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ELS, National RV Investing in Florida Market

October 24, 2011 by · Leave a Comment 

With home prices and personal incomes plummeting in Southwest Florida, local governments have declared the affordable housing crisis to be over, the Sarasota Herald-Tribune reported.

The tough economy has spurred demand for lower-priced homes, which, in turn, is driving the large number of recent mobile home park deals, investors say.

This month, Equity LifeStyle Properties Inc. bought the 63-acre Lake Village mobile home park at U.S. 41 and State Road 681 in Nokomis. The park with nearly 300 home sites was sold for $23.8 million by the owner, a subsidiary of Hometown America.

In August, Equity LifeStyle paid $53.4 million for the 2,211-site Colony Cove mobile home park in Ellenton and $6 million for the 201-site Emerald Lake mobile home park in Punta Gorda.

And last month, a unit of National RV Communities LLC of Scottsdale, Ariz., bought Saralake Estates off Bahia Vista Street for $10.55 million. Saralake has nearly 200 mobile home sites.

During the boom, mobile home parks were being bought by developers who planned to shut them down and redevelop the land on which they sat.

Except for mobile home parks at key intersections, the flurry of purchases being made these days is driven by the attractiveness of investing in mobile home parks, said Charles Ellis, a principal and vice president for acquisitions at National RV.

That company was formed in 2005 and now owns 58 mobile home properties, 80% of them in Florida. It is backed by financing from General Electric Capital Corp.

“From an investor standpoint, the revenue is very stabilized,” Ellis said.

Once a mobile home is placed on a site and various improvements made, it becomes cost prohibitive to move, which translates into a stable stream of rents for investors.

National RV’s focus on Florida — most of its properties are in Manatee, Sarasota, Pinellas and Pasco counties — stems from a belief that middle-class retirees still want to retire to Florida but might not be able to afford a single-family home that costs well into the six figures.

“They’re more likely to buy a $30,000 or $100,000 park model or manufactured home,” Ellis said.

The history of mobile home park conversions makes residents at these newly acquired properties leery of the new owners, said Ellis, who noted there is a rumor at Saralake that National RV will clear the property and build a three-story medical office building there.

The rumors have not been quelled, Ellis noted, by either National RV’s history of buying and holding onto properties or by the fact that commercial office construction has all but halted in this region.

“As far as they know, I’m just some big corporation,” he said of Saralake’s residents. “We’ve owned it for three weeks now and we need to earn their trust.”

The stream of rent National RV says is so stable is improving these days, thanks to the economic downturn and the housing crisis, according to Equity LifeStyle.

In its second-quarter report, the public company that owns 111,000 home sites noted that it expected rental incomes to increase 2.7% this year. The report also noted that the extreme slowdown in new home construction was part of the reason rental demand was high, and that, in this market, it had an opportunity to convert renters into home buyers.

“The No. 1 thing with mobile home parks in the current economic crisis is affordable housing’s really in,” said Dave Reynolds, whose MHP Investment and Leasing LLC in Cedaredge, Colo., specializes in mobile home parks in the Midwest.

A key part of the housing crisis has been the difficulty many would-be buyers have in qualifying for a mortgage from a bank. But part of the investment strategy for the buyers of mobile home parks is to provide financing to park residents.

“The park owner becomes the lender,” said Reynolds, whose company also operates industry websites, such as mobilehomeparkstore.com.

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Equity LifeStyle Reports Lower Q3 FFO Results

October 18, 2011 by · Leave a Comment 

Equity LifeStyle Properties Inc. today (Oct. 18) announced results for the three and nine months ended Sept. 30.

For the three months, Funds From Operations (FFO) were $31.8 million or 73 cents per share, compared to $32.7 million or 92 cents per share for the same period in 2010.

For the nine months ended Sept. 30, FFO was $99.7 million, or $2.57 per share, compared to $97.3 million, or $2.74 per share for the same period in 2010.

Excluding approximately $15.2 million and $17.3 million in transaction costs incurred in connection with property acquisitions during the three and nine months ended Sept. 30, respectively, FFO would have been $47.0 million and $117.0 million, or $1.08 and $3.01 per share, respectively.

Net loss available to common stockholders totaled $2.9 million, or 7 cents per share for the three months ended Sept. 30, compared to net income available to common stockholders of $11.6 million, or 37 cents per share for the same period in 2010. Net income available to common stockholders totaled $22.9 million, or 67 cents per share for the nine months ended Sept. 30, compared to $32.6 million, or $1.06 per share for the same period in 2010.

Excluding approximately $15.2 million and $17.3 million in transaction costs incurred in connection with the acquisition, net income available to common stockholders would have been $12.4 million and $40.3 million, or 28 cents and $1.04 per share for the three and nine months ended Sept. 30, respectively.

Portfolio Performance

For the three months ended Sept. 30, property operating revenues, excluding deferrals, were $154.6 million, compared to $130.6 million in the same period in 2010. Property operating revenues for the nine months ended Sept. 30 were $411.8 million, compared to $385.6 million for the same period in 2010. Property operating revenues include approximately $22.1 million of property operating revenues from 58 properties acquired during the three months ended Sept. 30.

For the three months ended Sept. 30, core property operating revenues increased approximately 1.5% as compared to the same period in 2010. Core property operating expenses for the three months ended Sept. 30 decreased approximately 0.7%, resulting in an increase of approximately 4.1% to income from Core property operations over the same period in 2010. For the nine months ended Sept. 30, core property operating revenues increased approximately 1% and core property operating expenses decreased approximately 0.7%, resulting in an increase of approximately 2.8% to income from core property operations over the same period in 2010.

Storm Damage

A number of the company’s locations on the east coast of the United States were closed during the weekend of Aug. 27 due to power outages and other weather related issues caused by Hurricane Irene and a few properties remained closed over the Labor Day holiday weekend. As a result of Hurricane Irene, the company’s income from core property operations was approximately $600,000 less than expected due to the costs associated with the cleanup of flood damage and other items such as wind blown debris, falling trees and tree branches as well as reduced transient RV income due to property closures.

Asset-related Transactions

In the third quarter, ELS closed on 58 of the acquisition properties and certain Home Related Assets associated with the properties for $1.047 billion.

During October, the company closed on three more of the acquisition properties and certain Home-related assets for approximately $110 million.

The company expects to close on 14 of the remaining acquisition properties on or before Nov. 1.

Balance Sheet

Cash balance as of Sept. 30 was approximately $213.0 million. ELS expects to use most of the cash balance on the completion of the acquisition during the fourth quarter of 2011.

Guidance

The company’s annualized dividend for 2011 is $1.50 per common share. At the next quarterly board of directors meeting, management of the company intends to recommend an increase of 25 cents per common share to the annual dividend for 2012 for a total dividend of $1.75 per common share.

As of Oct. 17, ELS owns or has an interest in 368 properties in 32 states and British Columbia consisting of 136,100 sites.

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ELS Closes on Two More Acquisition Properties

October 4, 2011 by · Leave a Comment 

Equity LifeStyle Properties Inc. (ELS) announced on Monday (Oct. 3) that it has closed on two more of its property acquisitions, bringing the total to 60 since July 1.

The latest acquisitions were for a stated purchase price of approximately $82 million, according to a news release from the Chicago-based firm.

The purchase price in connection with this closing was funded with:

• The issuance of 497,538 shares of the company’s Series B Subordinated Non-Voting Cumulative Preferred Stock to the seller with an aggregate stated value of approximately $29 million.

• The assumption of approximately $35 million of mortgage debt secured by the two acquisition properties acquired on Monday.

• Approximately $18 million in cash.

The issuance of the Series B Preferred Stock is the final equity issuance to the seller for the acquisition. The cash was obtained from the proceeds of the previously announced $200 million of financings originated during the quarter ended Sept. 30.

On May 31, ELS entered into purchase and other agreements to acquire a portfolio of 75 manufactured home communities and one RV resort containing 31,167 sites on approximately 6,500 acres located in 16 states (primarily located in Florida and the Northeastern region of the United States) and certain manufactured homes and loans secured by manufactured homes located at the properties for a stated purchase price of $1.43 billion.

The company expects to close on eight additional properties by Oct. 14 and seven others by Nov. 1.

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ELS Assesses Irene Damage at Less than $1.5M

September 2, 2011 by · Leave a Comment 

Equity LifeStyle Properties Inc. (ELS) said Thursday (Sept. 1) the impact on income from property operations as a result of Hurricane Irene will be less than $1.5 million.

The Chicago-based real estate investment trust (REIT) based its estimate after undertaking a preliminary assessment of the impact of Hurricane Irene on its operations, according to a news release. A number of the company’s locations on the East Coast were closed during the weekend of Aug. 27 due to power outages and other weather related issues while Hurricane Irene moved north up the coast.

“A few properties remain closed and will not be open over Labor Day weekend. We expect that the primary impact to our property operations will be costs to clean up flood damage and other items such as wind blown debris, falling trees and tree branches as well as reduced transient RV income due to property closures,” the company stated.

ELS owns or has an interest in 365 properties in 32 states and British Columbia consisting of 134,005 sites.

 

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Equity LifeStyle Closes Deal on 16 Properties

August 2, 2011 by · Leave a Comment 

On May 31, Equity LifeStyle Properties Inc. through its operating partnership entered into purchase and other agreements to acquire a portfolio of 75 manufactured home communities and one RV resort containing 31,167 sites on approximately 6,500 acres located in 16 states (primarily located in Florida and the northeastern region of the United States) and certain manufactured homes and loans secured by manufactured homes located at the Acquisition Properties for a stated purchase price of $1.43 billion.

The company closed on 16 of the acquisition properties today (Aug. 2) along with certain manufactured homes and loans secured by manufactured homes located for a stated purchase price of approximately $436 million. The purchase price in connection with this closing was funded with: the issuance of 1,379,310 shares of the company’s common stock to the seller with an aggregate stated value of $80 million; the assumption of approximately $226 million of mortgage debt secured by 11 of the acquisition properties; and approximately $130 million in cash. The cash was obtained from the net proceeds of the company’s June 2011 common stock offering and a borrowing on our line of credit. The borrowing on the line of credit is expected to be repaid with proceeds from the previously announced $250 million secured mortgage financing that the Company expects to obtain in connection with the acquisition on or prior to October 1.

The closing of five acquisition properties that was previously scheduled on August 1 was postponed to September 1 due to a delay in lender approvals.

As previously announced, on July 1 ELS closed on 35 acquisition properties. The company’s closing of the remaining 25 properties is expected to occur by October 1 and assumption of the indebtedness is subject to the receipt of loan servicer consents. The acquisition is also subject to other customary closing conditions. Accordingly, no assurances can be given that the remainder of the acquisition will be completed in its entirety in accordance with the anticipated timing or at all.

Equity LifeStyle Properties, Inc. is a fully integrated owner and operator of lifestyle-oriented properties and as of August 1 owns or has an interest in 358 quality properties in 32 states and British Columbia consisting of 130,891 sites. The company is a self-administered, self-managed, real estate investment trust (REIT) with headquarters in Chicago.

 

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ELS Finalizes Loan to Help Fund Acquisition

June 9, 2011 by · Leave a Comment 

Equity LifeStyle Properties Inc. (ELS) Wednesday (June 8) announced that it has entered into a commitment for a $200 million senior unsecured term loan facility.

According to a news release, the term loan matures in six years and has a one-year extension option. The interest rate on the is at LIBOR plus 1.85% to 2.80% per annum. The spread over LIBOR is variable based on leverage throughout the loan term.

In connection with the term loan, the Chicago-based company also entered into a three-year LIBOR Swap Agreement allowing it to trade its variable interest rate for a fixed interest rate on the term loan. The term loan is expected to close, and the swap will become effective, on July 1.

The proceeds from the term loan are expected to be used to partially fund the previously announced pending acquisition of a portfolio of 76 manufactured home communities containing 31,167 sites on approximately 6,500 acres located in 16 states (primarily located in Florida and the northeastern region of the United States) and certain manufactured homes and loans secured by manufactured homes located at the Hometown Properties for a stated purchase price of $1.43 billion.

ELS anticipates closing on the acquisition of 39 of the properties on July 1 with a stated purchase price of approximately $519.0 million.

ELS owns or has an interest in 307 quality properties in 27 states and British Columbia consisting of 111,008 sites. The company is a self-administered, self-managed, real estate investment trust (REIT) with headquarters in Chicago.

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ELS Announces $1.43B MH Community Buyout

May 31, 2011 by · Leave a Comment 

Chicago-based Equity LifeStyle Properties, Inc. (ELS) announced Tuesday (May 31) it had entered into purchase and other agreements with certain affiliates of Hometown America, L.L.C. to acquire a portfolio of 76 manufactured home communities containing 31,167 sites on approximately 6,500 acres located in 16 states.

The stated purchase price: $1.43 billion.

The sale also includes certain manufactured homes and loans secured by manufactured homes located at the Hometown Properties.

ELS, a major player in the RV park and campground business through its affiliated Encore properties, anticipates that the acquisition will be funded through:

• The net proceeds from a public offering of common stock.

• The assumption by ELS of approximately $524.3 million of fixed-rate, non- recourse mortgage indebtedness (as of March 31, 2011) secured by 34 properties in the Hometown Portfolio with a weighted average interest rate of approximately 5.63% per annum and a weighted average maturity of approximately 6.0 years.

• The issuance by ELS to Hometown of: 1,7 million shares of common stock, par value $0.01 per share, and 1.74 million shares of Series B Subordinated Non-Voting Cumulative Redeemable Preferred Stock, par value $0.01 per share, which have a stipulated aggregate value of $200 million in the purchase agreements.

• Approximately $300 million of debt capital through an anticipated 10-year secured financing that the company plans to raise after completion of a public offering of common stock.

• Approximately $200 million of debt capital through an anticipated six-year unsecured term loan that the company plans to raise after completion of a public offering of common stock.

Prior to the announcement, ELS owned and managed, or had a controlling interest in more than 300 communities with more than 110,000 sites. Founded more than 30 years ago, the real estate investment trust has been a publicly traded company since 1993.

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ELS Parks Mark Earth Day with Nature-Zyme

April 22, 2011 by · Leave a Comment 

Encore RV Resorts and Thousand Trails, which are owned and operated by Equity LifeStyle Properties, are sharing their commitment to environmentally friendly RVing with their guests by offering free samples of Nature-Zyme – an environmentally friendly holding tank solution.

Starting at seven Encore resorts (see below for property names and locations), RVers who do not currently use a chemical-free holding tank solution will be offered a free sample of Nature-Zyme when they arrive to begin their overnight stay, according to a news release.

“Encore Resorts and Thousand Trails have been investing in environmentally friendly initiatives for years, ranging from use of solar panels to heat pools to installation of energy efficient fixtures and light bulbs.” said Ellen Kelleher, executive vice president of property management for ELS. “We use environmentally safe treatment solutions at our campgrounds and feel offering similar products to our guests is a great way to help increase awareness.”

Nature-Zyme is a 100% natural and non-toxic RV holding tank treatment that has been shown to effectively manage holding tank needs while improving overall operation of RV holding tank systems. Use of Nature-Zyme promotes “Clean and Green” RV’ing by removing the need for use of hazardous chemicals that are often found in products used to manage holding tanks.

The Encore Resort properties where guests can receive a free Nature-Zyme sample include:

California

  • Pio Pico RV Resort in Jamul.
  • Wilderness Lakes RV Resort in Menifee.
  • Palm Desert RV Resort in Palm Desert.
  • San Francisco RV Resort in Pacifica.

Oregon

  • Whalers Rest RV Resort in South Beach

Washington

  • La Conner RV Resort in La Conner

Virginia

  • Chesapeake Bay RV Resort in Gloucester

ELS owns or has an interest in 307 quality properties in 27 states and British Columbia consisting of 111,004 sites. The company is a self-administered, self-managed, real estate investment trust (REIT) with headquarters in Chicago.

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McAdams Stepping Down as ELS President

January 25, 2011 by · Leave a Comment 

Joe McAdams

Joe McAdams

Equity LifeStyle Properties Inc. today (Jan. 25) announced results for the quarter and year ended Dec. 31.

In a companion development, ELS announced that Joe McAdams, company president, is scaling back his duties at ELS and will step down as president effective Feb. 1.

Chicago-based ELS owns or has an interest in 307 RV parks and manufactured housing communities in 27 states and British Columbia consisting of 110,984 sites.

For the fourth quarter 2010, Funds From Operations (FFO) were $25.9 million, or  73 cents per share, compared to $27.7 million, or 79 cents per shares for the same period in 2009. For the year ended Dec. 31, FFO was $123.2 million, or $3.47 per share, compared to $118.1 million, or $3.58 per share for the same period in 2009, according to a news release.

Net income available to common stockholders totaled $5.7 million, or 18 cents per share for the fourth quarter. This compares to net income available to common stockholders of $6.3 million, or 21 cents per share for the same period in 2009. Net income available to common stockholders totaled $38.4 million, or $1.25 per share for the year ended Dec. 31. This compares to net income available to common stockholders of $34.0 million, or $1.22 per share for the same period in 2009.

As previously discussed in Dec. 15 press release, the results for the quarter and year ended Dec. 31 include a non-cash charge related to the write-off of goodwill in the fourth quarter of 2010 of approximately $3.6 million, or 10 cents per share.

Fourth quarter 2010 property operating revenues were $117.9 million, compared to $115 million in the fourth quarter of 2009. Property operating revenues for the year ended Dec. 31 were $491.7 million, compared to $479.3 million for the year ended Dec. 31, 2009.

For the quarter ended Dec. 31, core property operating revenues increased approximately 1.3%and core property operating expenses decreased approximately 0.1%, resulting in an increase of approximately 2.8% to income from core property operations over the quarter ended Dec. 31, 2009.

For the year ended Dec. 31, core property operating revenues increased approximately 1.5% and core property operating expenses increased approximately 1%, resulting in an increase of approximately 2.1%to income from core property operations over the year ended

For the quarter ended Dec. 31, the company had 20 new home sales (including six third-party dealer sales), which represents a 41.2% decrease as compared to the quarter ended Dec. 31, 2009. Gross revenues from home sales were $1.4 million for the quarter ended Dec. 31, compared to $2.1 million for the same period in 2009.

For the year ended Dec.31, the company had 82 new home sales (including 19 third-party dealer sales), which represents a 27.4% decrease as compared to the same period in 2009. Gross revenues from home sales were $6.1 million for the year ended December 31, 2010, compared to $7.1 million for the same period in 2009.

Average long-term secured debt balance was approximately $1.4 billion in the quarter, with a weighted average interest rate, including amortization, of approximately 6.04% per annum. Interest coverage was approximately 2.4 times in the quarter ended Dec. 31.

During the quarter ended Dec. 31, the company paid off approximately $2.4 million of financing encumbering one resort property with a stated interest rate of 5.58% per annum.

In 2011, the company has approximately $52 million of secured mortgage debt maturing, the majority of which we expect to pay off during the first six months of 2011.

Meanwhile, McAdams, 67, the company’s current president, has expressed a desire to reduce his involvement in the day-to-day operations of the company. Effective Feb. 1, McAdams will become president of a subsidiary of the company involved in ancillary activities and relinquish his role as president of ELS.

“We appreciate Joe’s willingness to continue to be a part-time resource for the company and thank him for his contribution to the company’s steady performance over the last few years in a challenging economic environment,” said Thomas Heneghan, ELS CEO.

Heneghan will re-assume the role of president of the company, in addition to his current role as CEO. As a result, effective Feb. 1, the following executive officers will be reporting to Heneghan:

  • Michael Berman, executive vice president and CFO.
  • Ellen Kelleher, executive vice president, property management.
  • Roger Maynard, executive vice president, asset management.
  • Marguerite Nader, executive vice president, new business development.
  • Seth Rosenberg, senior vice president of sales and marketing.

Kelleher will no longer act as secretary of the company as such duties will be transitioned to Rosenberg, the company’s general counsel. Rosenberg joined the company in February 2010 and was previously a general manager for a division of Active Network Inc., a leading provider of software and marketing services used by campgrounds and other outdoor recreation providers.

Guidance for 2011 FFO per share, on a fully-diluted basis, is projected to be in the range of $3.75 to $3.95 for the year ending Dec. 31, 2011, and in the range of $1.06 to $1.16 for the quarter ending March 31, 2011. The company estimates that core property operating revenue for 2011 is expected to grow at approximately 1% to 1.5% over 2010, assuming stable occupancy. Income from core property operations, excluding property management expenses, is expected to grow at approximately 2.5% to 3% over 2010.

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Equity LifeStyle Adjusts Quarterly Earnings

December 16, 2010 by · Leave a Comment 

Equity LifeStyle Properties Inc. (ELS) announced Wednesday (Dec. 15) that the company will incur a non-cash charge related to the write-off of goodwill in the fourth quarter of 2010 of approximately $3.6 million, or 10 cents per share.

The goodwill was recorded in connection with the company’s August 2009 acquisition of a small Florida Internet and media-based advertising business, according to a news release. The business operates a professional call center to promote advertising and resale brokerage services for the sale of campground memberships and vacation ownership intervals.

A primary purpose of this acquisition was to consolidate most of the company’s call center operations at this location. Overall call center activity improved in 2010 due in part to increased RV resort reservations and the rollout of new low-cost membership products. The company is evaluating the sale to a third party of the advertising and resale brokerage services. Alternatively, the company may transfer these services to another subsidiary that operates a reciprocal use campground membership business or cease certain operations. The net income from the advertising and resale brokerage services in 2010 is expected to be approximately $300,000.

In light of the company and its board’s objective of full and transparent disclosure and due to the uncertainty in valuing the advertising and resale brokerage services, the company has decided to recognize a non-cash charge for the goodwill allocated to the acquisition. As a result of the charge, fourth quarter net income will be reduced by approximately $3.6 million, or 10 cents per share. Excluding this item, the company reiterates its previously announced 2010 and 2011 earnings guidance.

ELSowns or has an interest in 307 quality properties in 27 states and British Columbia consisting of 110,984 sites. The company is a self-administered, self-managed, real estate investment trust with headquarters in Chicago.

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