On Wednesday, Equity Lifestyle Props (NYSE:ELS) discussed first-quarter financial results during its earnings call. The full transcript is provided below.
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Summary
Equity Lifestyle Props reported strong first-quarter 2026 financial performance, maintaining full-year normalized FFO guidance of $3.17 per share, with a core portfolio NOI growth of 4.9%.
The company’s manufactured housing portfolio, which comprises 60% of total revenue, is 94% occupied, driven by a high rate of homeownership among residents.
Equity Lifestyle Props continues to expand in high-demand areas, adding over 1,100 MH sites in Florida since 2020, and pursuing technology investments to enhance customer experience.
The balance sheet is robust, with a long average debt maturity and limited refinancing risks, supporting a stable capital structure.
Guidance adjustments for 2026 include a slight reduction in RV and Marina rent growth due to delayed marina slip restoration but maintain overall positive expectations for core property income growth.
Full Transcript
OPERATOR
Good day everyone and thank you all for joining us to discuss Equity Lifestyle Properties first quarter 2026 results. Our featured speakers today are Marguerite Nader, our Vice Chairman and CEO Patrick Waite, our President and coo, and Paul Seavey, our Executive Vice President and cfo. 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 the question and answer session, management asks that you limit yourself to one question 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 risk and uncertainty. The Company assumes no obligation to update or supplement any statements that become untrue because of subsequent events. In addition, during today’s call we will discuss non GAAP financial measures, as defined by SEC Regulation G. Reconciliations of these non GAAP financial measures to the comparable GAAP financial measures are included in our earnings release, our supplemental information and our historical SEC filings. At this time I would like to turn the call over to Marguerite Nader, our Vice Chairman and CEO.
Marguerite Nader (Vice Chairman and CEO)
Good morning and thank you for joining us today. I am pleased to report the results for the first quarter of 2026. We continued our long term record of strong core operations and have maintained our full year normalized FFO guidance of $3.17 per share. Our manufactured housing portfolio represents approximately 60% of our total revenue and these properties are currently 94% occupied. Our communities distinguish themselves by their ability to sustain high occupancy levels over extended periods. This resilience is driven by the composition of our resident base as homeowners represent 97% of our manufactured housing (MH) portfolio. Homeownership promotes long term residency and supports our strong operating performance. The high concentration of homeowners is a key driver of our predictable recurring cash flow. Residents are invested in their communities which encourages stability, long tenure and strong neighborhood engagement. Within our RV portfolio, the increase in annual revenue reflects continued strength across our customer base. Our annual customers stay in park models, resort cottages and RVs with many families viewing our properties as an integral part of their traditions and family history. This loyalty supports sustained long term revenue. Turning to demand Our offerings across our portfolio are unique. We offer great long term experiences in sought after locations at a fraction of the cost of alternatives. We are engaging with our customers through traditional email campaigns, social media outreach and digital advertising. For the quarter, our websites attracted a combined 1.3 million unique visitors and generated 94,000 online leads, reflecting strong engagement. The drivers of the lead generation are from our rv, annual lease campaign and trip planning lead generation Our social media strategy seeks to engage both customers and prospects in a wide variety of platforms. We have over 2.4 million fans and followers across several social media networks. Over the past 10 years, we have grown our social media fans and followers by an average of 25% annually. During periods of uncertainty, it’s important to recognize the stability of our business and the fundamentals that support continued growth. I will highlight three of the key components of our success. First, our unique business model drives sustained long term outperformance. Over the past 25 years, ELS has outperformed the REIT industry NOI growth by 150 basis points. The stability through economic cycles is a hallmark of our success. Second, the demand drivers are the support for continued long term outperformance. Our core customers are baby boomers and 10,000 people per day turn 65 through 2030. Thereafter, the GenX generation maintains the demographic tailwind for the 15 year period following the Baby boomers. The Runway remains long supported by favorable migration patterns and finally, our capital structure is an advantage for us. Our balance sheet is in terrific shape with an average term to maturity of more than seven years. 17% of our debt is fully amortizing and not subject to refinance risk and our debt maturity schedule through 2028 shows only 14% of our debt coming due. Compared to the REIT average of 35%. We have delivered an 18% compounded annual dividend growth rate over a 20 year period. ELS offers a rare combination of strong income growth stability and demographic tailwinds backed by a well managed balance sheet. I want to thank our team for a great start at the year. They’ve done an excellent job supporting our Snowbird guests and will soon welcome our customers for the upcoming summer season. I will now turn it over to Patrick to provide more details about property operations.
Patrick Waite (President and COO)
Thanks Marguerite. We’re in the middle of our seasonal shift with our Snowbird customers heading back to northern climates and our northern properties gearing up for the summer season. As we wrap up the busy season in the Sun Belt, I’d like to provide an update on our key Sunbelt MH markets and the value found in our communities. Florida is our largest market accounting for about 50% of our core manufactured housing (MH) revenue in our top markets of Tampa, St. Pete and Fort Lauderdale. West Palm beach, the average single family home price ranges from 350,000 to over 500,000. Our communities in these markets offer a compelling value with average new home prices of $100,000 and resale home prices averaging about $50,000. We continue our strategy to expand existing communities in areas of high demand and have added more than 1,100 MH sites in Florida since 2020. In our core Arizona market of Phoenix Mesa, single family homes average more than $400,000 while new homes in our communities average $100,000 and resale homes average $70,000. We are actively selling homes in our expansion projects in Arizona where new inventory is selling at prices typically ranging from 110,000 to $180,000, and we have 500 completed expansion sites to support further occupancy growth. In our Northern California markets around San Francisco and San Jose, homes average over $1.3 million while the Southern California markets of Los Angeles and San Diego are about $900,000 to 1 million. Given high demand and the strong value proposition for our California properties, the portfolio is 99% occupied and home sales are typically resales of resident homes in the range of $100,000 and higher. In each of these markets, residents receive an exceptional housing value along with desirable amenities including swimming pools, clubhouses, pickleball courts and more. The active lifestyle and social engagement offered our communities is why homeowners stay with us for an average of 10 years. Leveraging feedback from our customers, our property operation team establishes comprehensive budget plans for each property. Our on site team members prioritize occupancy and revenue growth while thoughtfully managing expenses such as seasonal staffing, overtime and discretionary spending. We’re able to adjust to changes in the business to meet high customer expectations while managing expenses scaled to property operations. At the same time, we are investing in new technology across our business customer touch points like online payments, customer surveys and follow up and operational efficiencies like online check in, staffing plans and expense management. This continued innovation allows us to increase operational capacity while improving the customer experience. Importantly, these efficiencies give our on site team members more time to make connections with our customers and create memorable experiences in our RV business. The long term annual are the core stable occupancy core of our stable occupancy Through April we have seen improvement in attrition trends compared to last year and we are looking forward to the summer sales season. Annual sites account for 75% of our core RE revenue and most of our annual RV customers own a park model or RV with site improvements and sell their unit in place when they choose to leave the campground. Annual marina revenues experienced occupancy headwinds year over year from delays for permits and longer construction timelines for projects related to previous storms. We expect these construction projects to be completed late in 26 and into 27, which will then contribute to occupancy gains. As we build back that business, we’re looking forward to launching the 12th annual 100 Days of Camping social media campaign this summer, which runs from Memorial Day weekend through Labor Day weekend. We see strong engagement with this campaign year after year, earning over 45 million views across social media last summer. Our teams will be following along as customers post photos online, helping each guest make memories and reinforcing the legacy of our brand. Now I’ll turn it over to Paul
Paul Seavey (Executive Vice President and CFO)
Thanks Patrick and good morning everyone. I will review our first quarter 2026 results and provide an overview of our second quarter and full year 2026 guidance. First quarter normalized FFO was $0.84 per share in line with our guidance Core portfolio NOI growth of 4.9% compared to prior year was slightly ahead of our expectations for the quarter. Core community based rental income increased 5.7% for the quarter compared to the first quarter 2025. The increase in rental income is primarily the result of noticed increases to renewing residents and market rent paid by new residents. Occupied sites increased.54 during the first quarter resulting in occupancy of 93.9%. During the first quarter we sold 228 new and used homes. The occupancy comparison to first quarter 2025 is impacted by expansion sites added during the past 12 months. Adjusted for expansion sites, occupancy would be 94.4% in line with first quarter 2025. First quarter core resort and marina based rental income outperformed our budget by 10 basis points in the quarter. Rent growth from RV and Marina annuals increased 4.2% for the quarter compared to prior year, slightly below expectations for the quarter. Marina performance was impacted by delays in slip restoration efforts. Seasonal and transient ramp was 70 basis points higher than guidance as a result of higher than expected seasonal rent in the quarter. 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, was $17.6 million, an increase of 13.7% compared to the prior year membership dues revenue growth is primarily rate driven. Approximately 1200 upgrade subscriptions were originated in the quarter from new and existing members. Core utility and Other income increased 5.4% compared to first quarter 2025. Our utility income recovery percentage was 50.4%, about 280 basis points higher than first quarter 2025. First quarter core operating expenses increased 1.8% compared to the same period in 2025. We renewed our property and casualty insurance programs April 1st and the premium decrease year over year was approximately 18%. We’re pleased with the result, which reflects no change in our property insurance program coverage. Core property operating revenues increased 3.7% while core property operating expenses increased 1.8% resulting in growth in core NOI before property of 4.9%. Our non core properties contributed $3 million in the quarter slightly higher than our expectations. Property management and Corporate expenses were $28.6 million in the first quarter of 2026, 3.4% lower than 2025. The press release and supplemental package provide an overview of 2026 second quarter and full year earnings guidance. The following remarks are intended to provide context for our current estimate of future results. All growth rate ranges and revenue and expense projections are qualified by the risk factors included in our press release and supplemental package. Our guidance for 2026 full year normalized FFO is $3.17 per share at the midpoint of our guidance range of $3.12 to $3.22. We project core property operating income growth of 5.7% at the midpoint of our range of 5.2% to 6.2%. We project the non core properties will generate between $5.7 million and $9.7 million of NOI during 2026.. Our property management and G and A expense guidance range is $119 million to $125 million in the core portfolio. We project the following full year growth rate ranges 4% to 5% for core revenues, 2.2% to 3.2% for core expenses, and 5.2% to 6.2% for core NOI. Full year guidance assumes core MH rent growth in the range of 5.1% to 6.1%. Full year guidance for combined RV and Marina rent growth is 2% to 3%. Annual RV and Marina rent represents approximately 75% of the full year RV and Marina rent, and we expect 4.8% growth in rental income from annuals at the midpoint of our guidance range. As I mentioned, the change in expectations for full year growth in annuals compared to our prior guidance is attributed to our Marina portfolio which is experiencing longer than anticipated delays in restoration of slips. Our full year expense growth assumption includes the impact of our April 1st insurance renewal for the rest of 2026. Our second quarter guidance assumes normalized FFO per share in the range of $0.69 to $0.75. Core property operating income growth is projected to be in the range of 4.8% to 5.4% for the second quarter. Second quarter growth in MH rent is 5.6% at the midpoint of our guidance range. We project second quarter annual RV and marina rent growth to be approximately 5.1% at the midpoint of our guidance range. Our guidance assumes second quarter seasonal and transient RV revenues performed in line with our current reservation pacing. We’ve made no changes to prior guidance for seasonal and transient rent in the third and fourth quarters. Second quarter growth in core property operating expenses is projected to be in the range of 3.9% to 4.5% and includes the impact of our April 1st insurance renewal. I’ll now provide some comments on our balance sheet and the financing market. Our balance sheet is insulated from refinance and rate risk and is well positioned to execute on capital allocation opportunities. Our floating rate exposure is limited to balances on our line of credit. Our debt to EBITDARE is 4.5 times and interest coverage is 5.6 times. We have access to approximately $1.2 billion of capital from our combined line of credit and ATM programs. We continue to place high importance on balance sheet flexibility and we believe we have multiple sources of capital available to us. Current secured debt terms vary depending on many factors including lender, borrower, sponsor and asset type and quality. Current 10 year loans are quoted between 5.25% and 6.25%, 60 to 75% loan to value and 1.4 to 1.6 times debt service coverage. We continue to see solid interest from life companies and GSEs to lend for 10 year terms. High quality age qualified MH assets continue to command best financing terms. Now we would like to open it up for questions.
OPERATOR
Thank you. To ask a question please press star 11 on your telephone and wait for your name to be announced. To withdraw your question please press star 11 again. Please stand by while we compile the Q and A roster. And our first question comes from Jamie Feldman of Wells Fargo. Your line is open.
Jamie Feldman (Equity Analyst)
Great. Thanks for taking my question. I wanted to dig a little deeper into the insurance renewal and then just the impact on the expense savings and the new guidance. Can you talk about what you had in the original guidance for the insurance renewal, how that compares to the down 18% and then just maybe some of the moving pieces around the expense savings in the guidance going forward.
Paul Seavey (Executive Vice President and CFO)
Sure, Jamie. I think that we’ve guided to full year core expense growth. I think I mentioned this in the January call. It includes a premium to cpi. …
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