
Patrick Waite: These annual sites provide a stable revenue base for our RV portfolio, accounting for more than 75% of our core RV revenue.
Patrick Waite: While transient sites are an important element of our business, including serving a pipeline for anal sites and membership sales, we have less visibility into this revenue line, as the time between booking and travel continues to be short.
Patrick Waite: More than half of our transient reservations are booked within 30 days of arrival.
Patrick Waite: A majority of our full-year transient revenue comes to us in Q2 and Q3, when we see historically high holiday demand.
Patrick Waite: We're looking forward to our annual 100 days of camping promotion, spanning from Memorial Day to Labor Day.
Patrick Waite: This will be our 11th season celebrating the 100 days of camping.
Patrick Waite: We see very high engagement levels with this promotion. We saw more than 38 million impressions for the campaign last summer.
Now I'll turn it over to Paul.
Paul Seavey: Thanks, Patrick, and good morning everyone. I will review our first quarter 2025 results and provide an overview of our second quarter and full year 2025 guidance.
Patrick Waite: First quarter normalized FFO with 83 cents per share in line with our guidance.
Patrick Waite: Core portfolio and a wide growth of 3.8% compared to prior year, with in line with their expectations for the quarter.
Patrick Waite: Core Community Based Rental Income increased 5.5% for the quarter compared to the same quarter in 2024. Rake Growth of 5.7% was in line with our guidance, primarily as a result of noticed increases to renewing residents and market rent paid by new residents after resident turnover.
Patrick Waite: Our high quality resident base consists of more than 97% homeowners with very low levels of bad debts written off, currently below 40 basis points on average.
Patrick Waite: First quarter core, resort, and marine-based rental income perform the inline with our budget.
Patrick Waite: Ranked growth from annuals increased 4.1% for the quarter compared to prior year and was slightly higher than our guidance.
Transient rent was down 9.1% compared to 1st quarter, 2024 4.
Patrick Waite: For the first quarter, the net contribution from our total membership business, which consists of annual subscription and upgrade revenues offset by sales and marketing expenses, with $15.5 million, an increase of 4% compared to the prior year.
Patrick Waite: Core utility and other income increased 3.9% compared to first quarter 2024. Our utility income recovery percentage was 47.6%, about 110 bases point fire than first quarter 2024.
Thank you.
Patrick Waite: First quarter core operating expenses increased 1.5% compared to the same period in 2024. Property operating and maintenance and real estate tax expenses increased 2.6%.
Patrick Waite: Membership sales and marketing expenses were in line with our budget in lower than prior year.
Patrick Waite: We renewed our property and casualty insurance programs April 1st, and the premium decrease year-over-year was approximately 6%. We were pleased with the result which reflects no change in our property insurance program deductibles or coverage.
Patrick Waite: Core Property Operating Revenues increased 2.9%, while Core Property Operating expenses increased 1.5%, resulting in growth and core and a wide before property management of 3.8%.
Patrick Waite: Our non-core properties contributed $4 million in the quarter slightly higher than our expectations as a result of expense savings.
Patrick Waite: JV income includes income recognition related to an expected distribution from one of our joint ventures.
Patrick Waite: The press release and supplemental package provide an overview of 2025's second quarter and full-year earnings guidance
Patrick Waite: The following remarks are intended to provide context for our current estimate of future results.
Patrick Waite: All growth rate ranges and revenue and expense projections are qualified by the respectors included in our press release and supplemental package.
Patrick Waite: Our guidance for 2025 full-year normalized FFO is $3.6 per share at the midpoint of our guidance range of $3.1 to $3.11.
Patrick Waite: We project core property operating income growth at 5% at the midpoint of our range of 4.5% to 5.5% . .
Patrick Waite: We project the non-core properties will generate between $8.2 million and $12.2 million of NLI during 2025.
I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry
Patrick Waite: In the core portfolio, we project the following full-year growth rate ranges, 3.2% to 4.2% for core revenues, 1.5% to 2.5% for core expenses, and 4.5% to 5.5% for core NOI.
Patrick Waite: Full-year guidance assumes core MH-RENT growth in the range of 4.8% to 5.8%
Patrick Waite: Full Your Guidance for Combined RV and Marina Rent Growth is 2.2% to 3.2%
Patrick Waite: Annual RV and Marina Rent represents approximately 70% of the full year RV and Marina Rent, and we expect 5% growth and rental income from annuals at the midpoint of our guidance range.
Patrick Waite: Our full-year expense growth assumption includes the impact of our April 1st insurance renewal for the rest of 2025.
Patrick Waite: Our second quarter guidance assumes normalized FFO per share in the range of 66 cents to 72 cents that represents approximately 23% of full year normalized FFO per share
Patrick Waite: Core property operating income growth is projected to be in the range of 5.4% to 6% for the second quarter.
Patrick Waite: Second quarter growth in MH rent is 5.3% at the midpoint of our guidance range.
Patrick Waite: We project second quarter annual RV and Marina Rancros to be approximately 4.6% to the midpoint of our guidance range.
Patrick Waite: Our guidance to student second quarter seasonal and transient RV revenues perform in line with our current reservation pacing.
Patrick Waite: I'll now provide some comments on our balance sheet in the financing market.
Patrick Waite: Our balance sheet is well positioned to execute on capital allocation opportunities. As at the end of March, we have only $87 million scheduled to mature before 2028, and our weighted average maturity for all debt is 8.4 years.
Patrick Waite: Ardetti Bedare is 4.4 times and interest coverage is 5.4 times [inaudible]
Patrick Waite: We have access to approximately $1 billion of capital from our combined line of credit and ATM programs.
Patrick Waite: We continue to place high importance on balance sheet flexibility, and we believe we have multiple sources of capital available to us.
Patrick Waite: Current secure debt terms vary depending on many factors including lender, bar response or an asset type in quality.
Patrick Waite: Current 10-year loans are quoted between five and a half percent and six and a quarter percent, 60 to 75 percent loan to value in 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 H-qualified MH assets continue to command best financing terms.
Now we would like to open it up for questions.
Speaker Change: Certainly, we'd like to remind everyone to please limit yourselves to two questions each, one moment for our first question.
Jamie Feldman: And our first question comes from the line of Jamie Feldman from Wells Fargo. Your question, please?
Jamie Feldman: Hey, this is Cooper Clark on for Jamie today. Thank you for taking the question. On the MH top line guidance cut and full year reduction, was there anything outside of the hurricane impact that drove this number lower? And also just wondering if you've seen any material changes in the MH mark to market on new leases recently, I believe it was roughly 14% last year. [inaudible]
Good morning Cooper, Patrick, maybe you could walk through that [inaudible]
Patrick Waite: Yeah, sure. Let me just start by taking a step back to last October when we set our initial expectation for rate in the MHB. So we were at 5%.
Patrick Waite: Our rate growth is now 5.6% so I think that shows strong demand.
Patrick Waite: and for the market market, it's running in the mid-teens about 14 percent year-to-date. The occupancy headwind is, you know, it is the result of the hurricanes.
We experienced a loss of 176 sites.
Patrick Waite: in the quarters a result of the hurricanes and just to put that in perspective the Q1 occupancy is down 171. So if you control for the hurricanes to take that out of the...
Patrick Waite: Out of the basic math, the occupancy for the portfolio was flat to slightly up, which again, I think, underscores the consistency of the demand part.
Speaker Change: Thank you. And then, earlier on the call, you mentioned the average length of stay in the MH portfolio is 10 years just wondering what that figure was pre-COVID.
That was around 10 years as fins, it's been pretty consistent. [inaudible]
Speaker Change: And that number I would like to present to you over the last 30 years is at that 10-year mark.
Speaker Change: Thank you, and our next question comes from a line of Eric Wolfe from City. Your question please.
Eric Wolfe: Hey, thanks. Just to follow up on the image question a second ago, I guess at the time you gave guidance you probably would have known about the storm damage. So it's just curious, you know, is it normally that the people stay through the storm damage and this time they decided not to like what?
What changed versus the original guidance? [inaudible]
Eric Wolfe: in Why, because I think the guidance he gave was sort of at the end of January Hercane's or in 4Q, so just trying to understand if the behavior among storm impacted tenants changed a bit versus what normally happens.
Eric Wolfe: Yeah, I don't know that I'd say that the behavior changed
Eric Wolfe: and as you work your way through the aftermath of a hurricane.
Eric Wolfe: There are some homes that are significantly impacted and that's clear.
Eric Wolfe: and then there's a significant number of homes where the individuals who own those homes either haven't come down from up north yet.
Eric Wolfe: So they come down over some period of time and evaluate any damage [inaudible]
Eric Wolfe: Or they are living at the property and are evaluating what their options are [inaudible]
Eric Wolfe: They're reviewing what their options are to complete any repairs and if their home is repairable.
Eric Wolfe: That tends to play out over several months after we work our way through the initial assessment. So it can be difficult to get that visibility.
Eric Wolfe: until the residents are actually making their final decision on whether or not they're going to repair their home or move on to whatever their next housing choices do.
Eric Wolfe: and Eric, a clear indicator for us is certainly if they're paying us rent, which they were prider to making the decision to move their home or no longer stay in the community. So that's the difference between January and now.
Damn, it makes sense [inaudible]
Speaker Change: And I know you've given some of this information that I'll call a couple years ago, but to do this help us understand sort of what your exposure is to a Canadian customer and what are you sort of factored in any changes to that customer's behavior into your guidance or if you think it's probably unlikely that the material impact your guidance is here.
Speaker Change: Yeah, I think for just as a reminder, what we've talked about in the past is roughly 10% of the RV revenue comes from Canadian customers. Half of that roughly is annual rent and then the remaining 50% is split between seasonal and transient.
The first quarter, obviously, is behind us, and-
Speaker Change: So, the seasonal impact is really in the first quarter of the year and so we didn't make any change to guidance as a result of that.
Speaker Change: I think the next kind of meaningful impact that we would see would be into the first quarter of 2026.
Speaker Change: and just to circle back on the annual for a moment, those customers primarily have a park model or an owned unit in place.
Speaker Change: and so if they decide not to return, there's a transfer of ownership that occurs and our revenue stream remains uninterrupted as typically happens on turnover of customers.
Thank you [inaudible]
Speaker Change: Thank you. Thank you, and our next question comes to a line of Yannagallan from Think of America
Yana Galland: Thank you. Good morning. Good morning, Anna. Just curious, any chance that you could discuss the MH occupancy trends that you have embedded in the guidance for the second quarter through your end?
Speaker Change: Generally, we have an assumption for a modest increase in occupancy for the remainder of the year. Typically, we don't forecast forward significant uptick in occupancy and we've kept that consistent in 2025.
Speaker Change: Thank you. And then maybe just if you could provide some color on trends in MH home sales kind of the mix of new and used and what you're seeing in the early spring selling season.
Yes, sure.
Well...
Speaker Change: We're in a bit of a shoulder season here, so let me just touch on Q1, where we saw some headwinds in Florida that basically hang over from the hurricanes that occurred in the lake in the quarter [inaudible]
Speaker Change: and as we're moving through the shoulder season we're seeing consistent demand. [inaudible]
including applications for new home sales and as I referenced.
Speaker Change: That Consistent Mark the Market as people are choosing to purchase the element of property and accepting a 14% increase in the in-place rent.
Speaker Change: With respect to the used home sales, it's a very small part of the business and we see, you know, consistent demand there as well but the larger driver overall occupancy is the new home sales.
Great, thank you so much [inaudible]
Thanks, John.
Speaker Change: Thank you, and our next question comes from the line of Steve Sakwa from Evercore ISI. Your question, please?
Speaker Change: Yeah, great, thanks. Can you maybe just talk a little bit more about the seasonal and transient RV? If I did my math, right? I think you did produce the revenue growth a little bit, so just curious, is that...
Speaker Change: sort of an expectation that international travel may come down, is that just a little more cautiousness about the US consumer, you know, baby witcher of that.
Speaker Change: Well, maybe Steve, I'll start by just reminding everybody of how we forecast our seasonal entrancy and then Patrick can step in with some more color, but...
in terms of our process. [inaudible]
Um...
Speaker Change: You know, if you think about the first quarter, we earn about 50% of that seasonal rent and about 20% of the transient rent And then by the end of quarter two, we've earned about two thirds of our full year seasonal and almost 45% of the full year transient
Speaker Change: and then in the third quarter, 40% of our transient rent comes in.
Speaker Change: Because of the short booking window, we've adopted a practice, and I think I mentioned it during the call in January , we used it when we prepared our budget.
Speaker Change: We focus on reservation pacing at the time for rent we anticipate earning in the coming quarter and then we've left our budget assumption alone. So the change in the forecast that you see is really our reservation pacing for the second quarter.
Nate Patrick, you can address this.
Patrick Waite: Yes, and Steve, I also just touch on for transients as I mentioned in my opening comments. It's a short fucking window and continues to be.
but just looking forward to the summer season.
Um...
Speaker Change: We have over 200 RV properties and 85% of them are pacing in line [inaudible]
with the same time last year. [inaudible]
Speaker Change: So it's a smaller subset of the portfolio that is experiencing some headwinds when we're reviewing pacing.
Speaker Change: In the northern markets around the Wisconsin Dells, Coastal and Jersey, somewhat in Bahrhar remain, we see lagging at a small number of properties. A common trend I would characterize as a normalizing of demand.
Speaker Change: and just for a further perspective in the case of Bar Harbor. We're seeing commentary on service level changes at Acadia National Park, potentially leading to fewer visits there and that would have a marginal impact on our properties and that's some market.
Speaker Change: Okay, great, thanks. Maybe could you just touch on home sales? I think they were down. I know it's not a large number and not a huge revenue contributor, but home sales were down in the quarter. Anything that you noticed there and I guess any just sort of broad changes in your expectation about home sales over the balance of the year. Thank you very much.
Speaker Change: Now, I think the, I touched on this last quarter and there's a little bit of carryover into Q1.
Speaker Change: The Hurricanes in Florida were an impact. We feel it's a demand profile in Florida is still very strong.
Speaker Change: but we've seen a recovery along the Gulf Coast that was impacted.
Speaker Change: and as we moved into the winter season, the winter up north was not particularly cold, so that hampered some of our velocity in the western sunbelt for us.
Speaker Change: As we look forward to the summer season, I think we feel pretty good about the demand that we're seeing and I touched on this frequently just that the
We've been through a period of elevated new home sales.
Speaker Change: A good year pre-COVID would be called 5-600
Speaker Change: Last year we were for the full year about 750 new home sales.
Speaker Change: and we were 117 for Q1 which as you pointed out is down 74 year over year. That's a lot of color but over arching I think we feel pretty good about the demand profile for the MH portfolio.
Thank you.
Speaker Change: Thank you, and our next question comes from the line of Michael Goldsmith from UBS. Your question please.
Michael Goldsmith: Good morning, things are operating in my question. My question is on the insurance renewal. What were you assuming in your guidance prior to it coming down to 6% and just what was the conversation with the insurance providers just given, you know, you've had a couple of incidents or storms over the last couple of years which has taken things offline. So, how are you able to drive a decrease of 6%? Thanks. Thank you very much.
Michael Goldsmith: Sure, Michael. So, as I mentioned, excuse me, our core expense growth assumptions include the impact of the renewal we disclosed in our earnings release.
Michael Goldsmith: as well as other changes to expense assumptions based on actual first-quarter experience and insight into the remainder of the year. Our insurance premiums were down 6% compared to prior year, negotiating insurance programs for our portfolios of fairly complex endeavor with multiple parties involved. [inaudible]
Michael Goldsmith: Consistent with past practice, we do not share our budget assumptions in order to help us secure the most favorable renewal terms for the current and future programs.
Michael Goldsmith: Then with regard to the conversation with the carriers, I think there was certainly discussion of the events that you mentioned. There were two storms at the end of 2024. One was a far more modest storm.
Michael Goldsmith: that did not result in a claim. So there was one one storm that did result in a claim.
Speaker Change: And then I think the other thing Paul, you mentioned in your comments that, you know, there's no change, there was no change in the deductibles or the coverage which I think is an important point Michael to note.
Speaker Change: And then, just as a follow-up, can you talk on the guidance, right? You took down the MH guidance, the NL MH guidance, like 40 basic points, or V down by 50 basis points, but then the total seems to revenue was down by 20 basis points. So can you talk about some of these offsetting factors? I assume that relates to memberships and some other factors, but can you provide a little bit more color on that? [inaudible]
For more information, visit www.FEMA.gov
Speaker Change: in the quarter. Some of it is timing related associated with insurance proceeds that we might recognize and just some other changes.
[inaudible]
Thank you very much, good luck in the second quarter [inaudible]
Thank you. Thanks Michael.
Speaker Change: Thank you, and our next question comes from a lot end of Wesley Golladay from Baird. Your question please.
Wesley Gallaudet: Hey, good morning, everyone. Are you seeing more Canadians listening to their homes for sale? And can you give us your overall image exposure to Canada?
Speaker Change: Yeah, I don't know that I had that overall exposure to Canadians in the MH space. I would directly say that it's similar to what Paul covered earlier with respect to the RV business.
Thank you.
Speaker Change: And we are not seeing any trends coming through with respect to Canadian demand on the UNH portfolio or listings.
of the existing residents in our MH portfolio from Canadians.
Speaker Change: I've been on site through several times through this sunbelt season and I can tell you that the Canadians were there all seem very happy to be there and we're sharing their interest in coming back next year.
Thank you!
Thank you.
Speaker Change: Thank you and our next question comes from the line of John Kim from BMO Capital Markets. Your question please?
John Kim: Thank you. How long do you think it will take to regain the occupied sites, the 260 lost and two quarters due to the hurricane? Will it be this year or event or will it take a couple of years to?
To fully raise your rights.
John Kim: I think that as we begin to repopulate those sites with homes, I think you see that take place over the next couple of years as we build up the occupancy in Florida.
Speaker Change: And so, why would it take more than, I guess, 12 months? Why would it take a couple of years? It would take into the, into 2026, I guess I'm saying so the rest of this year and into 2026.
Speaker Change: Ok, great. And then my second question is on the casual RV user, like the seasonal transient in 1000 trails.
Speaker Change: Why do you think it's continued to be weak? I guess you have to pull forward in 21 and 22, and now you have three straight years where it's been either weak or declining. Do you think that seasonal transient goes back to 2019 levels?
Speaker Change: And can you maybe comment on any changes in demand among generations? I think during COVID you had widespread increase from baby boomers all the way to Gen Z? Have you noticed anything different that those customers have pulled back?
Yeah, I think so
Speaker Change: Recently our seasonal revenue has seen some pressure on the growth due to seasonal workers and displaced residents, so we're seeing that but we think the demand remains very strong and we look at that from the length of stay. The length of stay for a particular customer has been the same over the last few years.
Speaker Change: But it's just some of those workers just no longer have the work that they were doing and that causes a bit of a decline in that demand and we're seeing the most of that happen in Florida.
Speaker Change: But overall, I think the demand is very strong. As you can see on the annual side of our business
Speaker Change: and show strength in being able to convert an annual and seasonal into, I'm sorry, seasonal in a transient, into an annual customer.
Thank you very much.
Thank you.
Thanks John .
Moderator: Thank you, and our next question comes from the line of John Plasky from Green Street. Your question, please.
John Pulaski: Hey, good morning. Thank you for the time. Patrick, I still don't understand the cadence of manufactured housing occupancy throughout the quarter. So, we told us a few months ago occupancy was at 94.8 as of end of January , which implies you lost.
80 basis points of occupancy between January
John Pulaski: Men of March, and 176 sites only shake out 25 bits of occupancy, so the occupancy loss throughout the quarter seems to be more than just storm. So it can help me understand what's the moving pieces here.
Speaker Change: Sure, John . I think maybe Paul would be able to walk through that a little bit based on the guidance and the numbers. Yeah, John . I do think there's a little bit of confusion. So at the end of the quarter, our occupancy was 94.4%. You can see on pages eight and nine of the earnings release that occupied sites were nearly the same for the quarter average as at quarter-end. [inaudible]
Speaker Change: What happened during the time period when we lost those occupied sites related to the storm events that Patrick mentioned, we completed expansion sites And added those to our core site count, which impacted the occupancy percentage [inaudible]
John Kim: Okay, that makes some sense. And then on the, actually one more follow up there, Paul, you said that you expect a modest uptick an occupancy, what's your definition of modest? Are we talking 10 to 20 bits? Is that the right ballpark to think about? Like, you know, 20, 25 to 50 sites.
I've had a few sets
John Kim: Ok, and then final questions on the annual RV Rebner Growth
John Kim: I believe it's a little over 4% in the quarter, which is below the low end of the downwindly revised range. So, one, what's driving this slightly softer than expected start of the year in annual RV? And then two, what do you see on the ground that gives you confidence that annual RV revenue growth will reaccelerate over the balance of the year?
John Kim: John , we have a, we have a, in the first quarter we have a bit of a leap year comparison, just FYI compared to the remainder of the year, so 2024 was a leap year, so we had an extra day.
John Kim: 2025, Week.com is more challenging in Q1, so it's like, excuse me, about a hundred-ish, 110 basis points.
John Kim: We'll adjust for the remainder of the year just as an FYI. And then as it relates to just the guidance for the rest of the year, that really has to do with one property, one marina that is in the process of being brought back online and it's taking longer than anticipated. So that's the driver of that.
Okay. Thanks for all the talk.
Thank you, thank you John
Speaker Change: Thank you, and our next question comes to the line of Peter Abramowitz from Jeffree's, your question please.
Thank you.
Peter Abramowitz: Peter, you might be on. Oh, there we go. Yeah, thank you. Yeah, sorry about that. Thank you for taking the questions.
Peter Abramowitz: I was just curious, you had some pretty solid results on the OPEC side and disclosed what looks like a pretty favorable result on your insurance renewal. Just curious, you know, there's been a lot of speculation about increased inflation, potentially if there is kind of an extended issue with the trade war here. Anything that gives you pause, whether it be on payroll or anything else on the inflation side when it comes to operating expenses, and maybe how you're thinking about that internally
You updated your guidance assumptions.
Peter Abramowitz: Yeah, we watched those very closely. Roughly two-thirds of our expenses are comprised of utilities payroll and repairs and maintenance. And the expected year-over-year growth for the rest of the year is slightly higher than the most recent headline CPI print of 2.4%.
Peter Abramowitz: So, you know, as we looked at it, our pay increases take effect April 1st each year. And so, you know, considering where CPI is right now, anticipating that we're slightly ahead of that going forward.
Peter Abramowitz: We note the possibility that that changes and that there could be an acceleration, but we don't see an indication of that at this time.
Speaker Change: Ok, that's helpful. And kind of in a similar vein, I guess on conversions or possibly site additions, whether it be RV or MH. Any pause when it comes to potential cost inflation, whether that could impact just kind of the pacing of conversions or site additions, or if you think that could impact yields on those.
Speaker Change: I think we're on track from a development perspective as we've indicated throughout the year. Our returns have gone down over the last couple of years as a result of increased cost pressures, but we don't see any large change in that.
That's all for me. Thank you.
Thank you.
Thank you, one moment for our next question.
Speaker Change: Our next question comes in the line of Tama Atsakiana from Georgia Bank, your question please.
Speaker Change: Yes, good morning, everyone. Good morning, Marguerite. Can we just follow up on Peter's question there around off-back? On the recurring cap backside, is there anything you should be thinking about as we released the tariffs, not just kind of regular off-back?
on the Recurring Cap X side. Excuse me, our budget is...
Speaker Change: Approximately $90 million for the year, we had about $85 million in recurring CapEx last year.
Speaker Change: Anticipated about $90 million this year, and you know, similar to what we're seeing on the OPEC side.
Speaker Change: We're watching that very closely and aren't yet seeing any signs of pressure. I think that as the team manages through that, certainly as it relates to labor and projects were already into April , so contracts are already being signed for that type of work, so don't anticipate a significant increase and would expect to manage to that budget number for the year.
Speaker Change: But that's helpful. And then, a question on the RV side, again, on the Marina side, sorry, seeing again...
Speaker Change: with it validates value issue and how you kind of think about it and also…
Speaker Change: just a more competitive perspective as we perceive their exit kind of changing anything in regards to the competitive landscape.
Sure.
Speaker Change: Portfolio. These are the assets that we've chosen are primarily annual leases with limited and slurry revenue. They're in strong markets with high demand for our slips.
Speaker Change: You know, it's always good to see price points in the marketplace that support and enforce our valuations But the properties have been doing very well and the team has done a great job operating them for the last five or six years
Thank you.
Speaker Change: Thank you. Thank you. And our next question is a follow from the line of Eric Wolfe from City. Your question please.
Speaker Change: Thanks, it's Mick Joseph here, Eric. I just want to follow up on the Canadian RBC's No Exposure. My understanding is that the certain percentage that we've talked 30-40% in the past, but please let me know if not typically booked for the following year when they leave this year. So, curious where that reservation pace stands right now versus where it was in this year, historically. Bye-bye.
Speaker Change: Nick, we do have roughly that level that reserve typically. We do see a lower number this year, then we've seen in the past. It's about, you know...
Speaker Change: 20% lower than it's been, but I would say that it's early and there's a fair amount of time between now and January when those customers arrive. So we'll watch and see what happens, but we're happy to see the level of early reservations that we have to date.
Speaker Change: So that's good. Thank you. And then just one of the questions is on interest expense guidance. I think the current run rate is around $124 million, but you're guiding to $132 million. So just trying to bridge that gap when it seems like there's only about $87 million of debt maturing in 2025.
Speaker Change: Yeah, we have the 87 million that's maturing. We do have an assumption in the budget for some
Speaker Change: Investments, a working capital investment that we plan to make in the properties and that's really the driver of the difference between first quarter and the run rate for the year.
Speaker Change: So that's not external growth, that's more investment in existing properties [inaudible]
Yes. Yes.
Thank you very much.
Thank you!
Speaker Change: Thank you. Since we have no more questions on the line at this time, I would like to turn it back to Marguerite Nader for closing comments.
Marguerite Nader: Thanks for joining today. We look forward to updating you on our next call. Take care.
Marguerite Nader: Thank you, ladies and gentlemen, for your participation at today's conference. This does conclude the program. You may now disconnect. Good day.