What changed in this filing

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Item 1. Financial Statements

2021-10-26 compared with 2021-07-27 · 118 added, 63 removed, 543 unchanged (25% of the section changed)

3 unchanged sentences

(amounts in thousands, except share and per share data)

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Investment in real estate:

22 unchanged sentences

Stockholders' Equity:

Preferred stock, $ 0.01 par value, 10,000,000 shares authorized as of June 30, 2021 and December 31, 2020;

Preferred stock, $ 0.01 par value, 10,000,000 shares authorized as of September 30, 2021 and December 31, 2020;

none issued and outstanding.

Common stock, $ 0.01 par value, 600,000,000 and shares authorized as of June 30, 2021 and December 31, 2020;

183,754,301 and 182,230,631 shares issued and outstanding as of June 30, 2021, and December 31, 2020, respectively.

Common stock, $ 0.01 par value, 600,000,000 and shares authorized as of September 30, 2021 and December 31, 2020;

183,824,165 and 182,230,631 shares issued and outstanding as of September 30, 2021, and December 31, 2020, respectively.

Paid-in capital 1,427,606 1,411,397

9 unchanged sentences

(amounts in thousands, except per share data)

Quarters Ended June 30, Six Months Ended June 30,

Quarters Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

64 unchanged sentences

Balance as of June 30, 2021 1,827 1,424,350 — ( 185,930 ) 239 61,505 1,301,991

Exchange of Common OP Units for Common Stock 1 438 — — — ( 439 ) —

Issuance of Common Stock through employee stock purchase plan — 379 — — — — 379

Compensation expenses related to restricted stock and stock options — 2,774 — — — — 2,774

Adjustment for Common OP Unitholders in the Operating Partnership — ( 142 ) — — — 142 —

Adjustment for fair market value of swap — — — — 86 — 86

Consolidated net income — — — 70,625 — 3,468 74,093

Distributions — — — ( 66,636 ) — ( 3,272 ) ( 69,908 )

Other — ( 193 ) — — — — ( 193 )

Balance as of September 30, 2021 $ 1,828 $ 1,427,606 $ — $ ( 181,941 ) $ 325 $ 61,404 $ 1,309,222

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

24 unchanged sentences

Balance as of June 30, 2020 1,812 1,405,764 — ( 169,903 ) ( 1,161 ) 70,871 1,307,383

Issuance of Common Stock through employee stock purchase plan — 528 — — — — 528

Compensation expenses related to restricted stock and stock options — 2,878 — — — — 2,878

Adjustment for Common OP Unitholders in the Operating Partnership — ( 592 ) — — — 592 —

Adjustment for fair market value of swap — — — — 1,161 — 1,161

Consolidated net income — — — 50,560 — 2,908 53,468

Distributions — — — ( 62,411 ) — ( 3,590 ) ( 66,001 )

Other — ( 325 ) — — — — ( 325 )

Balance as of September 30, 2020 $ 1,812 $ 1,408,253 $ — $ ( 181,754 ) $ — $ 70,781 $ 1,299,092

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

2 unchanged sentences

(amounts in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash Flows From Operating Activities:

25 unchanged sentences

Distributions of capital from unconsolidated joint ventures 2,320 2,294

Proceeds from insurance claims 2,048 109

Capital improvements ( 204,037 ) ( 155,061 )

4 unchanged sentences

(amounts in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash Flows From Financing Activities:

17 unchanged sentences

Cash and restricted cash, end of period $ 40,272 $ 114,218

Six Months Ended June 30,

Nine Months Ended September 30,

Supplemental Information:

22 unchanged sentences

Our Properties are owned primarily by the Operating Partnership and managed internally by 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 95.3 % interest as of June 30, 2021.

As the general partner with control, ELS is the primary beneficiary of, and therefore consolidates, the Operating Partnership.

41 unchanged sentences

(b) Restricted Cash

As of June 30, 2021 and December 31, 2020, restricted cash consists of $ 31.2 million and $ 24.1 million, respectively, primarily related to cash reserved for customer deposits and escrows for insurance and real estate taxes.

As of September 30, 2021 and December 31, 2020, restricted cash consists of $ 31.7 million and $ 24.1 million, respectively, primarily related to cash reserved for customer deposits and escrows for insurance and real estate taxes.

11 unchanged sentences

(amounts in thousands)

As of June 30, 2021

As of September 30, 2021

2021 $ 44,370

4 unchanged sentences

Note 3 – Leases (continued)

We lease land under non-cancelable operating leases at 14 Properties expiring at various dates through 2054.

We lease land under non-cancelable operating leases at 14 Properties expiring at various dates between 2022 and 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 2032.

For the quarters ended June 30, 2021 and 2020, total operating lease payments were $ 2.6 million and $ 2.4 million, respectively.

For the six months ended June 30, 2021 and 2020, total operating lease payments were $ 5.1 million and $ 4.8 million, respectively.

The following table summarizes our minimum future rental payments, excluding variable costs, which are discounted by our incremental borrowing rate to calculate the lease liability for our operating leases as of June 30, 2021:

As of June 30, 2021

For the quarters ended September 30, 2021 and 2020, total operating lease payments were $ 2.9 million and $ 2.5 million, respectively.

For the nine months ended September 30, 2021 and 2020, total operating lease payments were $ 8.0 million and $ 7.3 million, respectively.

As of September 30, 2021

(amounts in thousands)

9 unchanged sentences

Total lease liabilities $ 7,023 $ 18,649 $ 25,672

Right-of-use (“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 $ 23.7 million and $ 27.0 million, respectively, as of June 30, 2021.

The weighted average remaining lease term for our operating leases was ten years and the weighted average incremental borrowing rate was 3.8 % at June 30, 2021.

The weighted average remaining lease term for our operating leases was nine years and the weighted average incremental borrowing rate was 3.8 % at September 30, 2021.

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 $ 16.4 million, respectively, as of December 31, 2020.

3 unchanged sentences

Note 4 – Earnings Per Common Share

The following table sets forth the computation of basic and diluted earnings per share of common stock for the quarters and six months ended June 30, 2021 and 2020:

Quarters Ended June 30, Six Months Ended June 30,

The following table sets forth the computation of basic and diluted earnings per share of common stock for the quarters and nine months ended September 30, 2021 and 2020:

Quarters Ended September 30, Nine Months Ended September 30,

(amounts in thousands, except per share data) 2021 2020 2021 2020

20 unchanged sentences

$ 0.3625 June 30, 2021 June 25, 2021 July 9, 2021

$ 0.3625 September 30, 2021 September 24, 2021 October 8, 2021

Equity Offering Program

On July 30, 2020, 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, 2021, the full capacity remained available for issuance.

As of September 30, 2021, the full capacity remained available for issuance.

Subject to certain limitations, 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, 2021 and 2020, 1,386,716 and 9,228 OP Units, respectively, were exchanged for an equal number of shares of Common Stock.

During the nine months ended September 30, 2021 and 2020, 1,451,710 and 9,228 OP Units, respectively, were exchanged for an equal number of shares of Common Stock.

Note 6 – Investment in Real Estate

On September 30, 2021, we completed the acquisition of an approximately 40 acre vacant land parcel in Nokomis, Florida, adjacent to our MH community, Lake Village, for additional expansion.

The purchase price was $ 10.4 million, which was funded with available cash.

On August 26, 2021, we acquired a portion of Pirateland Camping Resort located in Myrtle Beach, South Carolina for $ 110.8 million.

Pirateland is a 1,484 site RV community, and the ELS parcel contains 813 sites.

Pirateland, including the ELS parcel, is managed by a tenant pursuant to existing ground leases.

The ground lease with respect to the ELS parcel expires in February 2025.

The acquisition was funded with proceeds from our unsecured line of credit.

On June 3, 2021, we completed the acquisition of Pine Haven, a 629 -site RV community located in Cape May, New Jersey, for a purchase price of $ 62.8 million.

5 unchanged sentences

The acquisition was funded with our unsecured line of credit.

On July 31, 2020, we completed the acquisition of an 11 -acre development parcel that contained an additional 56 sites in Stella, North Carolina.

On August 27, 2020, we completed the acquisition of a 51 -acre vacant land parcel, also in Stella, North Carolina, for additional expansion.

Both parcels are adjacent to our RV community, White Oak Shores.

The total aggregate purchase price was $ 4.8 million, which was funded with available cash.

On April 21, 2020, we completed the acquisition of a 4.6 -acre vacant land parcel in North Ellenton, Florida, adjacent to our MH community, Colony Cove, for additional expansion.

1 unchanged sentence

Note 7 - Investments in Unconsolidated Joint Ventures

The following table summarizes our investment in unconsolidated joint ventures (investment amounts in thousands with the number of Properties shown parenthetically as of June 30, 2021 and December 31, 2020 , respectively ) :

The following table summarizes our investment in unconsolidated joint ventures (investment amounts in thousands with the number of Properties shown parenthetically as of September 30, 2021 and December 31, 2020 , respectively ) :

Investment as of Income/(Loss) for

the nine months ended

Investment Location Number of Sites Economic

June 30, 2021 December 31, 2020 June 30, 2021 June 30, 2020

September 30, 2021 December 31, 2020 September 30, 2021 September 30, 2020

Meadows Various (2,2) 1,077 50 % $ — $ — $ 1,350 $ 1,404

5 unchanged sentences

_____________________

(a) The percentages shown approximate our economic interest as of June 30, 2021.

(a) The percentages shown approximate our economic interest as of September 30, 2021.

Our legal ownership interest may differ.

1 unchanged sentence

(c) Primarily consists of a 50 % interest in Voyager RV Resort and a 33 % interest in the utility plant servicing this Property.

We received approximately $ 1.7 million and $ 1.5 million in distributions from our unconsolidated joint ventures for the six months ended June 30, 2021 and 2020, respectively.

Approximately $ 1.5 million and $ 1.0 million of the distributions made to us exceeded our basis in our unconsolidated joint ventures for the six months ended June 30, 2021 and 2020, respectively, and as such, were recorded as income from unconsolidated joint ventures.

On October 14, 2021, we acquired our joint venture partner’s 50 % interest in Voyager RV Resort.

Subsequent events .

We received approximately $ 2.4 million and $ 2.4 million in distributions from our unconsolidated joint ventures for the nine months ended September 30, 2021 and 2020, respectively.

Approximately $ 2.2 million and $ 1.8 million of the distributions made to us exceeded our basis in our unconsolidated joint ventures for the nine months ended September 30, 2021 and 2020, respectively, and as such, were recorded as income from unconsolidated joint ventures.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 8 – Borrowing Arrangements

2 unchanged sentences

The following table presents the fair value of our mortgage notes payable:

As of June 30, 2021 As of December 31, 2020

As of September 30, 2021 As of December 31, 2020

(amounts in thousands)

1 unchanged sentence

Mortgage notes payable, excluding deferred financing costs $ 2,722,619 $ 2,633,681 $ 2,537,137 $ 2,472,876

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 8 - Borrowing Arrangements (continued)

The weighted average interest rate on our outstanding mortgage indebtedness, including the impact of premium/discount amortization and loan cost amortization on mortgage indebtedness, as of June 30, 2021, was approximately 3.8 % per annum.

The debt bears interest at stated rates ranging from 2.4 % to 8.9 % per annum and matures on various dates ranging from 2022 to 2041.

The debt encumbered a total of 117 and 116 of our Properties as of June 30, 2021 and December 31, 2020, respectively, and the gross carrying value of such Properties was approximately $ 2,698.2 million and $ 2,580.9 million, as of June 30, 2021 and December 31, 2020, respectively.

The debt encumbered a total of 117 and 116 of our Properties as of September 30, 2021 and December 31, 2020, respectively, and the gross carrying value of such Properties was approximately $ 2,726.0 million and $ 2,580.9 million, as of September 30, 2021 and December 31, 2020, respectively.

2021 Activity

8 unchanged sentences

These mortgage loans had a weighted average interest rate of 5.2 % per annum and were secured by three MH communities.

During the quarter ended September 30, 2020, we entered into a Secured Credit Facility with Fannie Mae for $ 386.9 million.

The loan consisted of two tranches with a weighted average interest rate of 2.55 % per annum and a weighted average maturity of 13.4 years.

The first tranche generated proceeds of $ 202.0 million with an interest rate of 2.47 % per annum and a maturity of 12 years.

The second tranche generated proceeds of $ 184.9 million with an interest rate of 2.64 % per annum and a maturity of 15 years.

The loan is secured by ten MH communities.

The net proceeds from the transaction were primarily used to repay our $ 200.0 million unsecured term loan scheduled to mature in 2023 and $ 166.8 million of secured loans scheduled to mature in 2021.

The unsecured term loan had an interest rate of LIBOR plus 1.20 % to 1.90 % per annum and, subject to certain conditions, could be prepaid at any time without premium or penalty.

In connection with the term loan, we entered into a LIBOR swap agreement allowing us to trade the variable rate of LIBOR on the term loan for a fixed interest rate of 1.85 %.

Our spread over LIBOR was 1.20 % resulting in an all-in interest rate of 3.05 % per annum.

In connection with the repayment of the unsecured term loan, we terminated the associated swap agreement as disclosed in Note 9.

Derivative Instruments and Hedging Activities.

The secured loans had a weighted average interest rate of approximately 5.0 % per annum.

As part of the repayment of the loans, we incurred early debt retirement costs of $ 8.8 million.

Third Amended and Restated Unsecured Credit Facility

1 unchanged sentence

We have the option to increase the borrowing capacity by $ 200.0 million, subject to certain conditions.

The LOC maturity date was extended to April 18, 2025, and this term can be extended two times for additional six month increments, subject to certain conditions.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 8 – Borrowing Arrangements (continued)

LOC maturity date was extended to April 18, 2025, and this term can be extended two times for additional six month increments, subject to certain conditions.

The LOC bears interest at a rate of LIBOR plus 1.25 % to 1.65 % and requires an annual facility fee of 0.20 % to 0.35 %.

6 unchanged sentences

During the quarter ended June 30, 2021, in conjunction with the issuance of the Term Loan, we repaid the Loan.

The LOC had a balance of $ 62.0 million and $ 222.0 million outstanding as of June 30, 2021 and December 31, 2020, respectively.

As of June 30, 2021, our LOC had remaining borrowing capacity of $ 438.0 million.

As of June 30, 2021, we were in compliance in all material respects with the covenants in all our borrowing arrangements.

The LOC had a balance of $ 220.0 million and $ 222.0 million outstanding as of September 30, 2021 and December 31, 2020, respectively.

As of September 30, 2021, our LOC had remaining borrowing capacity of $ 280.0 million.

As of September 30, 2021, we were in compliance in all material respects with the covenants in all our borrowing arrangements.

Note 9 – Derivative Instruments and Hedging

3 unchanged sentences

We do not enter into derivatives for speculative purposes.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 9 – Derivative Instruments and Hedging (continued)

During the six months ended June 30, 2021, we entered into a three-year LIBOR Swap Agreement (the “Swap”) allowing us to trade the variable interest rate associated with our variable rate debt for a fixed interest rate.

During the nine months ended September 30, 2021, we entered into a three-year LIBOR Swap Agreement (the “Swap”) allowing us to trade the variable interest rate associated with our variable rate debt for a fixed interest rate.

The 2021 Swap has a notional amount of $ 300.0 million of outstanding principal with a fixed interest rate of 0.39 % per annum and matures on March 25, 2024.

Based on the leverage as of June 30, 2021, our spread over LIBOR was 1.40 % resulting in an estimated all-in interest rate of 1.79 % per annum.

Based on the leverage as of September 30, 2021, our spread over LIBOR was 1.40 % resulting in an estimated all-in interest rate of 1.79 % per annum.

During the nine months ended September 30, 2020, in connection with the repayment of our $ 200.0 million unsecured term loan (See Note 8.

Borrowing Arrangements for additional information), we terminated the interest rate swap that was scheduled to mature on November 1, 2020.

As a result of the interest rate swap termination, we incurred an early termination fee of $ 0.9 million, which was recognized in the Consolidated Statements of Income and Comprehensive Income.

Our derivative financial instrument was classified as Level 2 in the fair value hierarchy.

The following table presents the fair value of our derivative financial instrument:

As of June 30, As of December 31,

As of September 30, As of December 31,

(amounts in thousands) Balance Sheet Location 2021 2020

3 unchanged sentences

in OCI on derivative

for the six months ended June 30, Location of (gain)/ loss reclassified from

for the nine months ended September 30, Location of (gain)/ loss reclassified from

accumulated OCI into income Amount of (gain)/loss reclassified from

accumulated OCI into income

for the six months ended June 30,

for the nine months ended September 30,

(amounts in thousands) 2021 2020 (amounts in thousands) 2021 2020

Interest Rate Swap $ 142 $ 1,561 Interest Expense $ 467 $ 1,941

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 9 – Derivative Instruments and Hedging (continued)

During the next twelve months, we estimate that $ 0.8 million will be reclassified as a decrease to interest expense.

1 unchanged sentence

We determined that no adjustment was necessary for non-performance risk on our derivative obligation.

As of June 30, 2021, we had not posted any collateral related to this Swap.

As of September 30, 2021, we had not posted any collateral related to this Swap.

Note 10 – Equity Incentive Awards

7 unchanged sentences

These are time-based awards subject to various vesting dates between October 27, 2021 and April 27, 2023.

Stock based compensation expense, reported in General and administrative expense on the Consolidated Statements of Income and Comprehensive Income, for the quarters ended June 30, 2021 and 2020, was $ 2.8 million and $ 2.7 million, respectively, and for the six months ended June 30, 2021 and 2020, was $ 5.4 million and $ 5.6 million, respectively.

Stock based compensation expense, reported in General and administrative expense on the Consolidated Statements of Income and Comprehensive Income, for the quarters ended September 30, 2021 and 2020, was $ 2.8 million and $ 2.9 million, respectively, and for the nine months ended September 30, 2021 and 2020, was $ 8.2 million and $ 8.5 million, respectively.

Note 11 – Commitments and Contingencies

We are involved in various legal and regulatory proceedings (“Proceedings”) arising in the ordinary course of business.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 11 – Commitments and Contingencies (continued)

relating to our utility infrastructure, including water and wastewater treatment plants and other waste treatment facilities and electrical systems.

The Proceedings include, but are not limited to, legal claims made by employees, vendors and customers, and notices, consent decrees, information requests, additional permit requirements and other similar enforcement actions by governmental agencies relating to our utility infrastructure, including water and wastewater treatment plants and other waste treatment facilities and electrical systems.

Additionally, in the ordinary course of business, our operations are subject to audit by various taxing authorities.

7 unchanged sentences

The Nicholsons filed a demand for arbitration on January 28, 2020, which they subsequently amended, pursuant to which they request (i) a declaration that the Operating Partnership, as the “owner and manager” of Westwinds, is “required by the Ground Leases, and State and local law to deliver the Property free of any encumbrances or third-party claims at the expiration of the lease terms,” (ii) that the Operating Partnership anticipatorily breached the ground leases by publicly repudiating any such obligation and (iii) that the Operating Partnership is required to indemnify the Nicholsons with respect to the claims brought by the interested parties in the Superior Court proceeding.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 11 – Commitments and Contingencies (continued)

On February 3, 2020, the Nicholsons filed a motion in California Superior Court to compel arbitration and to stay the Superior Court litigation, which motion was heard on June 25, 2020.

3 unchanged sentences

We intend to continue to vigorously defend our interests in this matter.

As of June 30, 2021, we have not made an accrual, as we are unable to predict the outcome of this matter or reasonably estimate any possible loss.

As of September 30, 2021, we have not made an accrual, as we are unable to predict the outcome of this matter or reasonably estimate any possible loss.

Equity LifeStyle Properties, Inc.

5 unchanged sentences

The distribution of the Properties throughout the United States reflects our belief that geographic diversification helps insulate the portfolio from regional economic influences.

All revenues were from external customers and there is no customer who contributed 10% or more of our total revenues during the quarters and six months ended June 30, 2021 or 2020.

The following tables summarize our segment financial information for the quarters and six months ended June 30, 2021 and 2020:

Quarter Ended June 30, 2021

All revenues were from external customers and there is no customer who contributed 10% or more of our total revenues during the quarters and nine months ended September 30, 2021 or 2020.

The following tables summarize our segment financial information for the quarters and nine months ended September 30, 2021 and 2020:

Quarter Ended September 30, 2021

(amounts in thousands) Property

22 unchanged sentences

Note 12 – Reportable Segments (continued)

Quarter Ended June 30, 2020

Quarter Ended September 30, 2020

(amounts in thousands) Property

18 unchanged sentences

Capital improvements $ 40,387 $ 11,527 $ 51,914

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

(amounts in thousands) Property

22 unchanged sentences

Note 12 – Reportable Segments (continued)

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

(amounts in thousands) Property

18 unchanged sentences

Capital Improvements $ 110,544 $ 44,517 $ 155,061

The following table summarizes our financial information for the Property Operations segment for the quarters and six months ended June 30, 2021 and 2020:

Quarters Ended June 30, Six Months Ended June 30,

The following table summarizes our financial information for the Property Operations segment for the quarters and nine months ended September 30, 2021 and 2020:

Quarters Ended September 30, Nine Months Ended September 30,

(amounts in thousands) 2021 2020 2021 2020

16 unchanged sentences

Note 12 – Reportable Segments (continued)

The following table summarizes our financial information for the Home Sales and Rentals Operations segment for the quarters and six months ended June 30, 2021 and 2020:

Quarters Ended June 30, Six Months Ended June 30,

The following table summarizes our financial information for the Home Sales and Rentals Operations segment for the quarters and nine months ended September 30, 2021 and 2020:

Quarters Ended September 30, Nine Months Ended September 30,

(amounts in thousands) 2021 2020 2021 2020

13 unchanged sentences

Base rent is included within property operations.

Note 13 – Subsequent Events

On October 14, 2021, we acquired our joint venture partner’s 50 % interest in Voyager RV Resort.

The purchase price to acquire our partner’s interest consisted of debt assumption of $ 20.1 million and a $35.2 million payment primarily comprised of 427,723 Operating Partnership units issued with the remainder in cash.

Upon closing the acquisition, we became the resort’s sole owner.

Voyager, located in Tucson, AZ, is a resort with 1,801 sites of which 1,576 are RV and 225 are MH.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements