EQUITY LIFESTYLE PROPERTIES INC 10-Q

els-20230331 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _________________________________________________________ FORM 10-Q _________________________________________________________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 1-11718 _________________________________________________________ EQUITY LIFESTYLE PROPERTIES, INC. (Exact Name of Registrant as Specified in Its Charter) _________________________________________________________ Maryland 36-3857664 (State or other jurisdiction of incorporation) (IRS Employer Identification Number) Two North Riverside Plaza, Suite 800 Chicago, Illinois 60606 (Address of Principal Executive Offices) (Zip Code) ( 312 ) 279-1400 Registrant's telephone number, including area code Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, $0.01 Par Value ELS New York Stock Exchange _________________________________________________________ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 186,209,657 shares of Common Stock as of April 19, 2023. Equity LifeStyle Properties, Inc. Table of Contents Page Part I - Financial Information Item 1. Financial Statements (unaudited) Index To Financial Statements Consolidated Balance Sheets as of March 3 1 , 202 3 and December 31, 20 22 3 Consolidated Statements of Income and Comprehensive Income for the quarters ended March 31, 2023 and 2022 4 Consolidated Statements of Changes in Equity for the quarters ended March 31, 2023 and 2022 5 Consolidated Statements of Cash Flows for the quarters ended March 31, 2023 and 2022 6 Notes to Consolidated Financial Statements 8 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 17 Item 3. Quantitative and Qualitative Disclosures About Market Risk 30 Item 4. Controls and Procedures 30 Part II - Other Information Item 1. Legal Proceedings 31 Item 1A. Risk Factors 31 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 31 Item 3. Defaults Upon Senior Securities 31 Item 4. Mine Safety Disclosures 31 Item 5. Other Information 31 Item 6. Exhibits 31 2 Part I – Financial Information Item 1. Financial Statements Equity LifeStyle Properties, Inc. Consolidated Balance Sheets (amounts in thousands, except share and per share data) March 31, 2023 December 31, 2022 (unaudited) Assets Investment in real estate: Land $ 2,086,725 $ 2,084,532 Land improvements 4,170,166 4,115,439 Buildings and other depreciable property 1,197,416 1,169,590 7,454,307 7,369,561 Accumulated depreciation ( 2,306,538 ) ( 2,258,540 ) Net investment in real estate 5,147,769 5,111,021 Cash and restricted cash 30,661 22,347 Notes receivable, net 46,655 45,356 Investment in unconsolidated joint ventures 81,135 81,404 Deferred commission expense 51,090 50,441 Other assets, net 162,003 181,950 Total Assets $ 5,519,313 $ 5,492,519 Liabilities and Equity Liabilities: Mortgage notes payable, net $ 2,677,318 $ 2,693,167 Term loan, net 497,039 496,817 Unsecured line of credit 212,000 198,000 Accounts payable and other liabilities 185,126 175,148 Deferred membership revenue 204,312 197,743 Accrued interest payable 12,090 11,739 Rents and other customer payments received in advance and security deposits 130,704 122,318 Distributions payable 87,338 80,102 Total Liabilities 4,005,927 3,975,034 Equity: Stockholders' Equity: Preferred stock, $ 0.01 par value, 10,000,000 shares authorized as of March 31, 2023 and December 31, 2022; none issued and outstanding. — — Common stock, $ 0.01 par value, 600,000,000 shares authorized as of March 31, 2023 and December 31, 2022; 186,205,815 and 186,120,298 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively. 1,916 1,916 Paid-in capital 1,629,866 1,628,618 Distributions in excess of accumulated earnings ( 205,203 ) ( 204,248 ) Accumulated other comprehensive income 15,141 19,119 Total Stockholders’ Equity 1,441,720 1,445,405 Non-controlling interests – Common OP Units 71,666 72,080 Total Equity 1,513,386 1,517,485 Total Liabilities and Equity $ 5,519,313 $ 5,492,519 The accompanying notes are an integral part of the consolidated financial statements. 3 Equity LifeStyle Properties, Inc. Consolidated Statements of Income and Comprehensive Income (amounts in thousands, except per share data) (unaudited) Quarters Ended March 31, 2023 2022 Revenues: Rental income $ 296,451 $ 285,065 Annual membership subscriptions 15,970 15,157 Membership upgrade sales current period, gross 7,975 7,151 Membership upgrade sales upfront payments, deferred, net ( 4,470 ) ( 4,084 ) Other income 17,714 13,542 Gross revenues from home sales, brokered resales and ancillary services 32,133 39,695 Interest income 2,088 1,759 Income from other investments, net 2,091 1,904 Total revenues 369,952 360,189 Expenses: Property operating and maintenance 112,483 103,992 Real estate taxes 18,316 19,457 Sales and marketing, gross 5,517 4,914 Membership sales commissions, deferred, net ( 679 ) ( 583 ) Property management 19,464 17,871 Depreciation and amortization 50,502 49,394 Cost of home sales, brokered resales and ancillary services 23,141 30,684 Home selling expenses and ancillary operating expenses 6,924 6,481 General and administrative 11,661 12,072 Casualty-related charges/(recoveries), net — — Other expenses 1,468 1,048 Early debt retirement — 516 Interest and related amortization 32,588 27,464 Total expenses 281,385 273,310 Loss on sale of real estate and impairment, net ( 2,632 ) — Income before equity in income of unconsolidated joint ventures 85,935 86,879 Equity in income of unconsolidated joint ventures 524 171 Consolidated net income 86,459 87,050 Income allocated to non-controlling interests – Common OP Units ( 4,088 ) ( 4,144 ) Net income available for Common Stockholders $ 82,371 $ 82,906 Consolidated net income $ 86,459 $ 87,050 Other comprehensive income (loss): Adjustment for fair market value of swap ( 3,978 ) 9,924 Consolidated comprehensive income 82,481 96,974 Comprehensive income allocated to non-controlling interests – Common OP Units ( 3,899 ) ( 4,616 ) Comprehensive income attributable to Common Stockholders $ 78,582 $ 92,358 Earnings per Common Share – Basic $ 0.44 $ 0.45 Earnings per Common Share – Fully Diluted $ 0.44 $ 0.45 Weighted average Common Shares outstanding – Basic 185,900 185,690 Weighted average Common Shares outstanding – Fully Diluted 195,369 195,246 The accompanying notes are an integral part of the consolidated financial statements. 4 Equity LifeStyle Properties, Inc. Consolidated Statements of Changes in Equity (amounts in thousands) (unaudited) Common Stock Paid-in Capital Distributions in Excess of Accumulated Earnings Accumulated Other Comprehensive Income (Loss) Non-controlling Interests – Common OP Units Total Equity Balance as of December 31, 2022 $ 1,916 $ 1,628,618 $ ( 204,248 ) $ 19,119 $ 72,080 $ 1,517,485 Exchange of Common OP Units for Common Stock — 198 — — ( 198 ) — Issuance of Common Stock through employee stock purchase plan — 363 — — — 363 Compensation expenses related to restricted stock and stock options — 2,549 — — — 2,549 Repurchase of Common Stock or Common OP Units — ( 1,932 ) — — — ( 1,932 ) Adjustment for Common OP Unitholders in the Operating Partnership — 168 — — ( 168 ) — Adjustment for fair market value of swap — — — ( 3,978 ) — ( 3,978 ) Consolidated net income — — 82,371 — 4,088 86,459 Distributions — — ( 83,326 ) — ( 4,136 ) ( 87,462 ) Other — ( 98 ) — — — ( 98 ) Balance as of March 31, 2023 $ 1,916 $ 1,629,866 $ ( 205,203 ) $ 15,141 $ 71,666 $ 1,513,386 Common Stock Paid-in Capital Distributions in Excess of Accumulated Earnings Accumulated Other Comprehensive Income (Loss) Non-controlling interests – Common OP Units Total Equity Balance as of December 31, 2021 $ 1,913 $ 1,593,362 $ ( 183,689 ) $ 3,524 $ 71,061 $ 1,486,171 Exchange of Common OP Units for Common Stock — 67 — — ( 67 ) — Issuance of Common Stock through employee stock purchase plan — 513 — — — 513 Issuance of Common Stock 3 28,367 — — — 28,370 Compensation expenses related to restricted stock and stock options — 2,590 — — — 2,590 Repurchase of Common Stock or Common OP Units — ( 3,449 ) — — — ( 3,449 ) Adjustment for Common OP Unitholders in the Operating Partnership — ( 1,641 ) — — 1,641 — Adjustment for fair market value of swap — — — 9,924 — 9,924 Consolidated net income — — 82,906 — 4,144 87,050 Distributions — — ( 76,375 ) — ( 3,812 ) ( 80,187 ) Other — ( 645 ) — — — ( 645 ) Balance as of March 31, 2022 $ 1,916 $ 1,619,164 $ ( 177,158 ) $ 13,448 $ 72,967 $ 1,530,337 . The accompanying notes are an integral part of the consolidated financial statements. 5 Equity LifeStyle Properties, Inc. Consolidated Statements of Cash Flows (amounts in thousands) (unaudited) Quarters Ended March 31, 2023 2022 Cash Flows From Operating Activities: Consolidated net income $ 86,459 $ 87,050 Adjustments to reconcile consolidated net income to net cash provided by operating activities: Loss on sale of real estate and impairment, net 2,632 — Early debt retirement — 516 Depreciation and amortization 51,860 50,237 Amortization of loan costs 1,208 1,213 Debt premium amortization ( 32 ) ( 60 ) Equity in income of unconsolidated joint ventures ( 524 ) ( 171 ) Distributions of income from unconsolidated joint ventures 174 — Proceeds from insurance claims, net 5,795 59 Compensation expense related to incentive plans 3,330 ( 1,529 ) Revenue recognized from membership upgrade sales upfront payments ( 3,505 ) ( 3,067 ) Commission expense recognized related to membership sales 1,095 1,040 Changes in assets and liabilities: Notes receivable, net ( 1,345 ) 189 Deferred commission expense ( 1,744 ) ( 1,550 ) Other assets, net 21,763 23,168 Accounts payable and other liabilities 9,553 ( 1,923 ) Deferred membership revenue 10,074 8,494 Rents and other customer payments received in advance and security deposits 7,668 13,665 Net cash provided by operating activities 194,461 177,331 Cash Flows From Investing Activities: Real estate acquisitions, net ( 8,803 ) ( 15,402 ) Investment in unconsolidated joint ventures ( 1,752 ) ( 7,912 ) Distributions of capital from unconsolidated joint ventures 1,012 374 Proceeds from insurance claims, net 4,070 1,405 Capital improvements ( 96,455 ) ( 83,647 ) Net cash used in investing activities ( 101,928 ) ( 105,182 ) The accompanying notes are an integral part of the consolidated financial statements. 6 Equity LifeStyle Properties, Inc. Consolidated Statements of Cash Flows (continued) (amounts in thousands) (unaudited) Quarters Ended March 31, 2023 2022 Cash Flows From Financing Activities: Proceeds from stock options and employee stock purchase plan 363 513 Gross proceeds from the issuance of common stock — 28,370 Distributions: Common Stockholders ( 76,309 ) ( 67,295 ) Common OP Unitholders ( 3,799 ) ( 3,373 ) Share based award tax withholding payments ( 1,932 ) ( 3,449 ) Principal payments and mortgage debt repayment ( 16,443 ) ( 29,592 ) Term loan proceeds — 200,000 Line of Credit repayment ( 104,000 ) ( 319,000 ) Line of Credit proceeds 118,000 39,000 Debt issuance and defeasance costs — ( 1,957 ) Other ( 99 ) ( 644 ) Net cash used in financing activities ( 84,219 ) ( 157,427 ) Net increase (decrease) in cash and restricted cash 8,314 ( 85,278 ) Cash and restricted cash, beginning of period 22,347 123,398 Cash and restricted cash, end of period $ 30,661 $ 38,120 Quarters Ended March 31, 2023 2022 Supplemental Information: Cash paid for interest, net $ 31,630 $ 26,839 Net investment in real estate – reclassification of rental homes $ 15,907 $ 21,311 Other assets, net – reclassification of rental homes $ ( 15,907 ) $ ( 21,311 ) Real estate acquisitions: Investment in real estate $ ( 9,535 ) $ ( 15,075 ) Notes receivable, net — ( 772 ) Other assets, net 14 — Deferred membership revenue — 315 Other liabilities — 79 Rents and other customer payments received in advance and security deposits 718 51 Real estate acquisitions, net $ ( 8,803 ) $ ( 15,402 ) The accompanying notes are an integral part of the consolidated financial statements. 7 Equity LifeStyle Properties, Inc. Notes to Consolidated Financial Statements Note 1 – Organization and Basis of Presentation Equity LifeStyle Properties, Inc. (“ELS”), a Maryland corporation, together with MHC Operating Limited Partnership (the “Operating Partnership”) and its other consolidated subsidiaries (the “Subsidiaries”), are referred to herein as “we,” “us,” and “our”. 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. We provide our customers the opportunity to place manufactured homes and cottages, RVs and/or boats on our Properties either on a long-term or short-term basis. Our customers may lease individual developed areas (“Sites”) or enter into right-to-use contracts, also known as membership subscriptions, which provide them access to specific Properties for limited stays. Our Properties are owned primarily by the Operating Partnership and managed internally by affiliates of the Operating Partnership. ELS is the sole general partner of the Operating Partnership, has exclusive responsibility and discretion in management and control of the Operating Partnership and held a 95.3 % interest as of March 31, 2023. As the general partner with control, ELS is the primary beneficiary of, and therefore consolidates, the Operating Partnership. Equity method of accounting is applied to entities in which ELS does not have a controlling interest or for variable interest entities in which ELS is not considered the primary beneficiary, but with respect to which it can exercise significant influence over operations and major decisions. Our exposure to losses associated with unconsolidated joint ventures is primarily limited to the carrying value of these investments. Accordingly, distributions from a joint venture in excess of our carrying value are recognized in earnings. The accompanying unaudited interim consolidated financial statements have been prepared pursuant to Securities and Exchange Commission (“SEC”) rules and regulations for Quarterly Reports on Form 10-Q. Accordingly, they do not include all of the information and note disclosures required by U.S. Generally Accepted Accounting Principles (“GAAP”) for complete financial statements and should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022. Intercompany balances and transactions have been eliminated. All adjustments to the unaudited interim consolidated financial statements are of a normal, recurring nature and, in the opinion of management, are necessary for a fair presentation of results for these interim periods. Revenues and expenses are subject to seasonal fluctuations and accordingly, quarterly interim results may not be indicative of full year results. Certain prior period amounts have been reclassified on our unaudited interim consolidated financial statements to conform with current year presentation. Note 2 – Summary of Significant Accounting Policies (a) Revenue Recognition Our revenue streams are predominantly derived from customers renting our Sites or entering into membership subscriptions. Leases with customers renting our Sites are accounted for as operating leases. The rental income associated with these leases is accounted for in accordance with the Accounting Standards Codification (“ASC”) 842, Leases, and is recognized over the term of the respective lease or the length of a customer’s stay. MH Sites are generally leased on an annual basis to residents who own or lease factory-built homes, including manufactured homes. RV and marina Sites are leased to those who generally have an RV, factory-built cottage, boat or other unit placed on the site, including those customers renting marina dry storage slips. Annual Sites are leased on an annual basis, including those Northern Properties that are open for the summer season. Seasonal Sites are leased to customers generally for one to six months . Transient Sites are leased to customers on a short-term basis. We do not separate expenses reimbursed by our customers (“utility recoveries”) from the associated rental income as we meet the practical expedient criteria of ASC 842, Leases to combine the lease and non-lease components. We assessed the criteria and concluded that the timing and pattern of transfer for rental income and the associated utility recoveries are the same and, as our leases qualify as operating leases, we account for and present rental income and utility recoveries as a single component under Rental income in our Consolidated Statements of Income and Comprehensive Income. In addition, customers may lease homes that are located in our communities. These leases are accounted for as operating leases. Rental income derived from customers leasing homes is also accounted for in accordance with ASC 842, Leases and is recognized over the term of the respective lease. The allowance for credit losses related to the collectability of lease receivables is presented as a reduction to Rental income. Lease receivables are presented within Other assets, net on the Consolidated Balance Sheets and are net of an allowance for credit losses. The estimate for credit losses is a result of our ongoing assessments and evaluations of collectability, including historical loss experience, current market conditions and future expectations in forecasting credit losses. 8 Equity LifeStyle Properties, Inc. Notes to Consolidated Financial Statements Note 2 – Summary of Significant Accounting Policies (continued) Annual membership subscriptions and membership upgrade sales are accounted for in accordance with ASC 606 , Revenue from Contracts with Customers. Membership subscriptions provide our customers access to specific Properties for limited stays at a specified group of Properties. Payments are deferred and recognized on a straight-line basis over the one-year period during which access to Sites at certain Properties is provided. Membership subscription receivables are presented within Other assets, net on the Consolidated Balance Sheets and are net of an allowance for credit losses. Membership upgrades grant certain additional access rights to the customer and require non-refundable upfront payments. The non-refundable upfront payments are recognized on a straight-line basis over 20 years. Financed upgrade sales (also known as contract receivables) are presented within Notes receivable, net on the Consolidated Balance Sheets and are net of an allowance for credit losses. Income from home sales is recognized when the earnings process is complete. The earnings process is complete when the home has been delivered, the purchaser has accepted the home and title has transferred. We have a limited program under which we purchase loans made by an unaffiliated lender to homebuyers at our Properties. Financed home sales (also known as chattel loans) are presented within Notes receivable, net on the Consolidated Balance Sheets and are net of an allowance for credit losses. (b) Restricted Cash As of March 31, 2023 and December 31, 2022, restricted cash consisted of $ 19.8 million and $ 19.7 million, respectively, primarily related to cash reserved for customer deposits and escrows for insurance and real estate taxes. (c) Casualty related charges/(recoveries), net During the quarter ended March 31, 2023, we recognized expenses of approximately $ 8.5 million related to debris removal and cleanup related to Hurricane Ian and an offsetting insurance recovery revenue accrual of $ 8.5 million related to the expected insurance recovery as a result of Hurricane Ian. Note 3 – Leases Lessor The leases entered into between the customer and us for rental of a Site are renewable upon the consent of both parties or, in some instances, as provided by statute. Long-term leases that are non-cancelable by the tenants are in effect at certain Properties. Rental rate increases at these Properties are primarily a function of increases in the Consumer Price Index, taking into consideration certain conditions. Additionally, periodic market rate adjustments are made as deemed appropriate. In addition, certain state statutes allow entry into long-term agreements that effectively modify lease terms related to rent amounts and increases over the term of the agreements. The following table presents future minimum rents expected to be received under long-term non-cancelable tenant leases, as well as those leases that are subject to long-term agreements governing rent payments and increases: (amounts in thousands) As of March 31, 2023 2023 $ 86,670 2024 115,394 2025 42,805 2026 23,963 2027 22,544 Thereafter 57,200 Total $ 348,576 Lessee We lease land under non-cancelable operating leases at 10 Properties expiring at various dates between 2028 and 2054. The majority of the leases have terms requiring fixed payments plus additional rents based on a percentage of gross revenues at those Properties. We also have other operating leases, primarily office space, expiring at various dates through 2032. For the quarters ended March 31, 2023 and 2022, total operating lease payments were $ 1.5 million and $ 2.6 million, respectively. 9 Equity LifeStyle Properties, Inc. Notes to Consolidated Financial Statements 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 March 31, 2023: As of March 31, 2023 (amounts in thousands) Ground Leases Office and Other Leases Total 2023 $ 544 $ 3,081 $ 3,625 2024 675 3,407 4,082 2025 680 3,108 3,788 2026 684 2,613 3,297 2027 689 2,424 3,113 Thereafter 4,525 10,794 15,319 Total undiscounted rental payments 7,797 25,427 33,224 Less imputed interest ( 2,013 ) ( 3,741 ) ( 5,754 ) Total lease liabilities $ 5,784 $ 21,686 $ 27,470 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 $ 25.3 million and $ 27.5 million, respectively, as of March 31, 2023. The weighted average remaining lease term for our operating leases was nine years and the weighted average incremental borrowing rate was 3.8 % at March 31, 2023. 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 $ 28.0 million, respectively, as of December 31, 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 December 31, 2022. Note 4 – Earnings Per Common Share The following table sets forth the computation of basic and diluted earnings per share of common stock (Common Share) for the quarters ended March 31, 2023 and 2022: Quarters Ended March 31, (amounts in thousands, except per share data) 2023 2022 Numerators: Net income available for Common Stockholders – Basic $ 82,371 $ 82,906 Amounts allocated to non controlling interest (dilutive securities) 4,088 4,144 Net income available for Common Stockholders – Fully Diluted $ 86,459 $ 87,050 Denominators: Weighted average Common Shares outstanding – Basic 185,900 185,690 Effect of dilutive securities: Exchange of Common OP Units for Common Shares 9,262 9,301 Stock options and restricted stock 207 255 Weighted average Common Shares outstanding – Fully Diluted 195,369 195,246 Earnings per Common Share – Basic $ 0.44 $ 0.45 Earnings per Common Share – Fully Diluted $ 0.44 $ 0.45 Note 5 – Common Stock and Other Equity Related Transactions Common Stockholder Distribution Activity The following quarterly distributions have been declared and paid to Common Stockholders and the Operating Partnership unit (“OP Unit”) holders since January 1, 2022. 10 Equity LifeStyle Properties, Inc. Notes to Consolidated Financial Statements Note 5 – Common Stock and Other Equity Related Transactions (continued) Distribution Amount Per Share For the Quarter Ended Stockholder Record Date Payment Date $ 0.4100 March 31, 2022 March 25, 2022 April 8, 2022 $ 0.4100 June 30, 2022 June 24, 2022 July 8, 2022 $ 0.4100 September 30, 2022 September 30, 2022 October 14, 2022 $ 0.4100 December 31, 2022 December 30, 2022 January 13, 2023 $ 0.4475 March 31, 2023 March 31, 2023 April 14, 2023 Equity Offering Program On February 24, 2022, we entered into our current at-the-market (“ATM”) equity offering program with certain sales agents, pursuant to which we may sell, from time-to-time, shares of our common stock, par value $ 0.01 per share, having an aggregate offering price of up to $ 500.0 million. As of March 31, 2023, the full capacity remained available for issuance under our ATM equity offering program. Exchanges 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 quarters ended March 31, 2023 and 2022, 25,496 and 8,640 OP Units, respectively, were exchanged for an equal number of shares of Common Stock. Note 6 – Investment in Real Estate Acquisitions 2023 On March 28, 2023, we completed the acquisition of Red Oak Shores Campground, a 223 -site RV community located in Ocean View, New Jersey for a purchase price of $ 9.5 million. The acquisition was accounted for as an asset acquisition under ASC 805, Business Combinations and was funded from our unsecured line of credit. Impairment During the quarter ended March 31, 2023, we recorded an impairment charge of approximately $ 2.6 million related to flooding events at certain Properties in California. 11 Equity LifeStyle Properties, Inc. Notes to Consolidated Financial Statements 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 March 31, 2023 and December 31, 2022 , respectively): Investment as of Income/(Loss) for the Quarters Ended Investment Location Number of Sites Economic Interest (a) March 31, 2023 December 31, 2022 March 31, 2023 March 31, 2022 Meadows Various (2,2) 1,077 50 % $ 232 $ 158 $ 374 $ 260 Lakeshore Florida (3,3) 721 (b) 2,866 2,625 172 135 Voyager Arizona (1,1) — — % (c) — 139 692 20 ECHO JV Various — 50 % 2,773 2,963 ( 190 ) 177 RVC Various 1,282 80 % (d) 60,036 60,323 ( 353 ) ( 421 ) Mulberry Farms Arizona 200 50 % 10,071 9,902 ( 31 ) — Hiawassee KOA JV Georgia 283 50 % $ 5,157 $ 5,294 $ ( 140 ) $ — 3,563 $ 81,135 $ 81,404 $ 524 $ 171 _____________________ (a) The percentages shown approximate our economic interest as of March 31, 2023. Our legal ownership interest may differ. (b) Includes two joint ventures in which we own a 65 % interest in each and the Crosswinds joint venture in which we own a 49 % interest. (c) During the quarter ended March 31, 2023 we sold our 33 % interest in the utility plant servicing Voyager RV Resort. (d) Includes three joint ventures of which one joint venture owns a portfolio of seven operating RV communities and two joint ventures each own an RV property under development. We received approximately $ 1.2 million and $ 0.4 million in distributions from our unconsolidated joint ventures for the quarters ended March 31, 2023 and 2022, respectively. Approximately $ 0.3 million of the distributions made to us exceeded our basis in our unconsolidated joint ventures for the quarters ended March 31, 2023 and 2022, and as such, were recorded as income from unconsolidated joint ventures. Note 8 – Borrowing Arrangements Mortgage Notes Payable Our mortgage notes payable are classified as Level 2 in the fair value hierarchy. The following table presents the fair value of our mortgage notes payable: As of March 31, 2023 As of December 31, 2022 (amounts in thousands) Fair Value Carrying Value Fair Value Carrying Value Mortgage notes payable, excluding deferred financing costs $ 2,100,665 $ 2,701,638 $ 2,043,412 $ 2,718,114 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 March 31, 2023, 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 of our Properties as of March 31, 2023 and December 31, 2022, and the gross carrying value of such Properties was approximately $ 2,895.2 million and $ 2,868.3 million, as of March 31, 2023 and December 31, 2022, respectively. Unsecured Debt We previously entered into a Third Amended and Restated Credit Agreement (“Credit Agreement”), pursuant to which we have access to a $ 500.0 million unsecured line of credit (the “LOC”) and a $ 300.0 million senior unsecured term loan (the “$ 300 million Term Loan”). On March 1, 2023, we amended the Credit Agreement to transition the LIBOR rate borrowings to Secured Overnight Financing Rate (“SOFR”) borrowings. The LOC bears interest at a rate of SOFR plus 1.25 % to 1.65 % and requires an annual facility fee of 0.20 % to 0.35 %. The $ 300 million Term Loan has an interest rate of SOFR plus 1.40 % to 1.95 % per annum. For both the LOC and the $ 300 million Term Loan, the spread over SOFR is variable based on leverage throughout the respective loan terms. As of March 31, 2023, the Company has no remaining LIBOR based borrowings. 12 Equity LifeStyle Properties, Inc. Notes to Consolidated Financial Statements Note 8 – Borrowing Arrangements (continued) The LOC had a balance of $ 212.0 million and $ 198.0 million outstanding as of March 31, 2023 and December 31, 2022, respectively. As of March 31, 2023, our LOC had a remaining borrowing capacity of $ 288.0 million. As of March 31, 2023, we were in compliance in all material respects with the covenants in all our borrowing arrangements. During the year ended December 31, 2022, we entered into a $ 200.0 million senior unsecured term loan agreement (the “$ 200 million Term Loan”). The maturity date is January 21, 2027, with an interest rate of SOFR plus approximately 1.30 % to 1.80 %, depending on leverage levels. Note 9 – Derivative Instruments and Hedging Cash Flow Hedges of Interest Rate Risk We record all derivatives at fair value. Our objective in utilizing interest rate derivatives is to add stability to our interest expense and to manage our exposure to interest rate movements. We do not enter into derivatives for speculative purposes. In March 2021, we entered into a Swap Agreement (the “2021 Swap”) with a notional amount of $ 300.0 million allowing us to trade the variable interest rate associated with our $ 300.0 million Term Loan for a fixed interest rate. In March 2023, we amended the 2021 Swap agreement to reflect the change in the $ 300.0 million Term Loan interest rate benchmark from LIBOR to SOFR ( see Note 8.Borrowing arrangements ). The 2021 Swap has a fixed interest rate of 0.41 % per annum and matures on March 25, 2024. Based on the leverage as of March 31, 2023, our spread over SOFR was 1.40 % resulting in an estimated all-in interest rate of 1.81 % per annum. In April 2023, we entered into a Swap Agreement (the “2023 Swap”) with a notional amount of $ 200.0 million allowing us to trade the variable interest rate associated with our $ 200.0 million Term Loan for a fixed interest rate. The 2023 Swap has a fixed interest rate of 3.68 % per annum and matures on January 21, 2027. Based on the leverage as of March 31, 2023, our spread over SOFR was 1.20 % resulting in an estimated all-in interest rate of 4.88 % 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 March 31, As of December 31, (amounts in thousands) Balance Sheet Location 2023 2022 Interest Rate Swap Other assets, net $ 15,141 $ 19,119 The following table presents the effect of our derivative financial instrument on the Consolidated Statements of Income and Comprehensive Income: Derivatives in Cash Flow Hedging Relationship Amount of (gain)/loss recognized in OCI on derivative for the quarters ended March 31, Location of (gain)/ loss reclassified from accumulated OCI into income Amount of (gain)/loss reclassified from accumulated OCI into income for the quarters ended March 31, (amounts in thousands) 2023 2022 (amounts in thousands) 2023 2022 Interest Rate Swap $ 523 $ ( 9,661 ) Interest Expense $ ( 3,455 ) $ 263 During the next twelve months, we estimate that $ 14.0 million will be reclassified as a decrease to interest expense. This estimate may be subject to change as the underlying SOFR changes. We determined that no adjustment was necessary for non-performance risk on our derivative obligation. As of March 31, 2023, we had not posted any collateral related to the 2021 Swap. 13 Equity LifeStyle Properties, Inc. Notes to Consolidated Financial Statements Note 10 – Equity Incentive Awards Our 2014 Equity Incentive Plan (the “2014 Plan”) was adopted by the Board of Directors on March 11, 2014 and approved by our stockholders on May 13, 2014. During the quarter ended March 31, 2023, 82,884 shares of restricted stock were awarded to certain members of our management team. Of these shares, 50 % are time-based awards, vesting in equal installments over a three-year period on January 30, 2024, February 4, 2025 and February 3, 2026, respectively, and have a grant date fair value of $ 3.0 million. The remaining 50 % are performance-based awards vesting in equal installments on January 30, 2024, February 4, 2025 and February 3, 2026, respectively, upon meeting performance conditions as established by the Compensation Committee in the year of the vesting period. They are valued using the closing price at the grant date when all the key terms and conditions are known to all parties. The 13,812 shares of restricted stock subject to 2023 performance goals have a grant date fair value of $ 1.0 million. Stock based compensation expense, reported in General and administrative expense on the Consolidated Statements of Income and Comprehensive Income, was $ 2.5 million and $ 2.6 million for the quarters ended March 31, 2023 and 2022, respectively. Note 11 – Commitments and Contingencies We are involved in various legal and regulatory proceedings (“Proceedings”) arising in the ordinary course of business. The Proceedings include, but are not limited to, legal claims made by employees, vendors and customers, and notices, consent decrees, information requests, additional permit requirements and other similar enforcement actions by governmental agencies relating to our utility infrastructure, including water and wastewater treatment plants and other waste treatment facilities and electrical systems. Additionally, in the ordinary course of business, our operations are subject to audit by various taxing authorities. Management believes these Proceedings taken together do not represent a material liability. 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. Note 12 - Reportable Segments We have identified two reportable segments: (i) Property Operations and (ii) Home Sales and Rentals Operations. The Property Operations segment owns and operates land lease Properties and the Home Sales and Rentals Operations segment purchases, sells and leases homes at the Properties. 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 ended March 31, 2023 or 2022. 14 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 ended March 31, 2023 and 2022: Quarter Ended March 31, 2023 (amounts in thousands) Property Operations Home Sales and Rentals Operations Consolidated Operations revenues $ 341,737 $ 24,036 $ 365,773 Operations expenses ( 165,023 ) ( 20,143 ) ( 185,166 ) Income from segment operations 176,714 3,893 180,607 Interest income 1,566 514 2,080 Depreciation and amortization ( 47,755 ) ( 2,747 ) ( 50,502 ) Loss on sale of real estate and impairment, net ( 2,632 ) — ( 2,632 ) Income from operations $ 127,893 $ 1,660 $ 129,553 Reconciliation to consolidated net income: Corporate interest income 8 Income from other investments, net 2,091 General and administrative ( 11,661 ) Other expenses ( 1,468 ) Interest and related amortization ( 32,588 ) Equity in income of unconsolidated joint ventures 524 Consolidated net income $ 86,459 Total assets $ 5,239,891 $ 279,422 $ 5,519,313 Capital improvements $ 51,412 $ 45,043 $ 96,455 Quarter Ended March 31, 2022 (amounts in thousands) Property Operations Home Sales and Rentals Operations Consolidated Operations revenues $ 325,426 $ 31,100 $ 356,526 Operations expenses ( 154,988 ) ( 27,828 ) ( 182,816 ) Income from segment operations 170,438 3,272 173,710 Interest income 1,377 380 1,757 Depreciation and amortization ( 46,877 ) ( 2,517 ) ( 49,394 ) Income from operations $ 124,938 $ 1,135 $ 126,073 Reconciliation to consolidated net income: Corporate interest income 2 Income from other investments, net 1,904 General and administrative (1) ( 12,072 ) Other expenses (1) ( 1,048 ) Interest and related amortization ( 27,464 ) Equity in income of unconsolidated joint ventures 171 Early debt retirement ( 516 ) Consolidated net income $ 87,050 Total assets $ 5,012,335 $ 252,470 $ 5,264,805 Capital improvements $ 54,990 $ 28,657 $ 83,647 ______________________ (1) Prior period amounts have been reclassified to conform to the current period presentation. 15 Equity LifeStyle Properties, Inc. Notes to Consolidated Financial Statements Note 12 – Reportable Segments (continued) The following table summarizes our financial information for the Property Operations segment for the quarters ended March 31, 2023 and 2022: Quarters Ended March 31, (amounts in thousands) 2023 2022 Revenues: Rental income $ 292,579 $ 281,104 Annual membership subscriptions 15,970 15,157 Membership upgrade sales current period, gross 7,975 7,151 Membership upgrade sales upfront payments, deferred, net ( 4,470 ) ( 4,084 ) Other income 17,714 13,542 Gross revenues from ancillary services 11,969 12,556 Total property operations revenues 341,737 325,426 Expenses: Property operating and maintenance 111,524 102,590 Real estate taxes 18,316 19,457 Sales and marketing, gross 5,517 4,914 Membership sales commissions, deferred, net ( 679 ) ( 583 ) Cost of ancillary services 5,297 5,721 Ancillary operating expenses 5,584 5,018 Property management 19,464 17,871 Total property operations expenses 165,023 154,988 Income from property operations segment $ 176,714 $ 170,438 The following table summarizes our financial information for the Home Sales and Rentals Operations segment for the quarters ended March 31, 2023 and 2022: Quarters Ended March 31, (amounts in thousands) 2023 2022 Revenues: Rental income (a) $ 3,872 $ 3,961 Gross revenue from home sales and brokered resales 20,164 27,139 Total revenues 24,036 31,100 Expenses: Rental home operating and maintenance 959 1,402 Cost of home sales and brokered resales 17,844 24,963 Home selling expenses 1,340 1,463 Total expenses 20,143 27,828 Income from home sales and rentals operations segment $ 3,893 $ 3,272 ______________________ (a) Rental income within Home Sales and Rentals Operations does not include base rent related to the rental home Sites. Base rent is included within property operations . 16 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis should be read in conjunction with the consolidated financial statements and accompanying notes thereto included in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2022 (“2022 Form 10-K”), as well as information in Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2022 Form 10-K. Overview and Outlook We are a self-administered and self-managed real estate investment trust (“REIT”) with headquarters in Chicago, Illinois. 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, 2023, we owned or had an ownership interest in a portfolio of 450 Properties located throughout the United States and Canada containing 171,477 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. We invest in properties in sought-after locations near retirement and vacation destinations and urban areas across the United States with a focus on delivering an exceptional experience to our residents and guests that results in delivery of value to stockholders. Our business model is intended to provide an opportunity for increased cash flows and appreciation in value. We seek growth in earnings, Funds from Operations (“FFO”), Normalized Funds from Operations (“Normalized FFO”) and cash flows by enhancing the profitability and operation of our Properties and investments. We accomplish this by attracting and retaining high quality customers to our Properties, who take pride in our Properties and in their homes, and efficiently managing our Properties by increasing occupancy, maintaining competitive market rents and controlling expenses. We also actively pursue opportunities that fit our acquisition criteria and are currently engaged in various stages of negotiations relating to the possible acquisition of additional properties. We believe the demand from baby boomers for MH and RV communities will continue to be strong over the long term. It is estimated that approximately 10,000 baby boomers are turning 65 daily through 2030. In addition, the population age 55 and older is expected to grow 17% within the next 15 years. These individuals, seeking an active lifestyle, will continue to drive the market for second-home sales as vacation properties, investment opportunities or retirement retreats. We expect it is likely that over the next decade, we will continue to see high levels of second-home sales and that manufactured homes and cottages in our Properties will continue to provide a viable second-home alternative to site-built homes. We also believe the Millennial and Generation Z demographic will contribute to our future long-term customer pipeline. After conducting a comprehensive study of RV ownership, according to the Recreational Vehicle Industry Association (“RVIA”), data suggested that RV sales are expected to benefit from an increase in demand from those born in the United States from 1980 to 2003, or Millennials and Generation Z, over the coming years. We believe the demand from baby boomers and these younger generations will continue to outpace supply for MH and RV communities. The entitlement process to develop new MH and RV communities is extremely restrictive. As a result, there have been limited new communities developed in our target geographic markets. We generate the majority of our revenues from customers renting our Sites or entering into right-to-use contracts, also known as membership subscriptions, which provide them access to specific Properties for limited stays. MH Sites are generally leased on an annual basis to residents who own or lease factory-built homes, including manufactured homes. Annual RV and marina Sites are leased on an annual basis to customers who generally have an RV, factory-built cottage, boat or other unit placed on the site, including those Northern properties that are open for the summer season. Seasonal RV and marina Sites are leased to customers generally for one to six months. Transient RV and marina Sites are leased to customers on a short-term basis. The revenue from seasonal and transient Sites is generally higher during the first and third quarters. We consider the transient revenue stream to be our most volatile as it is subject to weather conditions and other factors affecting the marginal RV customer’s vacation and travel preferences. We also generate revenue from customers renting our marina dry storage. Additionally, we have interests in joint venture Properties for which revenue is classified as Equity in income from unconsolidated joint ventures on the Consolidated Statements of Income and Comprehensive Income. 17 Management's Discussion and Analysis (continued) The following table shows the breakdown of our Sites by type (amounts are approximate): Total Sites as of March 31, 2023 MH Sites 72,700 RV Sites: Annual 34,900 Seasonal 12,500 Transient 15,000 Marina Slips 6,900 Membership (1) 25,800 Joint Ventures (2) 3,600 Total 171,400 _________________________ (1) Primarily utilized to service approximately 127,700 members. Includes approximately 6,300 Sites rented on an annual basis. (2) Includes approximately 2,000 annual Sites and 1,600 transient Sites. In our Home Sales and Rentals Operations business, our revenue streams include home sales, home rentals and brokerage services and ancillary activities. We generate revenue through home sales and rental operations by selling or leasing manufactured homes and cottages that are located in Properties owned and managed by us. We believe renting our vacant homes represents an attractive source of occupancy and an opportunity to convert the renter to a homebuyer in the future. Additionally, home sale brokerage services are offered to our residents who may choose to sell their homes rather than relocate them when moving from a Property. At certain Properties, we operate ancillary facilities, such as golf courses, pro shops, stores and restaurants. In the manufactured housing industry, options for home financing, also known as chattel financing, are limited. Chattel financing options available today include community owner-funded programs or third-party lender programs that provide subsidized financing to customers and often require the community owner to guarantee customer defaults. Third-party lender programs have stringent underwriting criteria, sizable down payment requirements, short term loan amortization and high interest rates. We have a limited program under which we purchase loans made by an unaffiliated lender to homebuyers at our Properties. In addition to net income computed in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), we assess and measure our overall financial and operating performance using certain Non-GAAP supplemental measures, which include: (i) FFO, (ii) Normalized FFO, (iii) Income from property operations, (iv) Income from property operations, excluding deferrals and property management, (v) Core Portfolio income from property operations, excluding deferrals and property management (operating results for Properties owned and operated in both periods under comparison), and (vi) Income from rental operations, net of depreciation. We use these measures internally to evaluate the operating performance of our portfolio and provide a basis for comparison with other real estate companies. Definitions and reconciliations of these measures to the most comparable GAAP measures are included below in this discussion. Results Overview For the quarter ended March 31, 2023, net income available for Common Stockholders decreased $0.5 million to $82.4 million, or $0.44 per fully diluted Common Share, compared to $82.9 million, or $0.45 per fully diluted Common Share, for the same period in 2022. Net income available for Common Stockholders for the quarter ended March 31, 2023 includes an impairment charge of approximately $2.6 million related to flooding events at certain Properties in California. For the quarter ended March 31, 2023, FFO available for Common Stock and Operating Partnership unit (“OP Unit”) holders increased $3.2 million, or $0.02 per fully diluted Common Share, to $144.1 million, or $0.74 per fully diluted Common Share, compared to $140.9 million, or $0.72 per fully diluted Common Share, for the same period in 2022. For the quarter ended March 31, 2023, Normalized FFO available for Common Stock and OP Unit holders increased $2.9 million, or $0.02 per fully diluted Common Share, to $144.3 million, or $0.74 per fully diluted Common Share, compared to $141.4 million, or $0.72 per fully diluted Common Share, for the same period in 2022. For the quarter ended March 31, 2023, our Core Portfolio property operating revenues, excluding deferrals, increased 6.4% and property operating expenses, excluding deferrals and property management, increased 7.4%, from the same period in 2022, resulting in an increase in income from property operations, excluding deferrals and property management, of 5.7%, compared to the same period in 2022. 18 Management's Discussion and Analysis (continued) 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 94.9%, 95.1% and 95.0% for the quarters ended March 31, 2023, December 31, 2022 and March 31, 2022, respectively. For the quarter ended March 31, 2023, our Core Portfolio occupancy decreased by 79 sites, which included an increase in homeowner occupancy of 30 sites and a decrease in rental occupancy of 109 compared to December 31, 2022. 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 depending on local market conditions, availability of vacant sites and success with converting renters to homeowners. As of March 31, 2023, we had 2,702 occupied rental homes in our Core MH communities. RV and marina base rental income in our Core Portfolio increased 5.5% for the quarter ended March 31, 2023, compared to the same period in 2022 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 8.4% for the quarter ended March 31, 2023, compared to the same period in 2022 due to an 8.0% increase in rate and 0.4% increase in occupancy. Core seasonal RV and marina base rental income increased 11.9% for the quarter ended March 31, 2023, compared to the same period in 2022. Core transient RV and marina base rental income decreased by $2.4 million, or 14.9% for the quarter ended March 31, 2023, compared to the same period in 2022. Across the portfolio we have fewer sites available for transient stays and we experienced operating disruptions in California as a result of flooding events during the quarter ended March 31, 2023. Demand for our homes and communities remains strong as evidenced by factors including our high occupancy levels. We closed 176 new home sales during the quarter ended March 31, 2023, compared to 261 new home sales during the quarter ended March 31, 2022, a decrease of 32.6%. The new home sales during the quarter ended March 31, 2023 were primarily in the Florida market. Our gross investment in real estate increased $84.7 million to $7,454.3 million as of March 31, 2023 from $7,369.6 million as of December 31, 2022, primarily due to capital improvements and an acquisition during the quarter ended March 31, 2023. The following chart lists the Properties acquired or sold from January 1, 2022 through March 31, 2023 and Sites added through expansion opportunities at our existing Properties: Location Type of Property Transaction Date Sites Total Sites as of January 1, 2022 (1) 169,300 Acquisition Properties: Blue Mesa Recreational Ranch Gunnison, Colorado Membership February 18, 2022 385 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 Hiawasee KOA JV Hiawassee, Georgia Unconsolidated JV November 10, 2022 283 Whippoorwill Campground Marmora, New Jersey RV December 20, 2022 288 Red Oak Shores Campground Ocean View, New Jersey RV March 28, 2023 223 Expansion Site Development: Sites added (reconfigured) in 2022 1,034 Sites added (reconfigured) in 2023 6 Ground Lease Termination: Westwinds San Jose, California MH August 31, 2022 (723) Total Sites as of March 31, 2023 (1) 171,400 ______________________ (1) Sites are approximate. Non-GAAP Financial Measures Management’s discussion and analysis of financial condition and results of operations include certain Non-GAAP financial measures that in management’s view of the business are meaningful as they allow investors the ability to understand key operating details of our business both with and without regard to certain accounting conventions or items that may not always be indicative of recurring annual cash flows of the portfolio. These Non-GAAP financial measures as determined and 19 Management's Discussion and Analysis (continued) presented by us may not be comparable to similarly titled measures reported by other companies, and include income from property operations and Core Portfolio, FFO, Normalized FFO and income from rental operations, net of depreciation. We believe investors should review Income from property operations and Core Portfolio, FFO, Normalized FFO and Income from rental operations, net of depreciation, along with GAAP net income and cash flow from operating activities, investing activities and financing activities, when evaluating an equity REIT’s operating performance. 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. Income from Property Operations and Core Portfolio We use income from property operations, income from property operations, excluding deferrals and property management, and Core Portfolio income from property operations, excluding deferrals and property management, as alternative measures to evaluate the operating results of our Properties. 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, 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. For comparative purposes, 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 2022 and 2023. Core Portfolio income from property operations, excluding deferrals and property management, is useful to investors for annual comparison as it removes the fluctuations associated with acquisitions, dispositions and significant transactions or unique situations. Our Non-Core Portfolio includes all Properties that were not owned and operated during all of 2022 and 2023. This includes, but is not limited to, four RV communities and one membership RV community acquired during 2022 and one RV community acquired during 2023. The Non-Core Properties also include Fish Tale Marina, Fort Myers Beach, Gulf Air, Palm Harbour Marina, Pine Island and Ramblers Rest. FFO and Normalized FFO We define FFO as net income, computed in accordance with GAAP, excluding gains or losses from sales of properties, depreciation and amortization related to real estate, impairment charges and adjustments to reflect our share of FFO of unconsolidated joint ventures. Adjustments for unconsolidated joint ventures are calculated to reflect FFO on the same basis. We compute FFO in accordance with our interpretation of standards established by the National Association of Real Estate Investment Trusts (“NAREIT”), which may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently than we do. We receive non-refundable upfront payments from membership upgrade contracts. In accordance with GAAP, the non-refundable upfront payments and related commissions are deferred and amortized over the estimated membership upgrade contract term. 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, 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. We believe that FFO and Normalized FFO are helpful to investors as supplemental measures of the performance of an equity REIT. We believe that by excluding the effect of gains or losses from sales of properties, depreciation and amortization related to real estate and impairment charges, which are based on historical costs and which may be of limited relevance in evaluating current performance, FFO can facilitate comparisons of operating performance between periods and among other equity REITs. We further believe that Normalized FFO provides useful information to investors, analysts and our management because it allows them to compare our operating performance to the operating performance of other real estate companies and between periods on a consistent basis without having to account for differences not related to our normal operations. For example, we believe that excluding the early extinguishment of debt and other miscellaneous non-comparable items from FFO allows investors, analysts and our management to assess the sustainability of operating performance in future periods because these costs do not affect the future operations of the properties. In some cases, we provide information about identified non-cash components of FFO and Normalized FFO because it allows investors, analysts and our management to assess the impact of those items. 20 Management's Discussion and Analysis (continued) Income from Rental Operations, Net of Depreciation We use income from rental operations, net of depreciation as an alternative measure to evaluate the operating results of our home rental program. Income from rental operations, net of depreciation represents income from rental operations less depreciation expense on rental homes. We believe this measure is meaningful for investors as it provides a complete picture of the home rental program operating results including the impact of depreciation which affects our home rental program investment decisions. 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. The following table reconciles net income available for Common Stockholders to income from property operations for the quarters ended March 31, 2023 and 2022: Quarters Ended March 31, (amounts in thousands) 2023 2022 Computation of Income from Property Operations: Net income available for Common Stockholders $ 82,371 $ 82,906 Income allocated to non-controlling interests – Common OP Units 4,088 4,144 Equity in income of unconsolidated joint ventures (524) (171) Income before equity in income of unconsolidated joint ventures 85,935 86,879 Loss on sale of real estate and impairment, net (1) 2,632 — Total other expenses, net 92,040 86,831 Gain from home sales operations and other (2,068) (2,530) Income from property operations $ 178,539 $ 171,180 _____________________ (1) During the quarter ended March 31, 2023, we recorded an impairment charge of approximately $2.6 million related to flooding events at certain Properties in California. 21 Management's Discussion and Analysis (continued) 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, 2023 and 2022: Quarters Ended March 31, (amounts in thousands) 2023 2022 Computation of FFO and Normalized FFO: Net income available for Common Stockholders $ 82,371 $ 82,906 Income allocated to non-controlling interests – Common OP Units 4,088 4,144 Membership upgrade sales upfront payments, deferred, net 4,470 4,084 Membership sales commissions, deferred, net (679) (583) Depreciation and amortization 50,502 49,394 Depreciation on unconsolidated joint ventures 1,135 941 Gain on unconsolidated joint ventures (416) — Loss on sale of real estate and impairment, net 2,632 — FFO available for Common Stock and OP Unit holders 144,103 140,886 Early debt retirement — 516 Transaction/pursuit costs (1) 116 — Lease termination expenses (2) 90 — Normalized FFO available for Common Stock and OP Unit holders $ 144,309 $ 141,402 Weighted average Common Shares outstanding – Fully Diluted 195,369 195,246 _____________________ (1) Represents transaction/pursuit costs related to unconsummated acquisitions included in Other expenses in the Consolidated Statements of Income. (2) Represents non-operating expenses associated with the Westwinds ground leases that terminated on August 31, 2022 and is included in General and Administrative expenses in the Consolidated Statement of Income. 22 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, 2023 and March 31, 2022 and our operating activities, investing activities and financing activities for the quarters ended March 31, 2023 and March 31, 2022. For the comparison of our results of operations for the quarters ended March 31, 2022 and March 31, 2021 and discussion of our operating activities, investing activities and financing activities for the quarters ended March 31, 2022 and March 31, 2021, 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, 2022, filed with the SEC on April 27, 2022. Comparison of the quarter ended March 31, 2023 to the quarter ended March 31, 2022 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, 2023 and March 31, 2022: Core Portfolio Total Portfolio Quarters Ended March 31, Quarters Ended March 31, (amounts in thousands) 2023 2022 Variance % Change 2023 2022 Variance % Change MH base rental income (1) $ 164,404 $ 154,436 $ 9,968 6.5 % $ 164,553 $ 157,336 $ 7,217 4.6 % Rental home income (1) 3,861 3,954 (93) (2.4) % 3,872 3,961 (89) (2.2) % RV and marina base rental income (1) 108,403 102,737 5,666 5.5 % 111,592 108,764 2,828 2.6 % Annual membership subscriptions 15,780 15,075 705 4.7 % 15,970 15,157 813 5.4 % Membership upgrades sales current period, gross 7,982 7,019 963 13.7 % 7,975 7,151 824 11.5 % Utility and other income (1) 29,483 26,957 2,526 9.4 % 35,331 30,044 5,287 17.6 % Property operating revenues, excluding deferrals 329,913 310,178 19,735 6.4 % 339,293 322,413 16,880 5.2 % Property operating and maintenance (1)(2) 110,015 100,686 9,329 9.3 % 112,707 104,088 8,619 8.3 % Real estate taxes 17,659 17,975 (316) (1.8) % 18,316 19,457 (1,141) (5.9) % Rental home operating and maintenance 959 1,392 (433) (31.1) % 959 1,402 (443) (31.6) % Sales and marketing, gross 5,521 4,872 649 13.3 % 5,517 4,914 603 12.3 % Property operating expenses, excluding deferrals and property management 134,154 124,925 9,229 7.4 % 137,499 129,861 7,638 5.9 % Income from property operations, excluding deferrals and property management (3) 195,759 185,253 10,506 5.7 % 201,794 192,552 9,242 4.8 % Property management 19,464 17,871 1,593 8.9 % 19,464 17,871 1,593 8.9 % Income from property operations, excluding deferrals (3) 176,295 167,382 8,913 5.3 % 182,330 174,681 7,649 4.4 % Membership upgrade sales upfront payments and membership sales commission, deferred, net 3,791 3,501 290 8.3 % 3,791 3,501 290 8.3 % Income from property operations (3) $ 172,504 $ 163,881 $ 8,623 5.3 % $ 178,539 $ 171,180 $ 7,359 4.3 % _____________________ (1) Rental income consists of the following total portfolio income items in this table: 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 and maintenance expense in this table. (2) Includes bad debt expense for all periods presented. (3) See Part I. Item 2. Management's 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 March 31, 2023, increased $7.4 million, or 4.3%, from the quarter ended March 31, 2022, driven by an increase of $8.6 million, or 5.3%, from our Core Portfolio, partially offset by a decrease of $1.3 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 MH base rental income and RV and marina base rental income, partially offset by an increase in property operating expenses, excluding deferrals and property management. The decrease in income from property operations from our Non-Core Portfolio was primarily due to lower MH base rental income and RV and marina base rental income, partially offset by business interruption income related to Hurricane Ian of $3.6 million recognized during the quarter ended March 31, 2023. 23 Management's Discussion and Analysis (continued) Property Operating Revenues MH base rental income in our Core Portfolio for the quarter ended March 31, 2023 increased $10.0 million, or 6.5%, from the quarter ended March 31, 2022, which reflects 6.6% growth from rate increases and a decline of 0.1% in occupancy. The average monthly base rental income per Site in our Core Portfolio increased to approximately $797 for the quarter ended March 31, 2023 from approximately $747 for the quarter ended March 31, 2022. The average occupancy for our Core Portfolio was 94.9% for the quarter ended March 31, 2023 and 95.0% for the quarter ended March 31, 2022. RV and marina base rental income is comprised of the following: Core Portfolio Total Portfolio Quarters Ended March 31, Quarters Ended March 31, (amounts in thousands) 2023 2022 Variance % Change 2023 2022 Variance % Change Annual $ 67,058 $ 61,848 $ 5,210 8.4 % $ 69,401 $ 64,333 $ 5,068 7.9 % Seasonal 27,400 24,496 2,904 11.9 % 27,960 26,625 1,335 5.0 % Transient 13,945 16,393 (2,448) (14.9) % 14,231 17,806 (3,575) (20.1) % RV and marina base rental income $ 108,403 $ 102,737 $ 5,666 5.5 % $ 111,592 $ 108,764 $ 2,828 2.6 % RV and marina base rental income in our Core Portfolio for the quarter ended March 31, 2023 increased $5.7 million, or 5.5%, from the quarter ended March 31, 2022, driven by an increase in Annual and Seasonal RV and marina base rental income, partially offset by a decrease in Transient rental income. The increase in Annual RV and marina base rental income of 8.4% was driven by an increase in rate. The increase in Seasonal RV and marina base rental income of 11.9% was driven by an increase in the South and West regions. The decrease in Transient RV and marina base rental income of 14.9% was primarily due to a decrease in transient RV revenue as a result of a reduction in the number of Transient sites available and flooding events at certain Properties in California during the quarter. Utility and other income in our Core Portfolio for the quarter ended March 31, 2023 increased $2.5 million, or 9.4%, from the quarter ended March 31, 2022. The increase was primarily due to a $1.9 million increase in utility income, which was primarily due to an increase in electric income in all regions except the Northeast, gas income in the South and trash income in all regions and an increase of $0.4 million in other property income primarily due to business interruption income related to Hurricane Ian recognized during the quarter ended March 31, 2023. Property Operating Expenses Property operating expenses, excluding deferrals and property management, in our Core Portfolio for the quarter ended March 31, 2023 increased $9.2 million, or 7.4%, from the quarter ended March 31, 2022, driven by increases in property operating and maintenance expenses of $9.3 million. Core property operating and maintenance expenses were higher in 2023 primarily due to increases in utility expenses of $4.1 million, repair and maintenance of $2.5 million and property payroll of $2.4 million. 24 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 our Home Sales and Other Operations: Quarters Ended March 31, (amounts in thousands, except home sales volumes) 2023 2022 Variance % Change Gross revenues from new home sales $ 18,314 $ 25,530 $ (7,216) (28.3) % Cost of new home sales 16,662 23,326 (6,664) (28.6) % Gross profit from new home sales 1,652 2,204 (552) (25.0) % Gross revenues from used home sales 1,175 998 177 17.7 % Cost of used home sales 945 1,410 (465) (33.0) % Gross profit/(loss) from used home sales 230 (412) 642 155.8 % Gross revenue from brokered resales and ancillary services 12,644 13,167 (523) (4.0) % Cost of brokered resales and ancillary services 5,534 5,948 (414) (7.0) % Gross profit from brokered resales and ancillary services 7,110 7,219 (109) (1.5) % Home selling and ancillary operating expenses 6,924 6,481 443 6.8 % Income from home sales and other $ 2,068 $ 2,530 $ (462) (18.3) % Home sales volumes Total new home sales (1) 176 261 (85) (32.6) % Used home sales 102 72 30 41.7 % Brokered home resales 134 188 (54) (28.7) % _________________________ (1) Total new home sales volume for the quarter ended March 31, 2022 includes 22 home sales from our ECHO JV. Income from home sales and other operations was $2.1 million for the quarter ended March 31, 2023, a decrease of $0.5 million, compared to $2.5 million for the quarter ended March 31, 2022. The decrease in income from home sales and other operations was primarily due to a decrease in gross profit from new home sales and higher home selling and ancillary operating expenses, partially offset by an increase in gross profit from used home sales during the quarter ended March 31, 2023 compared to the quarter ended March 31, 2022. 25 Management's Discussion and Analysis (continued) Rental Operations The following table summarizes certain financial and statistical data for our MH Rental Operations: Quarters Ended March 31, (amounts in thousands, except rental unit volumes) 2023 2022 Variance % Change Rental operations revenue (1) $ 10,258 $ 11,347 $ (1,089) (9.6) % Rental home operating and maintenance expenses 959 1,392 (433) (31.1) % Income from rental operations 9,299 9,955 (656) (6.6) % Depreciation on rental homes (2) 2,747 2,517 230 9.1 % Income from rental operations, net of depreciation $ 6,552 $ 7,438 $ (886) (11.9) % Gross investment in new manufactured home rental units $ 252,204 $ 226,890 $ 25,314 11.2 % Gross investment in used manufactured home rental units $ 14,056 $ 15,004 $ (948) (6.3) % Net investment in new manufactured home rental units $ 209,697 $ 192,819 $ 16,878 8.8 % Net investment in used manufactured home rental units $ 8,071 $ 9,776 $ (1,705) (17.4) % Number of occupied rentals – new, end of period 2,389 2,908 (519) (17.8) % Number of occupied rentals – used, end of period 313 402 (89) (22.1) % ______________________ (1) Consists of Site rental income and home rental income. Approximately $6.4 million and $7.4 million for the quarters ended March 31, 2023 and March 31, 2022, 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. (2) Presented in Depreciation and amortization in the Consolidated Statements of Income and Comprehensive Income. Income from rental operations, net of depreciation, decreased $0.9 million during the quarter ended March 31, 2023, compared to the quarter ended March 31, 2022, primarily due to 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, (amounts in thousands, expenses shown as negative) 2023 2022 Variance % Change Depreciation and amortization $ (50,502) $ (49,394) $ (1,108) (2.2) % Interest income 2,088 1,759 329 18.7 % Income from other investments, net 2,091 1,904 187 9.8 % General and administrative (11,661) (12,072) 411 3.4 % Other expenses (1,468) (1,048) (420) (40.1) % Early debt retirement — (516) 516 100.0 % Interest and related amortization (32,588) (27,464) (5,124) (18.7) % Total other income and expenses, net $ (92,040) $ (86,831) $ (5,209) (6.0) % Total other income and expenses, net increased $5.2 million for the quarter ended March 31, 2023 compared to the quarter ended March 31, 2022, primarily due to higher interest and related amortization expense as a result of an increase in interest rates and depreciation and amortization expense. Casualty related charges/(recoveries), net During the quarter ended March 31, 2023, we recorded $8.5 million of expenses for debris removal and cleanup costs and an offsetting insurance recovery revenue of $8.5 million related to Hurricane Ian. Loss on sale of real estate and impairment, net During the quarter ended March 31, 2023, we recorded an impairment charge of approximately $2.6 million related to flooding events at certain California properties. 26 Management's Discussion and Analysis (continued) Liquidity and Capital Resources Liquidity Our primary demands for liquidity include payment of operating expenses, dividend distributions, debt service, including principal and interest, capital improvements on Properties, home purchases and property acquisitions. 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 (the “LOC”) and proceeds from issuance of equity and debt securities. One of our stated objectives is to maintain financial flexibility. Achieving this objective allows us to take advantage of strategic opportunities that may arise. When investing capital, we consider all potential uses, including returning capital to our stockholders or the conditions under which we may repurchase our stock. These conditions include, but are not limited to, market price, balance sheet flexibility, alternative opportunistic capital uses and capital requirements. We believe effective management of our balance sheet, including maintaining various access points to raise capital, managing future debt maturities and borrowing at competitive rates, enables us to meet this objective. Accessing long-term low-cost secured debt continues to be our focus. Our at-the-market (“ATM”) equity offering program allows us, from time-to-time, to sell shares of our common stock, par value $0.01 per share, having an aggregate offering price up to $500.0 million. As of March 31, 2023, the full capacity of our ATM equity offering program remained available for issuance. As of March 31, 2023, we had available liquidity in the form of approximately 413.8 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. We also utilize interest rate swaps to add stability to our interest expense and to manage our exposure to interest rate movements. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. 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 Part I. Item 1. Financial Statements—Note 9. Derivative Instruments and Hedging . We previously entered into a Third Amended and Restated Credit Agreement (“Credit Agreement”), pursuant to which we have access to a $500.0 million unsecured LOC and a $300.0 million senior unsecured term loan (the “$300 million Term Loan”). On March 1, 2023, we amended the Credit Agreement to transition the LIBOR rate borrowings to Secured Overnight Financing Rate (“SOFR”) borrowings. See Part I. Item 1. Financial Statements—Note 8. Borrowing Arrangements for further details. As of March, 31, 2023, the Company has no remaining LIBOR based borrowings. In connection with our $300 million Term Loan, we entered into a Swap Agreement (the “2021 Swap”) allowing us to trade the variable interest rate for a fixed interest rate. During the quarter ended March 31, 2023, in connection with the amendment to the Credit Agreement, we replaced the LIBOR benchmarked swap with a SOFR benchmarked swap. See Part I. Item 1. Financial Statements—Note 9. Derivative Instruments and Hedging for further details. We previously entered into a $200.0 million senior unsecured term loan agreement. In connection with our $200 million Term Loan, in April 2023, we entered into a Swap Agreement (the “2023 Swap”) allowing us to trade the variable interest rate for a fixed interest rate. See Part I. Item 1. Financial Statements—Note 9. Derivative Instruments and Hedging for further details. 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, 2023, our LOC had a borrowing capacity of $288.0 million. 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. 27 Management's Discussion and Analysis (continued) The following table summarizes our cash flows activity: For the quarters ended March 31, (amounts in thousands) 2023 2022 Net cash provided by operating activities $ 194,461 $ 177,331 Net cash used in investing activities (101,928) (105,182) Net cash used in financing activities (84,219) (157,427) Net increase (decrease) in cash and restricted cash $ 8,314 $ (85,278) Operating Activities Net cash provided by operating activities increased $17.1 million to $194.5 million for the quarter ended March 31, 2023 from $177.3 million for the quarter ended March 31, 2022. The increase in net cash provided by operating activities was primarily due to higher income from property operations of $7.4 million and the net change in other assets, net and accounts payable and other liabilities. Investing Activities Net cash used in investing activities decreased $3.3 million to $101.9 million for the quarter ended March 31, 2023 from $105.2 million for the quarter ended March 31, 2022. The decrease was due to a decrease in spending on acquisitions of $6.6 million, a decrease in investments in unconsolidated joint ventures of $6.2 million and an increase in insurance proceeds of $2.7 million, partially offset by an increase in capital improvement spending of $12.8 million. Capital Improvements The following table summarizes capital improvements: For the quarters ended March 31, (amounts in thousands) 2023 2022 Asset preservation (1) $ 11,154 $ 9,906 Improvements and renovations (2) 6,958 6,431 Property upgrades and development 33,204 30,302 New and used home investments (3) 45,043 28,657 Total property improvements 96,359 75,296 Corporate 96 8,351 Total capital improvements $ 96,455 $ 83,647 ______________________ (1) Includes upkeep of property infrastructure including utilities and streets and replacement of community equipment and vehicles. (2) Includes enhancements to amenities such as buildings, common areas, swimming pools and replacement of furniture and site amenities. (3) Net proceeds from new and used home sale activities are reflected within Operating Activities. Financing Activities Net cash used in financing activities decreased $73.2 million to $84.2 million for the quarter ended March 31, 2023 from $157.4 million for the quarter ended March 31, 2022. The decrease was primarily due to a decrease in net debt repayments of approximately $107.1 million during the quarter ended March 31, 2023, compared to the same period in the prior year and proceeds from the sale of common stock under our prior ATM program of approximately $28.4 million recognized during the quarter ended March 31, 2022. Contractual Obligations Significant ongoing contractual obligations consist primarily of long-term borrowings, interest expense, operating leases, LOC maintenance fees and ground leases. For a summary and complete presentation and description of our ongoing commitments and contractual obligations, see Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Contractual Obligations in our 2022 Form 10-K. Off-Balance Sheet Arrangements As of March 31, 2023, we have no off-balance sheet arrangements. 28 Management's Discussion and Analysis (continued) Critical Accounting Policies and Estimates Refer to Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2022 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, 2023. Forward-Looking Statements This Quarterly Report on Form 10-Q includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. When used, words such as “anticipate,” “expect,” “believe,” “project,” “intend,” “may be” and “will be” and similar words or phrases, or the negative thereof, unless the context requires otherwise, are intended to identify forward-looking statements and may include without limitation, information regarding our expectations, goals or intentions regarding the future, and the expected effect of our acquisitions. These forward-looking statements are subject to numerous assumptions, risks and uncertainties, including, but not limited to: • our ability to control costs and real estate market conditions, our ability to retain customers, the actual use of Sites by customers and our success in acquiring new customers at our Properties (including those that we may acquire); • our ability to maintain historical or increase future rental rates and occupancy with respect to properties currently owned or that we may acquire; • our ability to attract and retain customers entering, renewing and upgrading membership subscriptions; • our assumptions about rental and home sales markets; • our ability to manage counterparty risk; • our ability to renew our insurance policies at existing rates and on consistent terms; • home sales results could be impacted by the ability of potential homebuyers to sell their existing residences as well as by financial, credit and capital markets volatility; • results from home sales and occupancy will continue to be impacted by local economic conditions, including an adequate supply of homes at reasonable costs, lack of affordable manufactured home financing and competition from alternative housing options including site-built single-family housing; • impact of government intervention to stabilize site-built single-family housing and not manufactured housing; • impact of the COVID-19 pandemic or other highly infectious or contagious diseases on our business operations, our residents, our customers, our employees and the economy generally; • effective integration of recent acquisitions and our estimates regarding the future performance of recent acquisitions; • the completion of future transactions in their entirety, if any, and timing and effective integration with respect thereto; • unanticipated costs or unforeseen liabilities associated with recent acquisitions; • the effect of Hurricane Ian on our business including, but not limited to the following: (i) the timing and cost of recovery, (ii) the condition of properties and the impact on occupancy demand and related rent revenue and (iii) the timing and amount of insurance proceeds; • our ability to obtain financing or refinance existing debt on favorable terms or at all; • the effect of inflation and interest rates; • the effect from any breach of our, or any of our vendors’, data management systems; • the dilutive effects of issuing additional securities; • the outcome of pending or future lawsuits or actions brought by or against us, including those disclosed in our filings with the Securities and Exchange Commission; and • other risks indicated from time to time in our filings with the Securities and Exchange Commission. These forward-looking statements are based on management’s present expectations and beliefs about future events. As with any projection or forecast, these statements are inherently susceptible to uncertainty and changes in circumstances. We are under no obligation to, and expressly disclaim any obligation to, update or alter our forward-looking statements whether as a result of such changes, new information, subsequent events or otherwise. 29 Item 3. Quantitative and Qualitative Disclosures About Market Risk We disclosed a quantitative and qualitative analysis regarding market risk in Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk in our 2022 Form 10-K. There have been no material changes in the assumptions used or results obtained regarding market risk since December 31, 2022. Item 4. Controls and Procedures Evaluation of Disclosure Controls and Procedures Our management, with the participation of our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), has evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2023. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective to give reasonable assurances to the timely collection, evaluation and disclosure of information relating to us that would potentially be subject to disclosure under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated thereunder as of March 31, 2023. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Changes in Internal Control Over Financial Reporting During the quarter ended March 31, 2023, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 30 Part II – Other Information Item 1. Legal Proceedings See Part I. Item 1. Financial Statements—Note 11. Commitments and Contingencies accompanying the Consolidated Financial Statements in this Quarterly Report on Form 10-Q. Item 1A. Risk Factors A description of the risk factors associated with our business are discussed in Part1. Item 1A. Risk Factors in our 2022 Form 10-K. On April 1, 2023, we renewed our property and casualty insurance policies. We have updated our risk factors disclosed in Part1. Item 1A. Risk Factors in our 2022 Form 10-K with the risk factor described below. Some Potential Losses Are Not Covered by Insurance We carry comprehensive insurance coverage for losses resulting from property damage and environmental liability and business interruption claims on all of our Properties. In addition, we carry liability coverage for other activities not specifically related to property operations. These coverages include, but are not limited to, Directors & Officers liability, Employment Practices liability, Fiduciary liability and Cyber liability. We believe that the policy specifications and coverage limits of these policies should be adequate and appropriate given the relative risk of loss, the cost of insurance and industry practice. There are, however, certain types of losses, such as punitive damages, lease and other contract claims that generally are not insured. Should an uninsured loss or a loss in excess of coverage limits occur, we could lose all or a portion of the capital we have invested in a Property or the anticipated future revenue from a Property. In such an event, we might nevertheless remain obligated for any mortgage debt or other financial obligations related to the Property. Our current property and casualty insurance policies with respect to our MH and RV Properties renewed on April 1, 2023. We have a $125 million per occurrence limit with respect to our MH and RV all-risk property insurance program, which includes approximately $50 million of coverage per occurrence for named windstorms, which include, for example, hurricanes. The loss limit is subject to additional sub-limits as set forth in the policy form, including, among others, a $25 million aggregate loss limit for earthquake(s) in California. The deductibles for this policy primarily range from $500,000 minimum to 5% per unit of insurance for most catastrophic events. For most catastrophic events, there is an additional one-time aggregate deductible of $10 million, which is capped at $5 million per occurrence. We have separate insurance policies with respect to our marina Properties. Those casualty policies expire on November 1, 2023, and the property insurance program renewed on April 1, 2023. The marina property insurance program has a $25 million per occurrence limit, subject to self-insurance and a minimum deductible of $100,000 plus, for named windstorms, 5% per unit of insurance subject to a $500,000 minimum. A deductible indicates our maximum exposure, subject to policy limits and sub-limits, in the event of a loss. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds None. Item 3. Defaults Upon Senior Securities None. Item 4. Mine Safety Disclosures None. Item 5. Other Information None. Item 6. Exhibits 31 10.1* Amendment, dated March 1, 2023, to the Third Amended and Restated Credit Agreement, dated as of April 19, 2021, by and among MHC Operating Limited Partnership, as Borrower, Equity LifeStyle Properties, Inc., as Parent, Wells Fargo Bank, National Association, as Administrative Agent, and each of the Lenders set forth therein . 10.2 (a) Third Amended and Restated Credit Agreement, dated as of April 19, 2021, by and among MHC Operating Limited Partnership, as Borrower, Equity LifeStyle Properties, Inc., as Parent, Wells Fargo Bank, National Association, as Administrative Agent, and each of the Lenders set forth therein . 31.1 Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350. 32.2 Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350. 101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 104 Cover Page Interactive Data File included as Exhibit 101 (embedded within the Inline XBRL document) The following documents are incorporated by reference. (a) Included as an exhibit to our Report on Form 8-K dated April 19, 2021 * Filed herewith 32 Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized. EQUITY LIFESTYLE PROPERTIES, INC. Date: April 25, 2023 By: /s/ Marguerite Nader Marguerite Nader President and Chief Executive Officer (Principal Executive Officer) Date: April 25, 2023 By: /s/ Paul Seavey Paul Seavey Executive Vice President and Chief Financial Officer (Principal Financial Officer) Date: April 25, 2023 By: /s/ Valerie Henry Valerie Henry Senior Vice President and Chief Accounting Officer (Principal Accounting Officer) 33