Earnings call transcript: Equity Lifestyle beats Q1 2025 forecasts, stock dips

Equity Lifestyle Properties (ELS) reported its first-quarter 2025 earnings, surpassing analysts’ expectations with an earnings per share (EPS) of $0.57 against a forecast of $0.55. The company’s revenue also exceeded projections, coming in at $387.3 million compared to the anticipated $335.83 million. According to InvestingPro data, ELS is currently trading near its Fair Value, with a market capitalization of $12.7 billion and a beta of 0.74, indicating lower volatility than the broader market. Despite these positive results, ELS shares fell 1.18% in after-hours trading, closing at $64.43, signaling a complex investor sentiment.

Key Takeaways

• ELS reported better-than-expected Q1 2025 earnings and revenue.
• Despite strong financial performance, ELS stock declined by 1.18%.
• Core portfolio net operating income (NOI) grew by 3.8%.
• The company maintains a robust balance sheet with a long debt maturity.

Company Performance

Equity Lifestyle Properties demonstrated solid performance in the first quarter of 2025, with normalized funds from operations (FFO) of $0.83 per share. The core community-based rental income saw a significant increase of 5.5%, and the core portfolio’s NOI rose by 3.8%. InvestingPro analysis reveals that ELS has maintained dividend payments for 33 consecutive years and has raised its dividend for 19 straight years, demonstrating remarkable consistency. The company continues to benefit from limited new supply in the manufactured home communities and RV resorts sector, which supports stable occupancy rates and rental income growth, while maintaining a moderate debt level with a debt-to-equity ratio of 1.86.

Financial Highlights

• Revenue: $387.3 million, up from the forecast of $335.83 million.
• Earnings per share: $0.57, surpassing the forecast of $0.55.
• Core portfolio NOI growth: 3.8%.
• Core community-based rental income increase: 5.5%.
• Rate growth: 5.7%.

Earnings vs. Forecast

Equity Lifestyle Properties exceeded expectations with an EPS of $0.57, a 3.6% increase over the forecasted $0.55. The revenue also outperformed predictions, reaching $387.3 million against the anticipated $335.83 million, marking a notable positive surprise for the quarter.

Market Reaction

Despite the earnings beat, ELS shares fell by 1.18% in after-hours trading, closing at $64.43. This decline may reflect broader market trends or investor concerns over future growth prospects, given the stock’s proximity to its 52-week low of $58.86. InvestingPro data shows analyst consensus remains bullish with a target range of $67-$82, suggesting potential upside. The stock currently trades at a P/E ratio of 32.2x and maintains strong profitability with a gross margin of 52.7%. For deeper insights into ELS’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

Outlook & Guidance

For the full year, Equity Lifestyle forecasts normalized FFO of $3.06 per share and anticipates core property operating income growth of 5%. The company projects manufactured home (MH) rent growth between 4.8% and 5.8% and RV and marina rent growth in the range of 2.2% to 3.2%. The company expects a modest increase in MH portfolio occupancy. With an InvestingPro Financial Health Score of 2.84 (rated as "GOOD") and a strong Piotroski Score of 7, ELS demonstrates solid financial fundamentals supporting its growth initiatives. Subscribers to InvestingPro can access over 30 additional financial metrics and exclusive ProTips for comprehensive analysis.

Executive Commentary

CEO Marguerite Nader emphasized the company’s financial health, stating, "Our balance sheet is in terrific shape." COO Patrick Waite highlighted the company’s resilience, noting, "The fundamentals of our business remain strong." CFO Paul Sevey pointed to continued interest from life companies and government-sponsored enterprises as a positive sign for future growth.

Risks and Challenges

• Hurricane impact: The company lost 176 sites in Q1, with recovery expected to extend into 2026.
• Canadian RV customer exposure: Approximately 10% of RV revenue is tied to Canadian customers, which could be affected by currency fluctuations or economic conditions in Canada.
• Market saturation: Limited new supply of MH communities and RV resorts could impact future growth opportunities.
• Insurance costs: While premiums decreased by 6% year-over-year, future rate hikes could affect profitability.
• Economic conditions: Broader economic pressures, such as inflation or interest rate changes, could impact consumer spending and financing costs.

Q&A

During the earnings call, analysts inquired about the impact of hurricanes on site availability and the timeline for recovery. Management indicated that site recovery would continue into 2026. Analysts also questioned the exposure to Canadian RV customers, with management confirming it represents about 10% of RV revenue. Additionally, there was interest in the normalization of transient RV bookings, which management noted is progressing well.

Full transcript - Equity Lifestyle Properties Inc (ELS) Q1 2025:

Conference Moderator: Day everyone and thank you all for joining us to discuss Equity Lifestyle Properties First Quarter twenty twenty five Results. Our featured speakers today are Marguerite Nader, our President and CEO Paul Sevey, 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 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’d like to turn the call over to Marguerite Nader, our President and CEO.

Marguerite Nader, President and CEO, Equity Lifestyle Properties: Good morning, and thank you for joining us today. I am pleased to report the results for the first quarter of twenty twenty five. 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. 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. We are pleased with our outlook for the remainder of 2025.

We have maintained our strong full year FFO guidance of $3.06 per share. Over the last ten years, our average core NOI grew 5.3% and normalized FFO grew nearly 8%, both outpacing the REIT industry average over that time. Our balance sheet is in terrific shape, with an average term to maturity of more than eight years. Nineteen percent 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 30%. During uncertain times, it’s helpful to appreciate the stability of our business and the reasons it will continue to be stable.

Our MH portfolio comprises approximately 60% of our total revenue, and our properties are 94% occupied. Our properties stand out due to their ability to maintain high occupancy levels once achieved. 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 plays a key role in maintaining consistent cash flow.

Our communities foster a strong sense of connection where residents are focused on building relationships and contributing to an engaged neighborhood environment. 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. We welcome many multi generational customers who consider our properties as part of their family history. Our transient stays serve as an important entry point for introducing new customers to our properties, laying the foundation for long term revenue growth.

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 in those locations. We are engaging with our customers through traditional email campaigns, social media outreach, digital advertising, and ambassador programs. For the quarter, our websites attracted a combined 1,700,000 unique visitors and generated 72,000 online leads, reflecting strong engagement.

The drivers of the lead generation are from our RV annual site lease campaigns 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 2,200,000 fans and followers across the social media networks. Over the past ten years, we have grown our social media fans and followers by an average of 30% annually. 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. Our REIT 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.

Patrick Waite, Executive Vice President and COO, Equity Lifestyle Properties: Thanks, Marguerite. Our business is currently in its spring seasonal shift, with snowbirds in our Sunbelt locations beginning to head north and our northern locations preparing for the summer rush. 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. The fundamentals of our business remain strong. New supply of manufactured home communities and RV resorts continues to be limited, with MH entitlements remaining most challenging.

Our portfolio of MH and RV properties offer prime locations and meet demand from home buyers and RV vacationers. First, I’ll focus on our MH business. Our MH occupancy is at historically high levels, and on average, ELS homeowners pay $80,000 to $100,000 for a new home, and renters pay $1,500 per month. Our high homeowner count results in stable occupancy, with homeowners in our communities remaining an average of ten years. For perspective on the relative value of homes in our MH communities, I’ll highlight three states, Florida, California, and Arizona, that comprise the largest share of our MH business.

In our primary submarkets in Florida, the average single family home price ranges from over $370,000 in Tampa St. Pete to nearly 460,000 in the Fort Lauderdale West Palm Beach submarket. Homes in Northern California, around San Francisco and San Jose, average over 1,400,000.0 and in Southern California, in Los Angeles and San Diego, it’s just over 1,000,000. Homes in the Phoenix and Mesa submarket average more than 425,000. In each submarket, our communities offer great value to residents, both homeowners and renters.

Our largest market is Florida, and last quarter we discussed the impact of recent hurricanes on MH occupancy. The result of last season’s hurricanes, we lost approximately 170 occupied sites in Q1, in addition to more than 90 occupied sites in Q4. We are ordering replacement homes, and we will see the positive impact on the community and cash flow in coming quarters. 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. 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 lake house.

The annual site rent on one of our properties is a fraction of the cost of a mortgage on a second home, particularly on a home offering amenities like water access, a swimming pool, and a clubhouse with sports courts, among others. For many customers, their annual site rent, ranging from 5,000 to $6,000 in the North and averaging about $8,000 in the Sunbelt, is equivalent to the cost of their annual weeklong vacation, considering travel expenses and accommodations. Annual customers typically purchase a park model for $25,000 to $100,000 which compares favorably to vacation homes that often exceed $500,000 in submarkets where our properties are located. These annual sites provide a stable revenue base for our RV portfolio, accounting for more than 75% of our core RV revenue. While transient sites are an important element of our business, including serving a pipeline for annual sites and membership sales, we have less visibility into this revenue line as the time between booking and travel continues to be short.

More than half of our transient reservations are booked within thirty days of arrival. A majority of our full year transient revenue comes to us in Q2 and Q3 when we see historically high holiday demand. We’re looking forward to our annual one hundred Days of Camping promotion, spanning from Memorial Day to Labor Day. This will be our eleventh season celebrating the one hundred Days of Camping. We see very high engagement levels with this promotion.

We saw more than 38,000,000 impressions for the campaign last summer. Now I’ll turn it over to Paul.

Paul Sevey, Executive Vice President and CFO, Equity Lifestyle Properties: Thanks, Patrick, and good morning, everyone. I will review our first quarter twenty twenty five results and provide an overview of our second quarter and full year 2025 guidance. First quarter normalized FFO was $0.83 per share, in line with our guidance. Core portfolio NOI growth of 3.8% compared to prior year was in line with our expectations for the quarter. Core community based rental income increased 5.5% for the quarter compared to the same quarter in 2024.

Rate 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. 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. First quarter core resort and marina based rental income performed in line with our budget. Rent 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 first quarter twenty twenty four.

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 $15,500,000 an increase of 4% compared to the prior year. Core utility and other income increased 3.9% compared to first quarter twenty twenty four. Our utility income recovery percentage was 47.6%, about 110 basis points higher than first quarter twenty twenty four. 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%.

Membership sales and marketing expenses were in line with our budget and lower than prior year. We renewed our property and casualty insurance programs April 1, and the premium decrease year over year was approximately 6%. We are pleased with the result, which reflects no change in our property insurance program deductibles or coverage. Core property operating revenues increased 2.9%, while core property operating expenses increased 1.5%, resulting in growth in core NOI before property management of 3.8%. Our non core properties contributed $4,000,000 in the quarter, slightly higher than our expectations as a result of expense savings.

JV income includes income recognition related to an expected distribution from one of our joint ventures. The press release and supplemental package provide an overview of twenty twenty five 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 2025 full year normalized FFO is $3.06 per share at the midpoint of our guidance range of $3.01 to $3.11 We project core property operating income growth of 5% at the midpoint of our range of 4.5 to 5.5%.

We project the non core properties will generate between $8,200,000 and $12,200,000 of NOI during 2025. Our property management and G and A expense guidance range is $119,000,000 to $125,000,000 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. Full year guidance assumes core MH rent growth in the range of 4.8% to 5.8%. Full year guidance for combined RV and Marina rent growth is 2.2% to 3.2%. Annual RV and Marina rent represents approximately 70% of the full year RV and Marina rent, and we expect 5% growth in rental income from annuals at the midpoint of our guidance range.

Our full year expense growth assumption includes the impact of our April 1 insurance renewal for the rest of 2025. Our second quarter guidance assumes normalized FFO per share in the range of $0.66 to $0.72 That represents approximately 23% of full year normalized FFO per share. Core property operating income growth is projected to be in the range of 5.4% to 6% for the second quarter. Second quarter growth in MH rent is 5.3% at the midpoint of our guidance range. We project second quarter annual RV and Marina rent growth to be approximately 4.6% at the midpoint of our guidance range.

Our guidance assumes second quarter seasonal and transient RV revenues perform in line with our current reservation pacing. Second quarter growth in core property operating expenses is projected to be in the range of 1.6% to 2.2% and includes the impact of our April 1 insurance renewal. I’ll now provide some comments on our balance sheet and the financing market. Our balance sheet is well positioned to execute on capital allocation opportunities. As of the March, we have only $87,000,000 scheduled to mature before 2028 and our weighted average maturity for all debt is eight point four years.

Our debt to EBITDAre is 4.4 times and interest coverage is 5.4 times. We have access to approximately $1,000,000,000 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 ten year loans are quoted between 5.56.25%, sixty % 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 ten year terms. High quality age qualified MH assets continue to command best financing terms. Now we would like to open it up for questions.

Conference Moderator: Certainly. We’d like to remind everyone to please limit yourselves to two questions each. One moment for our first question. And our first question comes from the line of Jamie Feldman from Wells Fargo. Your question please.

Cooper Clark, Analyst, Wells Fargo: 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.

Marguerite Nader, President and CEO, Equity Lifestyle Properties: Good morning, Cooper. Patrick, maybe you could walk through that.

Patrick Waite, Executive Vice President and COO, Equity Lifestyle Properties: Yeah, sure. Let me just start by taking a step back to last October when we set our initial expectation for rate in the MH space, and we were at 5%. Our rate growth is now 5.6%. So, I think that shows strong demand across the resident base, you know, good consistent demand from our in place residents. And for the mark to market, it’s running in the mid teens about 14% year to date.

The occupancy headwind is, noted, is the result of the hurricanes. We experienced a loss of 176 sites in the quarter as 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, so take that 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.

Cooper Clark, Analyst, Wells Fargo: Thank you. And then earlier on the call, mentioned the average length of stay in the MH portfolio is ten years. Just wondering what that figure was pre COVID?

Patrick Waite, Executive Vice President and COO, Equity Lifestyle Properties: That was around ten years. It’s pretty consistent.

Marguerite Nader, President and CEO, Equity Lifestyle Properties: And that number, would say Cooper, has been consistent over the last thirty years, is that ten year mark.

Conference Moderator: Thank you. And our next question comes from the line of Eric Wolf from Citi. Your question, please.

Michael Goldsmith, Analyst, UBS: Hey, thanks. Just to follow-up on

Eric Wolf/Nick Joseph, Analysts, Citi: the MH question a second ago. I guess at the time you gave guidance you probably would have known about the storm damage. So I was just curious is it normally the people stay through the storm damage and this time they decided not to? Like what changed versus the original guidance and why? Because I think the guidance you gave was sort of at the January hurricanes were in 4Q.

So just trying to understand like if the behavior among storm impacted tenants changed a bit versus what normally happens.

Patrick Waite, Executive Vice President and COO, Equity Lifestyle Properties: Yeah, don’t know that I’d say that the behavior changed in, as you work your way through the aftermath of a hurricane, there are some homes that are significantly impacted and that’s clear. 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, so they come down over some period of time and evaluate any damage, or they are living at the property and they’re evaluating what their options are. They’re reviewing what their options are to complete any repairs and if their home is repairable. 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 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 choice is going to be.

Marguerite Nader, President and CEO, Equity Lifestyle Properties: And Eric, a clear indicator for us is certainly if they’re paying us rent, which they were prior to making the decision to move their home, or no longer stay in the community. So that’s the difference between January and now.

Eric Wolf/Nick Joseph, Analysts, Citi: Got it. Makes sense. And I know you’ve given some of this information out on calls a couple years ago, but could you just help us understand what your exposure is to the Canadian customer and whether you factored in any changes to that customer’s behavior into your guidance or if you think it’s probably unlikely to materially impact your guidance this year.

Paul Sevey, Executive Vice President and CFO, Equity Lifestyle Properties: 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 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. I think the next kind of meaningful impact that we would see would be into the first quarter of twenty twenty six. And just to circle back on the annual for a moment, those customers primarily have a park model or an owned unit in place and so if they decide not to return, there’s transfer of ownership that occurs and our revenue stream remains uninterrupted as typically happens on turnover of customers.

Eric Wolf/Nick Joseph, Analysts, Citi: Thank you.

Marguerite Nader, President and CEO, Equity Lifestyle Properties: Thank Thank you.

Conference Moderator: And our next question comes from the line of Yana Gallen from Bank of America Securities. Your question, please.

Yana Gallen, Analyst, Bank of America Securities: Thank you. Good morning.

Marguerite Nader, President and CEO, Equity Lifestyle Properties: Good morning, Ana.

Yana Gallen, Analyst, Bank of America Securities: Just curious, any chance that you could discuss the MH occupancy trends that you have embedded in the guidance for the second quarter through year end?

Paul Sevey, Executive Vice President and CFO, Equity Lifestyle Properties: Generally, have an assumption for a modest increase in occupancy for remainder of the year. Typically, don’t forecast forward significant uptick in occupancy, and we’ve kept that consistent in 2025.

Yana Gallen, Analyst, Bank of America Securities: 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.

Patrick Waite, Executive Vice President and COO, Equity Lifestyle Properties: Yeah, sure. Well, we’re in a bit of a shoulder season here. So, me just touch on Q1, where we saw some headwinds in Florida, that’s basically hangover from the hurricanes that occurred late in the quarter. And as we’re moving through the shoulder season, we’re seeing consistent demand, including applications for new home sales, and as I referenced, that consistent mark to market as people are choosing to purchase a home on our property and accepting a 14% increase in the in place rent. With respect to the used home sales, it’s a very small part of the business, and we see consistent demand there as well, but the larger driver of our overall occupancy is the new home sales.

Yana Gallen, Analyst, Bank of America Securities: Great, thank you so much.

Marguerite Nader, President and CEO, Equity Lifestyle Properties: Thanks, John.

Conference Moderator: Thank you. And our next question comes from the line of Steve Sakwa from Evercore ISI. Your question please.

Steve Sakwa, Analyst, Evercore ISI: Yes, great. Thanks. Can you maybe just talk a little bit more about the seasonal in transient RV? If I did my math right, I think you did reduce the revenue growth a little bit. So just curious, is that sort of an expectation that international travel may come down?

Is that just a little more cautiousness about The U. S. Consumer? Maybe what drove that?

Paul Sevey, Executive Vice President and CFO, Equity Lifestyle Properties: Well, maybe, Steve, I’ll start by just reminding everybody of how we forecast our seasonal and transient, and then Patrick can step in with some more color. But in terms of our process, if you think about the first quarter, earned 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. And then in the third quarter, ’40 percent of our transient rent comes in. 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.

We focused 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. Maybe, Patrick, you can address some comments. Yes. Steve, I’d also just touch on for transients, as I mentioned in my opening comments, it’s a short booking window and continues to be.

Patrick Waite, Executive Vice President and COO, Equity Lifestyle Properties: But just looking forward to the summer season, we have over 200 RV properties and 85% of them are pacing in line with the same time last year. So it’s smaller subset of the portfolio that experiencing some headwinds when we’re reviewing pacing. In the northern markets around the Wisconsin Dells, Coastal New Jersey, somewhat in Bar Harbor, Maine, we see lagging at a small number of properties. A common trend I would characterize as a normalizing of demand. And just for further perspective, in the case of Bar Harbor, we’re seeing commentary around service level changes at Acadia National Park, potentially leading to fewer visits there, and that would have a marginal impact on our properties in that submarket.

Steve Sakwa, Analyst, Evercore ISI: 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?

Patrick Waite, Executive Vice President and COO, Equity Lifestyle Properties: No, think the I touched on this last quarter and there’s a little bit of carryover into Q1. The hurricanes in Florida were an impact. We feel like the demand profile in Florida is still very strong, but we’ve seen a recovery along the Gulf Coast that was impacted. And as we moved into the winter season, the winter up north was not particularly cold, that hampered some of our velocity in the Western Sunbelt for us. As we look forward to the summer season, I think we feel pretty good about the demand that we’re seeing.

And, you know, I’ve touched on this frequently, just that the we’ve been through a period of elevated new home sales, A good year pre COVID would be, call it, five to six hundred. Last year, we were, for the full year, about seven fifty new home sales, and we were 117 for Q1, which as you pointed out is down 74 year over year. That’s a lot of color, overarching, I think we feel pretty good about the demand profile for the MH portfolio.

Conference Moderator: Thank you. And our next question comes from the line of Michael Goldsmith from UBS. Your question please.

Michael Goldsmith, Analyst, UBS: Good morning. Thanks a for taking my question. My question is on the insurance renewal. What were you assuming in your guidance prior to it coming down 6%? And just what was the conversation with the insurance providers just given you’ve had a couple of incidents or storms over the last couple of years, which was taking things offline.

So how are you able to drive a decrease of 6%? Thanks. Sure,

Paul Sevey, Executive Vice President and CFO, Equity Lifestyle Properties: Michael. So as I mentioned, our core expense growth assumptions include the impact of the renewal we disclosed in our earnings release 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 portfolio multiple parties involved. 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.

Then with regard to the conversation with the carriers, I think there was, you know, certainly discussion of the events that you mentioned. There were two storms at the end of twenty twenty four. ’1 was a far more modest storm that did not result in a claim. So there was one storm that did result in a claim.

Marguerite Nader, President and CEO, Equity Lifestyle Properties: And then I think the other thing, Paul, you mentioned in your comments that there’s no change there was no change in the deductibles or the coverage, which I think is an important point, Michael, to note.

Michael Goldsmith, Analyst, UBS: And then just as a follow-up, can you talk on the guidance? You took down the MH guidance, the annual MH guidance by 40 basis points, RV down by 50 basis points, but then the total same store revenue was down by 20 basis points. So can you talk about some of the offsetting factors? I assume that relates to memberships and some other factors, but can you provide a little bit more color on that? Thanks.

Paul Sevey, Executive Vice President and CFO, Equity Lifestyle Properties: Yeah, I think that as we mentioned, we have the occupancy impact on the MH and then discussed a little bit about the impact on the RV. We do have some adjustments to our other line items in the quarter. Some of it is timing related associated with insurance proceeds that we might recognize and just some other changes.

Michael Goldsmith, Analyst, UBS: Thank you very much. Good luck

Wesley Golladay, Analyst, Baird: in the second quarter.

Marguerite Nader, President and CEO, Equity Lifestyle Properties: Thank you. Thanks, Michael.

Conference Moderator: Thank you. And our next question comes from the line of Wesley Golladay from Baird. Your question please. Hey, good morning everyone.

Wesley Golladay, Analyst, Baird: Are you seeing more Canadians listing their homes for sale? And can you give us your overall MH exposure to Canada?

Patrick Waite, Executive Vice President and COO, Equity Lifestyle Properties: Yeah, don’t know that I have our overall exposure to Canadians in the MH space, I would directionally say that it’s similar to what Paul covered earlier with respect to the RV business. And we are not seeing any trends coming through with respect to Canadian demand on the MH portfolio or listings of the existing residents in our MH portfolio from Canadians. You know, I’ve been on-site through several times through the Sunbelt season, and I can tell you that the Canadians were there all seem very happy to be there, and we’re sharing their their interest in coming back next year.

Marguerite Nader, President and CEO, Equity Lifestyle Properties0: Thank you.

Conference Moderator: Thank you. And our next question comes from the line of John Kim from BMO Capital Markets. Your question please.

Eric Wolf/Nick Joseph, Analysts, Citi: Thank you. How long do you think it will take to regain the occupied sites, the two sixty lost in the last two quarters due to the hurricane? Will it be this year event, or will it take a couple of years to fully renew

Marguerite Nader, President and CEO, Equity Lifestyle Properties1: those think

Marguerite Nader, President and CEO, Equity Lifestyle Properties: that as we see as we begin to repopulate those sites with homes, I think you’d see that take place over the next couple of years as we build up the occupancy in Florida.

Eric Wolf/Nick Joseph, Analysts, Citi: And so why would it take more than, I guess, twelve months? Like, why why would it take a couple years?

Marguerite Nader, President and CEO, Equity Lifestyle Properties: It would take into the into 2026,

Yana Gallen, Analyst, Bank of America Securities: I guess. I I think the rest of

Marguerite Nader, President and CEO, Equity Lifestyle Properties: this year and into 2026.

Eric Wolf/Nick Joseph, Analysts, Citi: Okay. Great. And then my second question is on the the casual RV user, like, the seasonal transient and Thousand Trails. Why do you think it’s continued to be weak? I guess you had to pull forward in ’21 and ’22 and now you’ve had three straight years where it’s been either weak or declining.

Do you think that seasonal transient goes back to 2019 levels? And can you maybe comment on any change 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 as those customers have pulled back?

Marguerite Nader, President and CEO, Equity Lifestyle Properties: Yeah, I think 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, but it’s just some of 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. But overall, I think the demand is very strong, as you can see on the annual side of our business.

We continue to show strength in being able to convert an annual and seasonal into I’m sorry, seasonal and a transient into an annual customer.

Wesley Golladay, Analyst, Baird: Okay, thank you.

Marguerite Nader, President and CEO, Equity Lifestyle Properties: Thanks, John.

Conference Moderator: Thank you. And our next question comes from the line of John Plaske from Green Street. Your question, please.

Marguerite Nader, President and CEO, Equity Lifestyle Properties2: Hey, good morning. Thank you for the time. Patrick, I still don’t understand the cadence of manufactured housing occupancy throughout the quarter. So you told us a few months ago, occupancy was at 94.8 as of the January, which implies you lost 80 basis points of occupancy between January and March and 176 sites only shakes out like 25 bps of occupancy. So the occupancy loss throughout the quarter seems to be more than just storm.

So can you help me understand what’s what the moving pieces here?

Marguerite Nader, President and CEO, Equity Lifestyle Properties: Sure, John. I think maybe Paul would be able to walk through that a little bit based on the guidance and the numbers.

Paul Sevey, Executive Vice President and CFO, Equity Lifestyle Properties: Yeah, John. I do think there’s a little bit of confusion. So at the end of the quarter, core 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. 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.

Marguerite Nader, President and CEO, Equity Lifestyle Properties2: Okay. That makes some sense. And then on the actually one more follow-up there. Paul, said there you expect a modest uptick in occupancy. What’s your definition of modest?

Are we talking 10 to 20 bps? Is that the right ballpark to think about?

Paul Sevey, Executive Vice President and CFO, Equity Lifestyle Properties: Like, 25 to 50 sites.

Marguerite Nader, President and CEO, Equity Lifestyle Properties2: Okay. And then final questions on the annual RV revenue growth. I believe it was a little over 4% in the quarter, which is below the low end of the downwardly revised range. So one, what’s driving the slightly softer than expected start of the year and annual RV? And then two, what are you seeing on the ground that gives you confidence that annual RV revenue growth will reaccelerate over the balance of the year?

Paul Sevey, Executive Vice President and CFO, Equity Lifestyle Properties: John, 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. 2025, that comp is more challenging in Q1. So it’s like, excuse me, about 100 ish, 110 basis points that we’ll adjust for the remainder of the year, just as an FYI.

Marguerite Nader, President and CEO, Equity Lifestyle Properties: 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.

Wesley Golladay, Analyst, Baird: Okay. Thanks for all the color.

Marguerite Nader, President and CEO, Equity Lifestyle Properties: Thank you. Thank you, John.

Conference Moderator: Thank you. And our next question comes from the line of Peter Abramowitz from Jefferies. Your question please. You might be

Marguerite Nader, President and CEO, Equity Lifestyle Properties0: Thanks. Yes. Sorry about that. Thank you for taking the questions. I was just curious, you had some pretty solid results on the OpEx side and disclosed what looks like a pretty favorable result on your insurance renewal.

Just curious, 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 as you updated your guidance assumptions?

Paul Sevey, Executive Vice President and CFO, Equity Lifestyle Properties: Yeah. We’re we’ve 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. So, you know, as we looked at it, our pay increases take effect April 1 each year, and so considering where CPI is right now, anticipating that we’re slightly ahead of that going forward, 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.

Marguerite Nader, President and CEO, Equity Lifestyle Properties0: Okay, 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 just 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?

Marguerite Nader, President and CEO, Equity Lifestyle Properties: Yeah, 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 years as a result of increased cost pressures, but we don’t see any large change in that.

Marguerite Nader, President and CEO, Equity Lifestyle Properties0: Got it. That’s all for me. Thank you.

Marguerite Nader, President and CEO, Equity Lifestyle Properties: Thank you.

Conference Moderator: Thank you. One moment for our next question. Our next question comes from the line of Thomas Atsakyana from Deutsche Bank. Your question please.

Marguerite Nader, President and CEO, Equity Lifestyle Properties1: Yes. Good morning, everyone. Morning, Could we just follow-up on Peter’s question there around OpEx? On the recurring CapEx side, is there anything we should be thinking about as it relates to tariffs, not just kind of regular OpEx?

Paul Sevey, Executive Vice President and CFO, Equity Lifestyle Properties: On the recurring CapEx side, excuse me, our budget is approximately $90,000,000 for the year. We had about $85,000,000 in recurring CapEx last year, anticipate about $90,000,000 this year, and, you know, similar to what we’re seeing on the OpEx side, 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, we’re 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.

Marguerite Nader, President and CEO, Equity Lifestyle Properties1: Great. That’s helpful. And then a question on the RV side. Again, on the Marina side, sorry. Seeing again your your peers exit from that business, could you just talk about kind of implications, you know, for for your own business, whether it whether it validates valuation or how you kinda think about it?

And also just from a competitive perspective, how did you see their exit kind of changing anything in regards to the competitive landscape?

Marguerite Nader, President and CEO, Equity Lifestyle Properties: Sure. I’ll take the first half of it, or the last half of it first, which is the competitive landscape. These marinas, the marinas that are in place right now have been around for a long time, so from a local on the ground perspective, there’s really no change. But relative to just what does it mean in general in the Marina portfolio, we bought the loggerhead portfolio in, I think it was 2017, and subsequently we’ve added a couple We ordered a portfolio a few years later to our Marina portfolio.

And those properties have performed in line with expectations, and we’ve really been able to seamlessly integrate them into our MH and RV portfolio. The assets that we’ve chosen are primarily annual leases with limited ancillary revenue. They’re in strong markets with high demand for our slips. 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, the team has done a great job operating them for the last five or six years.

Eric Wolf/Nick Joseph, Analysts, Citi: Thank you.

Marguerite Nader, President and CEO, Equity Lifestyle Properties: Thank you.

Conference Moderator: Thank you. And our next question is a follow-up from the line of Eric Wolf from Citi. Your question, please.

Eric Wolf/Nick Joseph, Analysts, Citi: Thanks. It’s Nick Joseph here with Eric. Just want to follow-up on the Canadian RV seasonal exposure. My understanding is that a certain percentage, we’ve talked 30% to 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 either this year or historically.

Paul Sevey, Executive Vice President and CFO, Equity Lifestyle Properties: Nick, we do have roughly that level, that reserve typically. We do see a lower number this year than we’ve seen in the past. It’s about, you know, 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.

Eric Wolf/Nick Joseph, Analysts, Citi: Sounds good. Thank you. And then just one other question just on interest expense guidance. I think the current run rate is around 124,000,000 but you’re guiding to $132,000,000 So just trying to bridge that gap. It seems like there’s only about $87,000,000 of debt maturing in 2025.

Paul Sevey, Executive Vice President and CFO, Equity Lifestyle Properties: Yeah, we have the 87,000,000 that’s maturing. We do have an assumption in the budget for some investments, some 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.

Eric Wolf/Nick Joseph, Analysts, Citi: Thanks. So that’s not external growth, that’s more investment in existing properties?

Paul Sevey, Executive Vice President and CFO, Equity Lifestyle Properties: Yes. Yes.

Eric Wolf/Nick Joseph, Analysts, Citi: Great. Thank you very much.

Paul Sevey, Executive Vice President and CFO, Equity Lifestyle Properties: Thank you.

Wesley Golladay, Analyst, Baird: Thank you.

Conference Moderator: 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, President and CEO, Equity Lifestyle Properties: Thanks for joining today. We look forward to updating you on our next call. Take care.

Conference Moderator: Thank you, ladies and gentlemen, for your participation in today’s conference. This does conclude the program. You may now disconnect. Good day.

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