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Item 2. Management’s Discussion and Analysis

2022-07-27 compared with 2022-04-27 · 271 added, 96 removed, 394 unchanged (48% 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 and marinas.

As of March 31, 2022, we owned or had an ownership interest in a portfolio of 446 Properties located throughout the United States and Canada containing 169,984 individual developed areas (“Sites”).

As of June 30, 2022, we owned or had an ownership interest in a portfolio of 449 Properties located throughout the United States and Canada containing 170,880 individual developed areas (“Sites”).

These Properties are located in 35 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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The following table shows the breakdown of our Sites by type (amounts are approximate):

Total Sites as of March 31, 2022

Total Sites as of June 30, 2022

MH Sites 73,400

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_________________________

(1) Primarily utilized to service the approximately 128,100 members.

(1) Primarily utilized to service approximately 131,000 members.

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

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Results Overview

For the quarter ended March 31, 2022, net income available for Common Stockholders increased $17.7 million, or $0.09 per fully diluted Common Share, to $82.9 million, or $0.45 per fully diluted Common Share, compared to $65.2 million, or $0.36 per fully diluted Common Share, for the same period in 2021.

For the quarter ended March 31, 2022, FFO available for Common Stock and Operating Partnership unit (“OP Unit”) holders increased $20.3 million, or $0.09 per fully diluted Common Share, to $140.9 million, or $0.72 per fully diluted Common Share, compared to $120.6 million, or $0.63 per fully diluted Common Share, for the same period in 2021.

For the quarter ended March 31, 2022, Normalized FFO available for Common Stock and OP Unit holders increased $18.8 million, or $0.08 per fully diluted Common Share, to $141.4 million, or $0.72 per fully diluted Common Share, compared to $122.6 million, or $0.64 per fully diluted Common Share, for the same period in 2021.

For the quarter ended March 31, 2022, our Core Portfolio property operating revenues, excluding deferrals, increased 9.5% and property operating expenses, excluding deferrals and property management, increased 10.3%, from the same period in 2021, resulting in an increase in income from property operations, excluding deferrals and property management, of 9.0%, compared to the same period in 2021.

For the quarter ended June 30, 2022, net income available for Common Stockholders increased $0.4 million to $61.5 million, or $0.33 per fully diluted Common Share, compared to $61.1 million, or $0.33 per fully diluted Common Share, for the same period in 2021.

For the six months ended June 30, 2022, net income available for Common Stockholders increased $18.1 million, or $0.09 per fully diluted Common Share, to $144.4 million, or $0.78 per fully diluted Common Share, compared to $126.3 million, or $0.69 per fully diluted Common Share, for the same period in 2021.

For the quarter ended June 30, 2022, FFO available for Common Stock and Operating Partnership unit (“OP Unit”) holders increased $4.0 million, or $0.01 per fully diluted Common Share, to $121.6 million, or $0.62 per fully diluted Common Share, compared to $117.6 million, or $0.61 per fully diluted Common Share, for the same period in 2021.

For the six months ended June 30, 2022, FFO available for Common Stock and OP Unit holders increased $24.4 million, or $0.10 per fully diluted Common Share, to $262.5 million, or $1.34 per fully diluted Common Share, compared to $238.1 million, or $1.24 per fully diluted Common Share, for the same period in 2021.

For the quarter ended June 30, 2022, Normalized FFO available for Common Stock and OP Unit holders increased $7.0 million, or $0.03 per fully diluted Common Share, to $125.3 million, or $0.64 per fully diluted Common Share, compared to $118.3 million, or $0.61 per fully diluted Common Share, for the same period in 2021.

For the six months ended June 30, 2022, Normalized FFO available for Common Stock and OP Unit holders increased $25.8 million, or $0.12 per fully diluted Common Share, to $266.7 million or $1.37 per fully diluted Common Share, compared $240.9 million, or $1.25 per fully diluted Common Share, for the same period 2021.

For the quarter ended June 30, 2022, our Core Portfolio property operating revenues, excluding deferrals, increased 4.9% and property operating expenses, excluding deferrals and property management, increased 7.0%, from the same period in 2021, resulting in an increase in income from property operations, excluding deferrals and property management, of 3.3%, compared to the same period in 2021.

For the six months ended June 30, 2022, our Core Portfolio property operating revenues, excluding deferrals, increased 7.2% and property operating expenses, excluding deferrals and property management, increased 8.6%, from the same period in 2021, resulting in an increase in income from property operations, excluding deferrals and property management, of 6.2% compared to the same period in 2021.

We continue to focus on the quality of occupancy growth by increasing the number of manufactured homeowners in our Core Portfolio.

Our Core Portfolio average occupancy includes both homeowners and renters in our MH communities and was 95.1% for each of the quarters ended March 31, 2022 and December 31, 2021.

Our Core Portfolio average occupancy was 95.2% for the quarter ended March 31, 2021.

The decrease in average occupancy from the prior year was due to expansion sites completed and added to our Core Portfolio during the quarter but not yet occupied as of March 31, 2022.

For the quarter ended March 31, 2022, our Core Portfolio occupancy increased by 38 sites with an increase in homeowner occupancy of 191 sites, compared to occupancy as of December 31, 2021.

By comparison, for the quarter ended March 31, 2021, our Core Portfolio occupancy increased 92 sites with an increase in homeowner occupancy of 109 sites.

Our Core Portfolio average occupancy includes both homeowners and renters in our MH communities and was 95.1% for each of the quarters ended June 30, 2022, December 31, 2021 and June 30, 2021.

For the quarter ended June 30, 2022, our Core Portfolio occupancy increased by 59 sites with an increase in homeowner occupancy of 252 sites, compared to occupancy as of March 31, 2022.

By comparison, for the quarter ended June 30, 2021, our Core Portfolio occupancy increased 74 sites with an increase in homeowner occupancy of 185 sites.

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.

As of March 31, 2022, we had 3,310 occupied rental homes in our Core MH communities, including 210 homes rented through our ECHO JV.

RV and marina rental income in our Core Portfolio for the quarter ended March 31, 2022 was 21.4% higher than the same period in 2021 driven by the rebound of seasonal demand in the South and West as we welcomed back our Canadian guests and our domestic customers were able to travel without restrictions.

Annual, seasonal and transient rental income for the quarter ended March 31, 2022 increased 8.6%, 64.8% and 21.2%, respectively.

Annual membership subscription revenue in our Core Portfolio increased $1.5 million, or 11%, from 2021, reflecting a 5.3% increase in the number of Thousand Trails Camping members and a rate increase of 5.7%.

The increase in annual membership subscription revenue compared to 2021 was offset by a Membership upgrade sales current period, gross decrease of $2.9 million, or 28.9%, from 2021, as a result of the decrease in the number of upgrades sold primarily due to the introduction of the Adventure product during the first quarter of 2021.

As of June 30, 2022, we had 3,117 occupied rental homes in our Core MH communities, including 185 homes rented through our ECHO JV.

RV and marina base rental income in our Core Portfolio increased 6.6% and 13.9% for the quarter ended June 30, 2022 and six months ended June 30, 2022, respectively, compared to the same periods in 2021 driven by annual and seasonal rental income.

Core RV and marina base rental income from annuals represents more than 60% of total Core RV and marina base rental income and increased 9.1% and 8.9% for the quarter ended June 30, 2022 and six months ended June 30, 2022, respectively, compared to the same period in 2021.

Core seasonal RV and marina base rental income increased 30.6% and 54.1% for the quarter ended June 30, 2022 and six months ended June 30, 2022, respectively, compared to the same periods in 2021.

Core transient RV and marina base rental income decreased by $1.4 million, or 6.6% for the quarter ended June 30, 2022, compared to the same period in 2021 and increased $1.3 million or 3.7% for the six months ended June 30, 2022, compared to the same period in 2021.

Annual membership subscription revenue increased $1.3 million, or 9.3% for the quarter ended June 30, 2022 and $2.8 million, or 10.1% for the six months ended June 30, 2022, compared to the same periods in 2021.

The increase in annual membership subscription revenue for the six months ended June 30, 2022 compared to the six months ended June 30, 2021 was primarily offset by a decrease in Membership upgrade sales current period, gross of $2.5 million, or 13.2%, for the six months ended June 30, 2022 compared to the six months ended June 30, 2021.

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

We closed 261 new home sales during the quarter ended March 31, 2022, compared to 192 new home sales during the quarter ended March 31, 2021, an increase of 35.9%.

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

Our gross investment in real estate increased $82.8 million to $7,071.9 million as of March 31, 2022 from $6,989.1 million as of December 31, 2021, primarily due to acquisitions and capital improvements during the quarter ended March 31, 2022.

We closed 365 new home sales during the quarter ended June 30, 2022, compared to 295 new home sales during the quarter ended June 30, 2021, an increase of 23.7%.

We closed 626 new home sales during the six months ended June 30, 2022,

Management's Discussion and Analysis (continued)

The following chart lists the Properties acquired or sold from January 1, 2021 through March 31, 2022 and Sites added through expansion opportunities at our existing Properties:

compared to 487 new home sales during the six months ended June 30, 2021, an increase of 28.5%.

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

Our gross investment in real estate increased $253.5 million to $7,242.6 million as of June 30, 2022 from $6,989.1 million as of December 31, 2021, primarily due to acquisitions and capital improvements during the six months ended June 30, 2022.

The following chart lists the Properties acquired or sold from January 1, 2021 through June 30, 2022 and Sites added through expansion opportunities at our existing Properties:

Location Type of Property Transaction Date Sites

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Tucson, Arizona RV October 14, 2021 —

RVC Portfolio Multiple JV November 1, 2021 988

RVC Portfolio Multiple Unconsolidated JV November 1, 2021 988

Hope Valley Turner, Oregon RV November 18, 2021 164

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Pilot Knob RV Resort Winterhaven, California RV February 18, 2022 247

Holiday Trav-L-Park Resort Emerald Isle, North Carolina RV June 15, 2022 299

Oceanside RV Resort Oceanside, California RV June 16, 2022 139

Expansion Site Development:

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Sites added (reconfigured) in 2022 514

Total Sites as of March 31, 2022 (1)

Total Sites as of June 30, 2022 (1)

______________________

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A discussion of Income from property operations and Core Portfolio, FFO, Normalized FFO and Income from rental operations, net of depreciation, and a reconciliation to net income, are included below.

Management's Discussion and Analysis (continued)

Income from Property Operations and Core Portfolio

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Income from property operations represents rental income, membership subscriptions and upgrade sales, utility and other income less property and rental home operating and maintenance expenses, real estate taxes, sales and marketing expenses and property management expenses.

Income from property operations,

Management's Discussion and Analysis (continued)

excluding deferrals and property management, represents income from property operations excluding property management expenses and the impact of the GAAP deferrals of membership upgrade sales upfront payments and membership sales commissions, net.

We present bad debt expense within Property operating, maintenance and real estate taxes in the current and prior periods.

Income from property operations, excluding deferrals and property management, represents income from property operations excluding property management expenses and the impact of the GAAP deferrals of membership upgrade sales upfront payments and membership sales commissions, net.

We present bad debt expense within Property operating and maintenance in the current and prior periods.

Our Core Portfolio consists of our Properties owned and operated during all of 2021 and 2022.

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Our Non-Core Portfolio includes all Properties that were not owned and operated during all of 2021 and 2022.

This includes, but is not limited to, six RV communities and eleven marinas acquired during 2021, one membership RV community and one RV community acquired during 2022 and our Westwinds MH community and Nicholson Plaza.

This includes, but is not limited to, six RV communities and eleven marinas acquired during 2021, one membership RV community and three RV communities acquired during 2022 and our Westwinds MH community and Nicholson Plaza.

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

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Although the NAREIT definition of FFO does not address the treatment of non-refundable upfront payments, we believe that it is appropriate to adjust for the impact of the deferral activity in our calculation of FFO.

We define Normalized FFO as FFO excluding non-operating income and expense items, such as gains and losses from early debt extinguishment, including prepayment penalties and defeasance costs, and other miscellaneous non-comparable items.

We define Normalized FFO as FFO excluding non-operating income and expense items, such as gains and losses from early debt extinguishment, including prepayment penalties, defeasance costs and transaction/pursuit costs, and other miscellaneous non-comparable items.

Normalized FFO presented herein is not necessarily comparable to Normalized FFO presented by other real estate companies due to the fact that not all real estate companies use the same methodology for computing this amount.

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Our definitions and calculations of these Non-GAAP financial and operating measures and other terms may differ from the definitions and methodologies used by other REITs and, accordingly, may not be comparable.

These Non-GAAP financial and operating measures do not represent cash generated from operating activities in accordance with GAAP, nor do they represent cash available to pay distributions and should not be considered as an alternative to net income, determined in accordance with GAAP, as an indication of our financial performance, or to cash flows from operating activities, determined in accordance with GAAP, as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make cash distributions.

These Non-GAAP financial and operating measures do not represent cash generated from operating activities in accordance with GAAP, nor do they

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 March 31, 2022 and 2021:

Quarters Ended March 31,

represent cash available to pay distributions and should not be considered as an alternative to net income, determined in accordance with GAAP, as an indication of our financial performance, or to cash flows from operating activities, determined in accordance with GAAP, as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make cash distributions.

The following table reconciles net income available for Common Stockholders to income from property operations for the quarters and six months ended June 30, 2022 and 2021:

Quarters Ended June 30, Six Months Ended June 30,

(amounts in thousands)

2022 2021 2022 2021

Computation of Income from Property Operations:

Net income available for Common Stockholders $ 61,509 $ 61,051 $ 144,415 $ 126,291

Redeemable preferred stock dividends 8 8 8 8

Income allocated to non-controlling interests – Common OP Units 3,073 3,021 7,217 6,768

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Income from property operations $ 150,245 $ 144,924 $ 321,424 $ 293,928

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 March 31, 2022 and 2021:

Quarters Ended March 31,

Quarters Ended June 30, Six Months Ended June 30,

(amounts in thousands)

2022 2021 2022 2021

Computation of FFO and Normalized FFO:

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Early debt retirement 640 755 1,156 2,784

Transaction/pursuit costs (1)

$ 3,082 $ — $ 3,082 $ —

Normalized FFO available for Common Stock and OP Unit holders $ 125,345 $ 118,343 $ 266,747 $ 240,927

Weighted average Common Shares outstanding – Fully Diluted 195,227 192,701 195,253 192,668

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(1) Represents transaction/pursuit costs related to unconsummated acquisitions included in Other expenses in the Consolidated Statements of Income.

Management's Discussion and Analysis (continued)

Results of Operations

This section discusses the comparison of our results of operations for the quarters ended March 31, 2022 and March 31, 2021 and our operating activities, investing activities and financing activities for the quarters ended March 31, 2022 and March 31, 2021.

For the comparison of our results of operations for the quarters ended March 31, 2021 and March 31, 2020 and discussion of our operating activities, investing activities and financing activities for the quarters ended March 31, 2021 and March 31, 2020, 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 March 31, 2021, filed with the SEC on April 27, 2021.

Comparison of the quarter ended March 31, 2022 to the quarter ended March 31, 2021

This section discusses the comparison of our results of operations for the quarters and six months ended June 30, 2022 and June 30, 2021 and our operating activities, investing activities and financing activities for the six months ended June 30, 2022 and June 30, 2021.

For the comparison of our results of operations for the quarters and six months ended June 30, 2021 and June 30, 2020 and discussion of our operating activities, investing activities and financing activities for the six months ended June 30, 2021 and June 30, 2020, 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, 2021, filed with the SEC on July 27, 2021.

Comparison of the quarter ended June 30, 2022 to the quarter ended June 30, 2021

Income from Property Operations

The following table summarizes certain financial and statistical data for our Core Portfolio and total portfolio for the quarters ended March 31, 2022 and March 31, 2021:

The following table summarizes certain financial and statistical data for our Core Portfolio and total portfolio for the quarters ended June 30, 2022 and June 30, 2021:

Core Portfolio Total Portfolio

Quarters Ended March 31, Quarters Ended March 31,

Quarters Ended June 30, Quarters Ended June 30,

(amounts in thousands) 2022 2021 Variance %

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(2) Includes bad debt expense for all periods presented.

(3) See Non-GAAP Financial Measures section of the Management Discussion and Analysis for definitions and reconciliations of these Non-GAAP measures to Net Income available for Common Shareholders.

Total portfolio income from property operations for the quarter ended March 31, 2022, increased $22.2 million, or 14.9%, from the quarter ended March 31, 2021, driven by an increase of $14.9 million, or 10.2%, from our Core Portfolio and an increase of $7.3 million from our Non-Core Portfolio.

(3) See Part I.

Management Discussion and Analysis—Non-GAAP Financial Measures for definitions and reconciliations of these Non-GAAP measures to Net Income available for Common Shareholders.

Total portfolio income from property operations for the quarter ended June 30, 2022, increased $5.3 million, or 3.7%, from the quarter ended June 30, 2021, driven by an increase of $2.4 million, or 1.7%, from our Core Portfolio and an increase of $2.9 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 in 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 primarily attributed to income from properties acquired in 2021 and the first quarter of 2022.

The increase in income from property operations from our Non-Core Portfolio was primarily attributed to income from properties acquired in 2021 and the first half of 2022.

Management's Discussion and Analysis (continued)

Property Operating Revenues

MH base rental income in our Core Portfolio for the quarter ended March 31, 2022 increased $8.2 million, or 5.6%, from the quarter ended March 31, 2021, which reflects 5.1% growth from rate increases and 0.5% growth from occupancy gains.

The average monthly base rental income per Site in our Core Portfolio increased to approximately $747 for the quarter ended March 31, 2022 from approximately $711 for the quarter ended March 31, 2021.

The average occupancy for our Core Portfolio was 95.1% and 95.2% for the quarters ended March 31, 2022 and March 31, 2021, respectively.

MH base rental income in our Core Portfolio for the quarter ended June 30, 2022 increased $8.4 million, or 5.7%, from the quarter ended June 30, 2021, which reflects 5.3% growth from rate increases and 0.4% growth from occupancy gains.

The average monthly base rental income per Site in our Core Portfolio increased to approximately $753 for the quarter ended June 30, 2022 from approximately $716 for the quarter ended June 30, 2021.

The average occupancy for our Core Portfolio was 95.1% for the quarters ended June 30, 2022 and June 30, 2021.

The average occupancy rate decreased slightly due to the addition of expansion sites.

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Core Portfolio Total Portfolio

Quarters Ended March 31, Quarters Ended March 31,

Quarters Ended June 30, Quarters Ended June 30,

(amounts in thousands) 2022 2021 Variance %

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RV and marina base rental income $ 87,390 $ 81,958 $ 5,432 6.6 % $ 98,338 $ 89,008 $ 9,330 10.5 %

RV and marina base rental income in our Core Portfolio for the quarter ended March 31, 2022 increased $17.0 million, or 21.4%, from the quarter ended March 31, 2021, driven by an increase in Seasonal and Annual RV and marina base rental income.

The increase in Seasonal RV and marina base rental income of 64.8% was driven by increases in all regions, due to the rebound of seasonal demand in the South and West as we welcomed back our Canadian guests and our domestic customers were able to travel without restrictions.

The increase in Annual RV and marina base rental income was 8.6%, with 5.5% growth from rate increases and 3.1% from occupancy gains.

Annual membership subscription revenue in our Core Portfolio for the quarter ended March 31, 2022 increased $1.5 million, or 11%, from the quarter ended March 31, 2021, reflecting a 5.3% increase in the number of Thousand Trails Camping members.

Utility and other income in our Core Portfolio for the quarter ended March 31, 2022 increased $2.9 million, or 12.2%, from the quarter ended March 31, 2021.

The increase was due to higher utility income of $2.0 million, pass-through income of $0.5 million, and other property income of $0.4 million.

The increase in utility income was primarily due to an increase in electric income across the West, South, and Northeast.

The utility recovery rate (utility income divided by utility expenses) for both the quarters ended March 31, 2022 and 2021 was approximately 46%.

RV and marina base rental income in our Core Portfolio for the quarter ended June 30, 2022 increased $5.4 million, or 6.6%, from the quarter ended June 30, 2021, driven by an increase in Annual and Seasonal RV and marina base rental income that was partially offset by a decrease in Transient rental income.

The increase in Annual RV and marina base rental income of 9.1% was seen across all regions with the South, West and Northeast being the primary contributors.

The increase in Seasonal RV and marina base rental income of 30.6% was driven by demand for extended stays, mainly in Florida.

The decrease in Transient RV and marina base rental income of 6.6% was due to difficult weather in April and May and an increase in longer stays which reduced the number of Transient sites available.

Annual membership subscription revenue in our Core Portfolio for the quarter ended June 30, 2022 increased $1.1 million, or 7.9%, from the quarter ended June 30, 2021, reflecting a 6.5% increase in the number of Thousand Trails Camping members.

Utility and other income in our Core Portfolio for the quarter ended June 30, 2022 decreased $0.7 million, or 2.7%, from the quarter ended June 30, 2021.

The decrease was due to a decrease of $2.3 million in other property income related to Hurricane Hanna insurance proceeds received in 2021 partially offset by higher utility income of $1.3 million.

The increase in utility income was primarily due to an increase in electric income across the South and West, sewer income in all regions and trash income in the South.

The utility recovery rate (utility income divided by utility expenses) for the quarters ended June 30, 2022 and 2021 was approximately 44% and 43%, respectively.

Property Operating Expenses

Property operating expenses, excluding deferrals and property management, in our Core Portfolio for the quarter ended March 31, 2022 increased $11.3 million, or 10.3%, from the quarter ended March 31, 2021, driven by increases in property operating and maintenance expenses of $11.4 million and real estate taxes of $1.0 million, partially offset by a decrease in gross sales and marketing expenses of $1.3 million.

Property operating expenses, excluding deferrals and property management, in our Core Portfolio for the quarter ended June 30, 2022 increased $8.6 million, or 7.0%, from the quarter ended June 30, 2021, driven by increases in property operating and maintenance expenses of $8.0 million and real estate taxes of $0.6 million.

Core property operating and maintenance expenses were higher in 2022 primarily due to increases in utility expenses of $2.8 million, repair and maintenance of $2.6 million, property payroll of $1.8 million and administrative expenses of $1.4 million.

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

Quarters Ended March 31,

Quarters Ended June 30,

(amounts in thousands, except home sales volumes) 2022 2021 Variance %

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

Income from home sales and other operations was $2.5 million for the first quarter of 2022, an increase of $1.1 million, compared to $1.4 million in the first quarter of 2021.

The increase in income from home sales and other operations was primarily due to an increase in gross profit from new home sales resulting from an increase of 69 new home sales during the first quarter of 2022 compared to the first quarter of 2021, primarily driven by favorable housing trends in the broader real estate market.

Income from home sales and other operations was $4.1 million for the second quarter of 2022, an increase of $1.8 million, compared to $2.4 million in the second quarter of 2021.

The increase in income from home sales and other operations was primarily due to an increase in gross profit from new home sales resulting from an increase of 70 new home sales during the second quarter of 2022 compared to the second quarter of 2021, primarily driven by favorable housing trends in the broader real estate market.

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 March 31,

Quarters Ended June 30,

(amounts in thousands, except rental unit volumes)

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

Approximately $7.4 million and $8.1 million for the quarters ended March 31, 2022 and March 31, 2021, respectively, of Site rental income is included in MH base rental income in the Core Portfolio Income from Property Operations table.

Approximately $7.1 million and $8.1 million for the quarters ended June 30, 2022 and June 30, 2021, 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 $18.3 million and $17.5 million as of March 31, 2022 and March 31, 2021, respectively.

(4) Includes 210 and 295 homes rented through our ECHO JV as of March 31, 2022 and 2021, respectively.

Income from rental operations, net of depreciation, decreased $1.1 million during the first quarter of 2022, compared to the first quarter of 2021 primarily due to a decrease in rental operations revenues as a result of a decrease in the number of new occupied rentals.

Our investment in the ECHO JV was $18.7 million and $17.7 million as of June 30, 2022 and June 30, 2021, respectively.

(4) Includes 185 and 282 homes rented through our ECHO JV as of June 30, 2022 and 2021, respectively.

Income from rental operations, net of depreciation, decreased $1.2 million during the second quarter of 2022, compared to the second quarter of 2021, primarily due to a decrease in rental operations revenues as a result of a decrease in the number of new occupied rentals.

Other Income and Expenses

The following table summarizes other income and expenses, net:

Quarters Ended March 31,

Quarters Ended June 30,

(amounts in thousands, expenses shown as negative)

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Total other income and expenses, net $ (91,034) $ (84,266) $ (6,768) (8.0) %

Total other income and expenses, net increased $4.6 million for the quarter ended March 31, 2022 compared to the quarter ended March 31, 2021, primarily due to higher depreciation and amortization and an increase in general and administrative costs, partially offset by a decrease in early debt retirement costs.

The increase in depreciation and amortization is due to depreciation on Non-core properties acquired in 2021 and the first quarter of 2022.

The decrease in early debt retirement costs was due to lower debt repayment costs for the quarter ended March 31, 2022 compared to the quarter ended March 31, 2021.

Total other income and expenses, net increased $6.8 million for the quarter ended June 30, 2022 compared to the quarter ended June 30, 2021, primarily due to an increase in other expenses, higher depreciation and amortization and an increase in general and administrative costs, partially offset by an increase in income from other investments.

The increase in other expenses was primarily due to transaction/pursuit costs of $3.1 million related to unconsummated acquisitions recognized during the quarter.

The increase in depreciation and amortization is due to depreciation on Non-core properties acquired in 2021 and the first half of 2022.

The increase in income from other investments, net was primarily due to net income from MHVillage/Datacomp (acquired in the fourth quarter of 2021).

Management's Discussion and Analysis (continued)

Comparison of the Six Months Ended June 30, 2022 to the Six Months Ended June 30, 2021

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, 2022 and 2021.

Core Portfolio Total Portfolio

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

(amounts in thousands) 2022 2021 Variance %

Change 2022 2021 Variance %

MH base rental income (1)

$ 310,199 $ 293,556 $ 16,643 5.7 % $ 316,025 $ 299,119 $ 16,906 5.7 %

Rental home income (1)

7,758 8,559 (801) (9.4) % 7,775 8,571 (796) (9.3) %

RV and marina base rental income (1)

183,792 161,361 22,431 13.9 % 207,102 172,596 34,506 20.0 %

Annual membership subscriptions 30,498 27,918 2,580 9.2 % 30,749 27,921 2,828 10.1 %

Membership upgrade sales current period, gross 16,437 19,221 (2,784) (14.5) % 16,686 19,221 (2,535) (13.2) %

Utility and other income (1)

52,436 50,306 2,130 4.2 % 59,866 52,923 6,943 13.1 %

Property operating revenues, excluding deferrals 601,120 560,921 40,199 7.2 % 638,203 580,351 57,852 10.0 %

Property operating and maintenance (1)(2)

204,659 185,178 19,481 10.5 % 218,308 192,764 25,544 13.3 %

Real estate taxes 33,932 32,400 1,532 4.7 % 38,639 35,746 2,893 8.1 %

Rental home operating and maintenance 2,608 2,509 99 3.9 % 2,628 2,555 73 2.9 %

Sales and marketing, gross 11,244 12,472 (1,228) (9.8) % 11,323 12,474 (1,151) (9.2) %

Property operating expenses, excluding deferrals and property management 252,443 232,559 19,884 8.6 % 270,898 243,539 27,359 11.2 %

Income from property operations, excluding deferrals and property management (3)

348,677 328,362 20,315 6.2 % 367,305 336,812 30,493 9.1 %

Property management 36,970 31,941 5,029 15.7 % 36,970 31,940 5,030 15.7 %

Income from property operations, excluding deferrals (3)

311,707 296,421 15,286 5.2 % 330,335 304,872 25,463 8.4 %

Membership upgrade sales upfront payments and membership sales commission, deferred, net 8,911 10,944 (2,033) (18.6) % 8,911 10,944 (2,033) (18.6) %

Income from property operations (3)

$ 302,796 $ 285,477 $ 17,319 6.1 % $ 321,424 $ 293,928 $ 27,496 9.4 %

__________________________

(1) Rental income consists of the following total portfolio income items:

1) MH base rental income, 2) Rental home income, 3) RV and marina base rental income and 4) Utility income, which is calculated by subtracting Other income on the Consolidated Statements of Income and Comprehensive Income from Utility and other income in this table.

The difference between the sum of the total portfolio income items and Rental income on the Consolidated Statements of Income and Comprehensive Income is bad debt expense, which is presented in Property operating maintenance expense in this table.

(2) Includes bad debt expense for all periods presented.

(3) See Part I.

Management Discussion and Analysis—Non-GAAP Financial Measures for definitions and reconciliation of these Non-GAAP measures to Net Income available for Common Shareholders.

Total Portfolio income from property operations for 2022 increased $27.5 million, or 9.4%, from 2021, driven by an increase of $17.3 million, or 6.1%, from our Core Portfolio and by an increase of $10.2 million from our Non-Core Portfolio.

The increase in income from property operations from our Non-Core Portfolio was attributed to income from properties acquired in 2021 and the first half of 2022.

Property Operating Revenues

MH base rental income in our Core Portfolio for 2022 increased $16.6 million, or 5.7%, from 2021, which reflects 5.2% growth from rate increases and 0.5% growth from occupancy gains.

The average monthly base rental income per Site increased to approximately $750 in 2022 from approximately $713 in 2021.

The average occupancy for the Core Portfolio was 95.1% for the six months ended June 30, 2022 compared to 95.2% for the six months ended June 30, 2021.

The decrease in the average occupancy is due to expansion sites added.

Management's Discussion and Analysis (continued)

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

Core Portfolio Total Portfolio

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

(amounts in thousands)

2022 2021 Variance %

Change 2022 2021 Variance %

Annual $ 112,811 $ 103,636 $ 9,175 8.9 % $ 130,986 $ 113,267 $ 17,719 15.6 %

Seasonal 33,962 22,040 11,922 54.1 % 36,098 22,809 13,289 58.3 %

Transient 37,019 35,685 1,334 3.7 % 40,018 36,520 3,498 9.6 %

RV and marina base rental income $ 183,792 $ 161,361 $ 22,431 13.9 % $ 207,102 $ 172,596 $ 34,506 20.0 %

RV and marina base rental income in our Core Portfolio for 2022 increased $22.4 million, or 13.9%, from 2021 primarily due to increases in Seasonal and Annual RV and marina base rental income.

The increase of Seasonal RV and marina base rental income of $11.9 million, or 54.1% was due to the rebound of seasonal demand in the South and West as we welcomed back our Canadian guests and our domestic customers were able to travel without restrictions.

The increase in Annual RV and marina base rental income of $9.2 million, or 8.9% was seen across all regions, primarily in the South, West and Northeast.

Annual membership subscription revenue in our Core Portfolio for 2022 increased $2.6 million, or 9.2%, from 2021, reflecting a 6.5% increase in the number of Thousand Trails Camping members.

The increase in annual membership subscription revenue of $2.6 million, or 9.2% from 2021 was offset by a Membership upgrade sales current period, gross decrease of $2.8 million, or 14.5%, from 2021, as a result of the decrease in the number of upgrades sold primarily due to the introduction of the Adventure product during the first quarter of 2021.

Utility and other income in our Core Portfolio for 2022 increased $2.1 million, or 4.2%, from 2021.

The increase was primarily due to an increase in utility income of $3.3 million and pass-through income of $0.7 million, partially offset by a decrease in other property income of $1.9 million.

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

The utility recovery rate (utility income divided by utility expenses) for both 2022 and 2021 was approximately 45%.

The decrease in other property income was due to Hurricane Hanna recovery revenue received in 2021.

Property Operating Expenses

Property operating expenses, excluding deferrals and property management, in our Core Portfolio for 2022 increased $19.9 million, or 8.6%, from 2021, driven by increases in property operating and maintenance expenses of $19.5 million.

Core property operating and maintenance expenses were higher in 2022 compared to 2021 due to increases in utility expenses of $7.4 million, repairs and maintenance expenses of $5.5 million, and property payroll expenses of $3.4 million.

Management's Discussion and Analysis (continued)

Home Sales and Rental Operations

Home Sales and Other

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

Six Months Ended June 30,

(amounts in thousands, except home sales volumes)

2022 2021 Variance %

Gross revenues from new home sales (1)

$ 59,378 $ 37,658 $ 21,720 57.7 %

Cost of new home sales (1)

53,346 35,958 17,388 48.4 %

Gross profit from new home sales 6,032 1,700 4,332 254.8 %

Gross revenues from used home sales 2,365 1,989 376 18.9 %

Cost of used home sales 2,847 2,766 81 2.9 %

Loss from used home sales (482) (777) 295 38.0 %

Gross revenue from brokered resales and ancillary services 30,647 25,831 4,816 18.6 %

Cost of brokered resales and ancillary services 15,477 11,986 3,491 29.1 %

Gross profit from brokered resales and ancillary services 15,170 13,845 1,325 9.6 %

Home selling and ancillary operating expenses 14,066 11,031 3,035 27.5 %

Income from home sales and other $ 6,654 $ 3,737 $ 2,917 78.1 %

Home sales volumes

Total new home sales (2)

626 487 139 28.5 %

New Home Sales Volume - ECHO JV 51 24 27 112.5 %

Used home sales 169 210 (41) (19.5) %

Brokered home resales 451 372 79 21.2 %

_________________________

(1) New home sales gross revenues and costs of new home sales do not include the revenues and costs associated with our ECHO JV.

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

The income from home sales and other was $6.7 million for the six months ended June 30, 2022, an increase of $2.9 million, compared to $3.7 million for the six months ended June 30, 2021.

The increase in income from home sales and other operations was primarily due to an increase in gross profit from new home sales resulting from an increase of 139 new home sales during the six months ended June 30, 2022 compared to the six months ended June 30 2021, primarily driven by favorable housing trends in the broader real estate market.

Management's Discussion and Analysis (continued)

Rental Operations

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

Six Months Ended June 30,

(amounts in thousands, except rental unit volumes)

2022 2021 Variance %

Rental operations revenue (1)

$ 22,216 $ 24,752 $ (2,536) (10.2) %

Rental home operating and maintenance expenses 2,608 2,509 99 3.9 %

Income from rental operations 19,608 22,243 (2,635) (11.8) %

Depreciation on rental homes (2)

5,016 5,305 (289) (5.4) %

Income from rental operations, net of depreciation $ 14,592 $ 16,938 $ (2,346) (13.9) %

Gross investment in new manufactured home rental units (3)

$ 221,251 $ 230,774 $ (9,523) (4.1) %

Gross investment in used manufactured home rental units $ 14,571 $ 17,753 $ (3,182) (17.9) %

Net investment in new manufactured home rental units $ 184,101 $ 196,494 $ (12,393) (6.3) %

Net investment in used manufactured home rental units $ 6,076 $ 11,688 $ (5,612) (48.0) %

Number of occupied rentals – new, end of period (4)

2,742 3,305 (563) (17.0) %

Number of occupied rentals – used, end of period 375 491 (116) (23.6) %

______________________

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

Approximately $14.5 million and $16.2 million of Site rental income for the six months ended June 30, 2022 and 2021, 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.

(2) Presented in Depreciation and amortization in the Consolidated Statements of Income and Comprehensive Income.

(3) Includes both occupied and unoccupied rental homes in our Core Portfolio.

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

Our investment in the ECHO JV was $18.7 million and $17.7 million as of June 30, 2022 and 2021, respectively.

(4) Occupied rentals as of the end of the period in our Core Portfolio and includes 185 and 282 homes rented through our ECHO JV as of June 30, 2022 and 2021, respectively.

Income from rental operations, net of depreciation, was $2.3 million lower during the six months ended June 30, 2022 compared to the six months ended June 30, 2021, primarily due to a decrease in rental operations revenues as a result of a decrease in the number of new occupied rentals.

Other Income and Expenses

The following table summarizes other income and expenses, net:

Six Months Ended June 30,

(amounts in thousands, expenses shown as negative)

2022 2021 Variance %

Depreciation and amortization $ (100,190) $ (93,714) $ (6,476) (6.9) %

Interest income 3,481 3,509 (28) (0.8) %

Income from other investments, net 4,521 2,158 2,363 109.5 %

General and administrative (23,992) (20,740) (3,252) (15.7) %

Other expenses (5,009) (1,498) (3,511) (234.4) %

Early debt retirement (1,156) (2,784) 1,628 58.5 %

Interest and related amortization (55,517) (53,406) (2,111) (4.0) %

Total other income and expenses, net $ (177,862) $ (166,475) $ (11,387) (6.8) %

Total other income and expenses, net increased $11.4 million during the six months ended June 30, 2022 compared to the six months ended June 30, 2021, primarily due to higher depreciation and amortization, other expenses and general administrative expenses.

The increase in depreciation and amortization was due to depreciation on Non-Core properties acquired in 2021 and the first half of 2022.

The increase in Other expenses was primarily due to transaction/pursuit costs of $3.1 million related to unconsummated acquisitions.

The increase in general and administrative expense was due to higher payroll costs.

Management's Discussion and Analysis (continued)

Liquidity and Capital Resources

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We expect similar demand for liquidity will continue for the short-term and long-term.

Our primary sources of cash include operating cash flows, proceeds from financings, borrowings under our unsecured Line of Credit (“LOC”) and proceeds from issuance of equity and debt securities.

Our primary sources of cash include operating cash flows, proceeds from financings, borrowings under our unsecured LOC and proceeds from issuance of equity and debt securities.

One of our stated objectives is to maintain financial flexibility.

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Prior to the new program, the aggregate offering price was up to $200.0 million.

As of March 31, 2022, the full capacity of our current ATM equity offering program remained available for issuance.

During the quarter ended March 31, 2022, we sold 328,123 shares of our common stock under our prior ATM equity program for gross cash proceeds of approximately $28.0 million at a weighted average share price of $86.46.

As of March 31, 2022, we had available liquidity in the form of approximately 414.0 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 quarter ended March 31, 2022, we closed on a $200.0 million senior unsecured term loan.

During the six months ended June 30, 2022, we sold 328,123 shares of our common stock under our prior ATM equity program for gross cash proceeds of approximately $28.0 million at a weighted average share price of $86.46.

As of June 30, 2022, the full capacity of our current ATM equity offering program remained available for issuance.

As of June 30, 2022, we had available liquidity in the form of approximately 413.9 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, 2022, we closed on a $200.0 million senior unsecured term loan.

The maturity date is January 21, 2027.

The term loan bears interest at a rate of Secured Overnight Financing Rate (“SOFR”), plus approximately 1.30% to 1.80%, depending on leverage levels.

We also closed on a secured refinancing transaction generating gross proceeds of $200.0 million.

The loan is secured by one MH community, has a fixed interest rate of 3.36% per annum and has a maturity date of May 1, 2034.

The net proceeds from the refinancing transaction were used to repay all debt scheduled to mature in 2022 and to repay amounts outstanding on the LOC.

Financial Statements—Note 8.

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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.

For additional information regarding our interest rate swap, see Item 1.

For additional information regarding our interest rate swap, see Part I.

Financial Statements—Note 9.

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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 March 31, 2022, our LOC had a borrowing capacity of $431.0 million.

As of March 31, 2022, 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.

On April 18, 2022, we closed on a secured refinancing transaction generating gross proceeds of $200.0 million.

The loan is secured by one MH community, has a fixed interest rate of 3.36% per annum and has a maturity date of May 1, 2034.

The net proceeds from the transaction were used to repay all debt scheduled to mature in 2022 and to repay amounts outstanding on the LOC.

Financial Statements—Note 13.

Subsequent Events for further details.

As of June 30, 2022, our LOC had a borrowing capacity of $452.2 million.

As of June 30, 2022, 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.

1 unchanged sentence

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)

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.

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 quarters ended March 31,

Six Months ended June 30,

(amounts in thousands) 2022 2021

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Operating Activities

Net cash provided by operating activities increased $4.0 million to $177.3 million for the quarter ended March 31, 2022 from $173.3 million for the quarter ended March 31, 2021.

The increase in net cash provided by operating activities was primarily due to higher income from property operations of $22.2 million, partially offset by long term incentive compensation of approximately $4.4 million paid during the first quarter of 2022 and a decrease in deferred membership revenue of $4.2 million.

Net cash provided by operating activities increased $25.5 million to $354.5 million for the six months ended June 30, 2022 from $328.9 million for the six months ended June 30, 2021.

The increase in net cash provided by operating activities was primarily due to higher income from property operations of $27.5 million.

Investing Activities

Net cash used in investing activities decreased $246.5 million to $105.2 million for the quarter ended March 31, 2022 from $351.7 million for the quarter ended March 31, 2021.

The decrease was due to a decrease in spending on acquisitions of $280.2 million, partially offset by an increase in capital improvement spending of $26.9 million.

Net cash used in investing activities decreased $173.2 million to $302.1 million for the six months ended June 30, 2022 from $475.2 million for the six months ended June 30, 2021.

The decrease was due to a decrease in spending on acquisitions of $244.7 million, partially offset by an increase in capital improvement spending of $61.3 million and an increase in investments in unconsolidated joint ventures of $11.8 million.

Capital Improvements

The following table summarizes capital improvements:

For the quarters ended March 31,

Six Months ended June 30,

(amounts in thousands) 2022 2021

2 unchanged sentences

Improvements and renovations (2)

18,034 11,893

Property upgrades and development 70,263 45,008

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Financing Activities

Net cash used in financing activities was $157.4 million for the quarter ended March 31, 2022.

Net cash provided by financing activities was $245.8 million for the quarter ended March 31, 2021.

Net cash used in financing activities was $133.4 million for the six months ended June 30, 2022.

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

The decrease in net cash provided by financing activities was primarily due to a decrease in net debt proceeds of approximately $320.7 million, partially offset by proceeds from the sale of common stock under our ATM program of approximately $28.4 million.

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On February 22, 2022, the Nicholsons filed a petition for rehearing, which the Court of Appeal denied on March 2, 2022.

On March 16, 2022, the Nicholsons filed a petition for review with the California Supreme Court.

The arbitration is stayed pursuant to an agreement between MHC and the Nicholsons.

On March 16, 2022, the Nicholsons filed a petition for review with the California Supreme Court, which the California Supreme Court denied on April 20, 2022.

On May 18, 2022, the Nicholsons filed a cross complaint alleging that the Operating Partnership is obligated to deliver Westwinds free and clear of encumbrances and in good condition and repair.

The cross complaint asserts that it is no longer feasible for the Operating Partnership to cure its alleged breaches given that the ground leases terminate on August 31, 2022.

The Operating Partnership has filed a demurrer seeking dismissal of this cross complaint, and the Nicholsons also filed a demurrer to our complaint.

On July 19, 2022, the Nicholsons sent two notices of default to the Operating Partnership, one related to Westwinds and the other related to Nicholson Plaza, the adjacent shopping center.

The notices generally assert that the Operating Partnership failed to maintain or repair certain infrastructure and improvements at Westwinds and Nicholson Plaza.

The Operating Partnership is evaluating the notices but expects to dispute the contention that it has not maintained Westwinds and Nicholson Plaza in compliance with the terms of the applicable ground leases.

Management's Discussion and Analysis (continued)

The arbitration which was previously stayed pursuant to an agreement between the Operating Partnership and the Nicholsons is now proceeding with respect to the Nicholsons’ indemnification claim 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 and a claim by the Operating Partnership for recovery of fees incurred in connection with the Nicholsons’ failed motion to compel arbitration.

Following the filing of our lawsuit, the City of San Jose took steps to accelerate the passage of a general plan amendment previously under review by the City to change the designation for Westwinds from its current general plan designation of Urban Residential (which would allow for higher density redevelopment), to a newly created designation of Mobile Home Park.

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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.

Management's Discussion and Analysis (continued)

Off-Balance Sheet Arrangements

As of March 31, 2022, we have no off-balance sheet arrangements.

As of June 30, 2022, we have no off-balance sheet arrangements.

Critical Accounting Policies and Estimates

1 unchanged sentence

Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2021 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 March 31, 2022.

There have been no significant changes to our critical accounting policies and estimates during the quarter ended June 30, 2022.

Forward-Looking Statements

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

Management's Discussion and Analysis (continued)

In addition, these forward-looking statements are subject to risks related to the COVID-19 pandemic, many of which are unknown, including the duration of the pandemic, the extent of the adverse health impact on the general population and on our residents, customers, and employees in particular, its impact on the employment rate and the economy, the extent and impact of governmental responses, and the impact of operational changes we have implemented and may implement in response to the pandemic.

7 unchanged sentences

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