What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-10-26 compared with 2021-07-27 · 148 added, 143 removed, 519 unchanged (36% of the section changed)

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We are a fully integrated owner of lifestyle-oriented properties (“Properties”) consisting of property operations and home sales and rental operations primarily within manufactured home (“MH”) and recreational vehicle (“RV”) communities.

As of June 30, 2021, we owned or had an ownership interest in a portfolio of 435 Properties located throughout the United States and Canada containing 166,188 individual developed areas (“Sites”).

As of September 30, 2021, we owned or had an ownership interest in a portfolio of 436 Properties located throughout the United States and Canada containing 167,123 individual developed areas (“Sites”).

These Properties are located in 33 states and British Columbia, with more than 110 Properties with lake, river or ocean frontage and more than 120 Properties within 10 miles of the coastal United States.

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It is estimated that approximately 10,000 baby boomers are turning 65 daily through 2030.

In addition, the population age 55 and older is expected to grow 17% from 2021 to 2036.

In addition, the population aged 55 and older is expected to grow 17% from 2021 to 2036.

These individuals, seeking an active lifestyle, will continue to drive the market for second home sales as vacation properties, investment opportunities or retirement retreats.

We expect it is likely that over the next decade, we will continue to see high levels of second-home sales and that manufactured homes and cottages in our Properties will continue to provide a viable second-home alternative to site-built homes.

We also believe the Millennial and Generation X demographic will contribute to our future long-term customer pipeline.

We also believe the Millennial and Generation X demographics will contribute to our future long-term customer pipeline.

RV Industry Association (“RVIA”) tracking of the RV industry as of 2021 showed that those under 45 years of age is the fastest growing segment of RV owners and has been for the past few years.

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The following table shows the breakdown of our Sites by type (amounts are approximate):

Total Sites as of June 30, 2021

Total Sites as of September 30, 2021

MH Sites 73,300

Annual 32,400

Seasonal 10,700

Transient 15,400

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_________________________

(1) Includes sites reserved but not used by seasonal customers due to travel restrictions.

(2) Primarily utilized to service the approximately 124,900 members.

Includes approximately 6,300 Sites rented on an annual basis.

(2) Includes approximately 2,900 annual Sites, 200 seasonal Sites and 500 transient Sites.

(3) Includes approximately 2,900 annual Sites, 200 seasonal Sites and 500 transient Sites and includes sites at Voyager RV Resort.

(4) Total does not foot due to rounding.

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We continue to see strong demand in our RV business as our customers seek safe vacation and leisure activities and value the opportunity to spend time outdoors.

During the second quarter of 2021, Core Transient RV rental income increased $14.0 million, or 180% compared to the second quarter of 2020.

Transient RV rental income for the second quarter of 2020 was negatively impacted by temporary site closures as a result of COVID-19.

As compared to the second quarter of 2019, Transient RV rental income for the second quarter of 2021 increased $7.3 million or 50%.

RV and marina rental income in our Core Portfolio for the six months ended June 30, 2021 was 10.7% higher than the six months ended June 30, 2020.

Annual and transient rental income for the six months ended June 30, 2021 increased 5.8% and 83.0%, respectively, while seasonal rental income decreased 21.7%.

During the third quarter of 2021, Core Transient RV rental income increased $5.4 million, or 21.1% compared to the third quarter of 2020.

Core Annual RV rental income increased $3.8 million, or 7.8% compared to the third quarter of 2020.

Core Seasonal RV rental income increased $1.9 million, or 37.5% compared to the third quarter of 2020.

RV and marina rental income in our Core Portfolio for the nine months ended September 30, 2021 was 11.9% higher than the nine months ended September 30, 2020.

Compared to the same period in 2020, annual and transient rental income for the nine months ended September 30, 2021 increased 6.5% and 47.4%, respectively, while seasonal rental income decreased 12.4%.

The decrease in seasonal rental income was primarily due to lower seasonal RV rental income in the South and West regions during the first quarter of 2021, as seasonal customers, in particular Canadian customers, were impacted by travel restrictions resulting from COVID-19.

Management's Discussion and Analysis (continued)

We attribute the solid performance of our business, as shown by our cash collection activity, increases in home sales and occupancy, and growth in transient RV rental income, to the fundamentals of our business model.

We attribute the solid performance of our business, as shown by increases in home sales and occupancy, and growth in RV rental income, to the fundamentals of our business model.

Our customers have made an investment in a housing unit that is placed on land leased from us.

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We believe this is particularly relevant in a COVID-19 impacted environment.

We intend to continue to monitor the rapidly evolving situation and we may take further actions that alter our business operations as may be required and that are in the best interests of our employees, residents, customers and shareholders.

We intend to continue to monitor the evolving situation and we may take further actions that alter our business operations as may be required and that are in the best interests of our employees, residents, customers and shareholders.

Results Overview

For the quarter ended June 30, 2021, net income available for Common Stockholders increased $14.9 million, or $0.08 per fully diluted Common Share, to $61.1 million, or $0.33 per fully diluted Common Share, compared to $46.2 million, or $0.25 per fully diluted Common Share, for the same period in 2020.

For the six months ended June 30, 2021, net income available for Common Stockholders increased $13.2 million, or $0.07 per fully diluted Common Share, to $126.3 million, or $0.69 per fully diluted Common Share, compared to $113.1 million, or $0.62 per fully diluted Common Share, for the same period in 2020.

For the quarter ended June 30, 2021, FFO available for Common Stock and Operating Partnership unit (“OP Unit”) holders increased $28.1 million, or $0.14 per fully diluted Common Share, to $117.6 million, or $0.61 per fully diluted Common Share, compared to $89.5 million, or $0.47 per fully diluted Common Share, for the same period in 2020.

For the six months ended June 30, 2021, FFO available for Common Stock and Operating Partnership unit (“OP Unit”) holders increased $36.3 million, or $0.19 per fully diluted Common Share, to $238.1 million, or $1.24 per fully diluted Common Share, compared to $201.8 million, or $1.05 per fully diluted Common Share, for the same period in 2020.

For the quarter ended June 30, 2021, Normalized FFO available for Common Stock and OP Unit holders increased $27.4 million, or $0.14 per fully diluted Common Share, to $118.3 million, or $0.61 per fully diluted Common Share, compared to $90.9 million, or $0.47 per fully diluted Common Share, for the same period in 2020.

For the six months ended June 30, 2021, Normalized FFO available for Common Stock and OP Unit holders increased $36.6 million, or $0.19 per fully diluted Common Share, to $240.9 million, or $1.25 per fully diluted Common Share, compared to $204.3 million, or $1.06 per fully diluted Common Share, for the same period in 2020.

For the quarter ended June 30, 2021, our Core Portfolio property operating revenues, excluding deferrals, increased 14.9% and property operating expenses, excluding deferrals and property management, increased 13.9%, from the same period in 2020, resulting in an increase in income from property operations, excluding deferrals and property management, of 15.6% compared to the same period in 2020.

For the six months ended June 30, 2021, our Core Portfolio property operating revenues, excluding deferrals, increased 8.5% and property operating expenses, excluding deferrals and property management, increased 9.1%, from the same period in 2020, resulting in an increase in income from property operations, excluding deferrals and property management, of 8.2% compared to the same period in 2020.

For the quarter ended September 30, 2021, net income available for Common Stockholders increased $20.0 million, or $0.10 per fully diluted Common Share, to $70.6 million, or $0.38 per fully diluted Common Share, compared to $50.6 million, or $0.28 per fully diluted Common Share, for the same period in 2020.

For the nine months ended September 30, 2021, net income available for Common Stockholders increased $33.3 million, or $0.18 per fully diluted Common Share, to $196.9 million, or $1.08 per fully diluted Common Share, compared to $163.6 million, or $0.90 per fully diluted Common Share, for the same period in 2020.

For the quarter ended September 30, 2021, FFO available for Common Stock and Operating Partnership unit (“OP Unit”) holders increased $28.7 million, or $0.15 per fully diluted Common Share, to $124.5 million, or $0.65 per fully diluted Common Share, compared to $95.8 million, or $0.50 per fully diluted Common Share, for the same period in 2020.

For the nine months ended September 30, 2021, FFO available for Common Stock and OP Unit holders increased $65.0 million, or $0.33 per fully diluted Common Share, to $362.6 million, or $1.88 per fully diluted Common Share, compared to $297.6 million, or $1.55 per fully diluted Common Share, for the same period in 2020.

For the quarter ended September 30, 2021, Normalized FFO available for Common Stock and OP Unit holders increased $19.0 million, or $0.10 per fully diluted Common Share, to $124.5 million, or $0.65 per fully diluted Common Share, compared to $105.5 million, or $0.55 per fully diluted Common Share, for the same period in 2020.

For the nine months ended September 30, 2021, Normalized FFO available for Common Stock and OP Unit holders increased $55.6 million, or $0.29 per fully diluted Common Share, to $365.4 million, or $1.90 per fully diluted Common Share, compared to $309.8 million, or $1.61 per fully diluted Common Share, for the same period in 2020.

For the quarter ended September 30, 2021, our Core Portfolio property operating revenues, excluding deferrals, increased 8.5% and property operating expenses, excluding deferrals and property management, increased 5.7%, from the same period in 2020, resulting in an increase in income from property operations, excluding deferrals and property management, of 10.7% compared to the same period in 2020.

For the nine months ended September 30, 2021, our Core Portfolio property operating revenues, excluding deferrals, increased 8.5% and property operating expenses, excluding deferrals and property management, increased 7.8%, from the same period in 2020, resulting in an increase in income from property operations, excluding deferrals and property management, of 9.0% compared to the same period in 2020.

While we continue to focus on increasing the number of manufactured homeowners in our Core Portfolio, we also believe renting our vacant homes represents an attractive source of occupancy and an opportunity to potentially convert the renter to a new homebuyer in the future.

We continue to expect there to be fluctuations in the sources of occupancy gains depending on local market conditions, availability of vacant sites and success with converting renters to homeowners.

Our Core Portfolio average occupancy, including both homeowners and renters, in our MH communities was 95.2% for the quarter ended June 30, 2021, compared to 95.3% for the quarter ended March 31, 2021 and 95.2% for the same period in 2020.

The decrease in average occupancy from the prior quarter is due to expansion sites completed and added to our Core Portfolio during the quarter but not yet occupied as of June 30, 2021.

For the quarter ended June 30, 2021, our Core Portfolio occupancy increased by 68 sites with an increase in homeowner occupancy of 179 sites, compared to occupancy as of March 31, 2021.

By comparison, for the quarter ended June 30, 2020, our Core Portfolio occupancy increased 90 sites with an increase in homeowner occupancy of 80 sites.

In addition to higher occupancy, we have increased rental rates during the quarter and six months ended June 30, 2021, contributing to a growth of 4.1% for each respective period in MH rental income, compared to the same period in 2020.

RV and marina rental income in our Core Portfolio for the quarter ended June 30, 2021 was 32.0% higher than the same period in 2020.

Annual, seasonal and transient rental income for the quarter ended June 30, 2021 increased 7.6%, 31.1% and 180.3%, respectively.

Annual rental income increased primarily due to rate growth, including in the Core marina portfolio.

Core annual marina revenue represents 99% of Core marina base rental income.

Seasonal rental income increased due to increases in all regions, primarily due to cancellations in RV reservations and site closures during the second quarter of 2020 as a result of COVID-19.

Transient rental income increased as we have continued to see positive demand as our customers seek safe vacation and leisure activities and value the opportunity to spend time outdoors.

RV and marina rental income in our Core Portfolio for

Our Core Portfolio average occupancy, including both homeowners and renters, in our MH communities was 95.1% for the quarter ended September 30, 2021, compared to 95.2% for the quarter ended June 30, 2021 and 95.3% for the same period in 2020.

The decrease in average occupancy from the prior quarter is due to expansion sites completed and added to our Core Portfolio during the quarter but not yet occupied as of September 30, 2021.

For the quarter ended September 30, 2021, our Core Portfolio occupancy increased by 60 sites with an increase in homeowner occupancy of 268 sites, compared to occupancy as of June 30, 2021.

By comparison, for the quarter ended September 30, 2020, our Core Portfolio occupancy increased 93 sites with an increase in homeowner occupancy of 114 sites.

In addition to higher occupancy, we have increased rental rates during the quarter and nine months ended September 30, 2021, contributing to a growth of 4.2% for each respective period in MH rental income, compared to the same period in 2020.

RV and marina rental income in our Core Portfolio for the quarter ended September 30, 2021 was 14.1% higher than the same period in 2020.

Annual, seasonal and transient rental income for the quarter ended September 30, 2021 increased 7.8%, 37.5% and 21.1%, respectively.

The increase in Annual RV and marina base rental income was attributable to both rate and occupancy, driven by occupancy gains in the North and Northeast regions.

Seasonal and transient rental income increased across all regions as we have continued to see positive demand as our customers seek safe vacation and leisure activities and value the opportunity to spend time outdoors.

RV and marina rental income in our Core Portfolio for the nine months ended September 30, 2021 was 11.9% higher than the same period in 2020.

Annual and transient rental income for the nine months

Management's Discussion and Analysis (continued)

the six months ended June 30, 2021 was 10.7% higher than the same period in 2020.

Annual and transient rental income for the six months ended June 30, 2021 increased 5.8% and 83.0%, respectively, while seasonal rental income decreased 21.7%.

ended September 30, 2021 increased 6.5% and 47.4%, respectively, while seasonal rental income decreased 12.4%.

We continue to experience strong performance in our membership base within our Thousand Trails portfolio.

For the quarter ended June 30, 2021, annual membership subscriptions revenue increased 10.1% over the same period in 2020.

We sold approximately 8,200 TTC memberships during the quarter ended June 30, 2021, representing a 41% increase in sales volume compared to the same period in 2020.

We also activated approximately 7,800 TTC memberships through our RV dealer program for the quarter ended June 30, 2021.

Membership upgrade sales, gross increased $4.2 million for the quarter ended June 30, 2021 compared to the same period in 2020, driven by approximately 1,200 membership upgrade sales during the quarter.

We also experienced a 22% increase in the average sales price per upgrade sold during the quarter ended June 30, 2021 compared to the same period June 30, 2020.

For the quarter ended September 30, 2021, annual membership subscriptions revenue increased 12.5% over the same period in 2020.

We sold approximately 6,700 TTC memberships during the quarter ended September 30, 2021, compared to 7,400 in the same period in 2020.

For the nine months ended September 30, 2021, we sold approximately 20,200 TTC memberships compared to 16,400 in the same period in 2020.

We also activated approximately 6,800 TTC memberships through our RV dealer program for the quarter ended September 30, 2021.

Membership upgrade sales, gross increased $3.5 million for the quarter ended September 30, 2021 compared to the same period in 2020, driven by approximately 1,400 membership upgrade sales during the quarter.

We also experienced a 14% increase in the average sales price per upgrade sold during the quarter ended September 30, 2021 compared to the same period ended September 30, 2020.

The increase in upgrade sales and average sales price was driven by an increase in customer demand, including a new upgrade product, Adventure, introduced in the first quarter of 2021.

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Based on our historical experience, during the first 60 to 90 days following a new product launch, we experience an increase in upgrade sales and thereafter the upgrade sales fall back in line with historical run rate performance.

For the six months ended June 30, 2021, we sold approximately 13,500 TTC memberships and approximately 2,600 membership upgrades, an increase in membership subscriptions and upgrade revenues of 7.2% and 94.3%, respectively, over the same period in 2020.

For the nine months ended September 30, 2021, we sold approximately 4,000 membership upgrades and upgrade revenues increased 77.6% over the same period in 2020.

Demand for our homes and communities remains strong as evidenced by factors including our high occupancy levels.

We closed 295 new home sales during the quarter ended June 30, 2021, compared to 133 new home sales during the quarter ended June 30, 2020.

We closed 487 new home sales during the six months ended June 30, 2021, compared to 288 new home sales during the six months ended June 30, 2020.

We closed 338 new home sales during the quarter ended September 30, 2021, compared to 183 new home sales during the quarter ended September 30, 2020.

We closed 825 new home sales during the nine months ended September 30, 2021, compared to 471 new home sales during the nine months ended September 30, 2020.

The increase in new home sales was primarily due to favorable housing trends in the broader real estate market.

As of June 30, 2021, we had 3,794 occupied rental homes in our Core MH communities, including 282 homes rented through our ECHO JV.

Our Core Portfolio income from rental operations, net of depreciation, was $8.4 million and $8 million for the quarters ended June 30, 2021 and 2020, respectively.

Approximately $8.1 million and $7.8 million of rental operations revenue related to Site rental was included in MH base rental income in our Core Portfolio for the quarters ended June 30, 2021 and 2020, respectively.

Our Core Portfolio income from rental operations, net of depreciation, was $16.9 million and $15.5 million for the six months ended June 30, 2021 and 2020, respectively.

Approximately $16.2 million and $15.6 million of rental operations revenue related to Site rental was included in MH base rental income in our Core Portfolio for the six months ended June 30, 2021 and 2020, respectively.

Our gross investment in real estate increased $447.0 million to $6,607.4 million as of June 30, 2021 from $6,160.4 million as of December 31, 2020, primarily due to acquisitions and capital improvements during the six months ended June 30, 2021.

As of September 30, 2021, we had 3,586 occupied rental homes in our Core MH communities, including 253 homes rented through our ECHO JV.

Our Core Portfolio income from rental operations, net of depreciation, was $7.8 million and $7.6 million for the quarters ended September 30, 2021 and 2020, respectively.

Approximately $7.8 million and $7.9 million of rental operations revenue related to Site rental was included in MH base rental income in our Core Portfolio for the quarters ended September 30, 2021 and 2020, respectively.

Our Core Portfolio income from rental operations, net of depreciation, was $24.7 million and $23.2 million for the nine months ended September 30, 2021 and 2020, respectively.

Approximately $24.0 million and $23.5 million of rental operations revenue related to Site rental was included in MH base rental income in our Core Portfolio for the nine months ended September 30, 2021 and 2020, respectively.

Our gross investment in real estate increased $634.4 million to $6,794.8 million as of September 30, 2021 from $6,160.4 million as of December 31, 2020, primarily due to acquisitions and capital improvements during the nine months ended September 30, 2021.

Management's Discussion and Analysis (continued)

The following chart lists the Properties acquired or sold from January 1, 2020 through June 30, 2021 and Sites added through expansion opportunities at our existing Properties:

The following chart lists the Properties acquired or sold from January 1, 2020 through September 30, 2021 and Sites added through expansion opportunities at our existing Properties:

Location Type of Property Transaction Date Sites

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Pine Haven Cape May, New Jersey RV June 3, 2021 629

Pirateland Myrtle Beach, South Carolina RV August 26, 2021 813

Expansion Site Development:

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Sites added (reconfigured) in 2021 267

Total Sites as of June 30, 2021 (1)

Total Sites as of September 30, 2021 (1)

______________________

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Our Non-Core Portfolio includes all Properties that were not owned and operated during all of 2020 and 2021.

This includes, but is not limited to, one MH community, seven RV communities and one marina acquired during 2020 and two RV communities and eleven marinas acquired during 2021.

This includes, but is not

Management's Discussion and Analysis (continued)

limited to, one MH community, seven RV communities and one marina acquired during 2020 and three RV communities and eleven marinas acquired during 2021.

Funds from Operations ( “ FFO”) and Normalized Funds from Operations ( “ Normalized FFO”)

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Management's Discussion and Analysis (continued)

The following table reconciles net income available for Common Stockholders to income from property operations for the quarters ended June 30, 2021 and 2020:

Quarters Ended June 30, Six Months Ended June 30,

The following table reconciles net income available for Common Stockholders to income from property operations for the quarters and nine months ended September 30, 2021 and 2020:

Quarters Ended September 30, Nine Months Ended September 30,

(amounts in thousands)

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Total other expenses, net 79,930 80,652 246,404 228,812

Loss from home sales operations and other (2,354) 1,640 (3,737) 2,517

(Gain)/Loss from home sales operations and other (3,182) (611) (6,919) 1,906

Income from property operations $ 149,990 $ 132,541 $ 443,918 $ 401,524

The following table presents a calculation of FFO available for Common Stock and OP Unitholders and Normalized FFO available for Common Stock and OP Unitholders for the quarters ended June 30, 2021 and 2020:

Quarters Ended June 30, Six Months Ended June 30,

Quarters Ended September 30, Nine Months Ended September 30,

(amounts in thousands)

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Results of Operations

This section discusses the comparison of our results of operations for the quarters and six months ended June 30, 2021 and June 30, 2020 and our operating activities, investing activities and financing activities for the six months ended June 30, 2021 and June 30, 2020.

For the comparison of our results of operations for the quarters and six months ended June 30, 2020 and June 30, 2019 and discussion of our operating activities, investing activities and financing activities for the six months ended June 30, 2020 and June 30, 2019, refer to Part I, Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2020, filed with the SEC on July 28, 2020.

Comparison of the quarter ended June 30, 2021 to the quarter ended June 30, 2020

This section discusses the comparison of our results of operations for the quarters and nine months ended September 30, 2021 and September 30, 2020 and our operating activities, investing activities and financing activities for the nine months ended September 30, 2021 and September 30, 2020.

For the comparison of our results of operations for the quarters and nine months ended September 30, 2020 and September 30, 2019 and discussion of our operating activities, investing activities and financing activities for the nine months ended September 30, 2020 and September 30, 2019, refer to Part I, Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2020, filed with the SEC on October 27, 2020.

Comparison of the quarter ended September 30, 2021 to the quarter ended September 30, 2020

Income from Property Operations

The following table summarizes certain financial and statistical data for our Core Portfolio and total portfolio for the quarters ended June 30, 2021 and June 30, 2020:

The following table summarizes certain financial and statistical data for our Core Portfolio and total portfolio for the quarters ended September 30, 2021 and September 30, 2020:

Core Portfolio Total Portfolio

Quarters Ended June 30, Quarters Ended June 30,

Quarters Ended September 30, Quarters Ended September 30,

(amounts in thousands) 2021 2020 Variance %

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Total portfolio income from property operations for 2021 increased $17.4 million, or 13.2%, from 2020, driven by an an increase of $11.4 million, or 8.6%, from our Core Portfolio and an increase of $6.0 million from our Non-Core Portfolio.

The increase in income from property operations from our Core Portfolio was primarily due to higher property operating revenues, excluding deferrals primarily from increased RV and marina and MH base rental income, partially offset by an increase in property operating expenses, excluding deferrals and property management.

The increase in income from property operations from our Non-Core Portfolio was attributed to income from properties acquired in the fourth quarter of 2020 and the first and second quarters of 2021.

The increase in income from property operations from our Core Portfolio was primarily due to higher property operating revenues, excluding deferrals primarily from increased RV and marina base rental income and MH base rental income, partially offset by an increase in property operating expenses, excluding deferrals and property management.

The increase in income from property operations from our Non-Core Portfolio was attributed to income from properties acquired in the fourth quarter of 2020 and the first three quarters of 2021.

Management's Discussion and Analysis (continued)

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The average monthly base rental income per Site in our Core Portfolio increased to approximately $725 in 2021 from approximately $696 in 2020.

The average occupancy for our Core Portfolio was 95.2% for both the quarters ended June 30, 2021 and June 30, 2020.

The average occupancy for our Core Portfolio was 95.1% and 95.3% for the quarters ended September 30, 2021 and September 30, 2020 respectively.

The average occupancy rate decreased slightly due to expansion sites added.

RV and marina base rental income is comprised of the following:

Core Portfolio Total Portfolio

Quarters Ended June 30, Quarters Ended June 30,

Quarters Ended September 30, Quarters Ended September 30,

(amounts in thousands) 2021 2020 Variance %

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RV and marina base rental income $ 90,078 $ 78,979 $ 11,099 14.1 % $ 100,589 $ 78,979 $ 21,610 27.4 %

RV and marina base rental income in our Core Portfolio for 2021 increased by $19.2 million, or 32.0%, from 2020 primarily due to increases in Transient RV and marina base rental income of $14.0 million or 180.3%, Annual RV and marina base rental income of $3.6 million or 7.6% and Seasonal RV and marina base rental income of $1.6 million or 31.1%.

Transient and Seasonal RV and marina base rental income increased across all regions, primarily due to cancellations in RV reservations and site closures during the second quarter of 2020 as a result of COVID-19.

In addition, we continue to see positive Transient demand as our customers seek safe vacation and leisure activities and value the opportunity to spend time outdoors.

The increase in Annual rental income is attributable to both rate and occupancy, driven by occupancy gains in the North and Northeast regions.

RV and marina base rental income in our Core Portfolio for 2021 increased $11.1 million, or 14.1%, from 2020.

We experienced strong revenue growth across annual, seasonal and transient customers, which reflects the demand for our properties and the outdoor recreation opportunities they provide.

The increase in annual RV and marina base rental income was attributable to both rate and occupancy, driven by occupancy gains in the North and Northeast regions.

Membership upgrade sales, gross for 2021 increased $3.5 million, or 52.6%, from 2020.

The increase in membership upgrade sales was due to approximately 1,400 upgrade sales in 2021, compared to 1,000 in 2020, an increase of 34%.

We also experienced a 22% increase in the average sales price per upgrade sold during the second quarter of 2021, compared to the second quarter of 2020.

We also experienced a 14% increase in the average sales price per upgrade sold during the third quarter of 2021, compared to the third quarter of 2020.

The increase in upgrade sales and average sales price was driven by an increase in customer demand, including a new upgrade product, Adventure, introduced during the first quarter of 2021.

Utility and other income in our Core Portfolio for 2021 increased $0.1 million, or 0.4%, from 2020.

The increase was primarily due to an increase in other property income of $3.7 million and an increase in utility income of $1.2 million.

The increase in other property income was primarily due to insurance recovery revenue of $2.4 million related to Hurricane Hanna recorded during the second quarter of 2021 and an increase in late fees due to the suspension of late fees in 2020 as a result of COVID-19.

The increase in utility income was primarily due to an increase in electric income.

The increase was due to higher utility income of $1.4 million and pass-through income of $0.5 million, partially offset by lower other property income of $1.8 million.

The increase in utility income was seen across all categories with electricity being the largest contributor.

The decrease in other property income was driven by insurance proceeds related to Hurricanes Hanna and Isaias received in the third quarter of 2020.

Property Operating Expenses

Property operating expenses, excluding deferrals and property management, in our Core Portfolio for 2021 increased $15.0 million, or 13.9%, from 2020, driven by increases in property operating and maintenance expenses of $12.6 million and gross sales and marketing expenses of $2.0 million.

Core property operating and maintenance expenses were higher in 2021 primarily due to increases in utility expenses of $4.5 million, repairs and maintenance expenses of $2.7 million and property payroll of $2.2 million.

The increase in gross sales and marketing expense is primarily due to an increase in membership upgrade sales during the second quarter of 2021 compared to the second quarter 2020.

Property operating expenses, excluding deferrals and property management, in our Core Portfolio for 2021 increased $6.9 million, or 5.7%, from 2020, driven by increases in property operating and maintenance expenses of $4.3 million, gross sales and marketing expenses of $1.5 million and real estate taxes of $1.3 million.

Core property operating and maintenance expenses were higher in 2021 primarily due to increases in utility expenses of $2.5 million and property payroll of $1.3 million.

The increase in gross sales and marketing expense is primarily due to an increase in membership upgrade sales during the third quarter of 2021 compared to the third quarter of 2020.

The increase in real estate taxes was due to higher assessments, primarily in Florida.

Management's Discussion and Analysis (continued)

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The following table summarizes certain financial and statistical data for our Home Sales and Other Operations:

Quarters Ended June 30,

Quarters Ended September 30,

(amounts in thousands, except home sales volumes) 2021 2020 Variance %

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Home selling expenses 1,203 1,241 (38) (3.1) %

Income (loss) from home sales and other $ 2,354 $ (1,640) $ 3,994 243.5 %

Income from home sales and other $ 3,182 $ 611 $ 2,571 420.8 %

Home sales volumes

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(2) Total new home sales volume includes home sales from our ECHO JV.

The income from home sales and other operations was $2.4 million for the second quarter of 2021, compared to a loss of $1.6 million in the second quarter of 2020.

The increase in income from home sales and other operations was primarily due to an increase in ancillary services revenues, net, due to increased revenue from restaurants, stores and activities across the portfolio that were closed last year as a result of COVID-19 and an increase in non-core marina ancillary revenues, net.

Income from home sales and other operations also increased due to an increase in gross profit from new home sales due to an increase of 162 new homes sales during the second quarter of 2021 compared to the second quarter of 2020 primarily due to favorable housing trends in the broader real estate market.

The income from home sales and other operations was $3.2 million for the third quarter of 2021, compared to income of $0.6 million in the third quarter of 2020.

The increase in income from home sales and other operations was due to an increase in gross profit from new home sales resulting from an increase of 155 new homes sales during the third quarter of 2021 compared to the third quarter of 2020 primarily driven by favorable housing trends in the broader real estate market.

Additionally, there was an increase in ancillary services revenues, net, due to increased revenue from restaurants, stores and activities across the portfolio that were closed last year as a result of COVID-19 and an increase in non-core marina ancillary revenues, net.

Management's Discussion and Analysis (continued)

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The following table summarizes certain financial and statistical data for our MH Rental Operations:

Quarters Ended June 30,

Quarters Ended September 30,

(amounts in thousands, except rental unit volumes)

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(1) Consists of Site rental income and home rental income.

Approximately $8.1 million and $7.8 million for the quarters ended June 30, 2021 and June 30, 2020, respectively, of Site rental income is included in MH base rental income in the Core Portfolio Income from Property Operations table.

Approximately $7.8 million and $7.9 million for the quarters ended September 30, 2021 and September 30, 2020, respectively, of Site rental income is included in MH base rental income in the Core Portfolio Income from Property Operations table.

The remainder of home rental income is included in rental home income in our Core Portfolio Income from Property Operations table.

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(3) New home cost basis does not include the costs associated with our ECHO JV.

Our investment in the ECHO JV was $17.7 million and $17.1 million as of June 30, 2021 and June 30, 2020, respectively.

(4) Includes 282 and 283 homes rented through our ECHO JV as of June 30, 2021 and 2020, respectively.

Income from rental operations, net of depreciation, was $0.4 million higher during the second quarter of 2021, compared to the second quarter of 2020, primarily due to an increase in the number of occupied new rental homes which command a higher rental rate than occupied used homes.

Our investment in the ECHO JV was $17.8 million and $17.2 million as of September 30, 2021 and September 30, 2020, respectively.

(4) Includes 253 and 286 homes rented through our ECHO JV as of September 30, 2021 and 2020, respectively.

Other Income and Expenses

The following table summarizes other income and expenses, net:

Quarters Ended June 30,

Quarters Ended September 30,

(amounts in thousands, expenses shown as negative)

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Total other income and expenses, net $ (79,930) $ (80,652) $ 722 0.9 %

Total other income and expenses, net increased $11.3 million in 2021 compared to 2020, primarily due to higher depreciation and amortization, higher interest and related amortization, and early debt retirement costs incurred during the second quarter of 2021.

The increase in depreciation and amortization is due to depreciation on Non-core properties acquired in the fourth quarter of 2020, and the first and second quarters of 2021.

Total other income and expenses, net decreased $0.7 million in 2021 compared to 2020, primarily due to early debt retirement costs incurred during the third quarter of 2020, partially offset by higher depreciation and amortization and higher interest and related amortization.

The increase in depreciation and amortization is due to depreciation on Non-core properties acquired in the fourth quarter of 2020 and the first three quarters of 2021.

The increase in interest and related amortization is due to higher debt levels than the same period in 2020.

Management's Discussion and Analysis (continued)

Comparison of the Six Months Ended June 30, 2021 to the Six Months Ended June 30, 2020

Comparison of the Nine Months Ended September 30, 2021 to the Nine Months Ended September 30, 2020

Income from Property Operations

The following table summarizes certain financial and statistical data for the Core Portfolio and the total portfolio for the six months ended June 30, 2021 and 2020.

The following table summarizes certain financial and statistical data for the Core Portfolio and the total portfolio for the nine months ended September 30, 2021 and 2020.

Core Portfolio Total Portfolio

Six Months Ended June 30, Six Months Ended June 30,

Nine Months Ended September 30, Nine Months Ended September 30,

(amounts in thousands) 2021 2020 Variance %

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The increase in income from property operations from our Core Portfolio was primarily due to increases in RV and marina base rental income, MH base rental income and Membership upgrade sales, gross.

The increase in income from property operations from our Non-Core Portfolio was attributed to income from properties acquired in the fourth quarter of 2020 and during the six months ended June 30, 2021.

The increase in income from property operations from our Non-Core Portfolio was attributed to income from properties acquired in the fourth quarter of 2020 and during the nine months ended September 30, 2021.

Property Operating Revenues

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The average monthly base rental income per Site increased to approximately $721 in 2021 from approximately $692 in 2020.

The average occupancy for the Core Portfolio was 95.3% for the six months ended June 30, 2021 compared to 95.2% for the six months ended June 30, 2020.

The average occupancy for the Core Portfolio was 95.2% for both the nine months ended September 30, 2021 and 2020.

Management's Discussion and Analysis (continued)

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Core Portfolio Total Portfolio

Six Months Ended June 30, Six Months Ended June 30,

Nine Months Ended September 30, Nine Months Ended September 30,

(amounts in thousands)

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RV and marina base rental income in our Core Portfolio for 2021 increased $26.3 million, or 11.9%, from 2020 primarily due to increases in Transient RV and marina base rental income of $21.1 million, or 47.4% and Annual RV and marina base rental income of $9.2 million, or 6.5%, partially offset by a decrease in Seasonal RV and marina base rental income of $4.1 million, or 12.4%.

Transient RV and marina base rental income increased across all regions, primarily due to cancellations in RV reservations and site closures during the six months ended June 30, 2020 as a result of COVID-19.

In addition, we continue to see positive Transient demand as our customers seek safe vacation and leisure activities and value the opportunity to spend time outdoors.

Transient RV and marina base rental income increased across all regions, primarily due to cancellations in RV reservations and site closures during the nine months ended September 30, 2020 as a result of COVID-19.

We continue to see positive Transient demand as our customers seek safe vacation and leisure activities and value the opportunity to spend time outdoors.

The increase in Annual RV and marina base rental income was primarily due to growth from rate increases.

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Membership upgrade sales, gross for 2021 increased $12.8 million, or 77.6%, from 2020.

The increase in membership upgrade sales was due to approximately 2,600 upgrade sales during the six months ended June 30, 2021, compared to 1,600 during the six months ended June 30, 2020, an increase of 67%.

We also experienced a 16% increase in the average sales price per upgrade sold during the six months ended June 30, 2021, compared to the same period ended June 30, 2020.

The increase in membership upgrade sales was due to approximately 4,000 upgrade sales during the nine months ended September 30, 2021, compared to 2,600 during the nine months ended September 30, 2020, an increase of 54%.

We also experienced a 15% increase in the average sales price per upgrade sold during the nine months ended September 30, 2021, compared to the same period ended September 30, 2020.

The increase in upgrade sales and average sales price was driven by an increase in customer demand, including a new upgrade product, Adventure, introduced during the first quarter of 2021.

Utility and other income in our Core Portfolio for 2021 increased $4.0 million, or 5.5%, from 2020.

The increase was primarily due to an increase in other property income of $2.8 million and an increase in utility income of $0.9 million.

The increase in other property income was driven by insurance recovery revenue of $2.4 million related to Hurricane Hanna recorded during the second quarter of 2021 and increased late fees due to the suspension of late fees in 2020 as a result of COVID-19.

The increase was primarily due to an increase in utility income of $2.3 million and other property income of $1.0 million.

The increase in other property income is due to increased late fees due to the suspension of late fees in 2020 as a result of COVID-19.

Property Operating Expenses

Property operating expenses, excluding deferrals and property management, in our Core Portfolio for 2021 increased $26.3 million, or 7.8%, from 2020, driven by increases in property operating and maintenance expenses of $19.0 million and gross sales and marketing expenses of $5.7 million.

Core property operating and maintenance expenses were higher during the six months ended June 30, 2021 compared to the six months ended June 30, 2020 primarily due to increases in utility expenses of $5.1 million, repairs and maintenance expenses of $3.3 million, property payroll expenses of $2.6 million and insurance expense of $2.0 million.

Core property operating and maintenance expenses were higher during the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 primarily due to increases in utility expenses of $7.6 million, property payroll expenses of $3.9 million, insurance expense of $2.9 million and repairs and maintenance expenses of $1.5 million.

The increase in gross sales and marketing expenses was primarily due to an increase in membership upgrade sales.

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The following table summarizes certain financial and statistical data for Home Sales and Other Operations:

Six Months Ended June 30,

Nine Months Ended September 30,

(amounts in thousands, except home sales volumes)

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(2) Total new home sales volume includes home sales from our ECHO JV.

The income from home sales and other was $3.7 million for the six months ended June 30, 2021 compared to a loss of $2.5 million for the six months ended June 30, 2020.

The income from home sales and other was $6.9 million for the nine months ended September 30, 2021 compared to a loss of $1.9 million for the nine months ended September 30, 2020.

The increase in income from home sales and other was due to an increase in ancillary services revenues, net, driven by increased revenue from restaurants, stores and activities across the portfolio primarily as a result of closures in 2020 as a result of COVID-19, an increase in non-core marina ancillary revenues, net and an increase in gross profit from new home sales as a result of an increase in the number of new homes sold.

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The following table summarizes certain financial and statistical data for MH Rental Operations.

Six Months Ended June 30,

Nine Months Ended September 30,

(amounts in thousands, except rental unit volumes)

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(1) Rental operations revenue consists of Site rental income and home rental income in our Core Portfolio.

Approximately $16.2 million and $15.6 million of Site rental income for the six months ended June 30, 2021 and 2020, respectively, are included in community base rental income within the Core Portfolio Income from Property Operations table.

Approximately $24.0 million and $23.5 million of Site rental income for the nine months ended September 30, 2021 and 2020, respectively, are included in community base rental income within the Core Portfolio Income from Property Operations table.

The remainder of home rental income is included in rental home income within the Core Portfolio Income from Property Operations table.

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New home cost basis does not include the costs associated with our ECHO JV.

Our investment in the ECHO JV was $17.7 million and $17.1 million as of June 30, 2021 and 2020, respectively.

(4) Occupied rentals as of the end of the period in our Core Portfolio and includes 282 and 283 homes rented through our ECHO JV as of June 30, 2021 and 2020, respectively.

Income from rental operations, net of depreciation, was $1.4 million higher during the six months ended June 30, 2021 compared to the six months ended June 30, 2020, primarily due to an increase in the number of occupied new rental homes which command a higher rental rate than occupied used homes.

Our investment in the ECHO JV was $17.8 million and $17.2 million as of September 30, 2021 and 2020, respectively.

(4) Occupied rentals as of the end of the period in our Core Portfolio and includes 253 and 286 homes rented through our ECHO JV as of September 30, 2021 and 2020, respectively.

Income from rental operations, net of depreciation, was $1.5 million higher during the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020, primarily due to an increase in rental rates.

Other Income and Expenses

The following table summarizes other income and expenses, net:

Six Months Ended June 30,

Nine Months Ended September 30,

(amounts in thousands, expenses shown as negative)

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Total other income and expenses, net $ (246,404) $ (228,812) $ (17,592) (7.7) %

Total other income and expenses, net increased $18.3 million during the six months ended June 30, 2021 compared to the six months ended June 30, 2020, primarily due to higher depreciation and amortization and higher early debt retirement costs.

The increase in depreciation and amortization was due to depreciation on Non-Core properties acquired in the fourth quarter of 2020 and the six months ended June 30, 2021.

The increase in early debt retirement costs was due to higher debt repayment costs in 2021 compared to 2020.

Total other income and expenses, net increased $17.6 million during the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020, primarily due to higher depreciation and amortization and interest and related amortization expense, partially early offset by early debt retirement costs.

The increase in depreciation and amortization was due to depreciation on Non-Core properties acquired in the fourth quarter of 2020 and the nine months ended September 30, 2021.

The increase in interest and related amortization is due to higher debt levels in 2021 compared to 2020.

The decrease in early debt retirement costs was due to lower debt repayment costs in 2021 compared to 2020.

Equity in income of unconsolidated joint ventures

Equity in income of unconsolidated joint ventures increased $0.7 million during the six months ended June 30, 2021 compared to the six months ended June 30, 2020, primarily due to an increase in distributions received in 2021 compared to 2020.

Equity in income of unconsolidated joint ventures increased $0.5 million during the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020, primarily due to an increase in distributions received in 2021 compared to 2020.

Management's Discussion and Analysis (continued)

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Our at-the-market (“ATM”) equity offering program allows us, from time-to-time, to sell shares of our common stock, par value $0.01 per share, having an aggregate offering price up to $200.0 million.

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

As of June 30, 2021, we had available liquidity in the form of approximately 416.2 million shares of authorized and unissued common stock, par value $0.01 per share, and 10.0 million shares of authorized and unissued preferred stock registered for sale under the Securities Act of 1933, as amended.

During the six months ended June 30, 2021, we closed on an amended revolving line of credit with borrowing capacity of $500.0 million and a $300.0 million term loan (“Term Loan”).

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

As of September 30, 2021, we had available liquidity in the form of approximately 416.2 million shares of authorized and unissued common stock, par value $0.01 per share, and 10.0 million shares of authorized and unissued preferred stock registered for sale under the Securities Act of 1933, as amended.

During the nine months ended September 30, 2021, we closed on an amended revolving line of credit with borrowing capacity of $500.0 million and a $300.0 million term loan (“Term Loan”).

The variable interest rate on the Term Loan is LIBOR plus 1.40%.

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The changes in the fair value of the designated derivative are recorded in accumulated other comprehensive income (loss) on the Consolidated Balance Sheets and subsequently reclassified into earnings on the Consolidated Statements of Income and Comprehensive Income in the period that the hedged forecasted transaction affects earnings.

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 Swap has a notional amount of $300.0 million of outstanding principal and fixes the underlying LIBOR rate at 0.39% per annum and matures on March 25, 2024.

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We expect to meet our short-term liquidity requirements, including principal payments, capital improvements and dividend distributions for the next twelve months, generally through available cash, net cash provided by operating activities and our LOC.

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

As of June 30, 2021, the LOC bears interest at a rate of LIBOR plus 1.25% to 1.65%, carries an annual facility fee of 0.20% to 0.35% and matures on April 18, 2025.

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

As of September 30, 2021, the LOC bears interest at a rate of LIBOR plus 1.25% to 1.65%, carries an annual facility fee of 0.20% to 0.35% and matures on April 18, 2025.

We expect to meet certain long-term liquidity requirements, such as scheduled debt maturities, property acquisitions and capital improvements, using long-term collateralized and uncollateralized borrowings including the existing LOC and the issuance of debt securities or the issuance of equity including under our ATM equity offering program.

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.

Financial Statements—Note 13.

Subsequent events.

Management's Discussion and Analysis (continued)

We continue to monitor the development and adoption of an alternative index to LIBOR to manage the transition.

Given the majority of our current debt is secured and not subject to LIBOR, we do not believe the discontinuation of LIBOR will have a significant impact on our consolidated financial statements.

Management's Discussion and Analysis (continued)

patterns and operational decisions we have made and may make in the future in response to guidance from public authorities and/or for the health and safety of our employees, residents and guests.

The impact the COVID-19 pandemic will continue to have on our financial condition and cashflows is uncertain and is dependent upon various factors including the manner in which operations will continue at our Properties, customer payment patterns and operational decisions we have made and may make in the future in response to guidance from public authorities and/or for the health and safety of our employees, residents and guests.

The following table summarizes our cash flows activity:

For the six months ended June 30,

For the nine months ended September 30,

(amounts in thousands) 2021 2020

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Operating Activities

Net cash provided by operating activities increased $90.2 million to $328.9 million for the quarter ended June 30, 2021 from $238.7 million for the quarter ended June 30, 2020.

The increase in net cash provided by operating activities was primarily due to an increase in other assets, net and accounts payable and other liabilities of $38.0 million, higher income from property operations of $24.9 million, an increase in rents and other customer payments received in advance and security deposits of $16.3 million and higher deferred membership revenue of $10.3 million.

Net cash provided by operating activities increased $92.7 million to $453.6 million for the nine months ended September 30, 2021 from $360.9 million for the nine months ended September 30, 2020.

The increase in net cash provided by operating activities was primarily due to higher income from property operations of $42.4 million, an increase in other assets, net and accounts payable and other liabilities of $28.4 million, higher deferred membership revenue of $12.8 million, and an increase in rents and other customer payments received in advance and security deposits of $7.6 million.

Investing Activities

Net cash used in investing activities increased $369.4 million to $475.2 million for the quarter ended June 30, 2021 from $105.8 million for the quarter ended June 30, 2020.

Net cash used in investing activities increased $516.4 million to $678.0 million for the nine months ended September 30, 2021 from $161.5 million for the nine months ended September 30, 2020.

The increase was due to increased spending on acquisitions of $468.9 million along with an increase in capital improvement spending of $49.0 million.

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The following table summarizes capital improvements:

For the six months ended June 30,

For the nine months ended September 30,

(amounts in thousands) 2021 2020

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Financing Activities

Net cash provided by financing activities was $167.0 million for the quarter ended June 30, 2021.

Net cash used in financing activities was $41.8 million for the quarter ended June 30, 2020.

The increase in net cash provided by financing activities was primarily due to an increase net term loan proceeds of $300.0 million, partially offset by an increase in net repayments on the LOC of $50.0 million and an increase in mortgage debt repayments of $19.0 million.

Net cash provided by financing activities was $240.6 million for the nine months ended September 30, 2021.

Net cash used in financing activities was $114.0 million for the nine months ended September 30, 2020.

The increase in net cash provided by financing activities was primarily due to an increase in net term loan proceeds of $300.0 million and an increase in net borrowings on the LOC of $108.0 million, partially offset by an increase in net mortgage debt repayments of $46.0 million.

Contractual Obligations

Significant ongoing contractual obligations consist primarily of long-term borrowings, interest expense, operating leases, LOC maintenance fees and ground leases.

For a summary and complete presentation and description of our ongoing commitments and contractual obligations, see the Contractual Obligations section of the “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our 2020 Form 10-K.

The Operating Partnership operates and manages Westwinds, a 720 site mobilehome community, and Nicholson Plaza, an adjacent shopping center, both located in San Jose, California pursuant to ground leases that expire on August 31, 2022 and do not contain extension options.

Westwinds provides affordable, rent-controlled homes to numerous residents, including

For a summary and complete presentation and description of our ongoing

Management's Discussion and Analysis (continued)

families with children and residents over 65 years of age.

commitments and contractual obligations, see the Contractual Obligations section of the “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our 2020 Form 10-K.

Westwinds provides affordable, rent-controlled homes to numerous residents, including families with children and residents over 65 years of age.

For the year ended December 31, 2020, Westwinds and Nicholson Plaza generated approximately $5.8 million of net operating income.

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In 1997, the Operating Partnership acquired the leasehold interest in the ground leases.

In addition to rent based on the operations of Westwinds, the Nicholsons receive a percentage of gross revenues from the sale of new or used mobile homes in Westwinds.

In addition to rent based on the operations of Westwinds, the Nicholsons receive a percentage of gross revenues from the sale of new or used mobilehomes in Westwinds.

The Operating Partnership has entered into subtenancy agreements with the mobilehome residents of Westwinds.

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Notwithstanding this, the Nicholsons have made what we believe to be an unlawful demand that the Operating Partnership deliver the property free and clear of any subtenancies upon the expiration of the ground leases by August 31, 2022.

We believe the Nicholsons’ demand (i) violates California state and San Jose municipal law because the Nicholsons are demanding that the Operating Partnership remove all residents without just cause and (ii) conflicts with the terms and conditions of the ground leases, which contain no express or implied requirement that the Operating Partnership deliver the property free and clear of all subtenancies at the mobile home park and require, instead, that the Operating Partnership continuously operate the mobilehome park during the lease term.

We believe the Nicholsons’ demand (i) violates California state and San Jose municipal law because the Nicholsons are demanding that the Operating Partnership remove all residents without just cause and (ii) conflicts with the terms and conditions of the ground leases, which contain no express or implied requirement that the Operating Partnership deliver the property free and clear of all subtenancies at the mobilehome park and require, instead, that the Operating Partnership continuously operate the mobilehome park during the lease term.

On December 30, 2019, the Operating Partnership, together with certain interested parties, filed a complaint in California Superior Court for Santa Clara County, seeking declaratory relief pursuant to which it requested that the Court determine, among other things, that the Operating Partnership has no obligation to deliver the property free and clear of the mobilehome residents upon the expiration of the ground leases.

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In addition to requirements imposed by California state and San Jose municipal law, the change in designation requires, among other things, a further amendment to the general plan to a different land use designation by the City Council prior to any change in use.

Off-Balance Sheet Arrangements

As of June 30, 2021, we have no off-balance sheet arrangements.

Management's Discussion and Analysis (continued)

Off-Balance Sheet Arrangements

As of September 30, 2021, we have no off-balance sheet arrangements.

Critical Accounting Policies and Estimates

Refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2020 Form 10-K for a discussion of our critical accounting policies.

There have been no significant changes to our critical accounting policies and estimates during the quarter ended June 30, 2021.

There have been no significant changes to our critical accounting policies and estimates during the nine months ended September 30, 2021.

Forward-Looking Statements

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• the dilutive effects of issuing additional securities;

• the outcome of pending or future lawsuits or actions brought against us, including those disclosed in our filings with the Securities and Exchange Commission;

• the outcome of pending or future lawsuits or actions brought by or against us, including those disclosed in our filings with the Securities and Exchange Commission;

• other risks indicated from time to time in our filings with the Securities and Exchange Commission.

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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 2. Management’s Discussion and Analysis