Market Overview

ELS Reports Second Quarter Results

Share:

Continued Strong Performance

Equity LifeStyle Properties, Inc. (NYSE:ELS) (referred to herein as
"we," "us," and "our") today announced results for the quarter and six
months ended June 30, 2018. All per share results are reported on a
fully diluted basis unless otherwise noted.

Financial Results for the Quarter and Six Months Ended June 30, 2018

For the quarter ended June 30, 2018, total revenues increased $19.2
million, or 8.7 percent, to $240.5 million compared to $221.3 million
for the same period in 2017. Net income available for Common
Stockholders for the quarter ended June 30, 2018 increased $6.6 million,
or $0.07 per Common Share, to $46.1 million, or $0.52 per Common Share,
compared to $39.5 million, or $0.45 per Common Share, for the same
period in 2017.

For the six months ended June 30, 2018, total revenues increased $32.8
million, or 7.2 percent, to $486.5 million compared to $453.7 million
for the same period in 2017. Net income available for Common
Stockholders for the six months ended June 30, 2018 increased $10.0
million or $0.09 per Common Share, to $106.4 million, or $1.20 per
Common Share, compared to $96.4 million or $1.11 per Common Share, for
the same period in 2017.

Non-GAAP Financial Measures and Portfolio Performance

For the quarter ended June 30, 2018, Funds from Operations ("FFO")
available for Common Stock and OP Unit holders increased $10.7 million,
or $0.09 per Common Share, to $85.6 million or $0.90 per Common Share,
compared to $74.9 million, or $0.81 per Common Share, for the same
period in 2017. For the six months ended June 30, 2018, FFO available
for Common Stock and OP Unit holders increased $15.8 million, or $0.13
per Common Share, to $183.8 million or $1.94 per Common Share, compared
to $168.0 million or $1.81 per Common Share, for the same period in 2017.

For the quarter ended June 30, 2018, Normalized Funds from Operations
("Normalized FFO") available for Common Stock and OP Unit holders
increased $8.7 million, or $0.08 per Common Share, to $83.8 million, or
$0.89 per Common Share, compared to $75.1 million, or $0.81 per Common
Share, for the same period in 2017. For the six months ended June 30,
2018, Normalized FFO available for Common Stock and OP Unit holders
increased $13.4 million or $0.11 per Common Share, to $181.7 million, or
$1.92 per Common Share, compared to $168.3 million or $1.81 per Common
Share, for the same period in 2017.

For the quarter ended June 30, 2018, property operating revenues,
excluding deferrals, increased $16.1 million to $227.5 million compared
to $211.4 million for the same period in 2017. For the six months ended
June 30, 2018, property operating revenues, excluding deferrals,
increased $28.8 million to $462.2 million compared to $433.4 million for
the same period in 2017. For the quarter ended June 30, 2018, income
from property operations, excluding deferrals and property management,
increased $9.1 million to $129.1 million compared to $120.0 million for
the same period in 2017. For the six months ended June 30, 2018, income
from property operations, excluding deferrals and property management,
increased $14.7 million to $270.4 million compared to $255.7 million for
the same period in 2017.

For the quarter ended June 30, 2018, Core property operating revenues,
excluding deferrals, increased approximately 5.6 percent and Core income
from property operations, excluding deferrals and property management,
increased approximately 5.2 percent compared to the same period in 2017.
For the six months ended June 30, 2018, Core property operating
revenues, excluding deferrals, increased approximately 5.6 percent and
Core income from property operations, excluding deferrals and property
management, increased approximately 4.8 percent compared to the same
period in 2017.

Investment Activity

On July 20, 2018, we completed the acquisition of Everglades Lakes, a
612-site MH community in Fort Lauderdale, Florida. The purchase price
was $72.0 million and was funded with net proceeds from sales of common
stock under our at-the-market ("ATM") equity offering program as
discussed further below and proceeds from our line of credit.

Balance Sheet Activity

Subsequent to the quarter, we sold 252,864 shares of common stock as
part of our ATM equity offering program at a weighted average price per
share of $91.85, resulting in net cash proceeds of approximately $22.9
million.

About Equity LifeStyle Properties

We are a self-administered, self-managed real estate investment trust
("REIT") with headquarters in Chicago. As of July 23, 2018, we own or
have an interest in 410 quality properties in 32 states and British
Columbia consisting of 153,549 sites.

For additional information, please contact our Investor Relations
Department at (800) 247-5279 or at investor_relations@equitylifestyle.com.

Conference Call

A live webcast of our conference call discussing these results will take
place tomorrow, Tuesday, July 24, 2018, at 10:00 a.m. Central Time.
Please visit the Investor Information section at www.equitylifestyleproperties.com
for the link. A replay of the webcast will be available for two weeks at
this site.

Reporting Calendar

Quarterly financial results and related earnings conference calls for
the next three quarters are expected to occur as follows:

        Release Date     Earnings Call
Third Quarter 2018 Monday, October 22, 2018 Tuesday, October 23, 2018 10:00 a.m. CT
Fourth Quarter 2018 Monday, January 28, 2019 Tuesday, January 29, 2019 10:00 a.m. CT
First Quarter 2019 Monday, April 22, 2019 Tuesday, April 23, 2019 10:00 a.m. CT
 

Forward-Looking Statements

In addition to historical information, this press release includes
certain "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. When used, words such as
"anticipate," "expect," "believe," "project," "intend," "may be" and
"will be" and similar words or phrases, or the negative thereof, unless
the context requires otherwise, are intended to identify forward-looking
statements and may include without limitation, information regarding our
expectations, goals or intentions regarding the future, and the expected
effect of our acquisitions. These forward-looking statements are subject
to numerous assumptions, risks and uncertainties, including, but not
limited to:

  • our ability to control costs and real estate market conditions, our
    ability to retain customers, the actual use of sites by customers and
    our success in acquiring new customers at our properties (including
    those that we may acquire);
  • our ability to maintain historical or increase future rental rates and
    occupancy with respect to properties currently owned or that we may
    acquire;
  • our ability to retain and attract customers renewing, upgrading and
    entering right-to-use contracts;
  • our assumptions about rental and home sales markets;
  • our assumptions and guidance concerning 2018, including estimated net
    income, FFO and Normalized FFO;
  • our ability to manage counterparty risk;
  • our ability to renew our insurance policies at existing rates and on
    consistent terms;
  • in the age-qualified properties, home sales results could be impacted
    by the ability of potential home buyers to sell their existing
    residences as well as by financial, credit and capital markets
    volatility;
  • results from home sales and occupancy will continue to be impacted by
    local economic conditions, lack of affordable manufactured home
    financing and competition from alternative housing options including
    site-built single-family housing;
  • impact of government intervention to stabilize site-built
    single-family housing and not manufactured housing;
  • effective integration of recent acquisitions and our estimates
    regarding the future performance of recent acquisitions;
  • the completion of future transactions in their entirety, if any, and
    timing and effective integration with respect thereto;
  • unanticipated costs or unforeseen liabilities associated with recent
    acquisitions;
  • ability to obtain financing or refinance existing debt on favorable
    terms or at all;
  • the effect of interest rates;
  • the dilutive effects of issuing additional securities;
  • the effect of changes in accounting for Leases set forth under the
    Codification Topic "Leases";
  • the outcome of pending or future lawsuits or actions brought against
    us, including those disclosed in our filings with the Securities and
    Exchange Commission; and
  • other risks indicated from time to time in our filings with the
    Securities and Exchange Commission.

For further information on these and other factors that could impact us
and the statements contained herein, refer to our filings with
the Securities and Exchange Commission, including "Risk Factors" in our
most recent Annual Report on Form 10-K and subsequent quarterly reports.

These forward-looking statements are based on management's present
expectations and beliefs about future events. As with any projection or
forecast, these statements are inherently susceptible to uncertainty and
changes in circumstances. We are under no obligation to, and expressly
disclaim any obligation to, update or alter our forward-looking
statements whether as a result of such changes, new information,
subsequent events or otherwise.

 

Investor Information

 
Equity Research Coverage (1)
Robert W. Baird & Company     BMO Capital Markets     Green Street Advisors
Drew T. Babin John Kim John Pawlowski/ Ryan Lumb
215-553-7816 212-885-4115 949-640-8780

dbabin@rwbaird.com

johnp.kim@bmo.com

jpawlowski@greenst.com

rlumb@greenstreetadvisors.com

 
Bank of America Merrill Lynch
Global Research Citi Research Wells Fargo Securities
Jeffrey Spector/ Joshua Dennerlein Michael Bilerman/ Nick Joseph Todd Stender
646-855-1363 212-816-1383 562-637-1371

jeff.spector@baml.com

michael.bilerman@citi.com

todd.stender@wellsfargo.com

joshua.dennerlein@baml.com

nicholas.joseph@citi.com

 
Evercore ISI
Steve Sakwa/ Samir Khanal
212-466-5600

steve.sakwa@evercoreisi.com

samir.khanal@evercoreisi.com

 

______________________

1.   Any opinions, estimates or forecasts regarding our performance made
by these analysts or agencies do not represent our opinions,
forecasts or predictions. We do not by reference to these firms
imply our endorsement of or concurrence with such information,
conclusions or recommendations.
 

Financial Highlights

 

(In millions, except Common Stock and OP Units outstanding
and per share data, unaudited)

 
    As of and for the Three Months Ended
June 30,   March 31,   December   September   June 30,
2018   2018   31, 2017   30, 2017   2017
Operating Information
Total revenues $ 240.5 $ 246.0 $ 230.0 $ 241.6 $ 221.3
Net income $ 49.2 $ 64.2 $ 48.0 $ 54.9 $ 44.5
Net income available for Common Stockholders $ 46.1 $ 60.2 $ 45.0 $ 48.5 $ 39.5
Adjusted EBITDA (1) $ 108.6 $ 122.0 $ 106.7 $ 111.5 $ 100.8
FFO available for Common Stock and OP Unit holders (1)(2) $ 85.6 $ 98.2 $ 79.4 $ 84.3 $ 74.9
Normalized FFO available for Common Stock and OP Unit holders (1)(2) $ 83.8 $ 97.9 $ 82.6 $ 85.1 $ 75.1
Funds available for distribution (FAD) available for Common Stock
and OP Unit holders (1)(2)
$ 71.4 $ 89.1 $ 72.6 $ 74.0 $ 63.5
 
Common Stock Outstanding (In thousands)

and Per Share Data

Common Stock and OP Units, end of the period 94,623 94,565 94,420 93,334 92,840
Weighted average Common Stock and OP Units outstanding - Fully
Diluted
94,623 94,577 94,295 93,324 93,063
Net income per Common Share - Fully Diluted (3) $ 0.52 $ 0.68 $ 0.51 $ 0.56 $ 0.45
FFO per Common Share and OP Unit - Fully Diluted $ 0.90 $ 1.04 $ 0.84 $ 0.90 $ 0.81
Normalized FFO per Common Share and OP Unit - Fully Diluted $ 0.89 $ 1.04 $ 0.88 $ 0.91 $ 0.81
Dividends per Common Share $ 0.550 $ 0.550 $ 0.488 $ 0.488 $ 0.488
 
Balance Sheet
Total assets $ 3,700 $ 3,690 $ 3,610 $ 3,526 $ 3,485
Total liabilities $ 2,598 $ 2,589 $ 2,510 $ 2,511 $ 2,386
 
Market Capitalization
Total debt $ 2,251 $ 2,264 $ 2,224 $ 2,200 $ 2,072

Total market capitalization (4)

$ 10,947 $ 10,564 $ 10,629 $ 10,141 $ 10,224
 
Ratios
Total debt / total market capitalization 20.6 % 21.4 % 20.9 % 21.7 % 20.3 %
Total debt + preferred stock / total market capitalization 20.6 % 21.4 % 20.9 % 21.7 % 21.6 %
Total debt / Adjusted EBITDA (5) 5.0 5.1 5.1 5.1 4.9
Interest coverage (6) 4.4 4.4 4.4 4.4 4.3
Fixed charges + preferred distributions coverage (7) 4.3 4.2 4.1 4.0 3.9
______________________
1.   See Non-GAAP Financial Measures Definitions and Other Terms at the
end of the supplemental information for definitions of Adjusted
EBITDA, FFO, Normalized FFO and FAD; and reconciliation of
Consolidated net income to Adjusted EBITDA.
2. See page 7 for a reconciliation of Net income available for Common
Stockholders to Non-GAAP financial measures FFO available for Common
Stock and OP Unit holders, Normalized FFO available for Common Stock
and OP Unit holders and FAD available for Common Stock and OP Unit
holders.
3. Net income per fully diluted Common Share is calculated before
Income allocated to non-controlling interest- Common OP Units.
4. See page 16 for market capitalization as of June 30, 2018.
5. Calculated using trailing twelve months Adjusted EBITDA. We believe
trailing twelve months Adjusted EBITDA provides additional
information for determining our ability to meet future debt service
requirements.
6. Interest coverage is calculated by dividing trailing twelve months
Adjusted EBITDA by the interest expense incurred during the same
period.
7. See Non-GAAP Financial Measures Definitions and Other Terms at the
end of the supplemental information for a definition of fixed
charges. This ratio is calculated by dividing trailing twelve months
Adjusted EBITDA by the sum of fixed charges and preferred stock
dividends during the same period.
 
Balance Sheet

(In thousands, except share and per share data)

 
    June 30,     December 31,
2018 2017
(unaudited)
Assets
Investment in real estate:
Land $ 1,284,851 $ 1,221,375
Land improvements 3,072,474 3,045,221
Buildings and other depreciable property 692,495   649,217  
5,049,820 4,915,813
Accumulated depreciation (1,580,013 ) (1,516,694 )
Net investment in real estate 3,469,807 3,399,119
Cash and restricted cash 46,025 31,085
Notes receivable, net 34,672 49,477
Investment in unconsolidated joint ventures 57,699 53,080
Deferred commission expense 39,843 31,443
Escrow deposits, goodwill, and other assets, net 52,143   45,828  
Total Assets $ 3,700,189   $ 3,610,032  
Liabilities and Equity
Liabilities:
Mortgage notes payable $ 2,028,535 $ 1,971,715
Term loan 198,464 198,302
Unsecured line of credit 30,000
Accrued expenses and accounts payable 90,929 80,744
Deferred revenue – upfront payments from right-to-use contracts 112,288 85,596
Deferred revenue – right-to-use annual payments 12,806 9,932
Accrued interest payable 8,425 8,387
Rents and other customer payments received in advance and security
deposits
94,868 79,267
Distributions payable 52,043   46,047  
Total Liabilities 2,598,358   2,509,990  
Equity:
Stockholders' Equity:
Preferred stock, $0.01 par value, 10,000,000 shares authorized as of
December 31, 2017 and June 30, 2018; none issued and outstanding.
Common stock, $0.01 par value, 200,000,000 shares authorized as of
June 30, 2018 and December 31, 2017; 88,802,758 and 88,585,160
shares issued and outstanding as of June 30, 2018 and December 31,
2017, respectively
884 883
Paid-in capital 1,248,047 1,242,109
Distributions in excess of accumulated earnings (218,453 ) (211,980 )
Accumulated other comprehensive income 3,579   942  
Total Stockholders' Equity 1,034,057 1,031,954
Non-controlling interests – Common OP Units 67,774   68,088  
Total Equity 1,101,831   1,100,042  
Total Liabilities and Equity $ 3,700,189   $ 3,610,032  
 
Consolidated Income Statement

(In thousands, unaudited)

 
    Quarters Ended     Six Months Ended
June 30, June 30,
2018   2017 2018   2017
Revenues:
Community base rental income $ 128,579 $ 121,964 $ 255,318 $ 242,656
Rental home income 3,561 3,632 7,076 7,237
Resort base rental income 55,231 50,055 119,485 111,123
Right-to-use annual payments 11,891 11,350 23,410 22,602
Right-to-use contracts current period, gross 3,944 3,798 7,106 7,004
Right-to-use contract upfront payments, deferred, net (2,021 ) (1,321 ) (3,306 ) (2,096 )
Utility and other income 24,320 20,650 49,841 42,776
Gross revenues from home sales 9,105 7,833 17,414 14,860
Brokered resale revenue and ancillary services revenues, net 617 444 2,018 2,105
Interest income 1,862 1,798 3,812 3,568
Income from other investments, net 3,413   1,109   4,353   1,866  
Total revenues 240,502 221,312 486,527 453,701
 
Expenses:
Property operating and maintenance 80,091 72,901 154,999 140,955
Rental home operating and maintenance 1,629 1,657 3,053 3,208
Real estate taxes 13,440 13,943 27,575 27,980
Sales and marketing, gross 3,305 2,894 6,117 5,584
Right-to-use contract commissions, deferred, net (262 ) (112 ) (286 ) (196 )
Property management 13,472 13,023 27,153 25,583
Depreciation on real estate assets and rental homes 32,452 30,247 63,774 60,357
Amortization of in-place leases 1,893 958 2,945 1,990
Cost of home sales 9,632 7,895 18,206 15,014
Home selling expenses 973 929 2,048 1,854
General and administrative 9,669 8,461 17,707 15,834
Other expenses 367 271 710 490
Interest and related amortization 26,285   24,822   51,988   49,701  
Total expenses 192,946   177,889   375,989   348,354  
Income before equity in income of unconsolidated joint ventures 47,556 43,423 110,538 105,347
Equity in income of unconsolidated joint ventures 1,613   1,040   2,808   2,190  
Consolidated net income 49,169   44,463   113,346   107,537  
 
Income allocated to non-controlling interest-Common OP Units (3,024 ) (2,649 ) (6,979 ) (6,539 )

Series C redeemable perpetual preferred stock dividends

(8 ) (2,316 ) (8 ) (4,613 )
Net income available for Common Stockholders $ 46,137   $ 39,498   $ 106,359   $ 96,385  
 
 

Non-GAAP Financial Measures

 
Second Quarter 2018 - Selected Non-GAAP Financial Measures

(In millions, except per share data, unaudited)

 
    Quarter Ended
June 30, 2018

Income from property operations, excluding deferrals and property
management - 2018 Core (1)

$ 125.4
Income from property operations, excluding deferrals and property
management - Non-Core (1)
3.7
Property management and general and administrative (23.1 )
Other income and expenses 4.1
Financing costs and other (26.3 )
Normalized FFO available for Common Stock and OP Unit holders
(2)
83.8
Insurance proceeds due to catastrophic weather event (3) 1.8  
FFO available for Common Stock and OP Unit holders (2) $ 85.6  
 
Normalized FFO per Common Share and OP Unit - Fully Diluted $ 0.89
FFO per Common Share and OP Unit - Fully Diluted $ 0.90
 
 
Normalized FFO available for Common Stock and OP Unit holders (2) $ 83.8
Non-revenue producing improvements to real estate (12.4 )
FAD available for Common Stock and OP Unit holders (2) $ 71.4  
 
Weighted average Common Stock and OP Units - Fully Diluted 94.6
__________________
1.   See Non-GAAP Financial Measures Definitions and Other Terms at the
end of the supplemental information for definitions of Non-GAAP
financial measures Income from property operations, excluding
deferrals and property management, Core, Non-Core, and
reconciliation of income from property operations, excluding
deferrals and property management to Net income available to Common
Stockholders. See page 9 for details of the 2018 Core Income from
Property Operations, excluding deferrals and property management.
See page 10 for details of the Income from Property Operations,
excluding deferrals and property management for the Non-Core
properties.
2. See page 7 for a reconciliation of Net income available for Common
Stockholders to Non-GAAP financial measures FFO available for Common
Stock and OP Unit holders, Normalized FFO available for Common Stock
and OP Unit holders and FAD available for Common Stock and OP Unit
holders. See definitions of Non-GAAP financial measures of FFO,
Normalized FFO and FAD and Non-revenue producing improvements in
Non-GAAP Financial Measures Definitions and Other Terms at the end
of the supplemental information.
3. Represents insurance recovery revenue from reimbursement for capital
expenditures related to Hurricane Irma.
 
Reconciliation of Net Income to Non-GAAP Financial Measures

(In thousands, except per share data, unaudited)

 
    Quarters Ended     Six Months Ended
June 30, June 30,
2018   2017 2018   2017
Net income available for Common Stockholders $ 46,137 $ 39,498 $ 106,359 $ 96,385
Income allocated to Common OP Units 3,024 2,649 6,979 6,539
Right-to-use contract upfront payments, deferred, net (1) 2,021 1,321 3,306 2,096
Right-to-use contract commissions, deferred, net (2) (262 ) (112 ) (286 ) (196 )
Depreciation on real estate assets 30,062 27,608 58,883 55,061
Depreciation on rental homes 2,390 2,639 4,891 5,296
Amortization of in-place leases 1,893 958 2,945 1,990
Depreciation on unconsolidated joint ventures 367   364   739   811  
FFO available for Common Stock and OP Unit holders (3) 85,632 74,925 183,816 167,982
Transaction costs (4) 220 324
Insurance proceeds due to catastrophic weather event (5) (1,806 )       (2,092 )    
Normalized FFO available for Common Stock and OP Unit holders(3) 83,826 75,145 181,724 168,306
Non-revenue producing improvements to real estate (12,411 ) (11,648 ) (21,175 ) (18,808 )
FAD available for Common Stock and OP Unit holders (3) $ 71,415   $ 63,497   $ 160,549   $ 149,498  
 
Net income available per Common Share - Basic $ 0.52 $ 0.46 $ 1.20 $ 1.12
Net income available per Common Share - Fully Diluted
(6)
$ 0.52 $ 0.45 $ 1.20 $ 1.11
 
FFO per Common Share and OP Unit-Basic $ 0.91 $ 0.81 $ 1.95 $ 1.81
FFO per Common Share and OP Unit-Fully Diluted $ 0.90 $ 0.81 $ 1.94 $ 1.81
 
Normalized FFO per Common Share and OP Unit-Basic $ 0.89 $ 0.81 $ 1.93 $ 1.82
Normalized FFO per Common Share and OP Unit-Fully Diluted $ 0.89 $ 0.81 $ 1.92 $ 1.81
 
Average Common Stock - Basic 88,549 86,763 88,551 86,408
Average Common Stock and OP Units - Basic 94,375 92,649 94,375 92,643
Average Common Stock and OP Units - Fully Diluted 94,623 93,063 94,611 93,041
___________________________
1.   The Company adopted ASU 2014-09, Revenue from Contracts with
Customers, and all related amendments, effective January 1, 2018.
Upon adoption, right-to-use upfront nonrefundable payments will be
recognized on a straight-line basis over 20 years to reflect our
current estimated customer life for the majority of our upgrade
contracts. The amount shown represents the deferral of a substantial
portion of current period upgrade sales, offset by amortization of
prior period sales.
2. The deferred commissions will be amortized using the same method as
used for the related non-refundable upfront payments from the entry
of right-to-use contracts and upgrade sales. The amount shown
represents the deferral of a substantial portion of current period
commissions on those contracts, offset by the amortization of prior
period commissions.
3. See Non-GAAP Financial Measures Definitions and Other Terms at the
end of the supplemental information for Non-GAAP financial measure
definitions of FFO, Normalized FFO and FAD and for a definition of
Non-revenue producing improvements.
4. The Company adopted ASU 2017-01, Business Combinations, effective
January 1, 2018. Upon adoption, transaction costs related to asset
acquisitions are capitalized. All acquisitions completed subsequent
to January 1, 2018 were determined by the Company to be asset
acquisitions and, as such, the related transaction costs were
capitalized. Transaction costs related to 2017 acquisitions,
occurring prior to the adoption of this guidance, are included in
General and administrative on the Consolidated Income Statement on
page 4.
5. Represents insurance recovery revenue from reimbursement for capital
expenditures related to Hurricane Irma.
6. Net income per fully diluted Common Share is calculated before
Income allocated to non-controlling interest- Common OP Units.
 

Consolidated Income from Property Operations (1)

(In millions, except home site and occupancy figures,
unaudited)

 
    Quarters Ended     Six Months Ended
June 30, June 30,
2018   2017 2018   2017
Community base rental income (2) $ 128.6 $ 122.0 $ 255.3 $ 242.7
Rental home income 3.6 3.6 7.1 7.2
Resort base rental income (3) 55.2 50.1 119.5 111.1
Right-to-use annual payments 11.9 11.3 23.4 22.6
Right-to-use contracts current period, gross 3.9 3.8 7.1 7.0
Utility and other income (4) 24.3   20.6   49.8   42.8  
Property operating revenues 227.5 211.4 462.2 433.4
 
Property operating, maintenance and real estate taxes (4) 93.5 86.8 182.6 168.9
Rental home operating and maintenance 1.6 1.7 3.1 3.2
Sales and marketing, gross 3.3   2.9   6.1   5.6  
Property operating expenses 98.4   91.4   191.8   177.7  
Income from property operations, excluding deferrals and property
management
(1)
$ 129.1   $ 120.0   $ 270.4   $ 255.7  
 
Manufactured home site figures and occupancy averages:
Total sites 71,797 71,043 71,563 71,017
Occupied sites 67,870 66,822 67,620 66,732
Occupancy % 94.5 % 94.0 % 94.5 % 93.9 %
Monthly base rent per site $ 631 $ 608 $ 629 $ 606
 
Resort base rental income:
Annual $ 36.6 $ 32.9 $ 71.8 65.0
Seasonal 5.2 4.9 24.2 23.4
Transient 13.4   12.3   23.5   22.7  
Total resort base rental income $ 55.2   $ 50.1   $ 119.5   $ 111.1  
_________________________
1.   Excludes property management and the GAAP deferral of right-to-use
contract upfront payments and related commissions, net. See page 4
for the Consolidated Income Statement and see Non-GAAP Financial
Measures Definitions and Other Terms at the end of the supplemental
information for Non-GAAP measure definitions and reconciliation of
Income from property operations, excluding deferrals and property
management to Net income available to Common Stockholders.
2. See the manufactured home site figures and occupancy averages below
within this table.
3. See resort base rental income detail included below within this
table.
4. Includes impact for Hurricane Irma. Utility and other income
includes insurance recovery revenues of $1.7 million and $5.2
million, including $1.5 million and $2.5 million which we have
identified as business interruption, for the quarter and six months
ended June 30, 2018. Property operating, maintenance and real estate
taxes includes debris removal and cleanup costs of $0.2 million and
$2.6 million for the quarter and six months ended June 30, 2018.
 

2018 Core Income from Property Operations (1)

(In millions, except home site and occupancy figures,
unaudited)

 
    Quarters Ended         Six Months Ended    
June 30, % June 30, %
2018   2017

Change (2)

2018   2017 Change (2)
Community base rental income (3) $ 127.4 $ 121.8 4.6 % $ 253.7 $ 242.5 4.6 %
Rental home income 3.6 3.6 (2.0 )% 7.1 7.2 (2.2 )%
Resort base rental income (4) 51.9 48.2 7.7 % 113.9 105.8 7.6 %
Right-to-use annual payments 11.9 11.4 4.8 % 23.4 22.6 3.6 %
Right-to-use contracts current period, gross 3.9 3.8 3.8 % 7.1 7.0 1.5 %
Utility and other income (5) 22.2   20.5   8.5 % 46.4   42.4   9.3 %
Property operating revenues 220.9 209.3 5.6 % 451.6 427.5 5.6 %
 
Property operating, maintenance and real estate taxes (5) 90.6 85.5 5.9 % 177.7 166.2 6.9 %
Rental home operating and maintenance 1.6 1.7 (1.7 )% 3.1 3.2 (4.8 )%
Sales and marketing, gross 3.3   2.9   14.2 % 6.1   5.6   9.5 %
Property operating expenses 95.5   90.1   6.0 % 186.9   175.0   6.8 %
Income from property operations, excluding deferrals and property
management
(1)
$ 125.4   $ 119.2   5.2 % $ 264.7   $ 252.5   4.8 %
Occupied sites (6) 67,221 66,871
 
Core manufactured home site figures and occupancy averages:
Total sites 70,907 70,879 70,891 70,871
Occupied sites 67,127 66,787 67,090 66,714
Occupancy % 94.7 % 94.2 % 94.6 % 94.1 %
Monthly base rent per site $ 633 $ 608 $ 630 $ 606
 
Resort base rental income:
Annual $ 34.8 $ 32.5 7.0 % $ 68.7 $ 64.3 6.9 %
Seasonal 4.9 4.4 11.8 % 23.6 21.5 9.6 %
Transient 12.2   11.2   8.3 % 21.6   20.0   7.7 %
Total resort base rental income $ 51.9   $ 48.1   7.7 % $ 113.9   $ 105.8   7.6 %
___________________________
1.   Excludes property management and the GAAP deferral of right-to-use
contract upfront payments and related commissions, net. See Non-GAAP
Financial Measures Definitions and Other Terms at the end of the
supplemental information for definitions of Non-GAAP measures Income
from property operations, excluding deferrals and property
management, and Core.
2. Calculations prepared using actual results without rounding.
3. See the Core manufactured home site figures and occupancy averages
included below within this table.
4. See resort base rental income detail included below within this
table.
5. Includes impact for Hurricane Irma. Utility and other income
includes insurance recovery revenues of $0.1 million and $2.3
million for the quarter and six months ended June 30, 2018. Property
operating, maintenance and real estate taxes includes debris removal
and cleanup costs of $0.1 million and $2.3 million for the quarter
and six months ended June 30, 2018.
6. Occupied sites are presented as of the end of the period. Occupied
sites have increased by 128 from 67,093 at December 31, 2017.
 

Non-Core - Income from Property Operations (1)

(In millions, unaudited)

 
    Quarter         Six Months
Ended Ended
June 30, June 30,
2018 2018
Community base rental income $ 1.2 $ 1.6
Resort base rental income 3.4 5.6
Utility income and other property income (2) 2.1   3.5
Property operating revenues 6.7 10.7
 
Property operating expenses (2) 3.0   4.9
Income from property operations, excluding deferrals and property
management
$ 3.7   $ 5.8
______________________
1.   See Non-GAAP Financial Measures Definitions and Other Terms at the
end of the supplemental information for a definition of Non-Core.
2. Includes impact of Hurricane Irma. Utility and other property
includes insurance recovery revenues of $1.6 million and $2.8
million, including proceeds which we have identified as business
interruption for the quarter and six months ended June 30, 2018.
Property operating expenses includes debris removal and cleanup
costs of $0.1 million and $0.3 million for the quarter and six
months ended June 30, 2018.
 
Income from Rental Home Operations

(In millions, except occupied rentals, unaudited)

 
    Quarters Ended     Six Months Ended
June 30, June 30,
2018   2017 2018   2017
Manufactured homes:
New home $ 7.4 $ 7.0 $ 14.9 $ 13.6
Used home 4.4   5.5   8.6   11.3
Rental operations revenues (1) 11.8 12.5 23.5 24.9
Rental operations expense 1.6   1.7   3.1   3.2
Income from rental operations 10.2 10.8 20.4 21.7
Depreciation on rental homes 2.4   2.6   4.9   5.3
Income from rental operations, net of depreciation (2) $ 7.8   $ 8.2   $ 15.5   $ 16.4
 
Occupied rentals: (3)
New 2,614 2,517
Used 1,668   2,157  
Total occupied rental sites 4,282   4,674  
 
        As of
June 30, 2018     June 30, 2017
    Net of     Net of

Cost basis in rental homes: (4)

Gross Depreciation Gross Depreciation
New $ 138.9 $ 110.7 $ 129.9 $ 104.7
Used 39.2   20.0   48.2   28.2
Total rental homes $ 178.1   $ 130.7   $ 178.1   $ 132.9
__________________________
1.   For the quarters ended June 30, 2018 and 2017, approximately $8.2
million and $8.8 million, respectively, of the rental operations
revenue are included in the Community base rental income in the
Consolidated Income from Property Operations table on page 8. For
the six months ended June 30, 2018 and 2017, approximately $16.5
million and $17.6 million, respectively, of the rental operations
revenue are included in the Community base rental income in the
Consolidated Income from Property Operations table on page 8. The
remainder of the rental operations revenue is included in Rental
home income for the quarters and six months ended June 30, 2018 and
2017 in the Consolidated Income from Property Operations table on
page 8.
2. See Non-GAAP Financial Measures Definitions and Other Terms at the
end of the supplemental information for the Non-GAAP measure
definition of Income from rental operations, net of depreciation.
3. Occupied rentals as of the end of the period in our Core portfolio.
Included in the quarters ended June 30, 2018 and 2017 are 264 and
257 homes rented through our ECHO joint venture, respectively. For
the six months ended June 30, 2018 and 2017, the rental home
investment associated with our ECHO joint venture totals
approximately $9.2 million and $8.8 million, respectively.
4. Includes both occupied and unoccupied rental homes. New home cost
basis does not include the costs associated with our ECHO joint
venture. At June 30, 2018 and 2017, our investment in the ECHO joint
venture was approximately $15.9 million and $15.4 million,
respectively.
 
Total Sites and Home Sales

(In thousands, except sites and home sale volumes, unaudited)

 
Summary of Total Sites as of June 30, 2018        
Sites
Community sites 71,800
Resort sites:
Annuals 28,400
Seasonal 11,200
Transient 11,400
Membership (1) 24,200
Joint Ventures (2) 5,900
Total 152,900
 
Home Sales - Select Data
    Quarters Ended     Six Months Ended
June 30, June 30,
2018   2017 2018   2017
Total New Home Sales Volume (3) 146 120 276 240
New Home Sales Volume - ECHO joint venture 25 41 43 78
New Home Sales Gross Revenues (3) $ 6,859 $ 4,548 $ 13,595 $ 9,491
 
Total Used Home Sales Volume 297 338 538 623
Used Home Sales Gross Revenues $ 2,246 $ 3,285 $ 3,819 $ 5,369
 
Brokered Home Resales Volume 253 252 446 420
Brokered Home Resale Revenues, net $ 369 $ 346 $ 651 $ 588
__________________________
1.   Sites primarily utilized by approximately 110,400 members. Includes
approximately 5,800 sites rented on an annual basis.
2. Joint ventures have approximately 2,700 annual Sites, 400 seasonal
Sites, 500 transient Sites and includes approximately 2,300 marina
slips.
3. Total new home sales volume includes home sales from our ECHO joint
venture. New home sales gross revenues does not include the revenues
associated with our ECHO joint venture.
 

2018 Guidance - Selected Financial Data (1)

 
Our guidance acknowledges the existence of volatile economic
conditions, which may impact our current guidance assumptions.
Factors impacting 2018 guidance include, but are not limited to the
following: (i) the mix of site usage within the portfolio; (ii)
yield management on our short-term resort sites; (iii) scheduled or
implemented rate increases on community and resort sites; (iv)
scheduled or implemented rate increases in annual payments under
right-to-use contracts; (v) occupancy changes; (vi) our ability to
retain and attract customers renewing or entering right-to-use
contracts; (vii) our ability to integrate and operate recent
acquisitions in accordance with our estimates; (viii) completion of
pending transactions in their entirety and on assumed schedule; (ix)
ongoing legal matters and related fees; and (x) costs to restore
property operations and potential revenue losses following storms or
other unplanned events.
 

(In millions, except per share data, unaudited)

    Quarter Ending     Year Ending
September 30, 2018 December 31, 2018
Income from property operations, excluding deferrals and property
management - 2018 Core (2) (3)
$ 133.0 $ 528.9
Income from property operations - Non-Core (3) (4) 4.0 14.1
Property management and general and administrative (21.8 ) (87.7 )
Other income and expenses 4.7 15.4
Financing costs and other (26.2 ) (104.3 )
Normalized FFO available for Common Stock and OP Unit holders (5) 93.7 366.4
Insurance proceeds due to catastrophic weather event (3) (6)   2.1  
FFO available for Common Stock and OP Unit holders (5) 93.7 368.5
Depreciation on real estate and other (31.4 ) (125.0 )
Depreciation on rental homes (2.4 ) (9.7 )
Deferral of right-to-use contract sales revenue and commission, net (1.4 ) (5.5 )
Income allocated to non-controlling interest-Common OP Units (3.6 ) (13.9 )
Net income available for Common Stockholders $ 54.9   $ 214.4  
 
 
Net income per Common Share - Fully Diluted (7) $0.59 - $0.65 $2.36 - $2.46
FFO per Common Share and OP Unit - Fully Diluted $0.96 - $1.02 $3.84 - $3.94
Normalized FFO per Common Share and OP Unit - Fully Diluted $0.96 - $1.02 $3.82 - $3.92
 
Weighted average Common Stock outstanding - Fully Diluted 94.7 94.7
_____________________________________
1.   Each line item represents the mid-point of a range of possible
outcomes and reflects management's estimate of the most likely
outcome. Actual Normalized FFO available for Common Stock and OP
Unit holders, Normalized FFO per Common Share and OP Unit, FFO
available for Common Stock and OP Unit holders, FFO per Common Share
and OP Unit, Net income available for Common Stockholders and Net
income per Common Share could vary materially from amounts presented
above if any of our assumptions is incorrect.
2. See page 14 for 2018 Core Guidance Assumptions. Amount represents
2017 income from property operations, excluding deferrals and
property management, from the 2018 Core properties of $127.2 million
multiplied by an estimated growth rate of 4.5% and $505.5 million
multiplied by an estimated growth rate of 4.6% for the quarter
ending September 30, 2018 and year ending December 31, 2018,
respectively.
3. Includes insurance proceeds related to Hurricane Irma. As this
insurance claim is currently in process, we can not provide
assurance that the anticipated proceeds will be received as
projected nor can we provide assurance as to the amount that may be
received.
4. See page 14 for the 2018 Assumptions regarding the Non-Core
properties.
5. See Non-GAAP Financial Measures Definitions and Other Terms at the
end of the supplemental information for definitions of Normalized
FFO and FFO.
6. Represents insurance recovery revenue from reimbursement for capital
expenditures related to Hurricane Irma.
7. Net income per fully diluted Common Share is calculated before
Income allocated to non-controlling interest- Common OP Units.
 

2018 Core Guidance Assumptions (1)

(In millions, unaudited)

 
    Quarter     Third        
Ended Quarter 2018 Year Ended 2018
September 30, Growth December 31, Growth
2017

Factors (2)

2017

Factors (2)

Community base rental income $ 123.0 4.4 % $ 489.1 4.5 %
Rental home income 3.6 (1.9 )% 14.3 (1.2 )%
Resort base rental income (3) 56.6 5.7 % 211.1 6.7 %
Right-to-use annual payments 11.5 3.1 % 45.8 2.8 %
Right-to-use contracts current period, gross 4.2 (0.6 )% 14.1 0.2 %
Utility and other income (4) 26.1   (13.3 )% 92.0   (3.1 )%
Property operating revenues 225.0 2.4 % 866.4 4.0 %
 
Property operating, maintenance, and real estate taxes 92.8 % 342.9 3.2 %
Rental home operating and maintenance 1.7 (11.1 )% 6.6 (6.9 )%
Sales and marketing, gross 3.3   (2.7 )% 11.4   4.4 %
Property operating expenses 97.8   (0.2 )% 360.9   3.1 %
Income from property operations, excluding deferrals and property
management
$ 127.2   4.5 % $ 505.5   4.6 %
 
Resort base rental income:
Annual $ 33.3 6.3 % $ 131.7 6.4 %
Seasonal 4.3 6.0 % 33.6 8.0 %
Transient 19.0   4.6 % 45.8   6.6 %
Total resort base rental income $ 56.6   5.7 % $ 211.1   6.7 %
 

2018 Assumptions Regarding Non-Core Properties (1)

(In millions, unaudited)

 
    Quarter Ending     Year Ending
September 30, December 31,

2018 (5)

2018 (5)

Community base rental income $ 1.2 $ 4.0
Resort base rental income 5.2 15.0
Utility and other income (4) 1.5   6.8
Property operating revenues 7.9 25.8
 
Property operating, maintenance, and real estate taxes 3.9   11.7
Property operating expenses 3.9   11.7
Income from property operations, excluding deferrals and property
management
$ 4.0   $ 14.1
_____________________________________
1.   See Non-GAAP Financial Measures Definitions and Other Terms at the
end of the supplemental information for a definition of Core and
Non-Core properties.
2. Management's estimate of the growth of property operations in the
2018 Core Properties compared to actual 2017 performance. Represents
our estimate of the mid-point of a range of possible outcomes.
Calculations prepared using actual results without rounding. Actual
growth could vary materially from amounts presented above if any of
our assumptions is incorrect.
3. See Resort base rental income table included below within this table.
4. Includes insurance proceeds related to Hurricane Irma. As this
insurance claim is currently in process, we can not provide
assurance that the anticipated proceeds will be received as
projected nor can we provide assurance as to the amount that may be
received.
5. Each line item represents our estimate of the mid-point of a
possible range of outcomes and reflects management's best estimate
of the most likely outcome for the Non-Core properties. Actual
income from property operations for the Non-Core properties could
vary materially from amounts presented above if any of our
assumptions is incorrect.
 

Right-To-Use Memberships - Select Data

(In thousands, except member count, number of Thousand
Trails Camping Pass, number of annuals and number of upgrades,
unaudited)

 
    Year Ended December 31,
2014     2015     2016     2017     2018 (1)
Member Count (2) 96,130 102,413 104,728 106,456 108,800
Thousand Trails Camping Pass (TTC) Origination 18,187 25,544 29,576 31,618 35,000
TTC Sales 10,014 11,877 12,856 14,128 16,000
RV Dealer TTC Activations 8,173 13,667 16,720 17,490 19,000
Number of annuals (3) 5,142 5,470 5,756 5,843 6,000
Number of upgrade sales (4) 2,978 2,687 2,477 2,514 2,400
 
Right-to-use annual payments $ 44,860 $ 44,441 $ 45,036 $ 45,798 $ 47,100
Resort base rental income from annuals $ 12,491 $ 13,821 $ 15,413 $ 16,841 $ 18,400
Resort base rental income from seasonals/transients $ 13,894 $ 15,795 $ 17,344 $ 18,231 $ 19,900
Upgrade contract initiations (5) $ 13,892 $ 12,783 $ 12,312 $ 14,130 $ 14,200
Utility and other income $ 2,455 $ 2,430 $ 2,442 $ 2,254 $ 2,300
________________________________
1.   Guidance estimate. Each line item represents our estimate of the
mid-point of a possible range of outcomes and reflects management's
best estimate of the most likely outcome. Actual figures could vary
materially from amounts presented above if any of our assumptions is
incorrect.
2. Members have entered into right-to-use contracts with us that
entitle them to use certain properties on a continuous basis for up
to 21 days.
3. Members who rent a specific site for an entire year in connection
with their right-to-use contract.
4. Existing customers that have upgraded agreements are eligible for
longer stays, can make earlier reservations, may receive discounts
on rental units, and may have access to additional properties.
Upgrades require a non-refundable upfront payment.
5. Revenues associated with contract upgrades, included in Right-to-use
contracts current period, gross, on our Consolidated Income
Statement on page 4.
 
Market Capitalization

(In millions, except share and OP Unit data, unaudited)

 
Capital Structure as of June 30, 2018                    
 

Total

% of Total

% of Total

Common

Common

Market

Stock/Units     Stock/Units     Total     % of Total     Capitalization
 
Secured Debt $ 2,051 91.1 %
Unsecured Debt 200       8.9 %
Total Debt (1) $ 2,251 100.0 % 20.6 %
 
Common Stock 88,802,758 93.8 %
OP Units 5,820,262       6.2 %
Total Common Stock and OP Units 94,623,020 100.0 %
Common Stock price at June 30, 2018 $ 91.90
Fair Value of Common Stock and OP Units $ 8,696       100.0 %
Total Equity $ 8,696 100.0 % 79.4 %
 
Total Market Capitalization $ 10,947 100.0 %
_________________
1.   Excludes deferred financing costs of approximately $24.1 million.
 
Debt Maturity Schedule
Debt Maturity Schedule as of June 30, 2018

(In thousands, unaudited)

 
        Weighted       Weighted             Weighted
Average Average % of Average

Secured

Interest Unsecured Interest Total Interest
Year

Debt

    Rate     Debt     Rate     Total Debt     Debt     Rate  
2018 $ 3,020 8.00 % $ % $ 3,020 0.13 % 8.00 %
2019 195,151 6.27 % % 195,151 8.68 % 6.27 %
2020 118,251 6.14 % % 118,251 5.26 % 6.14 %
2021 185,337 5.01 % % 185,337 8.24 % 5.01 %
2022 144,454 4.59 % % 144,454 6.42 % 4.59 %
2023 107,235 5.08 % 200,000 3.05 % 307,235 13.66 % 3.76 %
2024 % % % %
2025 104,424 3.45 % % 104,424 4.64 % 3.45 %
2026 % % % %
2027 % % % %
Thereafter 1,190,657   4.23 %   % 1,190,657   52.95 % 4.23 %  
Total $ 2,048,529 4.64 % $ 200,000 3.05 % $ 2,248,529 100.0 % 4.50 %
 
Unsecured Line of Credit (2)      
 
Note Premiums 2,542     2,542  
 
Total Debt 2,051,071 200,000 2,251,071
 
Deferred Financing Costs (22,536 ) (1,536 ) (24,072 )
 
Total Debt, net $ 2,028,535   4.70 %

(1)

$ 198,464   3.05 % $ 2,226,999   4.62 % (1)
 
Average Years to Maturity 12.8 4.9 12.1
__________________
1.   Reflects effective interest rate including amortization of note
premiums and amortization of deferred loan cost for secured,
unsecured and total debt.
2. Reflects outstanding balance on the Line of Credit as of June 30,
2018. The Line of Credit matures in October 2021.
 

Non-GAAP Financial Measures Definitions and
Other Terms

This document contains certain Non-GAAP measures used by management that
we believe are helpful in understanding our business, as further
discussed in the paragraphs below. We believe investors should review
these Non-GAAP measures along with GAAP net income and cash flow from
operating activities, investing activities and financing activities,
when evaluating an equity REIT's operating performance. Our definitions
and calculations of these Non-GAAP financial and operating measures and
other terms may differ from the definitions and methodologies used by
other REITs and, accordingly, may not be comparable. These Non-GAAP
financial and operating measures do not represent cash generated from
operating activities in accordance with GAAP, nor do they represent cash
available to pay distributions and should not be considered as an
alternative to net income, determined in accordance with GAAP, as an
indication of our financial performance, or to cash flow from operating
activities, determined in accordance with GAAP, as a measure of our
liquidity, nor is it indicative of funds available to fund our cash
needs, including our ability to make cash distributions.

FUNDS FROM OPERATIONS (FFO). We define FFO as net income,
computed in accordance with GAAP, excluding gains and actual or
estimated losses from sales of properties, plus real estate related
depreciation and amortization, impairments, if any, and after
adjustments for unconsolidated partnerships and joint ventures.
Adjustments for unconsolidated partnerships and joint ventures are
calculated to reflect FFO on the same basis. We compute FFO in
accordance with our interpretation of standards established by the
National Association of Real Estate Investment Trusts ("NAREIT"), which
may not be comparable to FFO reported by other REITs that do not define
the term in accordance with the current NAREIT definition or that
interpret the current NAREIT definition differently than we do. We
receive up-front non-refundable payments from the entry of right-to-use
contracts. In accordance with GAAP, the upfront non-refundable payments
and related commissions are deferred and amortized over the estimated
customer life. Although the NAREIT definition of FFO does not address
the treatment of non-refundable right-to-use payments, we believe that
it is appropriate to adjust for the impact of the deferral activity in
our calculation of FFO.

We believe FFO, as defined by the Board of Governors of NAREIT, is
generally a measure of performance for an equity REIT. While FFO is a
relevant and widely used measure of operating performance for equity
REITs, it does not represent cash flow from operations or net income as
defined by GAAP, and it should not be considered as an alternative to
these indicators in evaluating liquidity or operating performance.

NORMALIZED FUNDS FROM OPERATIONS (NORMALIZED FFO). We define
Normalized FFO as FFO excluding the following non-operating income and
expense items: a) gains and losses from early debt extinguishment,
including prepayment penalties and defeasance costs; b) acquisition and
other transaction costs related to business combinations; and c) other
miscellaneous non-comparable items. Normalized FFO presented herein is
not necessarily comparable to Normalized FFO presented by other real
estate companies due to the fact that not all real estate companies use
the same methodology for computing this amount.

FUNDS AVAILABLE FOR DISTRIBUTION (FAD). We define FAD as
Normalized FFO less non-revenue producing capital expenditures.

We believe that FFO, Normalized FFO and FAD are helpful to investors as
supplemental measures of the performance of an equity REIT. We believe
that by excluding the effect of depreciation, amortization, impairments,
if any, and actual or estimated gains or losses from sales of real
estate, all of which are based on historical costs and which may be of
limited relevance in evaluating current performance, FFO can facilitate
comparisons of operating performance between periods and among other
equity REITs. We further believe that Normalized FFO provides useful
information to investors, analysts and our management because it allows
them to compare our operating performance to the operating performance
of other real estate companies and between periods on a consistent basis
without having to account for differences not related to our operations.
For example, we believe that excluding the early extinguishment of debt,
property acquisition and other transaction costs related to business
combinations from Normalized FFO allows investors, analysts and our
management to assess the sustainability of operating performance in
future periods because these costs do not affect the future operations
of the properties. In some cases, we provide information about
identified non-cash components of FFO and Normalized FFO because it
allows investors, analysts and our management to assess the impact of
those items.

INCOME FROM PROPERTY OPERATIONS, EXCLUDING DEFERRALS AND PROPERTY
MANAGEMENT.
We define Income from property operations, excluding
deferrals and property management as rental income, utility and other
income and right-to-use income less property and rental home operating
and maintenance expenses, real estate tax, sales and marketing expenses,
excluding property management and the GAAP deferral of right-to-use
contract upfront payments and related commissions, net. We believe that
this Non-GAAP financial measure is helpful to investors and analysts as
a measure of the operating results of our manufactured home and RV
communities.

The following table reconciles Net income available for Common
Stockholders to Income from property operations (amounts in thousands):

    Quarters Ended     Six Months Ended
June 30, June 30,
2018   2017 2018   2017
Net income available for Common Stockholders $ 46,137 $ 39,498 $ 106,359 $ 96,385

Series C redeemable perpetual preferred stock dividends

8 2,316 8 4,613
Income allocated to non-controlling interests - Common OP Units 3,024 2,649 6,979 6,539
Equity in income of unconsolidated joint ventures (1,613 ) (1,040 ) (2,808 ) (2,190 )
Income before equity in income of unconsolidated joint ventures 47,556 43,423 110,538 105,347
Right-to-use upfront payments, deferred, net 2,021 1,321 3,306 2,096
Gross revenues from home sales (9,105 ) (7,833 ) (17,414 ) (14,860 )
Brokered resale revenues and ancillary services revenues, net (617 ) (444 ) (2,018 ) (2,105 )
Interest income (1,862 ) (1,798 ) (3,812 ) (3,568 )
Income from other investments, net (3,413 ) (1,109 ) (4,353 ) (1,866 )
Right-to-use contract commissions, deferred, net (262 ) (112 ) (286 ) (196 )
Property management 13,472 13,023 27,153 25,583
Depreciation on real estate and rental homes 32,452 30,247 63,774 60,357
Amortization of in-place leases 1,893 958 2,945 1,990
Cost of homes sales 9,632 7,895 18,206 15,014
Home selling expenses 973 929 2,048 1,854
General and administrative 9,669 8,461 17,707 15,834
Other expenses, including property rights initiatives 367 271 710 490
Interest and related amortization 26,285   24,822   51,988   49,701  
Income from property operations, excluding deferrals and property
management
129,061 120,054 270,492 255,671
Right-to-use contracts, upfront payments and commissions, deferred,
net
(1,759 ) (1,209 ) (3,020 ) (1,900 )
Property management (13,472 ) (13,023 ) (27,153 ) (25,583 )
Income from property operations $ 113,830   $ 105,822   $ 240,319   $ 228,188  

EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND AMORTIZATION (EBITDA)
AND ADJUSTED EBITDA.
EBITDA is defined as net income or loss before
interest income and expense, income taxes, depreciation and
amortization. We define Adjusted EBITDA as EBITDA excluding the
following non-operating income and expense items: a) gains and losses
from early debt extinguishment, including prepayment penalties and
defeasance costs; b) property acquisition and other transaction costs
related to business combinations; c) GAAP deferral of right-to-use
contract upfront payments and related commissions, net; d) depreciation
on unconsolidated joint ventures; e) impairments, if any; and f) other
miscellaneous non-comparable items. EBITDA and Adjusted EBITDA provide
us with an understanding of one aspect of earnings before the impact of
investing and financing charges. We believe that EBITDA and Adjusted
EBITDA may be useful to an investor in evaluating our operating
performance and liquidity because the measures are widely used to
measure a company's operating performance and they are used by rating
agencies and other parties, including lenders, to evaluate our
creditworthiness.

The following table reconciles Consolidated net income to EBITDA and
Adjusted EBITDA (amounts in thousands):

    Quarters Ended     Six Months Ended
June 30, June 30,
2018   2017 2018   2017
Consolidated net income $ 49,169 $ 44,463 $ 113,346 $ 107,537
Interest income (1,862 ) (1,798 ) (3,812 ) (3,568 )
Depreciation on real estate assets and rental homes 32,452 30,247 63,774 60,357
Amortization of in-place leases 1,893 958 2,945 1,990
Depreciation on corporate assets 367 314 710 603
Depreciation on unconsolidated joint ventures 367 364 739 811
Interest and related amortization 26,285   24,822   51,988   49,701  
EBITDA 108,671 99,370 229,690 217,431
Right-to-use contract upfront payments, deferred, net 2,021 1,321 3,306 2,096
Right-to-use contract commissions, deferred, net (262 ) (112 ) (286 ) (196 )
Transaction costs 220 324
Insurance proceeds due to catastrophic weather event (1,806 )       (2,092 )    
Adjusted EBITDA $ 108,624   $ 100,799       $ 230,618     $ 219,655  

CORE. The Core properties include properties we owned and
operated during all of 2017 and 2018. We believe Core is a measure that
is useful to investors for annual comparison as it removes the
fluctuations associated with acquisitions, dispositions and significant
transactions or unique situations.

NON-CORE. The Non-Core properties include all properties that
were not owned and operated during all of 2017 and 2018. This includes,
but is not limited to, three properties and 76 lots of land acquired
during 2018, three properties acquired during 2017 and Fiesta Key and
Sunshine Key RV Resorts.

INCOME FROM RENTAL OPERATIONS, NET OF DEPRECIATION. We use Income
from rental operations, net of depreciation as an alternative measure to
evaluate the operating results of our home rental program. Income from
rental operations, net of depreciation, represents income from rental
operations less depreciation expense on rental homes. We believe this

measure is meaningful for investors as it provides a complete picture of
the home rental program operating results including the impact of
depreciation which affects our home rental program investment decisions.

NON-REVENUE PRODUCING IMPROVEMENTS. Represents capital
expenditures that will not directly result in increased revenue or
expense savings and are primarily comprised of common area improvements,
furniture, and mechanical improvements.

FIXED CHARGES. Fixed charges consist of interest expense,
amortization of note premiums and debt issuance costs.

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