Company Quick10K Filing
Quick10K
Equity Lifestyle Properties
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$115.71 90 $10,410
10-Q 2019-06-30 Quarter: 2019-06-30
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-07-30 Officers, Other Events
8-K 2019-07-22 Earnings, Exhibits
8-K 2019-04-30 Amend Bylaw, Shareholder Vote, Other Events, Exhibits
8-K 2019-04-22 Earnings, Exhibits
8-K 2019-03-14 Other Events, Exhibits
8-K 2019-02-12 Officers, Other Events
8-K 2019-01-28 Earnings, Exhibits
8-K 2019-01-23 Other Events
8-K 2019-01-23 Other Events
8-K 2018-11-06 Earnings, Regulation FD, Exhibits
8-K 2018-10-30 Other Events
8-K 2018-10-22 Earnings, Regulation FD, Exhibits
8-K 2018-09-21 Earnings, Regulation FD, Exhibits
8-K 2018-08-01 Officers, Other Events
8-K 2018-07-23 Earnings, Exhibits
8-K 2018-05-15 Earnings, Regulation FD, Exhibits
8-K 2018-04-23 Earnings, Exhibits
8-K 2018-03-15 Other Events, Exhibits
8-K 2018-03-09 Officers
8-K 2018-03-02 Earnings, Regulation FD
8-K 2018-02-27 Earnings, Officers, Amend Bylaw, Regulation FD, Other Events, Exhibits
8-K 2018-01-30 Earnings, Officers, Other Events, Exhibits
8-K 2017-10-26 Enter Agreement, Leave Agreement, Exhibits
AKAM Akamai Technologies 12,480
AMH American Homes 4 Rent 7,070
WGO Winnebago Industries 1,110
NFBK Northfield Bancorp 758
CVCY Central Valley Community Bancorp 273
IROQ IF Bancorp 71
HCGS Highcom Global Security 0
OHGI One Horizon Group 0
DNO United States Short Oil Fund 0
FXCH Invesco Currencyshares Chinese Renminbi Trust 0
ELS 2019-06-30
Part I - Financial Information
Item 1. Financial Statements
Note 1 - Organization and Basis of Presentation
Note 2 - Summary of Significant Accounting Policies
Note 3 - Leases
Note 4 - Earnings per Common Share
Note 5 - Common Stock and Other Equity Related Transactions
Note 6 - Investment in Real Estate
Note 7 - Investment in Unconsolidated Joint Ventures
Note 8 - Borrowing Arrangements
Note 9 - Derivative Instruments and Hedging Activities
Note 10 - Equity Incentive Awards
Note 11 - Commitments and Contingencies
Note 12 - Reportable Segments
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-3.1 equitylifestylepropertie.htm
EX-31.1 elsex311630201910q.htm
EX-31.2 elsex312630201910q.htm
EX-32.1 elsex321630201910q.htm
EX-32.2 elsex322630201910q.htm

Equity Lifestyle Properties Earnings 2019-06-30

ELS 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Document
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2019-06-30 0000895417 us-gaap:OperatingSegmentsMember 2019-01-01 2019-06-30 0000895417 us-gaap:OperatingSegmentsMember els:HomeSalesAndRentalsMember 2019-01-01 2019-06-30 0000895417 us-gaap:OperatingSegmentsMember els:PropertyOperationsSegmentMember 2019-01-01 2019-06-30 0000895417 us-gaap:MaterialReconcilingItemsMember 2019-01-01 2019-06-30 els:lease iso4217:USD xbrli:shares els:joint_venture_site els:Property els:loan iso4217:USD xbrli:shares els:property xbrli:pure utreg:Rate els:site els:segment
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________________________________________ 
FORM 10-Q
_________________________________________________________ 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2019
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to            
Commission file number: 1-11718
_________________________________________________________ 
EQUITY LIFESTYLE PROPERTIES, INC.
(Exact Name of Registrant as Specified in Its Charter)
_________________________________________________________ 
Maryland
 
 
 
36-3857664
(State or other jurisdiction of incorporation)
 
 
(IRS Employer Identification Number)
Two North Riverside Plaza, Suite 800
 
Chicago,
Illinois
 
60606
(Address of Principal Executive Offices)
 
 
 
(Zip Code)

(312) 279-1400
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
 
 
 
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.01 Par Value
ELS
New York Stock Exchange
_________________________________________________________ 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
Accelerated filer
Non-accelerated filer  
Smaller reporting company
 
 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes       No  
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 91,033,894 shares of Common Stock as of July 24, 2019.
 



Equity LifeStyle Properties, Inc.
Table of Contents
 
 
 
Page
Item 1.
Financial Statements (unaudited)
 
 
Index To Financial Statements
 
 
 
 
 
 
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.

2


Part I – Financial Information

Item 1. Financial Statements

Equity LifeStyle Properties, Inc.
Consolidated Balance Sheets
(amounts in thousands, except share and per share data)
 
As of
 
As of
 
June 30, 2019
 
December 31, 2018

(unaudited)
 
 
Assets
 
 
 
Investment in real estate:
 
 
 
Land
$
1,418,353

 
$
1,408,832

Land improvements
3,236,899

 
3,143,745

Buildings and other depreciable property
781,671

 
720,900

 
5,436,923

 
5,273,477

Accumulated depreciation
(1,704,091
)
 
(1,631,888
)
Net investment in real estate
3,732,832

 
3,641,589

Cash and restricted cash
90,457

 
68,974

Notes receivable, net
36,010

 
35,041

Investment in unconsolidated joint ventures
55,195

 
57,755

Deferred commission expense
40,710

 
40,308

Other assets, net
59,274

 
46,227

Assets held for sale, net

 
35,914

Total Assets
$
4,014,478

 
$
3,925,808

 
 
 
 
Liabilities and Equity
 
 
 
Liabilities:
 
 
 
Mortgage notes payable, net
$
2,075,689

 
$
2,149,726

Term loan, net
198,787

 
198,626

Accounts payable and other liabilities
127,051

 
102,854

Deferred revenue – upfront payments from right-to-use contracts (membership upgrade sales)
121,047

 
116,363

Deferred revenue – right-to-use annual payments (membership subscriptions)
13,022

 
10,055

Accrued interest payable
8,187

 
8,759

Rents and other customer payments received in advance and security deposits
104,249

 
81,114

Distributions payable
58,972

 
52,617

Liabilities related to assets held for sale

 
12,350

Total Liabilities
2,707,004

 
2,732,464

Equity:
 
 
 
Stockholders' Equity:
 
 
 
Preferred stock, $0.01 par value, 10,000,000 shares authorized as of June 30, 2019 and December 31, 2018; none issued and outstanding.

 

Common stock, $0.01 par value, 400,000,000 and 200,000,000 shares authorized as of June 30, 2019 and December 31, 2018, respectively; 91,032,007 and 89,921,018 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively.
906

 
896

Paid-in capital
1,397,613

 
1,329,391

Distributions in excess of accumulated earnings
(162,204
)
 
(211,034
)
Accumulated other comprehensive income (loss)
(242
)
 
2,299

Total Stockholders’ Equity
1,236,073

 
1,121,552

Non-controlling interests – Common OP Units
71,401

 
71,792

Total Equity
1,307,474

 
1,193,344

Total Liabilities and Equity
$
4,014,478

 
$
3,925,808









The accompanying notes are an integral part of the consolidated financial statements.

3


Equity LifeStyle Properties, Inc.
Consolidated Statements of Income and Comprehensive Income
(amounts in thousands, except per share data)
(unaudited)
 
Quarters Ended June 30,

Six Months Ended June 30,
 
2019

2018

2019

2018
Revenues:
 
 
 
 
 
 
 
Rental income
$
212,007

 
$
199,155

 
$
435,573

 
$
406,148

Right-to-use annual payments (membership subscriptions)
12,586

 
11,891

 
24,902

 
23,410

Right-to-use contracts current period, gross (membership upgrade sales)
5,041

 
3,944

 
8,879

 
7,106

Right-to-use contract upfront payments, deferred, net
(2,912
)
 
(2,021
)
 
(4,683
)
 
(3,306
)
Other income
10,265

 
12,536

 
20,635

 
25,572

Gross revenues from home sales
7,825

 
9,105

 
14,300

 
17,414

Brokered resale and ancillary services revenues, net
872

 
617

 
2,431

 
2,018

Interest income
1,803

 
1,862

 
3,554

 
3,812

Income from other investments, net
879

 
3,413

 
1,865

 
4,353

Total revenues
248,366

 
240,502


507,456


486,527

Expenses:
 
 
 
 
 
 
 
Property operating and maintenance
84,868

 
81,720

 
162,816

 
158,052

Real estate taxes
15,107

 
13,440

 
30,430

 
27,575

Sales and marketing, gross
4,214

 
3,305

 
7,623

 
6,117

Right-to-use contract commissions, deferred, net
(389
)
 
(262
)
 
(580
)
 
(286
)
Property management
14,385

 
13,472

 
28,070

 
27,153

Depreciation and amortization
37,776

 
34,345

 
75,753

 
66,719

Cost of home sales
8,164

 
9,632

 
14,796

 
18,206

Home selling expenses
1,102

 
973

 
2,185

 
2,048

General and administrative
9,225

 
9,669

 
19,134

 
17,707

Other expenses
540

 
367

 
967

 
710

Early debt retirement
1,491

 

 
1,491

 

Interest and related amortization
26,024

 
26,285

 
52,417

 
51,988

Total expenses
202,507

 
192,946


395,102


375,989

Gain on sale of real estate, net

 

 
52,507

 

Income before equity in income of unconsolidated joint ventures
45,859

 
47,556


164,861


110,538

Equity in income of unconsolidated joint ventures
3,226

 
1,613

 
4,759

 
2,808

Consolidated net income
49,085

 
49,169


169,620


113,346

 
 
 
 
 
 
 
 
Income allocated to non-controlling interests – Common OP Units
(2,676
)
 
(3,024
)
 
(9,902
)
 
(6,979
)
Redeemable perpetual preferred stock dividends
(8
)
 
(8
)
 
(8
)
 
(8
)
Net income available for Common Stockholders
$
46,401

 
$
46,137


$
159,710


$
106,359

 
 
 
 
 
 
 
 
Consolidated net income
$
49,085

 
$
49,169

 
$
169,620

 
$
113,346

Other comprehensive income (loss):
 
 
 
 
 
 
 
Adjustment for fair market value of swap
(1,610
)
 
764

 
(2,541
)
 
2,637

Consolidated comprehensive income
47,475

 
49,933


167,079


115,983

Comprehensive income allocated to non-controlling interests – Common OP Units
(2,589
)
 
(3,071
)
 
(9,759
)
 
(7,141
)
Redeemable perpetual preferred stock dividends
(8
)
 
(8
)
 
(8
)
 
(8
)
Comprehensive income attributable to Common Stockholders
$
44,878

 
$
46,854


$
157,312


$
108,834

 
 
 
 
 
 
 
 
Earnings per Common Share – Basic
$
0.51

 
$
0.52

 
$
1.78

 
$
1.20

 
 
 
 
 
 
 
 
Earnings per Common Share – Fully Diluted
$
0.51

 
$
0.52

 
$
1.77

 
$
1.20

 
 
 
 
 
 
 
 
Weighted average Common Shares outstanding – basic
90,156

 
88,549

 
89,969

 
88,537

Weighted average Common Shares outstanding – fully diluted
95,930

 
94,623

 
95,773

 
94,600



The accompanying notes are an integral part of the consolidated financial statements.

4


Equity LifeStyle Properties, Inc.
Consolidated Statements of Changes in Equity
(amounts in thousands)
(unaudited)
 
Common
Stock
 
Paid-in
Capital
 
Redeemable
Perpetual
Preferred
Stock
 
Distributions
in Excess of
Accumulated
Earnings
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Non-
controlling
Interests –
Common OP
Units
 
Total
Equity
Balance as of December 31, 2018
$
896

 
$
1,329,391

 
$

 
$
(211,034
)
 
$
2,299

 
$
71,792

 
$
1,193,344

Exchange of Common OP Units for common stock

 
66

 

 

 

 
(66
)
 

Issuance of common stock through exercise of options

 
53

 

 

 

 

 
53

Issuance of common stock through employee stock purchase plan

 
652

 

 

 

 

 
652

Compensation expenses related to restricted stock and stock options

 
2,420

 

 

 

 

 
2,420

Repurchase of common stock or Common OP Units

 
(53
)
 

 

 

 

 
(53
)
Adjustment for Common OP Unitholders in the Operating Partnership

 
(56
)
 

 

 

 
56

 

Adjustment for fair market value of swap

 

 

 

 
(931
)
 

 
(931
)
Consolidated net income

 

 

 
113,309

 

 
7,226

 
120,535

Distributions

 

 

 
(55,123
)
 

 
(3,516
)
 
(58,639
)
Other

 
(63
)
 

 

 

 

 
(63
)
Balance as of March 31, 2019
896

 
1,332,410

 
$

 
(152,848
)
 
1,368

 
75,492

 
1,257,318

Exchange of Common OP Units for Common Stock
5

 
6,430

 

 

 

 
(6,435
)
 

Issuance of Common Stock through employee stock purchase plan

 
587

 

 

 

 

 
587

Issuance of Common Stock
5

 
59,314

 

 

 

 

 
59,319

Compensation expenses related to restricted stock and stock options

 
2,625

 

 

 

 

 
2,625

Adjustment for Common OP Unitholders in the Operating Partnership

 
(2,883
)
 

 

 

 
2,883

 

Adjustment for fair market value of swap

 

 

 

 
(1,610
)
 

 
(1,610
)
Consolidated net income

 

 
8

 
46,401

 

 
2,676

 
49,085

Distributions

 

 
(8
)
 
(55,757
)
 

 
(3,215
)
 
(58,980
)
Other

 
(870
)
 

 

 

 

 
(870
)
Balance as of June 30, 2019
$
906

 
$
1,397,613

 
$

 
$
(162,204
)
 
$
(242
)
 
$
71,401

 
$
1,307,474
























The accompanying notes are an integral part of the consolidated financial statements.

5



Equity LifeStyle Properties, Inc.
Consolidated Statements of Changes in Equity
(amounts in thousands)
(unaudited)

 
Common
Stock
 
Paid-in
Capital
 
Redeemable
Perpetual
Preferred 
Stock
 
Distributions
in Excess of
Accumulated
Earnings
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Non-
controlling
interests –
Common OP
Units
 
Total
Equity
Balance as of December 31, 2017
$
883

 
$
1,242,109

 
$

 
$
(211,980
)
 
$
942

 
$
68,088

 
$
1,100,042

Cumulative effect of change in accounting principle (ASC 606, Revenue Recognition)

 

 

 
(15,186
)
 

 

 
(15,186
)
Balance as of January 1, 2018
883

 
1,242,109

 

 
(227,166
)
 
942

 
68,088

 
1,084,856

Exchange of Common OP Units for common stock

 
80

 

 

 

 
(80
)
 

Issuance of common stock through employee stock purchase plan

 
503

 

 

 

 

 
503

Compensation expenses related to restricted stock and stock options

 
1,800

 

 

 

 

 
1,800

Adjustment for Common OP Unitholders in the Operating Partnership

 
782

 

 

 

 
(782
)
 

Adjustment for fair market value of swap

 

 

 

 
1,873

 

 
1,873

Consolidated net income

 

 

 
60,222

 

 
3,955

 
64,177

Distributions

 

 

 
(48,805
)
 

 
(3,205
)
 
(52,010
)
Other

 
(60
)
 

 

 

 

 
(60
)
Balance as of March 31, 2018
883

 
1,245,214

 

 
(215,749
)
 
2,815

 
67,976

 
1,101,139

Exchange of Common OP Units for Common Stock
1

 
81

 

 

 

 
(82
)
 

Issuance of Common Stock through employee stock purchase plan

 
343

 

 

 

 

 
343

Compensation expenses related to restricted stock and stock options

 
2,741

 

 

 

 

 
2,741

Adjustment for Common OP Unitholders in the Operating Partnership

 
(57
)
 

 

 

 
57

 

Adjustment for fair market value of swap

 

 

 

 
764

 

 
764

Consolidated net income

 

 
8

 
46,137

 

 
3,024

 
49,169

Distributions

 

 
(8
)
 
(48,841
)
 

 
(3,201
)
 
(52,050
)
Other

 
(275
)
 

 

 

 

 
(275
)
Balance as of June 30, 2018
$
884

 
$
1,248,047

 
$

 
$
(218,453
)
 
$
3,579

 
$
67,774

 
$
1,101,831


 






















The accompanying notes are an integral part of the consolidated financial statements.

6


Equity LifeStyle Properties, Inc.
Consolidated Statements of Cash Flows
(amounts in thousands)
(unaudited)
 
Six Months Ended June 30,
 
2019
 
2018
Cash Flows From Operating Activities:
 
 
 
Consolidated net income
$
169,620

 
$
113,346

Adjustments to reconcile consolidated net income to net cash provided by operating activities:
 
 
 
Gain on sale of real estate, net
(52,507
)
 

Early debt retirement
1,491

 

Depreciation and amortization
76,648

 
67,431

Amortization of loan costs
1,768

 
1,772

Debt premium amortization
(232
)
 
(711
)
Equity in income of unconsolidated joint ventures
(4,759
)
 
(2,808
)
Distributions of income from unconsolidated joint ventures
2,008

 
1,732

Proceeds from insurance claims, net
4,422

 
1,809

Compensation expense related to restricted stock and stock options
5,045

 
4,541

Revenue recognized from right-to-use contract upfront payments (membership upgrade sales)
(4,195
)
 
(3,800
)
Commission expense recognized related to right-to-use contracts
1,867

 
1,810

Long-term incentive plan compensation
(3,608
)
 
461

Changes in assets and liabilities:
 
 
 
Notes receivable, net
(1,079
)
 
642

Deferred commission expense
(2,269
)
 
(2,010
)
Other assets, net
(8,275
)
 
10,895

Accounts payable and other liabilities
25,962

 
9,274

Deferred revenue – upfront payments from right-to-use contracts (membership upgrade sales)
8,879

 
7,106

Deferred revenue – right-to-use annual payments (membership subscriptions)
2,967

 
2,874

Rents and other customer payments received in advance and security deposits
20,932

 
15,601

Net cash provided by operating activities
244,685

 
229,965

Cash Flows From Investing Activities:
 
 
 
Real estate acquisitions, net
(38,463
)
 
(53,289
)
Proceeds from disposition of properties, net
77,746

 

Investment in unconsolidated joint ventures

 
(3,791
)
Distributions of capital from unconsolidated joint ventures
5,169

 
110

Proceeds from insurance claims
1,111

 
2,335

Repayments of notes receivable

 
13,823

Capital improvements
(121,444
)
 
(81,377
)
Net cash used in investing activities
(75,881
)
 
(122,189
)




















The accompanying notes are an integral part of the consolidated financial statements.

7



Equity LifeStyle Properties, Inc.
Consolidated Statements of Cash Flows (continued)
(amounts in thousands)
(unaudited)

 
Six Months Ended June 30,
 
2019
 
2018
Cash Flows From Financing Activities:
 
 
 
Proceeds from stock options and employee stock purchase plan
1,237

 
846

Gross proceeds from the issuance of common stock
59,319

 

Distributions:
 
 
 
Common Stockholders
(104,579
)
 
(92,008
)
Common OP Unitholders
(6,676
)
 
(6,049
)
Preferred Stockholders
(8
)
 
(8
)
Principal payments and mortgage debt repayment
(93,982
)
 
(23,964
)
New mortgage notes payable financing proceeds

 
64,014

Line of Credit payoff

 
(97,000
)
Line of Credit proceeds

 
67,000

Debt issuance and defeasance costs
(1,700
)
 
(1,688
)
Other
(932
)
 
(335
)
Net cash used in financing activities
(147,321
)
 
(89,192
)
Net increase in cash and restricted cash
21,483

 
18,584

Cash and restricted cash, beginning of period
68,974

 
35,631

Cash and restricted cash, end of period
$
90,457

 
$
54,215


 
Six Months Ended June 30,
 
2019
 
2018
Supplemental Information:
 
 
 
Cash paid for interest
$
51,744

 
$
52,658

Net investment in real estate – reclassification of rental homes
$
12,451

 
$
15,396

Other assets, net – reclassification of rental homes
$
(12,451
)
 
$
(15,396
)
 
 
 
 
Real estate acquisitions:
 
 
 
Investment in real estate
$
(58,871
)
 
$
(71,756
)
Other assets, net
(412
)
 
(9
)
Debt assumed
19,212

 
9,200

Debt financed

 
8,786

Other liabilities
1,608

 
490

Real estate acquisitions, net
$
(38,463
)
 
$
(53,289
)
 
 
 
 
Real estate dispositions:
 
 
 
Investment in real estate
$
35,572

 
$

Notes receivable, net
295

 

Other assets, net
97

 

Mortgage notes payable, net
(11,175
)
 

Other liabilities
450

 

Gain on sale of real estate, net
52,507

 

Real estate dispositions, net
$
77,746

 
$













The accompanying notes are an integral part of the consolidated financial statements.

8


Equity LifeStyle Properties, Inc.
Notes to Consolidated Financial Statements


Note 1 – Organization and Basis of Presentation
Equity LifeStyle Properties, Inc. ("ELS"), a Maryland corporation, together with MHC Operating Limited Partnership (the “Operating Partnership”) and its other consolidated subsidiaries (the “Subsidiaries”) are referred to herein as “we,” “us,” "the Company," and “our.” We are a fully integrated owner and operator of lifestyle-oriented properties ("Properties") consisting primarily of manufactured home ("MH") and recreational vehicle ("RV") communities. We provide our customers the opportunity to place factory-built homes, cottages, cabins or RVs on our Properties either on a long-term or short-term basis. Our customers may lease individual developed areas ("Sites") or enter right-to-use contracts, which provide them access to specific Properties for limited stays.
Our Properties are owned primarily by the Operating Partnership and managed internally by wholly-owned affiliates of the Operating Partnership. ELS is the sole general partner of the Operating Partnership, has exclusive responsibility and discretion in management and control of the Operating Partnership and held a 94.5% interest as of June 30, 2019. As the general partner with control, ELS is the primary beneficiary of, and therefore consolidates, the Operating Partnership.
Equity method of accounting is applied to entities in which ELS does not have a controlling interest or for variable interest entities in which ELS is not considered the primary beneficiary, but with respect to which it can exercise significant influence over operations and major decisions. Our exposure to losses associated with unconsolidated joint ventures is primarily limited to the carrying value of these investments. Accordingly, distributions from a joint venture in excess of our carrying value are recognized in earnings.
The accompanying unaudited interim consolidated financial statements have been prepared pursuant to Securities and Exchange Commission (“SEC”) rules and regulations for Quarterly Reports on Form 10-Q. Accordingly, they do not include all of the information and note disclosures required by U.S. Generally Accepted Accounting Principles ("GAAP") for complete financial statements and should be read in conjunction with the consolidated financial statements and notes thereto included in the 2018 Form 10-K.
Intercompany balances and transactions have been eliminated. All adjustments to the interim consolidated financial statements are of a normal, recurring nature and, in the opinion of management, are necessary for a fair presentation of results for these interim periods. Revenues and expenses are subject to seasonal fluctuations and accordingly, quarterly interim results may not be indicative of full year results. Certain prior period amounts have been reclassified on our interim consolidated financial statements to conform with current year presentation.

Note 2 – Summary of Significant Accounting Policies
(a)    Recently Adopted Accounting Pronouncements
In February 2016, the FASB issued ("ASU 2016-02") Leases. This new guidance, including the related subsequently issued ASUs, provides the principles for the recognition, measurement, presentation and disclosure of leases, including the requirement that lessees recognize right-of-use ("ROU") assets and lease liabilities for leases on the Consolidated Balance Sheets.
We adopted the new lease standard effective January 1, 2019 and have elected to use January 1, 2019 as our date of initial application. Results for reporting periods beginning January 1, 2019 are presented under the new lease standard. We made an accounting policy election to not recognize ROU assets and lease liabilities for leases with a term of 12 months or less. We elected the package of practical expedients permitted under the transition guidance within the new standard and were not required to reassess the following upon adoption: (i) whether an expired or existing contract met the definition of a lease, (ii) the lease classification at January 1, 2019 for existing leases and (iii) whether leasing costs previously capitalized as initial direct costs would continue to be amortized. Upon adoption, we did not have an adjustment to the opening balance of retained earnings due to the election of these practical expedients.
As a lessor, we adopted the practical expedient that allowed us not to separate expenses reimbursed by our customers (“utility recoveries”) from the associated rental revenue if certain criteria were met. We assessed these criteria and concluded the timing and pattern of transfer for rental revenue and the associated utility recoveries are the same and as our leases qualify as operating leases, we accounted for and presented rental revenue and utility recoveries as a single component under Rental income in our Consolidated Statements of Income and Comprehensive Income for 2019 and 2018. In addition, the new standard requires our expected credit loss related to the collectability of lease receivables to be reflected as an adjustment to the line item Rental income prospectively starting from January 1, 2019. For 2018, the credit loss related to the collectability of lease receivables was recognized

9

Equity LifeStyle Properties, Inc.
Notes to Consolidated Financial Statements

Note 2 – Summary of Significant Accounting Policies (continued)

in the line item Property operating and maintenance and was not significant. The guidance regarding capitalization of leasing costs did not have any effect on our consolidated financial statements.
On January 1, 2019, we recognized ROU assets of $17.5 million and lease liabilities of $18.7 million on the Consolidated Balance Sheets, principally for our ground and office space leases, in which we are the lessee.
For more disclosure on the adoption of the new lease accounting standard, see Note 3. Leases.
(b)    New Accounting Pronouncements
In August 2018, the FASB issued ("ASU 2018-15") Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. ASU 2018-15 provides clarity on the accounting for implementation costs of a cloud computing arrangement that is a service contract. The project stage (that is, preliminary project stage, application development stage, or post implementation stage) and the nature of the implementation costs determine which costs to capitalize as an asset related to the service contract and which ones to expense. This update also requires the capitalized implementation costs to be expensed over the term of the arrangement and to be presented in the same line item in the consolidated financial statements as the fees associated with the service of the arrangement. ASU 2018-15 is effective in fiscal years beginning after December 15, 2019, including interim periods within those years. Early adoption is permitted. This guidance can be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. We are currently in the process of evaluating the potential impact, if any, that the adoption of this standard may have on the consolidated financial statements and related disclosures.
In June 2016, the FASB issued (“ASU 2016-13”) Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326). ASU 2016-13 requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Entities will now use forward-looking information to better form their credit loss estimates. ASU 2016-13 also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. ASU 2016-13 is effective for annual reporting periods beginning after December 15, 2019. Early adoption is permitted. We are currently in the process of evaluating the potential impact, if any, that adoption of this standard may have on the consolidated financial statements and related disclosures.
(c)    Revenue Recognition
We account for certain revenue streams in accordance with Accounting Standard Codification (ASC) 606, Revenue from Contracts with Customers. Right-to-use contracts (also referred to as membership subscriptions), provide our customers access to specific Properties for limited stays at a specified group of Properties. Payments are deferred and recognized on a straight-line basis over the one-year period in which access to Sites at certain Properties are provided. Right-to-use upgrade contracts grant certain additional access rights to the customer and require non-refundable upfront payments. The non-refundable upfront payments are recognized on a straight-line basis over 20 years.
Income from home sales is recognized when the earnings process is complete. The earnings process is complete when the home has been delivered, the purchaser has accepted the home and title has transferred.
(d)    Restricted Cash
As of June 30, 2019 and December 31, 2018, restricted cash consists of $27.5 million and $24.1 million, respectively, primarily related to cash reserved for customer deposits and amounts escrowed for insurance and real estate taxes.


10


Equity LifeStyle Properties, Inc.
Notes to Consolidated Financial Statements

Note 3 – Leases

Lessor
Rental income derived from customers renting our Sites is accounted for in accordance with ASC 842, Leases, and is recognized over the term of the respective operating lease or the length of a customer's stay. Our MH community Sites and annual RV community Sites are leased on an annual basis. Seasonal Sites are leased to customers generally for one to six months. Transient Sites are leased to customers on a short-term basis. In addition, customers may lease homes that are located in our Properties.
The leases entered into between the customer and us for the rental of a Site are renewable upon the consent of both parties or, in some instances, as provided by statute. Long-term leases that are non-cancelable by the tenants are in effect at certain Properties. Rental rate increases at these Properties are primarily a function of increases in the Consumer Price Index, taking into consideration certain conditions. Additionally, periodic market rate adjustments are made as deemed appropriate. In addition, certain state statutes allow entry into long-term agreements that effectively modify lease terms related to rent amounts and increases over the term of the agreements. The following table presents future minimum rents expected to be received under long-term non-cancelable tenant leases, as well as those leases that are subject to long-term agreements governing rent payments and increases:

 
(amounts in thousands)
 
As of June 30, 2019
2019
 
$
60,067

2020
 
120,012

2021
 
65,321

2022
 
34,906

2023
 
19,714

Thereafter
 
84,254

Total
 
$
384,274



Lessee
We lease land under non-cancelable operating leases at 13 Properties expiring at various dates through 2054. The majority of the leases have terms requiring fixed payments plus additional rents based on a percentage of gross revenues at those Properties. We also have other operating leases, primarily office space expiring at various dates through 2026. For the quarters ended June 30, 2019 and 2018, total operating lease payments were $2.3 million and $2.1 million, respectively. For the six months ended June 30, 2019 and 2018, total operating lease payments were $4.6 million and $4.1 million, respectively.
The following table summarizes our future minimum rental payments, excluding variable costs, which are discounted by our incremental borrowing rate to calculate the lease liabilities for our operating leases:
(amounts in thousands)
 
As of June 30, 2019
 
As of December 31, 2018
2019
 
$
2,770

 
$
4,921

2020
 
4,801

 
4,801

2021
 
4,179

 
4,179

2022
 
2,103

 
2,103

2023
 
953

 
953

Thereafter
 
5,054

 
5,054

Total undiscounted rental payments
 
19,860

 
22,011

Less imputed interest
 
(2,895
)
 
(3,289
)
Total lease liabilities
 
$
16,965

 
$
18,722


    
ROU assets and lease liabilities from our operating leases included within Other assets, net and Accounts payable and other liabilities on the Consolidated Balance Sheets were $15.7 million and $17.0 million, respectively, as of June 30, 2019. The weighted average remaining lease term for our operating leases was 7 years and the weighted average incremental borrowing rate was 4.4% at June 30, 2019.

11


Equity LifeStyle Properties, Inc.
Notes to Consolidated Financial Statements

Note 4 – Earnings Per Common Share
The following table sets forth the computation of basic and diluted earnings per common share for the quarters and six months ended June 30, 2019 and 2018:
 
 
Quarters Ended June 30,
 
Six Months Ended June 30,
(amounts in thousands, except per share data)
 
2019
 
2018
 
2019
 
2018
Numerator:
 
 
 
 
 
 
 
 
Net income available for Common Stockholders – Basic
 
$
46,401

 
$
46,137

 
$
159,710

 
$
106,359

Amounts allocated to dilutive securities
 
2,676

 
3,024

 
9,902

 
6,979

Net income available for Common Stockholders – Fully Diluted
 
$
49,077

 
$
49,161

 
$
169,612

 
$
113,338

Denominator:
 
 
 
 
 
 
 
 
Weighted average Common Shares outstanding – Basic
 
90,156

 
88,549

 
89,969

 
88,537

Effect of dilutive securities:
 
 
 
 
 
 
 
 
Exchange of Common OP Units for Common Shares
 
5,643

 
5,826

 
5,691

 
5,827

Restricted stock and stock options
 
131

 
248

 
113

 
236

Weighted average Common Shares outstanding – Fully Diluted
 
95,930

 
94,623

 
95,773

 
94,600

 
 
 
 
 
 
 
 
 
Earnings per Common Share – Basic
 
$
0.51

 
$
0.52

 
$
1.78

 
$
1.20

 
 
 
 
 
 
 
 
 
Earnings per Common Share – Fully Diluted
 
$
0.51

 
$
0.52

 
$
1.77

 
$
1.20

 
 
 
 
 
 
 
 
 


Note 5 – Common Stock and Other Equity Related Transactions
Common Stockholder Distribution Activity
The following quarterly distributions have been declared and paid to Common Stockholders and the limited partners of the Operating Partnership (the "Common OP Unit holders") since January 1, 2018.
Distribution Amount Per Share
 
For the Quarter Ended
 
Stockholder Record Date
 
Payment Date
$0.5500
 
March 31, 2018
 
March 30, 2018
 
April 13, 2018
$0.5500
 
June 30, 2018
 
June 29, 2018
 
July 13, 2018
$0.5500
 
September 30, 2018
 
September 28, 2018
 
October 12, 2018
$0.5500
 
December 31, 2018
 
December 28, 2018
 
January 11, 2019
$0.6125
 
March 31, 2019
 
March 29, 2019
 
April 12, 2019
$0.6125
 
June 30, 2019
 
June 28, 2019
 
July 12, 2019


Increase in Authorized Shares

On April 30, 2019, our stockholders approved an amendment to our charter to increase the number of shares of our common stock that we are authorized to issue from 200,000,000 to 400,000,000 shares.

Equity Offering Program
On October 26, 2018, we entered into our current at-the-market ("ATM") equity offering program with certain sales agents, pursuant to which we may sell, from time-to-time, shares of our Common Stock, par value $0.01 per share, having an aggregate offering price of up to $200.0 million. As of June 30, 2019, we have $140.7 million of common stock available for issuance.




12

Equity LifeStyle Properties, Inc.
Notes to Consolidated Financial Statements
Note 5 – Common Stock and Other Equity Related Transactions (continued)

The following table presents the shares that were issued under the current ATM equity offering program during the six months ended June 30, 2019. There was no activity under the ATM equity offering program during the six months ended June 30, 2018.
 
 
Six Months Ended June 30,
(amounts in thousands, except stock data)
 
2019
Shares of Common Stock sold
 
505,236

Weighted average price
 
$
117.41

Total gross proceeds 
 
$
59,319

Commissions paid to sales agents
 
$
771


Exchanges
Subject to certain limitations, Common OP Unit holders can request an exchange of any or all of their OP Units for shares of Common Stock at any time. Upon receipt of such a request, we may, in lieu of issuing shares of Common Stock, cause the Operating Partnership to pay cash. During the six months ended June 30, 2019, 495,325 OP Units were exchanged for an equal number of shares of Common Stock. During the six months ended June 30, 2018, 13,838 OP Units were exchanged for an equal number of shares of Common Stock.

Note 6 – Investment in Real Estate
Acquisitions
On May 29, 2019, we completed the acquisition of White Oak Shores Camping and RV Resort, a 455-site RV community located in Stella, North Carolina, for a purchase price of $20.5 million. The acquisition was funded with available cash.
On April 10, 2019, we completed the acquisition of Round Top RV Campground, a 391-site RV community located in Gettysburg, Pennsylvania, for a purchase price of $