What changed in this filing

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Item 1. Financial Statements

2022-10-21 compared with 2022-07-27 · 124 added, 86 removed, 525 unchanged (29% of the section changed)

3 unchanged sentences

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

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Investment in real estate:

22 unchanged sentences

Stockholders' Equity:

Preferred stock, $ 0.01 par value, 10,000,000 shares authorized as of June 30, 2022 and December 31, 2021;

Preferred stock, $ 0.01 par value, 10,000,000 shares authorized as of September 30, 2022 and December 31, 2021;

none issued and outstanding.

Common stock, $ 0.01 par value, 600,000,000 shares authorized as of June 30, 2022 and December 31, 2021;

186,076,327 and 185,640,379 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively.

Common stock, $ 0.01 par value, 600,000,000 shares authorized as of September 30, 2022 and December 31, 2021;

186,108,851 and 185,640,379 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively.

Paid-in capital 1,625,751 1,593,362

9 unchanged sentences

(amounts in thousands, except per share data)

Quarters Ended June 30, Six Months Ended June 30,

Quarters Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

21 unchanged sentences

Total expenses 308,178 273,993 883,469 776,634

Loss on sale of real estate, net — — — ( 59 )

Loss on sale of real estate and impairment, net ( 3,747 ) — ( 3,747 ) ( 59 )

Income before equity in income of unconsolidated joint ventures 69,044 73,242 219,260 204,374

40 unchanged sentences

Balance as of June 30, 2022 1,916 1,622,876 — ( 191,828 ) 16,241 72,531 1,521,736

Exchange of Common OP Units for Common Stock — 203 — — — ( 203 ) —

Issuance of Common Stock through employee stock purchase plan — 458 — — — — 458

Compensation expenses related to restricted stock and stock options — 2,654 — — — — 2,654

Adjustment for Common OP Unitholders in the Operating Partnership — ( 342 ) — — — 342 —

Adjustment for fair market value of swap — — — — 4,235 — 4,235

Consolidated net income — — — 67,164 — 3,346 70,510

Distributions — — — ( 76,305 ) — ( 3,801 ) ( 80,106 )

Other — ( 98 ) — — — — ( 98 )

Balance as of September 30, 2022 $ 1,916 $ 1,625,751 $ — $ ( 200,969 ) $ 20,476 $ 72,215 $ 1,519,389

Equity LifeStyle Properties, Inc.

21 unchanged sentences

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

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

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

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

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

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

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

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

Other — ( 193 ) — — — — ( 193 )

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

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

2 unchanged sentences

(amounts in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash Flows From Operating Activities:

1 unchanged sentence

Adjustments to reconcile consolidated net income to net cash provided by operating activities:

Loss on sale of real estate, net — 59

Loss on sale of real estate and impairment, net 3,747 59

Early debt retirement 1,156 2,784

28 unchanged sentences

(amounts in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash Flows From Financing Activities:

18 unchanged sentences

Cash and restricted cash, end of period $ 30,510 $ 40,272

Six Months Ended June 30,

Nine Months Ended September 30,

Supplemental Information:

Cash paid for interest $ 53,987 $ 51,040

Cash paid for interest, net $ 82,368 $ 77,377

Net investment in real estate – reclassification of rental homes $ 75,726 $ 55,355

23 unchanged sentences

Our Properties are owned primarily by the Operating Partnership and managed internally by affiliates of the Operating Partnership.

ELS is the sole general partner of the Operating Partnership, has exclusive responsibility and discretion in management and control of the Operating Partnership and held a 95.2 % interest as of June 30, 2022.

ELS is the sole general partner of the Operating Partnership, has exclusive responsibility and discretion in management and control of the Operating Partnership and held a 95.3 % interest as of September 30, 2022.

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

42 unchanged sentences

(b) Restricted Cash

As of June 30, 2022 and December 31, 2021, restricted cash consisted of $ 25.8 million and $ 29.3 million, respectively, primarily related to cash reserved for customer deposits and escrows for insurance and real estate taxes.

As of September 30, 2022 and December 31, 2021, restricted cash consisted of $ 23.2 million and $ 29.3 million, respectively, primarily related to cash reserved for customer deposits and escrows for insurance and real estate taxes.

Note 3 – Leases

6 unchanged sentences

(amounts in thousands)

As of June 30, 2022

As of September 30, 2022

2022 $ 42,224

1 unchanged sentence

Total $ 448,763

We lease land under non-cancelable operating leases at 14 Properties expiring at various dates between August 31, 2022 and 2054.

For additional information regarding the Westwinds and Nicholson Plaza ground leases that expire August 31, 2022, see Part 1.

We lease land under non-cancelable operating leases at 10 Properties expiring at various dates between 2028 and 2054.

The Westwinds ground leases expired August 31, 2022, for additional information see Part I.

Financial Statements —Note 11.

Commitments and Contingencies.

1 unchanged sentence

We also have other operating leases, primarily office space, expiring at various dates through 2032.

For the quarters ended June 30, 2022 and 2021, total operating lease payments were $ 2.9 million and $ 2.6 million, respectively.

For the six months ended June 30, 2022 and 2021, total operating lease payments were $ 5.5 million and $ 5.1 million, respectively.

For the quarters ended September 30, 2022 and 2021, total operating lease payments were $ 2.7 million and $ 2.9 million, respectively.

For the nine months ended September 30, 2022 and 2021, total operating lease payments were $ 8.2 million and $ 8.0 million, respectively.

Equity LifeStyle Properties, Inc.

1 unchanged sentence

Note 3 – Leases (continued)

The following table summarizes our minimum future rental payments, excluding variable costs, which are discounted by our incremental borrowing rate to calculate the lease liability for our operating leases as of June 30, 2022:

As of June 30, 2022

As of September 30, 2022

(amounts in thousands)

9 unchanged sentences

Total lease liabilities $ 5,275 $ 22,657 $ 27,932

Right-of-use (“ROU”) assets and lease liabilities from our operating leases, included within Other assets, net and Accounts payable and other liabilities on the Consolidated Balance Sheets, were $ 26.8 million and $ 28.8 million, respectively, as of June 30, 2022.

The weighted average remaining lease term for our operating leases was nine years and the weighted average incremental borrowing rate was 3.8 % at June 30, 2022.

Right-of-use (“ROU”) assets and lease liabilities from our operating leases, included within Other assets, net and Accounts payable and other liabilities on the Consolidated Balance Sheets, were $ 25.9 million and $ 27.9 million, respectively, as of September 30, 2022.

The weighted average remaining lease term for our operating leases was nine years and the weighted average incremental borrowing rate was 3.7 % at September 30, 2022.

ROU assets and lease liabilities from our operating leases, included within Other assets, net and Accounts payable and other liabilities on the Consolidated Balance Sheets, were $ 30.3 million and $ 30.7 million, respectively, as of December 31, 2021.

1 unchanged sentence

Note 4 – Earnings Per Common Share

The following table sets forth the computation of basic and diluted earnings per share of common stock for the quarters and six months ended June 30, 2022 and 2021:

Quarters Ended June 30, Six Months Ended June 30,

The following table sets forth the computation of basic and diluted earnings per share of common stock for the quarters and nine months ended September 30, 2022 and 2021:

Quarters Ended September 30, Nine Months Ended September 30,

(amounts in thousands, except per share data) 2022 2021 2022 2021

23 unchanged sentences

$ 0.4100 June 30, 2022 June 24, 2022 July 8, 2022

$ 0.4100 September 30, 2022 September 30, 2022 October 14, 2022

Equity Offering Program

7 unchanged sentences

Commissions paid to sales agents $ 389

There has been no ATM activity under the current ATM equity offering program during the six months ended June 30, 2022 and as of June 30, 2022, the full capacity remained available for issuance.

There was no ATM equity activity during the six months ended June 30, 2021.

There has been no ATM activity under the current ATM equity offering program during the nine months ended September 30, 2022 and as of September 30, 2022, the full capacity remained available for issuance.

There was no ATM equity activity during the nine months ended September 30, 2021.

Subject to certain limitations, OP Unit holders can request an exchange of any or all of their OP Units for shares of Common Stock at any time.

Upon receipt of such a request, we may, in lieu of issuing shares of Common Stock, cause the Operating Partnership to pay cash.

During the six months ended June 30, 2022 and 2021, 8,640 and 1,386,716 OP Units, respectively, were exchanged for an equal number of shares of Common Stock.

During the nine months ended September 30, 2022 and 2021, 34,680 and 1,451,710 OP Units, respectively, were exchanged for an equal number of shares of Common Stock.

Note 6 – Investment in Real Estate

7 unchanged sentences

Notes to Consolidated Financial Statements

One June 16, 2022 we completed the acquisition of Oceanside RV Resort, a 139 -site RV community located in Oceanside, California for a total purchase price of $ 44.4 million.

Note 6 – Investment in Real Estate (continued)

On June 16, 2022, we completed the acquisition of Oceanside RV Resort, a 139 -site RV community located in Oceanside, California for a total purchase price of $ 44.4 million.

The acquisition was funded with available cash and debt financing from the unsecured line of credit.

On July 21, 2022, we completed the acquisition of an 83 -acre vacant land parcel in North Fort Myers, Florida, adjacent to one of our properties, for a purchase price of $ 6.4 million.

The acquisition was funded with available cash.

On August 9, 2022, we completed the acquisition of a 78 -acre vacant land parcel in Beecher, Illinois, adjacent to one of our properties, for a purchase price of $ 0.9 million.

The acquisition was funded with available cash.

Hurricane Ian made landfall on the west coast of Florida on September 28, 2022.

The most significant damage to our properties occurred in or near the Fort Myers area.

Six of our Properties in or near this market are temporarily closed.

As a result of the storm event and the damage caused, we wrote down the carrying value of certain assets at these properties by approximately $ 3.7 million during the quarter and nine months ended September 30, 2022, which is included in Loss on sale of real estate and impairment, net in the Consolidated Statements of Income.

Note 7 – Investments in Unconsolidated Joint Ventures

The following table summarizes our investment in unconsolidated joint ventures (investment amounts in thousands with the number of Properties shown parenthetically as of June 30, 2022 and December 31, 2021 , respectively):

The following table summarizes our investment in unconsolidated joint ventures (investment amounts in thousands with the number of Properties shown parenthetically as of September 30, 2022 and December 31, 2021 , respectively):

Investment as of Income/(Loss) for

the Six Months Ended

the Nine Months Ended

Investment Location Number of Sites Economic

June 30, 2022 December 31, 2021 June 30, 2022 June 30, 2021

September 30, 2022 December 31, 2021 September 30, 2022 September 30, 2021

Meadows Various (2,2) 1,077 50 % $ 150 $ — $ 1,850 $ 1,350

3 unchanged sentences

ECHO JV Various — 50 % 18,979 18,136 843 475

RVC Various 1,194 80 % 54,687 49,397 ( 323 ) —

Mulberry Farms Various — 50 % (d)

RVC Various 1,282 80 % (d)

57,779 49,397 ( 323 ) —

Mulberry Farms Various — 50 % (e)

3,080 $ 88,352 $ 70,312 $ 2,889 $ 2,786

(a) The percentages shown approximate our economic interest as of June 30, 2022.

_____________________

(a) The percentages shown approximate our economic interest as of September 30, 2022.

Our legal ownership interest may differ.

2 unchanged sentences

On October 14, 2021, we completed the acquisition of the remaining 50 % interest in Voyager RV Resort.

(d) On January 18, 2022, we acquired a 50 % equity interest in an entity developing an age-restricted community in Prescott Valley, Arizona.

We received approximately $ 2.0 million and $ 1.7 million in distributions from our unconsolidated joint ventures for the six months ended June 30, 2022 and 2021, respectively.

Approximately $ 0.8 million and $ 1.5 million of the distributions made to us exceeded our basis in our unconsolidated joint ventures for the six months ended June 30, 2022 and 2021, respectively, and as such, were recorded as income from unconsolidated joint ventures.

(d) On July 1, 2022, we acquired an 80 % interest in an additional joint venture with RVC Outdoor Destinations ("RVC") for a total value of $ 1.1 million.

(e) On January 18, 2022, we acquired a 50 % equity interest in an entity developing an age-restricted community in Prescott Valley, Arizona.

We received approximately $ 3.9 million and $ 2.4 million in distributions from our unconsolidated joint ventures for the nine months ended September 30, 2022 and 2021, respectively.

Approximately $ 1.7 million and $ 2.2 million of the distributions made to us exceeded our basis in our unconsolidated joint ventures for the nine months ended September 30, 2022 and 2021, respectively, and as such, were recorded as income from unconsolidated joint ventures.

Note 8 – Borrowing Arrangements

2 unchanged sentences

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

As of June 30, 2022 As of December 31, 2021

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 8 - Borrowing Arrangements (continued)

As of September 30, 2022 As of December 31, 2021

(amounts in thousands)

1 unchanged sentence

Mortgage notes payable, excluding deferred financing costs $ 2,027,030 $ 2,734,310 $ 2,743,527 $ 2,654,086

The weighted average interest rate on our outstanding mortgage indebtedness, including the impact of premium/discount amortization and loan cost amortization on mortgage indebtedness, as of June 30, 2022, was approximately 3.7 % per annum.

The debt bears interest at stated rates ranging from 2.4 % to 8.9 % per annum and matures on various dates ranging from 2023 to 2041.

The debt encumbered a total of 114 and 117 of our Properties as of June 30, 2022 and December 31, 2021, respectively, and the gross carrying value of such Properties was approximately $ 2,834.0 million and $ 2,817.5 million, as of June 30, 2022 and December 31, 2021, respectively.

During the six months ended June 30, 2022, we repaid $ 14.2 million of principal on two mortgage loans that were due to mature in 2022, incurring $ 0.5 million of prepayment penalties.

The debt encumbered a total of 114 and 117 of our Properties as of September 30, 2022 and December 31, 2021, respectively, and the gross carrying value of such Properties was approximately $ 2,851.5 million and $ 2,817.5 million, as of September 30, 2022 and December 31, 2021, respectively.

During the nine months ended September 30, 2022, we repaid $ 14.2 million of principal on two mortgage loans that were due to mature in 2022, incurring $ 0.5 million of prepayment penalties.

These mortgage loans had a weighted average interest rate of 5.25 % per annum and were secured by three RV communities.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 8 - Borrowing Arrangements (continued)

During the six months ended June 30, 2022, we entered into a $ 200.0 million secured refinancing transaction.

During the nine months ended September 30, 2022, we entered into a $ 200.0 million secured refinancing transaction.

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.

1 unchanged sentence

Unsecured Debt

During the six months ended June 30, 2022 we entered into a $ 200.0 million senior unsecured term loan agreement.

During the nine months ended September 30, 2022, we entered into a $ 200.0 million senior unsecured term loan agreement.

The maturity date is January 21, 2027, with an interest rate of Secured Overnight Financing Rate (“SOFR”) plus approximately 1.30 % to 1.80 %, depending on leverage levels.

The LOC had a balance of $ 47.8 million and $ 349.0 million outstanding as of June 30, 2022 and December 31, 2021, respectively.

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

As of June 30, 2022, we were in compliance in all material respects with the covenants in all our borrowing arrangements.

The LOC had a balance of $ 95.0 million and $ 349.0 million outstanding as of September 30, 2022 and December 31, 2021, respectively.

As of September 30, 2022, our LOC had a remaining borrowing capacity of $ 405.0 million.

As of September 30, 2022, we were in compliance in all material respects with the covenants in all our borrowing arrangements.

Note 9 – Derivative Instruments and Hedging

5 unchanged sentences

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

Based on the leverage as of June 30, 2022, our spread over LIBOR was 1.40 % resulting in an estimated all-in interest rate of 1.79 % per annum.

Based on the leverage as of September 30, 2022, our spread over LIBOR was 1.40 % resulting in an estimated all-in interest rate of 1.79 % per annum.

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

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

As of June 30, As of December 31,

As of September 30, As of December 31,

(amounts in thousands) Balance Sheet Location 2022 2021

Interest Rate Swap Other assets, net $ 20,474 $ 3,524

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 9 – Derivative Instruments and Hedging (continued)

The following table presents the effect of our derivative financial instrument on the Consolidated Statements of Income and Comprehensive Income:

1 unchanged sentence

in OCI on derivative

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

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

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

accumulated OCI into income

for the six months ended June 30,

for the nine months ended September 30,

(amounts in thousands) 2022 2021 (amounts in thousands) 2022 2021

3 unchanged sentences

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

As of June 30, 2022, we had not posted any collateral related to the Swap.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

As of September 30, 2022, we had not posted any collateral related to the Swap.

Note 10 – Equity Incentive Awards

7 unchanged sentences

These are time-based awards subject to various vesting dates between October 26, 2022 and April 26, 2025.

Stock based compensation expense, reported in General and administrative expense on the Consolidated Statements of Income and Comprehensive Income, was $ 2.7 million and $ 2.8 million for the quarters ended June 30, 2022 and 2021, respectively, and $ 5.3 million and $ 5.4 million for the six months ended June 30, 2022 and 2021, respectively.

Stock based compensation expense, reported in General and administrative expense on the Consolidated Statements of Income and Comprehensive Income, was $ 2.6 million and $ 2.8 million for the quarters ended September 30, 2022 and 2021, respectively, and $ 7.9 million and $ 8.2 million for the nine months ended September 30, 2022 and 2021, respectively.

Note 11 – Commitments and Contingencies

4 unchanged sentences

In addition, to the extent any such Proceedings or audits relate to newly acquired Properties, we consider any potential indemnification obligations of sellers in our favor.

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.

The master lessor of these ground leases, The Nicholson Family Partnership (the “Nicholsons”), has expressed a desire to redevelop Westwinds, and in a written communication, they claimed that we were obligated to deliver the property free and clear of any and all subtenancies upon the expiration of the ground leases on August 31, 2022.

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

The master lessor of these ground leases, The Nicholson Family Partnership (together with its predecessor in interest, the “Nicholsons”), has expressed a desire to redevelop Westwinds, and in a written communication, they claimed that we were obligated to deliver the property free and clear of any and all subtenancies upon the expiration of the ground leases on August 31, 2022.

In connection with any redevelopment, the City of San Jose’s conversion ordinance requires, among other things, that the landowner provide relocation, rental and purchase assistance to the impacted residents.

We believe the Nicholsons’ demand is unlawful, and 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.

The Operating Partnership and the interested parties filed an amended complaint on January 29, 2020.

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

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

On July 29, 2020, the Superior Court issued a final order denying the Nicholsons' motion to compel arbitration.

The Nicholsons filed a notice of appeal on August 7, 2020.

On February 4, 2022, the California Court of Appeal affirmed the Superior Court’s order denying the Nicholsons' motion to compel

Equity LifeStyle Properties, Inc.

1 unchanged sentence

Note 11 - Commitments and Contingencies (continued)

We believe the Nicholsons’ demand to be unlawful, and 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 had no obligation to deliver the property free and clear of the mobilehome residents upon the expiration of the ground leases.

The Operating Partnership and the interested parties filed an amended complaint on January 29, 2020.

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

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

On July 29, 2020, the Superior Court issued a final order denying the Nicholsons' motion to compel arbitration.

The Nicholsons filed a notice of appeal on August 7, 2020, which appeal was heard on February 1, 2022.

On February 4, 2022, the California Court of Appeal affirmed the Superior Court’s order denying the Nicholsons' motion to compel arbitration.

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

2 unchanged sentences

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 the cross complaint, and the Nicholsons also filed a demurrer to our complaint.

The Nicholsons filed a demurrer to our complaint which was denied by the Superior Court.

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.

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.

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

As of June 30, 2022, we have not made an accrual, as we are unable to predict the outcome of this matter or reasonably estimate any possible loss.

The Operating Partnership disputes the contention that it did not maintain Westwinds and Nicholson Plaza in compliance with the terms of the applicable ground leases.

The arbitration that was previously stayed pursuant to an agreement between the Operating Partnership and the Nicholsons was set for a hearing on October 31, 2022 with respect to the Nicholsons’ 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.

On October 6, 2022, the parties to the Superior Court proceeding as well as the arbitration entered into a binding agreement pursuant to which, among other things, the parties agreed to dismiss with prejudice all claims pending in the Superior Court and in the arbitration;

however, the Nicholsons reserved their rights to pursue their claim that the Operating Partnership failed to maintain or repair certain infrastructure and improvements at Westwinds and Nicholson Plaza.

To the extent the Nicholsons pursue such claim, we intend to vigorously defend our interests.

The parties are in the process of further documenting and implementing the settlement agreement.

We do not expect the settlement agreement to have a material impact to our Consolidated Financial Statements.

Note 12 - Reportable Segments

3 unchanged sentences

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

All revenues were from external customers and there is no customer who contributed 10% or more of our total revenues during the quarters and six months ended ended June 30, 2022 or 2021.

The following tables summarize our segment financial information for the quarters and six months ended June 30, 2022 and 2021:

Quarter Ended June 30, 2022

All revenues were from external customers and there is no customer who contributed 10% or more of our total revenues during the quarters and nine months ended September 30, 2022 or 2021.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 12 – Reportable Segments (continued)

The following tables summarize our segment financial information for the quarters and nine months ended September 30, 2022 and 2021:

Quarter Ended September 30, 2022

(amounts in thousands) Property

6 unchanged sentences

Depreciation and amortization ( 50,026 ) ( 2,521 ) ( 52,547 )

Loss on sale of real estate and impairment, net ( 2,289 ) ( 1,458 ) ( 3,747 )

Income from operations $ 107,559 $ 1,556 $ 109,115

6 unchanged sentences

Equity in income of unconsolidated joint ventures 1,465

Early debt retirement ( 640 )

Consolidated net income $ 70,509

1 unchanged sentence

Capital improvements $ 49,585 $ 37,994 $ 87,579

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 12 – Reportable Segments (continued)

Quarter Ended June 30, 2021

Quarter Ended September 30, 2021

(amounts in thousands) Property

14 unchanged sentences

Equity in income of unconsolidated joint ventures 851

Early debt retirement ( 755 )

Consolidated net income $ 74,093

1 unchanged sentence

Capital improvements $ 52,146 $ 32,169 $ 84,315

Six Months Ended June 30, 2022

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 12 – Reportable Segments (continued)

Nine Months Ended September 30, 2022

(amounts in thousands) Property

6 unchanged sentences

Depreciation and amortization ( 145,200 ) ( 7,537 ) ( 152,737 )

Loss on sale of real estate and impairment, net ( 2,289 ) ( 1,458 ) ( 3,747 )

Income (loss) from operations $ 334,505 $ 5,976 $ 340,481

13 unchanged sentences

Note 12 – Reportable Segments (continued)

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

(amounts in thousands) Property

19 unchanged sentences

Capital improvements $ 129,919 $ 74,118 $ 204,037

The following table summarizes our financial information for the Property Operations segment for the quarters and six months ended June 30, 2022 and 2021:

Quarters Ended June 30, Six Months Ended June 30,

The following table summarizes our financial information for the Property Operations segment for the quarters and nine months ended September 30, 2022 and 2021:

Quarters Ended September 30, Nine Months Ended September 30,

(amounts in thousands) 2022 2021 2022 2021

18 unchanged sentences

Note 12 – Reportable Segments (continued)

The following table summarizes our financial information for the Home Sales and Rentals Operations segment for the quarters and six months ended June 30, 2022 and 2021:

Quarters Ended June 30, Six Months Ended June 30,

The following table summarizes our financial information for the Home Sales and Rentals Operations segment for the quarters and nine months ended September 30, 2022 and 2021:

Quarters Ended September 30, Nine Months Ended September 30,

(amounts in thousands) 2022 2021 2022 2021

12 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 1. Financial Statements